INDEPENDENT MP Datuk Ibrahim Ali, the founder of Perkasa (Pertubuhan Pribumi Perkasa Malaysia), is known for his outspoken views on Malay rights. He contends that affirmative action must be in place at all times to ensure bumiputeras have their share of the country’s wealth and are not left out of economic activities. While admitting that the New Economic Policy (NEP) fell short of its objectives, he says there’s no argument about the relevance of the ideas underpinning the policy, particularly the welfare of the poor regardless of race. He says the New Economic Model (NEM) should reaffirm the NEP objectives to ensure bumiputeras achieve the targeted 30% control of national wealth, while making certain also that impoverished non-bumis are not left out. One of the proposals submitted by Majlis Perundingan Melayu (Malay Consultative Council) to the National Economic Action Council recently is the setting up of a bank for bumiputeras. Ibrahim, who convened the council representing 76 Malay interest groups, elaborated the idea to Sharon Tan and Yong Yen Nie in an interview. Here are excerpts of the interview:

Q: Why is there a need to set up a bank for bumiputeras? Is it because the banking system has failed them?
Ibrahim Ali (IA): No, but banks now are fully commercial.

Q: What is it that you are proposing?
IA: There are already lending agencies in place like Mara and others. The government should strengthen these, and put more money into agencies like Agrobank to make our agriculture sector more progressive.

Maybe the government also should look into the conditions of lending imposed on borrowers, whether they can find more leeway to lend to companies that have good management but need capital to expand their businesses. What has been put into practice may be totally different. (For instance), loan officers approving loan applications after accepting some money from company directors, and some companies that deserve to get a loan couldn’t get a loan.

Even if it’s not a bank, in terms of institutions for lending, we have enough. But, make it easier for companies with proven track records to borrow.

It’s pointless for a company seeking a loan of RM2 million to get only RM1 million. I see many banks approving loans not according to the amount asked by the borrower, but the borrower still takes the money although it will not do much for the business.

Banks make huge profits, interest income and all, but they will not help. They only disburse loans given by Bank Negara, which provides the fund through these banks. It is not the banks’ own money. When it comes to their own money, they become stricter than what Bank Negara requires of them.

This is what the bumiputera bank idea is about. What do the Malays have other than permits and construction?

If you ask me, the government should still sustain the affirmative action. Whatever the government allocates for infrastructure spending, 30% should be reserved for bumiputeras as before.

But this 30% that the government gave through direct negotiations or selected tenders, (going forward) the process has to be more serious and transparent.

If I compete, I don’t compete with Ah Chong. I compete with Rahim, among the Malays first. So, the project must go to a bumiputera, but it must go through a tender and the government (tender) board must be transparent. That can be done, and this can be one of the ways to improve the affirmative action.

Last time, if you know the minister, you get the project. I was not happy and I made noise. That’s why I was sacked.

Q: When the agencies are strengthened, do you think that a “Bank Bumiputera” is still necessary?
IA: It depends. If you are talking about wanting to increase the number of bumiputera entrepreneurs in strategic sectors and major sizes, then you still need this kind of bank to help them. But I am more concerned about the masses, people who need shelter and food, regardless of race.

To me, the most important thing is having a happy life. Basic necessities must be there. If you ask me should the government continue its subsidy programmes, I will say yes. Take petrol, for instance. We are an oil-producing country. At least, we should not be burdened by petrol price. Then, there is sugar and rice and cooking oil. All Malaysians should have access to these, regardless of race. Education at the lower level to secondary level is also important.

They (government these days) want to see balance sheet, no deficit, economic growth of 9%, reserves that can sustain six months of import, but the people have difficulty in paying for toll, no money to buy new clothes for their children because education has become so expensive.

I look more at these aspects. I don’t bother about the big businesses. Now, the government has lowered the tax for the high-income people. But, they should tax these people more and give the money to the poor. That should be the way.

Q: Are you saying we need to get our basics right first? And the help should also be extended to non-bumis?
IA: Yes. It must be incorporated together.

Q: Is setting up “Bank Bumiputera” part of the basic need for both bumis and non-bumis?
IA: Yes. Why not? The objective must go back to the original as what we discussed before. The system, transparency must be right for the bank to be run properly. But, how it should be run depends on the bankers and experienced people.

