Two key authors of a controversial Asli report on the bumiputera share of corporate equity have called on the government to set up an independent panel of experts to review present methodologies being used.

The panel should look into the calculations being used by the Economic Planning Unit as well as those of other government agencies, said both Dr Lim Teck Ghee and Dr Edmund Terence Gomez in a joint statement today.

"[The panel] must evaluate the data sources used in computing the ownership of corporate equity," they added.

"The panel should make comprehensive recommendations concerning methodological modifications that are needed, taking into account professional statistical and accounting best practices and standards," they said.

The two top academics said that the panel's terms of reference should be wide enough to permit it to consult with knowledgeable professionals and appropriate bodies in developing new standards of measurement.

"The panel, to enable it to enjoy credibility, should include professional accountants, economists, corporate analysts, academicians and statistical experts.

"It should also include representatives of both the public and private sectors and its work should be transparent and made available to the public," they said.

Conflicting figures

Lim and Terence said that the panel should be directed to complete its review in time for its recommendations to be incorporated in the Mid-Term Review of the 9th Malaysia Plan in 2008.

"We believe that it is in the national interest that these steps are taken immediately with the objective of defusing unhealthy speculation and restraining the polarising trends associated with this issue.

"What the nation needs is a clear and agreed set of yardsticks that contribute to building national unity rather than becoming tools for fueling divisiveness."

The Asli study on the nation's equity distribution, done by the Centre for Public Policy Studies (CPPS) which Lim headed, generated a heated debate and government consternation when it concluded that bumiputera equity stood at about 45 percent - more than double the EPU's figure of 18.9 percent.

After a barrage of government criticism and pressure, the think-tank withdrew the study, resulting in Lim quitting his post as the head of CPPS.

However, the debate over the bumiputera equity share did not abate with many quarters calling for the government to reveal the actual methodologies used to calculate the equity share.

Lim and Gomez, who is research coordinator of Geneva-based United Nations Research Institute for Social Development, today also issued an addendum to the study by which they hope to help the government to shed more light on the contentious issue.

Eight-page addendum

In the eight-page addendum, the two economists explain why the use of par valuation has led to a gross understatement of the true value of wealth or capital in the country's corporate sector.

"The government's case for using par valuation is weak. The NEP originally emphasises the issue of equitable corporate wealth distribution. Therefore, it is imperative that the yardstick employed is an accurate measure," they wrote.

"This continued use of an inappropriate and flawed system of measurement of equity distribution, based on par values, has fundamentally distorted the estimation of the wealth of the nation over the past three and a half decades.

They warned that the use of flawed and distorted data has had an impact on the direction of public policy.

"The cost of the distortion of wealth distribution figures on policy implementation is incalculable."

Addendum: Why par value measurement is flawed