Press Conference Statement by Parliamentary Opposition Leader, DAP Secretary-General and MP for Kota Melaka, Lim Kit Siang, in Ipoh on Friday, 13. 12.1985 at 11a.m.
Government’s increasing bumiputraism in economic and financial sectors the chief cause of lack of investor confidence in Malaysian economy
Daim Zainuddin’s tenure as Finance Minister for over a year has been characterised by his repeated attempt to boost up the stock market, with the pumping in of billions of dollars to ease the liquidity situation in the capital market.
But Daim’s attempts had repeatedly been frustrated by both economic and political factors, such as low prices of the primary commodities, the collapse of the international tin market, the protracted MCA crisis lasting 22 months, the Sabah political and constitution crisis, the Baling Incident, and most recently, the Pan El crisis resulting in the suspension of the Kuala Lumpur and Singapore stock exchanges.
Friday Daim id continuing to try to boost up the stock market, and last he predicted a good rise in stock prices this week had not materialised despite the unusual government directive of 100 per cent bank loan cover for institutions to buy shares.
The Finance Minister should realise that the stock market prices cannot be on a real upward climb unless the fundamental causes of the weakness of the Malaysian economy are resolved, except for a stock market which has been turned into a casino, with prices artificially jacked up by speculators.
The Finance Minister would do more good to the Malaysian economy, and in the process the stock market, if he addresses the fundamental problems of the Malaysian economy – such as the crisis of the various primary commodities, not only tin, but also rubber, palm oil, and petroleum, the poor growth rate of the economy, the retrenchment, the unemployed, and the serious national debt.
Another important cause for the lack of investor confidence in the Malaysian economy is the government’s increasing bumiputraism in economic and financial fields.
In early November, investor confidence was greatly undermined when in the MAS public issue, the Ministry of Trade and Industry issued a new directive without notice requiring 30 per cent of the open portion of all public shares issues to be reserved to bumiputras. Until then, the understanding was that in new public share issue, 30% should be reserved to bumiputra investors approved by the Ministry of Trade and Industry, while the remaining open portion of 70% available subscription. With the new government ruling that out of the open portion of 70 per cent for public subscription, another 30 per cent had to be reserved for bumiputras, this would mean that in all new public issue a total of 51 per cent would be reserved to bumiputras.
However, in the recent Mechmar Bestobell Bhd. Public shares issue, the percentage reserved for bumiputras has been raised further.
Under the company’s prospectus, out of 10 million new public shares issues, 49 per cent had to be reserved for bumiputra investors approved by government, 10 per cent reserved for an approved government institution (which would invariably be holding in trust for bumiputras), 6 per cent for employees and directors of the Group, and 35 per cent for open public subscription by Malaysians. Out of the 35 per cent is reserved for bumiputras. This means out of the total of million new shares issue, some 70 per cent would be reserved for bumiputras- made up of 49% + 10% +10.5% (which is derived from the 30% bumiputra quota for the 35% of open portion).
But from recent reports, this is not the end of the increasing bumiputraism of the government.
It has now been announced that the Ministry of Trade AND Industry has a further new directive on the issue of public shares. Bumiputra applicants who were unsuccessful in a closed bumiputra balloting of share in all public share issues would be mixed with the non-bumiputra applicants in a separate balloting. This means that bumiputra applicants have chances of success in two separate draws.
In the Mechmar Bestobell case, where non-bumiputras could only subscribe to 24.5%of the open portion of the new public issue, unsuccessful bumiputra applications in earlier draw would have another opportunity to compete with non-bumiputra applicants. According to one report, at least one quarter is estimated to be allocated to bumiputra applicants. This means that finally, the quota reserved for bumiputras for all new public shares would come to as high as 76 per cent!
`How could Financial Minister expect investors, in particular domestic investors, to have confidence in the Malaysian economy when the government is recklessly pursuing such ‘bumiputraism’ policy in utter disregard of its effect on the people?
I call on Daim Zainudding to stop such policy of ‘bumiputraism’ and revert to the pre-MAS issue situation, where only 30 per cent of all public new issues are reserved for bumiputras, and the ibalance open to subscription by Malaysians regardless of race.