No study shows 30pct equity rule helps bumiputera, says ex-govt agency chief

Former Yayasan Peneraju CEO Ibrahim Sani, 42, has questioned the effectiveness of the 30 percent Bumiputera equity requirement, saying no comprehensive impact study has been published to show whether it has improved the community’s economic standing.

He warned that the requirement could encourage proxy ownership, with bumiputera named as shareholders merely to meet the condition without genuinely participating in the business.

“This is the problem. It’s not real equity ownership. It’s just participation in name only,” he said.

Ibrahim was speaking at the “Equity by Decree? Rethinking Bumiputera Empowerment” forum organised by the Kuala Lumpur and Selangor Chinese Assembly Hall (KLSCAH) and Engage in Kuala Lumpur last night.

He said the key question was whether the requirement had delivered tangible economic benefits to the bumiputera community.

“Where is the efficacy and impact study on this policy, the 30 percent equity ownership, not just for tuition centres, (but for) everything?” he asked.

Ibrahim, who previously worked in the Economy Ministry’s equity division, said there had been plans to conduct such a study during his tenure, but he was unsure of its current status.

He also questioned whether requiring bumiputera equity ownership in businesses necessarily improved the community’s economic standing.

“How is it that having 30 percent equity ownership in, say, a private tuition centre actually helps bumiputera?

“I think that is also a big question that needs to be answered by the powers that be. Because right now, there is no correlation or causation to the effect,” he said.

Requirement is not law

Addressing the controversy over the 30 percent bumiputera equity requirement for private tuition centres, Ibrahim said it was not a law passed by Parliament but an administrative policy introduced through ministry guidelines in 2006.

“This is extremely critical. Why? Because it is not a law. This thing is not a law. It is a guideline and a policy set by a ministry,” he said.

As such, he said, the requirement could be implemented, amended, or withdrawn without parliamentary approval.

He also questioned why the condition applied to tuition centres seeking to operate as private limited companies but not to sole proprietorships or partnerships.

Incorporation is important for some operators because it provides limited liability protection and can make it easier to secure financing and expand their businesses, he said.

Ibrahim said the government should provide clear guidance if it expects operators to bring in genuine bumiputera investors or shareholders. Businesses would also need time to adapt and find investors willing to participate meaningfully, rather than simply hold shares to satisfy the requirement.

He stressed that increasing bumiputera participation was not necessarily incompatible with maintaining Malaysia as an open-market economy.

“These first two points are not in contradiction with each other. They can be complementary.

“However, you do need policy that can harmonise these two objectives. It’s possible if we plan it correctly,” he said.

‘Anti-growth’

Meanwhile, Universiti Malaya visiting professor Woo Wing Thye, 72, described the 30 percent equity requirement as “anti-growth”, arguing that it could prevent successful tuition centres from expanding.

He said operators seeking financing and business expansion had an incentive to incorporate as private limited companies, but the equity condition could discourage them from doing so.

“So the bottom line is, this condition prevents the expansion of the successful tuition centres.

“And this applies across the board, not just in tuition centres, but in every aspect of the economy,” he said.

Woo said Malaysia should instead pursue forms of bumiputera empowerment that raise incomes and improve livelihoods without undermining economic growth.

This should include developing high-quality skills to boost productivity and earnings, alongside creating more high-skilled, high-paying jobs, he said.

He also called for stronger support for small and medium enterprises, which he said are 84 percent bumiputera-owned.

“If you can strengthen the SME sector, you have certainly improved the economic position of the bumiputera community,” he said.

Woo identified cash flow constraints and limited access to working capital as key challenges facing SMEs, making it difficult for micro enterprises to grow into small businesses and for small businesses to become medium-sized enterprises.

He also urged reforms to the education system, including a review of the curriculum and teacher training, citing Malaysia’s performance in the Programme for International Student Assessment.

Such measures, he said, were more important in ensuring bumiputera and Malaysians generally acquire the skills needed to seize opportunities in a high-income economy.

Addressing inequality fairly

Meanwhile, KLSCAH secretary-general Yeo An Thai, 54, said efforts to empower the bumiputera community and address economic inequalities deserved serious attention, but their effectiveness and fairness must also be assessed.

He said bumiputera empowerment should not come at the expense of other communities. Instead, policies should expand economic opportunities so more Malaysians could benefit.

“Empowerment should not have to come at the expense of others,” he said, adding that economic opportunities should not be treated as a limited resource over which communities must compete.

Yeo said policies addressing inequality should create meaningful opportunities for those who need them without imposing unnecessary barriers on others or deepening divisions among Malaysians.

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