Malay issues / Najib Razak / Socio-economy

Ekuinas’ role in Najib’s politics

Last July, the setting up of Ekuinas was announced by the Prime Minister, Dato’ Sri Najib Tun Razak. Last week, the top management of Ekuinas finally announced their arrival to the scene.

In July, I wrote an article asking 5 relevant questions:

1. Since Ekuinas will not be audited by the Big 4 firms and its books will not be opened to public, who will given the task to manage the monies in Ekuinas?

2. What are the operating agreements or the management agreements between the parties involve in the overall management of the fund? And how much are the commissions and the management fees?

3. Who are the consultants employed for the incorporation of Ekuinas?

4. Who will be the members in its Investment Committee Board?

5. Will EPF/Petronas money be used to finance Ekuinas?

All these questions derived from the hope of not wanting to see another blunder. We do not want to see a case where even a RM2 company can get huge chunk of investment which in the end is just another facade for money laundering by cronies. As the consequence, the objective of achieving an increase in bumi equity will fail yet again.

Last weekend, the Chairman and the CEO of Ekuinas gave a few glimpses on how Ekuinas will operate. In case anyone forgets, the real reason for its existence is ‘to boost Bumiputera participation in the economy’.

This is in line with the massive economic reforms and the FIC deregulation which had canceled out the 30% equity requirement of Bumiputera shares in any new listing.

Interesting to note that Najib had swiftly repealed this old economic mechanism with immediate effect. With only 18% bumiputera equity holding, I wonder whether this equity percentage could stay put at 18% without any intervention from the revamped FIC for the past 70 days.

As Ekuinas will only make its first investment in 6 months, I believe the Bumiputera equity holding will further decrease within this 250 day-period of ‘doing absolutely nothing’.

Now, the objective of Ekuinas is to boost the participation of Bumiputera in the economy by investing in Bumiputera companies with high growth potential. As the government saw that the Bumiputera equity owners often cashed out their shares as soon as they received them, then this method (giving pink forms etc) of achieving a respectable Bumiputera national equity holding may not be feasible anymore.

I totally agree.

But can Ekuinas successfully replace this micro level mechanism with a macro level approach instead? Can Ekuinas increase the participation of Bumiputera well above this 18% barrier? Can they push it up to 30% and beyond?

Since any new listings no longer required to have 30% bumiputera equity requirement, and the fact that the new SC  public spread requirement in IPOs will further decrease the bumiputera holding from 25% to 12.5%, Ekuinas will have to shoulder much burden with regards to increasing the Bumiputera equity holding.

Reading Najib’s proclamation of economic reforms, there was no other mechanism besides Ekuinas that could compensate the sudden loss of opportunities for the Bumiputeras. When previous mechanism of wealth generation was abused by a few, it seems that the fate of many will now suffer as the consequence. Everything that the Prime Minister announced at that time was to the immediate detriment of Bumiputera asset ownership. Read this again please.

Yes, we all know that he wanted more Bumiputeras with quality than just quantity. But is Ekuinas the only solution? With the MECD abolished and most of the agencies under it were either absorbed or transferred to other ministries, one could not help but wonder whether there were any wisdom put to it.

The MECD was a one stop centre for all business issues involving and affecting the Bumiputeras. When all of its agencies were absorbed to 8 other ministries, how efficient would each of those director generals in supervising the achievements of the bumiputeras in order to create an overall Bumiputera Commercial and Industrial Community (“BCIC”)?

To me, it would make more sense to have one ministry to concentrate in the grand objective of creating the BCIC (in Malay, it is called Masyarakat Perdagangan dan Perindustrian Bumiputera).

MITI for instance has a more global outlook with regards to the Malaysian economy. Can the minister and his officials in charge be able to focus in a more localised issue that plagues these ex-MECD agencies?

Can Sabri Ismail of the Domestic Trade and Consumer Affairs Ministry be tasked to add franchise development and promotion and vendor development programme into his portfolio as well as taking charge of cooperative development, the Cooperatives Commission of Malaysia and also the Cooperative College of Malaysia?

All the agencies above are vital components in developing the BCIC. Yet he already seems to have his hands full just to counter any consumer products’ price hike.