Q: Who do you think should run the bank?
IA: The bankers, accountants, people who know financial planning but they must have moral education and integrity.

Q: Do you think the government should run this bank?
IA: Yes. It should be a government bank but professionally run (based on micro-financing principles). In Bangladesh, they have Grameen bank and it is very successful. Even the founder has won a Nobel prize.

Q: So, the bank suggested should be a micro-financier?
IA: Yes. But we can also give higher loans and increase the funds of the bank.

Q: How far has the idea of setting up a bank been pushed to the government?
IA: We submitted a memorandum to the government. It is just an idea as even the government has not prepared the hard copy of the New Economic Model (NEM). The economic model is going to be more of a framework on how things will work but the one that we are talking about is more on the implementation side. So, it is two different things.

I was told by (Tan Sri) Amirsham (Aziz), the one that is coming out next month is more of a policy statement, whereas the implementation will be out in October.
I prefer the government not to rush on this. Get the opinion from everybody and come out with something good for the country. If our forefathers can do that after the May 13 tragedy, why can’t we do it now? We are more educated now. We should come out with better policies.

Q: The proposal of setting up the bank is also included in the memorandum?
IA: Yes. It is very bad to see that we have world-class infrastructure but people are still going to unlicensed lending agencies to borrow money.

I was involved myself in an incident when there were a few men tugging an old Chinese woman’s hand at an ATM machine. It turned out that they were asking the woman to repay RM2,000 that she did not pay up for the past two years. Can you imagine the interest rates she has to pay? The government cannot control this, and it is very sad.

I am more concerned with the people on the street, regardless of race. I want the government to address these issues, and this is about implementing a true economic model.  

Q: What has gone wrong in the NEP that the bumi failed to attain 30% wealth?
IA: We have been independent since 1957. Fifty-two years as a nation, to me, is quite young. Some countries have been independent for 70 to 80 years, and they are still backward. But, I think we rush…
After May 13, the government introduced the NEP. The bumiputeras and native people were not yet ready, in terms of education, business experience, but the government gave out all kinds of things. In the end, the bumiputeras do not have much business experience, capital also not adequate, they alibaba-ed the permits and the projects. On top of that, top people take advantage of the NEP. This is where nepotism and cronyism came in.

The Malays are partly to be blamed, but not all. But there are a few who became great but some who were given the opportunities, they misused the opportunities. And the government itself, to certain extent, is also to be blamed.

At the beginning of the NEP in 1971, the government should have concentrated more on human capital — give more education, training. Then you have the awareness of ethics and integrity, so that there is no corruption or abuse of power.

Although the policy failed, (that is) to a certain extent it did not achieve its objective, it does not make it wrong for us to continue with the objectives. But not the same method. It may be the same instrument, but different affirmative action.

It can be done. For example, there are Chinese companies that cannot compete with big companies. Now the government opens everything, it is a floodgate. Even foreigners can come in for local participation. Certain things can, but certain things, it shouldn’t... because it is for national interests.

You can allocate certain projects, certain amount to Malaysians and certain percentage of ownership allocated to bumiputeras and non-bumis, or it can even be 100% bumi. These companies ought to be given special attention through certain affirmative action.

Not only bumis benefit, non-bumis also benefit because they are my partners. Last time, it must be 100% bumi.

Now, I am talking about companies owned by Malaysians but more about companies that are owned by bumis, as bumis are still lagging behind. But, these (the partnerships) are with the local people, and who are the local people? The Chinese, because they are the ones who control all these businesses.

When the government approves the budget each year, billions are approved for infrastructure. Where does the money go? To the private sector. And who controls the private sector?

For example, I have one project worth RM10 million. Even if the government gives me 50% in advance, it is not enough. I have to buy materials and hire workers and then I have to borrow money from the bank. Once I do that, I will be working for the bank.

Sometimes payment is late, because of many reasons. If I have a (Chinese) partner and we work together, because I am bumiputera, I have the privilege to get project and I manage to get one or two projects so when I get the projects, I get materials and six months’ credit because of my partner. So I reduce the bank loans and interest and this is when the profit comes in.

