DAP protest strongly against the .radical departure from NEP guidelines in the government decision to raise the bumiputra quota for new shares issue from 30% to over

Speech by Parliamentary Opposition Leader, DAP Secretary-General and MP for Kota Melaka, Lim Kit Slang, at the DAP Malacca English-speaking ceramah held in Malacca on Tuesday, January 14, 1385 at 6 pm

DAP protest strongly against the .radical departure from NEP guidelines in the government decision to raise the bumiputra quota for new shares issue from 30% to over

With The three-day suspension of the Kuala Lumpur Stock Exchange, and the subsequent collapse of the share prices – where $10.8 billion shares’ value was wiped out on the resumption of trading because of Tan Koon Swan’s Pan El crisis scandal – Malaysian attention had been distracted from a radical departure from NEP guidelines.

This is the government decision recently to arbitrarily, without nation or consultation, to raise the bumiputra quota for new shares issue from 30% to as high as over 70%!

The first indication of such new Ministry of Trade and Industry decision was the MAS public shares issue, where at the last minute, it was announced that 30% of the open portion of all new public shares issue would now have to be reserved to bumiputeras.

Until then, all new public shares issue would have to reserve 30% to the bumiputeras, leaving the remaining 70% to public subscription. With the new ruling during the MAS public shares issue, this means that with one stroke of the pens bumiputra quota for new shares issue had increased from 30% to 51% in early November.

But this was not the end of the story. Two weeks later, this was further jacked up in the Mechmar Bestobell Bhd. shares issue, where 59% was first reserved for bumiputras and an approved government institution (which would be holding in trust for bumiputeras) , leaving an open portion of 35% for public subscription. (Six per cent of the issue is reserved for the employees and directors of the company).

But with the new regulation requiring 30% of the open portion to bumiputras, total Bumiputera quota for the Bestobell issue would come to 69%.

But in December, it was found that bumiputeras who failed in the first balloting for the 30% open portion reserved for bumiputeras would be allowed a second balloting for the remaining portion, which would give them about 25% of the opportunity, which works out to another 6.1%, bringing a grand total of 75.6i% of the Bestohell shares for bumiputeras.

The latest public shares issue of Maruichi provides for a 46.11% for bumiputeras and an open portion of 42.5 % of the shares for public subscription. As 30% of this open portion is now further reserved for bumiputeras (working out to 12.75%) and taking into further account of the second balloting for bumiputeras working out to 25% of the successful ballot (which works out to another 7.44%) , then the total bumiputera share take in the Maruichi issue would come to 66.3%.

We thus see that with a stroke of the pen, in a matter of two months, the NEP rule that 30% of all new public shares be reserved for bumiputeras had more than doubled to 66.3% to 75.6% in two recent new public shares issues.

The DAP protests in the strongest possible term against such serious deviation from the NEP guidelines, especially at the surreptitous manner in which this new regulation was implemented. If Ministry officials can through administrative action without seeking Parliamentary approval make such radical deviation from established guidelines and rules, clearly certain administrators are even more powerful than MCA and Gerakan Minister.

From the three public shares issue of MAS, Mechmar Bestobell and Maruichi, we can draw two conclusions:

Firstly, a new rule that 30% of the open portion of shares issue for public subscription be reserved to bumiputras, and the further rule that bumiputras who failed in first balloting for this 30% could second-ballot for the remaining 70%.

Secondly, the previously closed portion of 30% bumiputra share reservation is now without limit, and could be as high as 49.5% in the Mechmar Bestobell case and 46.11% in the Maruchi case. In fact, it could go up to even 90% leaving 10% of the new shares issue as an ‘open portion’, out of which 30% is reserved to bumiputras, and subject to the second-balloting right of bumiputeras. This could work out to a final bumiputera share of 95.8%!

A very important principle is involved here, for if shares issue could be manipulated in this manner, in utter disregard of the spirit and intent of the NEP objectives, then it could be extended into other areas of economic, educational or employment fields, with far-reaching consequences to all Malaysians.

The DAP is most disappointed that the Gerakan and MCA Ministers and Deputy Ministers are mere puppets, who have no voice, mind or right of their own to speak up in Cabinet and outside to defend the people’s basic rights.

The new Deputy Minister for Trade and Industry is Senator Kee Yong Wee, the new MCA Youth Leader. Hs he anything better to show than his predecessor, Datuk Oo Gin Sun, on this matter of the arbitrary increase of bumiputra quota for new share issues from the 30% to the level of 66 and 76 per cent in Maruichi and Bestobell, and which could go even higher?