Raja Tan Sri Arshad Raja Tun Uda (left) and Abdul Rahman Ahmad

Raja Tan Sri Arshad Raja Tun Uda (left) and Abdul Rahman Ahmad

I am not criticising Ekuinas for its role in creating quality wealth among Bumiputeras. I believe, it is in good hands especially since the Chairman and its CEO have enough credibility to make it an effective GLC.

I am only criticising the lack of serious effort in compensating/replacing the cancellation of several mechanisms that had relatively proven to be successful, with nothing more than a GLC which will increase only a fraction of the economic wealth of the Bumiputeras.

They are already losing ground and yet the government seemed to be heavy-footed with its proactive actions. The cost of losing 250 days by doing nothing could never be easily gotten back.

That is why, if we look at the current situation, Ekuinas has the unenviable job of trying to increase the wealth of the Bumiputeras to a better level than the 18% we have now. How long will we eventually see the success of Ekuinas? Two years? Five years? Ten years?

How long is the contract of its CEO? Is Ekuinas going to increase the Bumiputera equity holding to 30% before 2013? Is this its KPI?

Ekuinas’ Chairman even said that “through Ekuinas, Bumiputera corporate equity ownership will be institutionalised to ensure New Economic Policy objectives are met on a sustainable basis”.

How can Ekuinas ensure that the NEP’s objectives of eradicating poverty and restructuring the society so that racial identification through economic activities is eliminated, will be met? I don’t think Ekuinas’ roles and responsibilities encompass such huge parameters. Not many Bumiputeras are involved in unlisted companies in the first place.

Another important question is, will Najib still be the Prime Minister in 5 years time?

Naturally, the next Prime Minister may want to discontinue Ekuinas altogether. After the FIC has been repealed and  potentially Ekuinas be thrown to the abyss, what is in store for the BCIC next?

Discarding a few mechanisms and then putting all your eggs into one small basket like Ekuinas without thinking about other prevailing risks is suicidal.

Hence, when Ekuinas is pressured to do something that is beyond its reach and scope, transparency and corporate governance issue kicks in. And the 5 questions at the start of this article may be relevant still.

Especially when we were told that its Investment Committee Board will look at each investment in a case by case basis.  This is understandable. But how strong is the willpower of this Board with regards to any political interventions in its decision-making?

One thing for sure, the CEO promised all of us that:

“In the private equity world, there’s a need sometimes to keep certain information private and confidential for the purpose of competitiveness.

“We’re cognisant of our responsibility that the fund is from the Government and the public, and will ensure sufficient disclosure for transparency”.

Note that the opposition-aligned Malaysian Insider craftily snipped the second paragraph from its reporting in order to create malicious commentary along with its already one sided headline.

Anyway, the PM is playing dangerous politics if he is not taking into consideration all the future scenarios. In the effort to show how liberal he is to the relevant parties, he may end up being a persona non grata to the millions of people who rely on him the most.

It will be far less dangerous and even a positive risk for his political survival if he institute various action plans to further strengthen the BCIC. With the 2010 budget going to be announced soon, we shall see how he prioritise his agenda.



The blogger Hidup Tuah wrote extensively about the Government’s unit trust fund – Permodalan Nasional Berhad. I believe PNB could have strategised its policies better than the one they are currently implementing. The articles can be read here.


17 thoughts on “Ekuinas’ role in Najib’s politics

  1. A Short note on Anwar Ibrahim

    Anwar’s biggest problem is that he is hooked on public attention. The real reason why he is really pissed off and wanted to take revenge against Umno is because Tun put him in prison..