But until I have this mechanism in place, no way the local people can do business. Unless the business is small scale but you are talking about real business, no way.

I spoke to many young people from Institut Kemahiran Belia Negara (IKBN) and asked them “why don’t you open workshops?” They told me they can’t as they couldn’t get the spare parts. I don’t know how it is controlled but it is very difficult and expensive for them to buy. If they buy from any shop, it is expensive and then, they are not competitive.

I go to a Malay shop to repair my car and it took me four to five days because there is no spare part. The same spare part, if I go to Lim Tayar or Dunlop, I send my car at 9am, I get my car back by 2pm.

I am talking about practicality. I am not a chauvinist or racist. I just want to talk about a real problem, about what is happening. This issue is not addressed. People don’t want to talk about this issue. Not many people want to talk about what I am saying. They are talking about big picture, policies, big things… but I concentrate more on how difficult it is to do business. Even the small Chinese companies are facing the same problem.

Q: There is this perception that the bumi partners are sleeping partners…
IA: That is generalised. There are a huge number of bumi partners that are active but we don’t have the figures. There are also Chinese and Indians that don’t pay up their bank loans, as well as Malays.

What does the government give most to bumiputeras? Number one is permits, and then there is the construction industry. But there are many bumiputeras that are already successful in the construction industry. But there are also quite a number that have failed.

There are many reasons for the failure. Out of ten 100%-owned bumiputera companies, eight failures can be due to circumstances — not enough capital, difficult to get building materials, difficult to get jobs. Only two out of ten fail because they are not responsible, due to mismanagement, and also politicking and doing business at the same time.

A lot of Malay-Chinese partnerships are successful. For example, in manufacturing. But, there are also failures because of the Chinese and Vietnamese markets that are more competitive, so these factories are moved there. I used to have two companies and 1,500 Bangladeshi workers, manufacturing power cord and wire harness but my buyers have gone to China and Vietnam. So, who to blame?
There are many reasons. It can be due to recession. China opening their market is also a headache to us. What’s more, we are a small country with very young experience.

Q: Given the global changes, doesn’t it mean that the bumiputeras have to change the way they work?
IA: Yes, we have to change but there must be affirmative action at the same time.

Q: Do you have suggestions for the government on how the new affirmative action should look like?
IA: For example, we can push the bumiputeras to participate in the automobile spare parts business. The bumiputera contractor has to use cash to buy the spare parts whereas the Chinese can have six months’ credit or one-year credit line.

The government started Pernas Edar and it was a failure, but should you blame the Malays or the government? I blame the government, but only partly.

This is an affirmative action. How can you compete on the same level playing ground when the bumiputera does not have access to capital and building materials?

The government can rectify that with new affirmative action on how to achieve the 30% for bumiputeras. Before the NEP, 40% of the country’s economy was controlled by foreigners, 30% plus controlled by the non-Malays, and the bumiputeras? Very little. Only 2% or 3%.

After the NEP, the share of the cake of the country is now almost 50% to 60% controlled by the non-bumis. Twenty to thirty percent is controlled by foreigners and the bumiputeras still own a very small figure. Before that, they were talking about 18%, but that included the government institutions like (Lembaga) Tabung Haji and PNB (Permodalan Nasional Bhd).

If you take out all these institutions, I don’t think bumiputeras own more than 5%. I am more concerned with not only the share equity but, the most important thing, ownership of shoplots.

But, you see, in terms of property ownership in the country, how much do the bumiputeras have? They have huge land but of no value, as most of them are in the jungle, compared to all the prime land in the city.

Q: If we introduce the right policy, and the bumiputeras can then stand on their own, will they then give up the special rights?
IA: Yes, to me, the target is 30%. If by 2020, we can compete, we can get rid of certain policies. As far as business activities are concerned, let me give an analogy of football teams between non-Malays and Malays. Non-Malays are already like Manchester United but the Malays are still amateurs. Even if they are already in the league they are like Tottenham Hotspur.

Wait until the Malays are like Manchester United, then we can play at the same level. But not now. People say global change is here, and hence, we must change; you can talk about it, but what will happen to the country?


This article appeared in The Edge Financial Daily, March 15, 2010.