QUESTION TIME Tomorrow the prime minister is due to announce measures to increase bumiputera participation in the economy. But for it to be meaningful, one has to define what that means and ensure that the measurement of participation is correct.

Unfortunately for many, the measure of success or failure of bumiputera economic participation is the 30% target in equity or ownership of companies. Considering that perhaps 95% or more of bumiputeras don’t own shares except for unit trusts through Permodalan Nasional, that’s rather unfortunate.

Much more meaningful would be to use income measures such as mean household income which affects practically everyone and would be a proper gauge of how income levels have moved over the years. More on this later.

And to compound this mistake, the measure that is used to measure equity ownership is ownership of companies valued at par, or the nominal value of the shares, mostly at the time the company was set up. Everyone knows that this is no reflection of the value of the company.

What should have been used is either the market value of the stake, if one is available for companies listed on the stock market, or the net book value of the assets as reported in the latest available accounts.

Using par value is not even an approximation to the actual value of ownership because often they don’t bear any resemblance whatsoever to the underlying value of the companies. Despite this, the government continues with this sham of measuring equity participation in this manner.

The other major criticism is that stakes which are owned either directly or indirectly by the government or government agencies are classified under others which severely understates bumiputera participation. The way to treat this would be to apportion it according to the racial composition of the country, which is 67% bumiputera.

Current bumiputera participation in the economy is said to be 23.5% compared to just 2.4% in 1970 but if the adjustments suggested are done, it is likely to be well over 50% with the inclusion of government stakes, direct and indirect.

It is unlikely that methodology will change because this so-called shortfall in bumiputera participation in the economy has been used over the years for the sake of pushing patronage to politically connected businessmen, especially Umno politicians.

One can hope against hope that the prime minister will be more circumspect and fair over those measures he is going to announce but that is hardly likely to be the case given the looming Umno elections later this year at which some 150,000 delegates will vote.

No doubt that is where the prime minister will aim his announcement to maximise support for himself and for his slate of candidates.

Now, if we adjust for bumiputera participation in the economy according to the ways we suggested above, we have no doubt that it will exceed 50% easily. But yes, much of it will be held in trust by the government and government agencies, which is still not bad as it takes a long, long time for a deserving entrepreneurial class to emerge.

But meantime, much damage is done to the economy by basically throwing money and projects at the existing rich bumiputeras who should be competing with others for projects. Between a handful and two handfuls continue to be plied with myriad mega projects ranging across a wide area, enriching themselves and playing the Ali Baba role to the hilt.

It is these people and the politicians aligned to them who continue to push for bumiputera equity participation as the main measure of the success of the New Economic Policy (NEP) and its successors.

Mean monthly household income

But other measures are more important, such as household incomes. The table shows the mean monthly income trends over the years and the change from 1970 when the NEP was implemented. The figures are illuminating.

cal syariman The achievements are really quite fantastic although one could argue that after 42 years income equality between the races should have been smaller.

Take a look at incomes in 1970. Bumiputera household monthly income then was RM172, well below half that of the Chinese who earned 130% more at RM394. In 2012, the average Chinese household earned RM6,366 or 42% more than the RM4,457 for bumiputera households.

Although the disparity is still large, it is much smaller. It could be smaller still in relative terms if one considers that the bumiputera population is dominant in the rural areas where living costs are substantially lower.

Therefore it is undeniable that the NEP and its predecessors have achieved much. That was achieved by a more rapid growth of bumiputera incomes of 8.1% a year over 1970-2012 compared to 6.9% for Chinese and 7% for Indians over the same period.

But strangely the figures appear to have been reversed for the period 2009-2012 with bumiputera household income growing 6.9%, Chinese household income up 8% and Indian income rising 9%. Why this is so is not clear, particularly the 9% figure for Indians which appears to defy logic.

Remember, according to recent police figures, some 70% of circa 40,000 gangsters are Indian, 10 times their population shares. If you associate gangsterism to poor incomes and living standards, it is a clear indication that the figures don’t jive.

But still according to official figures, there’s a huge gap between bumiputera and non-bumiputera incomes and no doubt part of these will be due to extreme poverty among bumiputera communities in Sabah and Sarawak.

Indications are that the poor bumiputeras who probably form the majority  of the community are not being helped enough and this is where the government should now concentrate its resources instead of continuing to feed the fat Umno elite.

And while it does this, let the programmes benefit all the poor and therefore lift the livelihoods of all those who are deprived in the country. If the bumiputeras/Malays are indeed the poorest community as the figures show, they will be helped the most.

P GUNASEGARAM is founding editor of KiniBiz . He likes this quote from Mahatma Gandhi: The world has enough for everyone’s need, but not enough for everyone’s greed. How true!