FOREIGN ownership of share capital in Malaysia is on the rise since 2006 and has overtaken local ethnic groups, a forum was told last night.

Since 2006, foreign ownership of share capital in local limited companies had risen from 30.1% in 2006 to 37.9% in 2008.

However, Chinese ownership had declined from 42.4% in 2006 to 34.9% in 2008, while Malay ownership remained at 21.9% in 2008, said Universiti Malaya’s Prof Dr Edmund Terence Gomez.

“And for the first time since 1969, foreigners are now on the rise again. This is quite scary,” said Gomez during the public forum “Interrogating Malaysian Capitalism: Malaysia’s Economy in Comparative Perspective”.

The forum was held in conjunction with the release of University Rennes’s Dr Elsa Lafaye de Micheaux’s book “The Development of Malaysian Capitalism: From British Rule to Present Day”.

In 1969 foreign ownership was at 62.1% before sliding to 26% in 1985, said Gomez.

“But the government has stopped releasing these numbers and we no longer know how much they own in Malaysia. In reality, it should be much higher now,” he added.

Gomez said the rise of foreign ownership points to some breakdown in the affirmative action policies as there are only two Bumiputera-owned companies on the list of top 50 companies in the country.

“When Abdul Razak (Hussein) came to power, he introduced the New Economic Policy following the 1969 crisis where the focus was on affirmative action.

“It was a good policy at the time because it was what the country needed. There was much focus on education and that helped the rise of the Bumiputera middle class.

“Then Malaysia had Dr Mahathir Mohamad who used affirmative action to focus on conglomerates and emphasised privatisation and subsequently heavy industries.

“When Abdullah Ahmad Badawi arrived, he was confronted with an economy deeply embedded in GLCs (government-linked companies). And as some of the GLCs had issues following the 1997 financial crisis, he turned to reforming them and nurturing the SMEs (small and medium enterprises).

“Under Najib Razak, he focussed on GLICs and state-to-state deals, where the state was the Malaysian government and other state-owned enterprises, such as those in China,” said Gomez.

Former United Nations assistant secretary-general Jomo Kwame Sundaram said Malaysian capitalism seems to be stuck now.

“And part of this stems from the de-industrialisation which began during Abdullah’s time. The government is now advocating services, as in the Transformasi Nasional 50 (TN50).

Jomo noted during the question and answer session that Malaysia and Southeast Asia’s industrialisation, hugely backed by state intervention, was unsustainable as it was done without industrial capitalists.

“This is not the case compared with North Asia where you had Japanese, Korean and Taiwanese industrial capitalists.

“Thirty years ago, Malaysia used to give out these ‘captains of industry’ (awards) and not a single recipient was from an industry that did manufacturing. 

“The awards were given to bankers, property developers but not a single was given to someone producing anything important enough to be exported.

“That was the problem then and that is the problem with Southeast Asian capitalism.”

And if that continued, SMEs would not be able to grow and compete internationally, he added. – January 13, 2018.