A futile and costly attempt in trying to create a Malay capitalist class
Ahmad Mustapha Hassan, The Ant Daily
The 1969 tragic incident or what is commonly referred to as May13 prompted the Umno/Alliance government to rethink its economic strategy. There was a need, according to the government, to restructure the wealth in the country so as to balance the economic standing of the various communities.
The Chinese had a very substantial number forming the capitalist group. The Indians, though not that significant, still had quite a sizeable wealthy class. Only the Malays completely lacked such a class.
If a Malay capitalist class could be created, then there would be more equal distribution of wealth in the country. That was the thinking of the Umno/Alliance strategists.
The best method was to hand development projects to Umno cronies so that they could accumulate wealth from the profits accrued from these projects. But the cronies wanted to be wealthy as quickly as possible through a short cut method.
What they did was to hand over the projects they had secured to the more experienced non-Malay entrepreneurs to implement them. Thus arose a class of what came to be known as Ali Babas. Ali would get the project and Baba would do the work.
Ali normally would get not less than 10 per cent of the project value as commission. To compensate the Babas, the project cost would have to be inflated by the authorities.
That was the first result of the quick way in trying to create the Malay capitalist class. A lot of money was wasted as project costs had to be raised to compensate all those involved in executing the successful implementation of the projects.
Perbadanan Nasional Berhad (Pernas) or the National Corporation which was set up towards the end of 1969 was to see to the implementation of the support structure to help Malay businessmen. It was a good proposal but the slow pace experienced through this strategy in creating a sizeable number of Malay capitalists prompted Pernas itself to go into business.
Such being the case, it sometimes competed against the nascent Malay entrepreneurs. The original goal was put aside. Pernas became a conglomerate indulging in various aspects of commerce.
Then more and more government-led companies were set up and as these companies were financed by the government, those entrusted to run them were not very concerned whether the companies made profits or not.
Huge losses were incurred by these GLCs. It was stated that in 2011 alone seven GLCs incurred a total loss of RM2 billion.
Proton, the national car company, was tasked with sourcing components from budding Malay entrepreneurs but again this failed and the field was therefore opened to all and sundry, and not just confined to the Malays only.
Another novel idea was hatched and implemented. It was assumed that if the government was able to create one Daim (Tun Daim Zainuddin had made it big) then this one Daim could create more Daims, and by extension the number of Malay capitalists would multiply exponentially.
Similarly with the success of Tan Sri Syed Mokhtar Albukhary — that one Syed Mokhtar could help create more Syed Mokhtars.
This was a kind of pyramid strategy whereby the base would grow and grow.
This strategy was also known as the umbrella concept but unfortunately it did not work out as planned.
