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Narrowing Disparity

Narrowing Disparity

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Published by: Permata Hati on Apr 26, 2012
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04/26/2012

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Narrowing disparity / inequality

1. High-performing Bumi SMEs (HPBS) To roll out HPBS programme that will develop the next generation of world-class Bumiputera entrepreneurs across all 12 National Key Economic Areas (NKEAs) championed by TERAJU. SMEs need to scale up, accelerate their growth and must be able to compete in the open market, without heavy reliance on Government contracts.

"However, the NEM does strongly seek to modify the manner in which the interests of all Malaysians are promoted through pro-poor, inclusive growth by means of market-friendly and transparent affirmative action," the NEAC said in its second and final report on the NEM.

The council said affirmative action had progressed successfully with an exemplary reduction in absolute poverty and notable advances in reducing economic functions by race. But the progress had also entailed fundamental negatives. "The implementation of affirmative action has propagated and embedded a distributive and entitlement culture and rentier behaviour.

"An insufficient number of qualified Bumiputera firms with the requisite capital resources have encouraged the establishment of spurious fronts.

"Excessive use of ethnic quotas has descended into acceptance of less qualified recipients and bred inefficiency. Preferential pricing and quotas have led to rent-seeking market distortions or perversion of the objectives," it added. The NEAC said recipients of share capital had sold off their allotments and reaped unearned windfall benefits. Deserving entrepreneurs had been marginalized with little access to finance, while rent-seekers had not really created wealth or added to economic growth.

increasing the number of Bumiputera professionals and overall representation in management as well as eradicating poverty. While there have been major achievements since the introduction of the NEP. management positions and high-income jobs.In light of the persistent inequalities. wherever possible. it said. there is still a significant need to address existing imbalances in income levels and ownership of economic assets." the NEAC said. The New Economic Policy (NEP) and its successors over the years have succeeded in transforming the Bumiputera community in terms of reducing inter-ethnic income disparities. contracts and licences. But affirmative action must be revised and reformed by drawing lessons from and by removing the negatives and flaws from past practices. There are significant opportunities to improve Bumiputera representation in highvalue added occupations. The new approach will ensure. it added. that its implementation will not undermine the functioning of the market. Bumiputera households . The programmes will be implemented based on the needs and merit of the applicants and will be focused on capacity and capability building. "The NEM’s inclusiveness objective is focused on reducing disparity and uplifting the bottom 40 per cent of households. jobs. Programmes to assist the bottom 40 per cent shall be ethnically blind without any market distorting elements such as quotas or preferences or entitlements to access to financial resources. The Bumiputera share of the economy is still small in proportion to the Bumiputera population. increasing participation in corporate equity. the economically disadvantaged should be given the opportunity to overcome their disadvantaged position through the continuation of the affirmative action policy.

Bumiputera ownership of share capital (at par value) of limited companies remains at 21. small number of high calibre Bumiputera entrepreneurs and small number of regional or global Bumiputera players among others. Perbadanan Usahawan Nasional Berhad (PUNB). Bumiputera-support institutions such as Majlis Amanah Rakyat (MARA).make up 65 per cent of total households and also represent a higher proportion of households in the lower income groups. The second policy measure proposes that capacity building programmes should be provided to Bumiputera as well as non-Bumiputera SMEs on the same market-friendly principles. making these Bumiputera SMEs more competitive. In the first policy measure. The Bumiputera SMEs that are products of these programmes should be self-sufficient and able to compete in a liberalised environment independently.9 per cent in 2008. with an emphasis on developing Bumiputera Small and Medium Enterprises (SMEs) and accelerating the BCIC development. This is done through two policy measures to establish specific programmes for Bumiputera SMEs and to focus on capacity building programmes. and be granted on the basis of needs and merit. ETP Workforce Requirement . which is still short of the 30 per cent target for corporate equity ownership set at the macro level. the NEAC proposes that these programmes should be market friendly and transparent. identifying new technologies and enhancing collaboration between Bumiputera and nonbumiputera firms. as well with government linked companies (GLCs) and multinational companies (MNCs). Permodalan Nasional Berhad (PNB) and others also play an important role in identifying possible opportunities for Bumiputera participation in the 12 National Key Economic Areas (NKEAs). NEM and Narrowing Disparity SRI The New Economic Model (NEM) introduced by the National Economic Advisory Council (NEAC) builds on the work of previous policies such as the NEP. The NEP has also led to unintended outcomes within the Bumiputera Commercial and Industrial Community (BCIC) such as the issue of quantity versus quality. The NEM’s recommendations – clustered in the Narrowing Disparities SRI – are intended to address existing imbalances in income levels and ownership of economic assets. with a focus on building talent.

