Wednesday, May 16, 2007

Are bumi professionals really 'sidelined'? Maybank's 50% bumi requirement

So... Maybank has backed down, reversing an earlier decision requiring all law firms in it's panel of solicitors to have at least 3 partners where one is a bumi with at least 50% stake in the firm.

Looking at the original requirement again, there is a much more insidious side effect of the partnership structure which Maybank had intended to enforce:

Partner A (bumi): 50%
Partner B (non-bumi): 49%
Partner C (non-bumi): 1%

Where there are a 3 partners (the minimum required), you'll find that the bumi partner (A) automatically becomes the senior or managing partner with the single largest stake in the firm by default.

Since the definition of Maybank's requirement prohibits the other 2 partners (there must be at least 2 in addition to the bumi partner) from holding more than 50% in total - partner B can only hold a maximum of 49% with partner C holding a minimum 1%.

Imagine if you're a firm, comprised of 2 non-bumi lawyers (father & son, for eg), currently engaged by Maybank. What happens? If you want to keep Maybank as a client, the 2 non-bumi partners effectively have to cede majority ownership and control to a new bumi partner.

And because the non-bumi partners need the new bumi partner more than he needs them (REMEMBER!... there is no reciprocating requirement that 100% bumi firms become 50% bumi / 50% non-bumi), logic dictates that the non-bumi will be gifted that 50% stake at token or no cost; and will put in less than 50% of the hard work (simply because he can't be fired!).

This is exactly the reason why the 38 year old NEP is rubbish! There is no link to personal effort and motivation. Affirmative action will never be successful if it is not based on hard work and severe consequences for underperformance.

The Aftermath...

As expected, Maybank's U-turn has drawn out some supporters of racist policies:

Senators Support Maybank's Pro-bumi Policy

" narrow the gap between the Bumiputeras and non-Bumiputeras in terms of the number of legal firms that were made panels of solicitors in the banking sector."

"I want to ask Hong Leong Bank and Public Bank, how many bumiputera legal firms have they appointed as their panels?"

"...appropriate to enhance Bumiputera interests in legal firms involved in the banking sector."

"...all the while, it was difficult for Bumiputera legal firms to get contracts or deal with other banks and Maybank's move should not be regarded as racist.
And from bumi accountants:
Bumi accounting firms sidelined too.

"...bumiputra accounting firms had to abide by unreasonable conditions that made it difficult to compete with foreign and non-bumiputra firms."

"Many bumiputra accountants who work with international audit firms left to set up their own firms but were not given any chances."

"Large companies also do not believe in the capabilities of bumiputra firms and there are financial institutions that impose conditions like having at least eight partners before we can be selected”
For all their racist rhetoric, the senators and bumi accountants raise a couple of very pertinent questions...

Are bumi professionals less successful compared to their non-bumi counterparts? Is this true? Do we have the data to support such a broad, motherhood statement?

ASSUMING that it is indeed true... where I disagree violently with them is the fact that they propose all sorts of racially delineated numerical solutions but like pantiless ballerinas dancing on a polished mirror floor, they skip over the main question... ie. WHY?

Why are bumi professionals less successful? The bumi accountants have said as much... "large companies do not believe in the capabilities of bumiputra firms." Why is there a gap between the perceived capabilities of bumi and non-bumi accountants?

Are bumi professionals really being sidelined? The accountants mentioned that financial institutions impose "unreasonable" conditions like requiring firms with at least 8 partners. Is this a business requirement (since financial institutions are big, complex entities and only a large, well staffed firm can handle the work)? Are non-bumi firms with less than 8 partners excluded exactly like their bumi counterparts? If they are, where then is the discrimination? Why don't bumi accountants simply setup firms with 8 partners or more? Why don't bumi accountants join larger firms?

Are bumi professionals on par with non-bumis in terms of abilities and skills? Let me give you an example specifically in the accounting profession. Accountants with local university degrees become fully qualified accountants (registered with MIA), after simply 3 years of work experience. Everyone else (read overseas degrees and professional exams) has to first gain entry into an affiliated professional accounting body like ACCA, ASCPA or MICPA (and this entails passing some professional exams), plus the 3 years of work experience before they can register with MIA.

If you tell me that local accounting graduates (local degree only), professional qualification holders (professional exam only) and overseas graduates (overseas degree + professional exam) are all of the same quality... I'd say you're talking crazy. This is the same "apples = oranges" thinking that equates a 1 year matriculation program to the 2 year STPM. And I haven't even started on the horrendous English language and problem solving skills of local graduates.

Since bumis form the bulk of local university graduates (by virtue of the education quotas, although there's no shortage of equally badly trained non-bumi local graduates), is it really an entire race that's being sidelined or is it more a rejection of the type of training that they tend to acquire?

So, should you adopt a non-racial solution to improve the training program for locally trained accountants... so that they can take advantage of market opportunities, OR should you modify market opportunities along racial lines in order to accomodate badly trained bumi accountants?

No comments: