Bumi board members a selfish lot
LETTER
However, the debate has tended to be limited to the more obvious dimensions of abuse in the 30% bumi equity quota, such as that reported by the prime minister where some RM52 billion was literally given as 'handouts' to bumiputra recipients.
As a result, insufficient attention has been given to the wider implications of bumi representation in other important related areas of the economic system, such as that of foreign multinationals in the context of corporate globalization. More specifically, we need to know the nature and extent of the distortion of the economy by the bumi representation on MNCs and whether this is inimical to GDP growth.
As a starting point we need to be reminded that despite foreign investors (MNC) being exempted from adhering to the 30% bumi equity requirement, they are, in fact, also given other investment incentives amounting almost to a blank cheque. In return, they willingly appoint retired Malay civil servants, as well as others who as VIPs still have significant political and social clout, to their management boards to facilitate their successful and profitable enterprises.
In some cases, they even appoint such persons to key positions on the board such as corporate advisors whose job is essentially to leverage the top politicians even to the level of prime minister (under whom they previously might have served) for important concessions in areas such as approval of land applications for new buildings and for the construction of roads and other areas where bureaucratic obstacles may need to be overcome
The MNCs understand the importance of ensuring that these board members are well remunerated. Some preliminary research (2002) revealed that most receive between RM8 - 15 thousand per month as a board member. The vast majority sit on more than one board. As I recall, the 'record' highest number represented was on 25 boards by the secretary of the then ministry of commerce and industry.
Of further greater significance is the fact that the export-oriented manufacturing of MNCs is 'mismatched'. What we need most is the manufacture of goods that are innovative and which can compete aggressively in the international market. But most multinationals are mere centres for the assembly of goods designed by others, using imported technology and even importing a significant proportion of raw materials, all of which have the effect of stifling the growth of the domestic economy.
The net effect is that while local SMEs account for 90% of manufacturing, only 10% is contributed to the GDP. What this means is that our exports are skewed and mismatched because the MNCs manufacture and export high-tech ICT components for the international market which, in this sense, are irrelevant to the development of local manufacturing.
The bumi representatives on the MNC boards are partly directly responsible for this state of affairs. They could certainly influence export policy by asserting demands that innovation and research be the basis for local export-oriented manufacturing but have been reluctant to play this role.
This is because their objective is not to ensure that Malaysia benefits from the long-term investments of MNCs, but from quick capital gains for themselves by selling their stock. This is well recognised by the multinational coporations. As a result, the bargaining power of bumi board members to force such changes in policy has been and will continue to remain weak.
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