    He loved every minute of reformasi because he was at the centre of attention but away in prison, he was dying from public attention deficit and that really made his anger grow

    Even his CIA handlers are starting to find this trait annoying you see he is not the only one they have lined up for Malaysia, he has a British counterpart that is working for the same agenda, to destabilise the most prosperous and forward looking Muslim state on the planet, Malaysia. In fact Sept 16 was self sabotaged by Anwar because he realized he could not be in full control due to strong resistance from within his coalition

    Remember the Indonesian Karate man who was arrested in Malaysia for solicting prostitues?
    His friend is sponsoring the Indon riots
    Karate man was arrested here and the official line is that he was looking for girls, the real story is that he was looking for young boys, Anwar may want to deny this link but these two boy lovers are linked by fate, their insatiable love for men have made them kindred spirit. Anwar uses his Indonesian network to generate the current hatred for Malaysia, as part of his global assignment…
    Anwar’s links in Indonesia goes to the same operatives in Indonesia where the CIA is known to be very active
    Anwar is part of the machinery that have been feeding hate messages into Indonesian Media, every maid brutality case is meticulously and religiously forwarded to the Indonesians to be played up by the Media
    If there is no good news then bad news is the only news, that is Anwar’s operating tactic in Malaysia, the same approach is being used by the CIA in Indonesia to damage Malaysia’s reputation and the bond between two well known and resolute Islamic countries,

    the long term strategy is to discredit traditional Islam and plant one of two of America’s version of Islam in all Islamic states, the hate-propelled Islam of Ben Laden and hi Wahabbi movement and the Orientalist Islam, which is the same as the agnostic movement in the Christian Church where God is just a discussion point, a focal point for their logic driven moral compass



    • Dear DEACON1957

      “to destabilise the most prosperous and forward looking Muslim state on the planet, Malaysia” It appeared like that.

      Is PAS a part of this conspiracy?



    • You are probably correct that anwar is a bummer. He failed as miserably as education minister.
      But Indonesians never did like malaysia, especially the young ones.
      Reason? – malays in Malaysia have become arrogant, looks down on their poorer neighbours like lepers. I remember new straits times under kadir jasin insulting thais with a prostitute cartoons by his crony cartoonist(forgot his name). And how about our malay army boasting about sleeping with dayak girls in sarawak during the sixties and seventies? Did they sleep or abuse those girls during their operasi there, like the timber workers are doing now?

      Funny how we are not invited to the G20 summit held earlier this year. Indonesia and thailand were invited, along with all the great economies of the world including US, most of EU, Korea, japan, China, Suadi etc.


      • “But Indonesians never did like malaysia, especially the young ones.
        Reason? – malays in Malaysia have become arrogant, looks down on their poorer neighbours like lepers.”

        Where did you get this? I thought its some some of the chinese that looked down at the Indonesian like lepers and even mistreated them badly.

        What a load of crap!



        • The violence between Indonesian and Malaysian (mostly malay) supporters during and after the AFC football match one year ago, when indonesia won at bukit jalil stadium, shows that Malaysian cannot accept losing to Indonesia, who they looked down upon.
          when Man Utd beat malaysia, no body showed any volent reaction, as they looked up to the EPL team.


  2. Dear JMD,

    I believe Ekuinas was meant to tap the private equity in unlisted companies. As we all know there are many private companies who are doing just as well if not better than its listed counterparts. This concept is laudable in that it gives an opportunity for people in an otherwise untapped market.

    I am however intrigued by the mechanism as to how the Bumiputras will benefit out of this. Will Ekuinas issue shares, bonds, REITs etc for purchase? Or will Bumiputras be made members of Ekuinas and thereby earn dividends or bonuses from the shares or bonds purchased. Or will Bumiputras be allowed to buy Units that will be invested by Ekuinas into these private entities/equities and thus bringing up the Bumiputra shareholding in corporations.

    Only way to ensure that the shareholding steadily increases is to disallow any form of trading on the equities. If the fund comes from the government, how does that translate to increase in Bumiputra shareholding.

    I would be more interested if I am allowed to also buy into these private entities and earn dividends or bonuses. This willl increase the Bumiputra shareholding and the government fund is merely to get the ball rolling and not to purchase on behalf of Bumiputras. Purchasing on behalf of Bumiputras is a mere technical nudge upwards but not ACTUAL Bumiputra purchase per se.

    With the wealth that a number of Bumiputras have, do we still require government funds to buy shares on our behalf? A much better arrangement would be to elicit funds from Bumiputra cooperatives, companies etc and invest in these entities via Ekuinas. Ekuinas is a mere facilitator, manager and trustee but nothing more than that. I am not sure if utilising government funds to buy on behalf of Bumiputras is a good idea.

