Monday, October 16, 2006

Racialising research: The Asli report debacle

Racialising research: The Asli report debacle
Edmund Terence Gomez
Oct 12, 06 11:28am

When the study titled ‘Corporate Equity Distribution: Past Trends and Future Policy’ was undertaken late last year, it was part of a larger report prepared for submission to the government which was then in the midst of putting together the Ninth Malaysia Plan (9MP).

The Asian Strategy and Leadership Institute's Centre for Public Policy Studies (CPPS), headed by Dr Lim Teck Ghee, had invited a multi-ethnic group of academics to review urgent issues, including the alleviation of poverty, the reformation of the civil service and tertiary institutions, and the plight of the nation's highly marginalised communities, in particular the Orang Asli.

This study was specifically undertaken in response to the call by Prime Minister Abdullah Ahmad Badawi for public participation in the formulation of the 9MP, a call that was seen as a genuine request to secure honest feedback on social and economic inequities.

For this reason, it is truly unfortunate that the whole debate on the CPPS report has eventually come to be focused on just one issue: the corporate wealth owned by bumiputeras.

As one of the authors of the section on ‘Corporate Equity Distribution’, I want to stress that this was neither the study's primary nor motivating concern. In fact, the point that the volume of publicly-listed corporate wealth attributable to bumiputeras may even be as high as 45% was only raised in the conclusion.

Different methodology

The report's sole basis for bringing up the issue of bumiputera equity ownership was to argue that there was a serious methodological flaw in the government's calculation of wealth distribution along ethnic lines.

By adopting a different methodology, that is by assessing equity distribution among owners of publicly-listed stock, the study wanted to show to the government that this alternative tabulation raised serious doubts about the government's figures.

The CPPS report's primary contention is that undue emphasis was being given by the government to achieving the 30% bumiputera target. In fact, as the study sought to show, important transitions had occurred in Malaysian society that raised the question whether it was necessary or even relevant to have policies concerned with redistributing wealth along ethnic lines.

For example, it noted that the New Economic Policy (NEP) had help create a new professional and entrepreneurial bumiputera community that was on par with non-bumiputeras in terms of competence and capacity to compete. The study also provided evidence of the emergence of business partnerships forged along inter-ethnic lines and indicated that a number of these firms involved bumiputeras from the new middle class.

Its concern, then, was if the present form of policy planning did not take into account these significant changes within society, such an omission would not help the government effectively advance the creation of a dynamic local entrepreneurial community. This objective of promoting the rise of entrepreneurial Malaysian firms was, after all, one of the government's key objectives.

Official figures unrealistic

Prime Minister Abdullah, when commenting on the report, voiced serious reservations, citing several reasons why the CPPS study could not be compared with the government's tabulation of wealth distribution.

First, he said that the government's figures were based on an assessment of 600,000 companies nationwide, while the CPPS study was merely an evaluation of publicly-listed firms.

Second, he stated that the government's tabulation was based on the par value of the shares of these 600,000 firms, while the study's was based on an appraisal of the market value of listed stock.

Third, he stated that while the study attributed equity owned by the government-linked companies (GLCs) to bumiputeras, the government did not include ownership of these shares in its tabulation. He also argued that GLC-owned stock is not to be listed as equity attributable to bumiputeras.

The points raised by the prime minister drew attention to two important issues that needed to be addressed.

The first concerned the government's tabulation of stock based on its par value. The argument in the CPPS report was that the official methodology for computation of corporate equity distribution - used first in the 1970s and continued until today - was unrealistic and had resulted in an underestimation of wealth attributable to bumiputeras.

There is clearly wide support for the argument that wealth distribution patterns cannot be accurately, and fairly, determined through this method. The report's tabulation, based on market capitalisation of equity, a more reliable indicator of wealth distribution, was precisely to draw attention to this point. This evaluation of wealth distribution of quoted stock along ethnic lines suggested that the government's figures were probably inaccurate.

Second, the prime minister disclosed a very important new point when addressing the issue of GLC ownership of equity - that the government had not included in its tabulation the equity owned by these companies. If the government is to include in its calculation the equity owned by the GLCs, the value of stock attributable to each ethnic community would vary considerably, presenting a fairer and more accurate indication of wealth distribution patterns.

Politicians racialise report

However, instead of debating these issues and the CPPS' recommendations, given that a forum had been created for a much-needed discussion of these pressing matters, politicians have chosen to racialise the report. Some of them have gone so far as to dismiss the report as 'rubbish', while others deemed it an attempt to incite racial tension, in the process portraying themselves as champions of the Malay community.

By drawing attention solely to the 45% equity figure, the debate has been diverted from one that could have been an open assessment of changes and issues in Malaysian society, such as the rise of new inequities, strategies to promote genuine entrepreneurship, and ways and means to ensure greater national cohesion.

At no point did any of these politicians address a key concern raised by the CPPS report: that the pattern of implementation of affirmative action had contributed to serious wealth and income disparities within the bumiputera community.

This point alone demonstrated the urgent need for a serious review of government policies, specifically those that were targeted at bumiputeras but that had done little to alleviate the plight of the poor of this community.

When this issue first emerged in the public domain last month, there was some hope that the debate it generated would compel the government to release its data on the 600,000 firms used to determine wealth distribution patterns. There was also some hope that the government would initiate an independent study to undertake an assessment of its implementation of affirmative action.

Unfortunately, however, this debate has been summarily dismissed by Umno leaders, who have also claimed that the intention of the CPPS report is to "incite anger" and "confuse the Malays". By racialising the debate and invoking the spectre of ethnic conflict, the government can now justify bringing this debate to a close. There will now be no compulsion on the part of the government to release its data on wealth ownership, nor can society hope for an independent study on this issue.

Resignation a noble act

What is most unfortunate about this incident is that the genuine attempt by the CPPS and its director, Dr Lim, to foster new research and debate on issues of crucial importance to the nation has been so thoroughly undermined.

The resignation of Dr Lim from the CPPS was a noble act, for by so doing he has refused to concede to the totally unwarranted demands that the centre retract its report and admit that it was a flawed scholarly exercise. The denunciation of a report that was aimed at helping to generate a serious review of public policies may now deter other academics from pursuing similar research for fear of inviting an adverse reaction from the government.

This incident does not augur well for the government as the CPPS report was undertaken solely in the spirit of responding to the prime minister's call to all Malaysians to speak the truth to him.

EDMUND TERENCE GOMEZ is research coordinator at the United Nations Research Institute for Social Development (UNRISD) in Geneva. He is also associate professor of political economy at the Faculty of Economics, Universiti Malaya.

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