000 per student and it is projected that 90% of tertiary education students will enrol not in public but private institutions.000. This makes accessibility and affordability for quality education (only 4% of private institutions compared to 33% of public institution’s academic staff has a Phd) a challenge in producing an educated workforce.3 million new ‘middle class’ jobs.000 to RM50. India’s 4. compared to Singapore’s 49%.0% labour productivity for the same period. Singapore’s 2. Malaysia has 25% high skilled workers and 75% low skilled workers (2007). Hong Kong’s 3.000 for a total of 150. However. the fee-paying structure will see fees increase from an average of RM10. Rising tertiary education costs and lower education quality trends Malaysia has 20 public universities and 627 institutes of higher learning. compared to Singapore’s 46%.ETP will create 3. Compared to Philippine’s 2. Taiwan’s 33% and South Korea’s 35% highly skilled workers percentages.8%. selected public universities will be corporatized and combined with private institutions of higher learning. The projected data based on available information would produce an annual average first degree graduates of 90. The low quality of our workforce is compounded by: Inefficient education services delivery In 2007.3% and South Korea’s 4. which in 10 years would produce slightly less than half the 3. Workforce productivity for Malaysian labour is an average of 2.4%. 80% of Malaysia’s workforce only received secondary level (SPM) education (2007). Thailand’s 41% and South Korea’s 89%.6%.9% (1998-2007). Thailand 3. Under the 10th Malaysia Plan.2%. compared to China’s 9.2% our student’s outcome for the workforce has been low.1% and Indonesia’s 3. . the percentage of Malaysia education expenditure as % of GDP was 4.3 million qualified workforce needed under ETP. of which half will require diploma or vocational qualifications. we can find that the quality of our workforce is based on the following characteristics: 30% of Malaysians obtained higher education qualifications (2005).5%.000 and vocational school graduates 60.

4%. . the racial disparity trend will create its own set of challenges. This would indicate that more has to be done to improve the overall quality of Malaysia’s tertiary education capacity to meet ETP workforce requirements.2% and China’s 1. Compared to South Korea’s 3. Compared to South Korea’s 4. However. And based on the number of R&D researchers per million population. Australia’s 2.3%. again Malaysia has to prioritise its human capital development. Universiti Malaya (UM) has dropped from the top 200 of the prestigious 2010 QS World University Rankings. Singapore’s 5. Question 8: How do we determine that the high quality of qualified workforce needed is available for the ETPs? Question 9: Are we going to welcome qualified immigrants to join our workforce? ETP’s Innovation Key Success Factor Innovation is one of the most critical factors to move up the economic value-chain and escape the ‘middle income trap’.6%. Malaysia has a lot more to do to prioritise its spending. Singapore’s 2. with 70% public institutions enrolment are bumiputeras while 95% of private institutions enrolment are non-bumiputeras. Australia’s 4. Low world university ranking Malaysia’s oldest and premier university. slipping to 207 this year compared to 180 in 2009. Malaysia had 372 researchers per million population.187. unless more proactive measures such as more scholarships and not PTPTN loans and drastic investments along with improvements in primary and secondary education are taken.Furthermore.231 and China’s 927 per million population. Malaysia currently has a low research and development (R&D) capacity based on the following statistics: 2006 World Bank data indicates that Malaysia’s R&D expenditure as a % of GDP was 0.2%.736.

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