Media people love to talk. And what better place to natter than the rear recesses of a fancy restaurant in Bangsar Shopping Centre, that tony enclave of Bangsar where high-net-worth individuals and their families cavort on weekends.
Being a hack at heart, one has learnt to say less, hopefully in return for more, in the form of useful information. And on that occasion, I was also the sole non-Malay, so the less volunteered and the more heard, well, the better.
As is the wont when educated sons of the soil gather, the discussion always gravitates to policy, and improving the lot of their lot.
And so it was quite the insight when the more senior of my lunch group, a former CFO of a GLC now elevated to CEO at another large organisation, brought up the subject of stock trading — or the lack thereof — among my bumiputera brothers.
Quite simply — and this never really occurred to me since Bursa Malaysia does not break down its numbers along racial lines — there isn’t much of a proposition to understand investing in the equity market among bumiputeras, simply because of the availability of generous, risk-free returns from government savings plans.
The two biggies are ASB (Amanah Saham Bumiputra), with whom one gets an average 8% annual return (up to a maximum of RM200,000 in savings, recently doubled in allowable size) and Tabung Haji, with whom one receives roughly the same return (5%+3%) — the additional 300 basis points coming as an incentive to save more so as to accelerate one’s time to a necessary pilgrimage.
In addition to the usual Employees Provident Fund savings plan (itself an excellent platform), these are exceptionally attractive from a returns perspective.
At more than twice the annual return available from conventional time deposit rates and the plethora of available credit lines from all the country’s lenders for eligible savers (the spread between borrowing costs and annual returns is healthy enough), there really is no need to understand and conquer the vagaries of the share market. Hence, the dilemma on multiple fronts.
First, Bursa wants — needs!!! — to up the interest in share investing and thereby trading volumes, from whence it derives income.
Its latest quarterlies reveal year-on-year drops in both clearing and trade fees in equities trading, the two largest component parts of its business. Listing and issuer services are also down, but are notoriously choppy and therefore not to be relied upon for consistency in any case.
Unsurprisingly, Bursa has, since time immemorial, attempted to galvanise retail interest in the share market, especially among the young bumiputera, knowing — rightly — that it cannot rely on the old-timers, institutional players and gap-toothed Chinaman retirees to prop up trading forever.
But bad press on share speculators, burnt fingers, rigged markets and the safe, attractive havens of government funds have meant Bursa is struggling to capture much of the demographic shift, which is seeing populations swell among the bumiputera.
Why, my table asked, would the young Malay take a risky punt on the share market when basically risk-free returns exist with ASB and Tabung Haji? And for as long as the country is doing fine and money continues to tip into the hat, everything, like in The Lego Movie, will remain Awesome.
It was clear to all at lunch that the problem goes beyond mere interest in the share market and the uncomfortable truth that policymakers have “policyed” themselves into a corner.
Having built a raft of privileges and institutionalised preferences into the system, real reform has become nigh on impossible — things are too easy and life too good to change.
In venture funds, we see much the same thing. Despite the lack of discernible successes in the entrepreneur class, the table wondered out loud about the madness of committing hundreds of millions (billions perhaps?) in bumiputera venture funds, year in, year out. And that, despite the glaring lack of successes, the virtual certainty that Budget 2017 will once again throw up the same goodies.
Even the constructs of yesteryear, where at least there were the various Tan Sris and Datuks in Halim Saad, Wan Azmi Wan Hamzah, Samsudin Abu Hassan (aka Sam) and Tajudin Ramli for the young and shiny-eyed entrepreneur to look up to (as opposed to say a politician) have not been replaced by a fresh team.
Heroes, therefore, are mostly to be found in the civil service. And among the young, there are those who aspire to a career in politics as one of their ways of rural oblivion. And, hence, on to a life of projects and concessions.
In another sign of change being rejected, said the ex-CFO, was the vast potential of a bumiputera entrepreneur programme he proposed in said GLC, premised on the award of mini-concessions to retiring senior officers (like him), so that a void appears, available to be filled by the next cadre of well-qualified executives and ensuring a pipeline of talent, and so on, and so on.
No cigar, said a new board, who did not know him as well as the previous lot. Perhaps the wider uncomfortable truth, the table exclaimed, was that maybe, just maybe, the powers that be are less concerned about the masses and more invested in their personal P&Ls and network, so to speak.
Why else would such a non-performing status quo be maintained?
Clearly, the trickle-down economics that keep the carnival going still benefit all, from the gargantuan to the tiny. Everyone gets a little bit of the pie. Except that some get (a lot) more than the others.
But long term? Can the system be sustained as such? Needless to say, the answer is obvious. All gravy trains must eventually come to an end. Longevity is entirely contingent on a country’s ability to produce a steady stream of well-educated and industrious people working at ever-higher productivity levels to march inexorably up the value chain.
If a nation’s success is instead contingent upon past successes and an unhealthy reliance on a black gold that lies beneath its surface (like ours does), then life can and does get a little tough when prices collapse and demand dries up (as it now has).
To the Chinaman who was brought up with an ingrained sense that nothing is ever the same forever, and that one must never get too complacent (aka the refugee mentality), this uncomfortable notion: that mutual benefit and equitable ecosystem must be ensured so that when the party does end, everyone goes home peacefully.
Khoo Hsu Chuang is contributing editor at The Edge Malaysia
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