Aliran calls on the government to drop – instead of merely deferring – its requirement that local logistics and freight forwarding firms must have 51% bumiputera equity interest.
If the government enforces this requirement from 2023, it would be a gross injustice to the owners of these companies. They would have toiled over the years to build their firms, only to have their controlling interest in their firms snatched away from them and handed over to others on a silver platter.
Federation of Malaysian Freight Forwarders president Alvin Chua was reported to have said that 80% of the freight forwarding companies with Customs Department brokerage licences are already bumiputera companies. If that is so, why the need to impose the 51% bumiputera equity requirement on the remaining 20% of firms?
Such a forced transfer of ownership would send the wrong signal to bumiputeras that they have an alternative to hard work, ie they can take a shortcut and piggyback on already successful companies.
Of course, it would be ideal if everyone could share in the nation’s prosperity. But compelling business owners from minority ethnic groups to cede their controlling interest to the majority ethnic community is not the way to go about it. Affirmative action should not regress into reverse discrimination: that would be an unjust and misguided strategy, which would fuel resentment and perhaps ethnic tension.
Who stands to gain from such blatant equity grabs? It is highly unlikely that the vast majority of cash-strapped or indebted lower-income Malays would benefit. Instead, it would be mainly the already wealthy, well-connected bumiputera elite who have the financial resources to take up a 51% stake in these firms.
The move to postpone this requirement to the end of next year leaves a sword of Damocles hanging over the potentially affected business owners. The prospect of forced corporate takeovers may compel these ethnic minority-owned companies to shut down completely. The disillusioned owners of these companies may even move their businesses to neighbouring countries.
The uncertainty is not just limited to the freight forwarding sector. The question on most people’s minds is which sector will be next to have this 51% bumiputera equity requirement imposed on them?
Such uncertainty will deter other investors – local or foreign – from putting any money into the country, as they will wonder if their own businesses will eventually be taken over in the same way. After all, it looks as if ownership rules could be changed midstream at the government’s whims and fancies. And if even ethnic minorities could lose their controlling interest in their firms, how much certainty can foreign companies have of retaining their controlling interest in the long run?
We have seen a similar abrupt midstream change of rules in the tighter rules for Malaysia, My Second Home residents, ie foreigners who have taken up residence in Malaysia. This change of rules will not only affect new applicants but also existing residents when they renew their visas. Many of these existing MM2H residents will be unable to afford the tighter requirements imposed on them.
All this uncertainty and the sense of injustice over such policies will worsen the exodus of entrepreneurs and talent from the country and cost the nation much goodwill.
In the end, who suffers when business confidence – and hence the investment climate – is eroded? It is the ordinary workers of all ethnic groups who will find it difficult to find stable jobs that pay decent wages.
Aliran urges the government to live up to its commendable Keluarga Malaysia (Malaysian Family) slogan. It should formulate policies that strengthen social solidarity rather than undermine these ‘family’ bonds through short-sighted greedy policies that serve wealthy elite interests.Aliran executive committee
1 October 2021