Challenging times for the towkays

Recently, Chinese businessmen met Prime Minister Datuk Seri Abdullah Ahmad Badawi about the economy. Foremost on their minds were, of course, the NEP and the targets set for bumiputra participation in the economy.

In my opinion, the NEP obssesses too much on the objectives (for eg. 30% of equity belonging to bumis, 1 bumi businessman for every 1.5 Chinese ones etc), but pay scant attention on how to meet those objectives.

For almost 40 years, the govt seemed to think that if you threw enough money at the bumis, they will learn, learn to uplift themselves and learn to succeed. But what has that thinking left us? Tun Mahathir was the first to despair that the bumis had largely failed to reap the benefits the affirmative policies had intended.

Here's my thinking why the policies and a trillion ringgit over 40 years have failed to bear fruit.

Simple... it's a mistaken link that at a communal level, OPPORTUNITY and RESOURCES equals PROGRESS. What's painfully missing is the element of LEARNING, or more specifically the MOTIVATION and INCENTIVE to learn.

It's like fishing. Give the man a fish, you feed him for a day. Teach a man to fish, you feed him for a lifetime.

What we've been doing for the past 40 years, is throwing fish at someone in the hopes that they somehow learn to fish. What we've ended up with are people addicted to fish, but with no fishing rod.

So, how do you make him learn? How do you incentivise and motivate him to learn to fish?

Instead of giving him a fish, give him a piece of bamboo instead and point out where the nearest pond is. And most importantly, make sure he starves if he doesn't turn the bamboo into a rod and catch some fish. And after he learns to fish, show him how to grow bamboo and give him directions to the ocean.

Below are some excerpts from the relevant article. The complete article is here

Opinion: Challenging times for the towkays
20 Aug 2006 Chow Kum Hor

But this time, Heng says, domestic policies also add to the disquiet among Chinese businessmen. One is a numerical target contained in the 9MP. Unlike previous plans, the current five-year national economic blueprint has set out to reduce the income disparity ratio between Bumiputera and Chinese as well as between Bumiputera and Indians.

The Government wants to reduce the Bumiputera-Chinese ratio from 1:1.64 in 2004 to 1:1.5 by the end of the Plan period in 2010.

Heng calls this "NEP-Plus" — an added target to the two-pronged NEP goal of poverty eradication and economic restructuring.

Although the 9MP does not spell out how this will be done, she believes one way is through the "Guidelines on Foreign Participation in the Distributive Trade Services".

Under the 2004 guidelines, all wholesalers, retailers and specialty stores with a foreign stake must have at least 30 per cent Bumiputera equity. These businesses must also raise their paid-up capital to RM1 million and ensure that their staff reflects the country’s racial composition.

"If implemented strictly, it will kill a lot of start-ups," says Dr Jeffery Goh, the Cheras MCA service centre director. "Many companies in the retail industry form alliances with foreign partners to acquire technology and rights. "These guidelines will be counter-productive in a globalised economy."

He estimates that 90 per cent of retail businesses are owned by non-Bumiputeras.

Fong says the Cabinet is also reviewing the controversial Distributive Trade Services Guidelines. "It’s not the Prime Minister’s intention to rob Peter to pay Paul.

"You can ask the developer of a condominium project to allocate 30 per cent of the units to Bumiputera buyers. "But it is not fair to build a bungalow and say that 30 per cent of the rooms should be occupied by Bumiputeras."

All in all, Fong says, Chinese businessmen in the country have shown resilience in overcoming economic difficulties over the years. This time, too, it should not be any different.