    Have a good Ramadhan JMD,


    JMD : Thank you for the comment. Have a good Ramadhan too.


  3. Dear JMD

    Under the current mechanism, for sure, Bumis’ equity ownership (%) will drop drastically within 1st year and will continue to slide. QED


    JMD : Thank you and Selamat Hari Raya, Maaf zahir dan batin.


  4. Bro

    PM Najib’s claim of 18% Bumi Equity has ben challenged by experts in the field. In fact, one such very senior expert resigned his position with the Govt during that fracas over Bumi Equity Valuation a few years ago, on a matter of principle, which we do not often see in M’sia.

    Burt for argument’s sake let’s say the 18% is correct. Many Plc’s are controlled by individuals, families and/or other companies who hold less than 33 1/3% equity. The situation is the same with the Bumis.

    With majority control in Federal Parliament, Cabinet, Civil Service, Army, Navy and Airforce, Judiciary, Teaching Profession and Universities etc., Bumis (even in most Pakatan led States) CONTROL all GLC’s, PNB, Khazanah, Value Cap, Macap, KWAP, Prasarna, PMB etc., (most Board of Directors and senior position taken up by Bumis).

    Thus the springboard for addressing and correcting any imbalance in Bumi Equity and distribution of national income has been around for at least the last 20 years, originating from the NEP which was lunched in 1969.

    So, even without the silly FIC rules which were long overdue for the trash can, I don’t see the need for Equinas. What is that Khazanah or PNB cannot handle? Mavcap was established as a venture Capital proposition by the Govt. What’s happened to it? How has it performed?

    What worries me is that the real financial position and results of Equinas will be masked from the public as is Mavcap’s &, Valuecap’s which needed further injection of $5 billion Taxpayer’s cash (read as bailout) two months ago over and above original equity and loan from PNB, Khazanah & KWAP of $10 billion!!

    Why do we keep dulicating and creating more and more billion $ ventures with very little accountability?

    We are all of 1 race, the Human Race

    JMD : Thank you for the comment. You have to belanja me makan sometimes 🙂


  5. Askm JMD,

    Equinas is just another corporate entity set up to replace the failed entitiies :PUNB and MaVec. The CEO of PUNB was charged for issuance of Bonds worth of billions of ringgit illegally. The failures of MayVec are well known.

    The worrying part is that all these entities use rakyat’s money. By the time corrective steps are taken against possible abuses by their CEOs/executives, the rakyats are poorer by a few billions dollars.

    I salute MARA in carrying out its tasks to help Bumipurtras. The exaltation of the Malays especially in the education fields is due to the dedication and committment of its Minister and DG and officers to help the Malays.

    I agree that it is a great a mistake on the part of DSN to scrap MECD and put MARA under the Rural Development Ministry.

    Let’s pray that Equinas will not develop into another PKFZ. The Rakyats have the right to know its activities and the BOD must be made accountable for their actions. They must be transparent.

    JMD , you have sounded the war cry. The Rakyats are behind you.Our moneys are at stake.


  6. The only way you can improve the lot of bumiputras is by giving them first class education from the age of 4 upwards until the age of 16. By then, they should be full able bodied adults and can stand on their own feet, leave home for work or education without the support of their parents. Unfurtunately, our we had pariahs who managed our education system whose only goal is to fail those who cannot speak bahasa properly, even if the guy is a physics or maths genius.

    Plus ugama classes should be changed to arabic reading classes, so that malays can speak arabic instead of learning religion, which should be done outside school time and taught by their parents. If they have arabic, at least it will be beneficial to student in the future job prospect at least in the middle east.

    I cannot understand why the need for ekuinas when there is already ASB/MARA etc.
    Just the other week, i was told ETHOS, another of those govenrment created fund/entity acquired a local shipping company for untold millions from a listed company. It was losing money, so they sold it to novices after showing nice accounts and future cash flows. The ships however, were newly built in china, and has been failing the charterers inspection due to bad workmanship and design. Looks like another bailot soon as bank money is involved.


    • Sdr Sputjam

      You wrote “The only way you can improve the lot of bumiputras is by giving them first class education from the age of 4 upwards until the age of 16. By then, they should be full able bodied adults and can stand on their own feet, leave home for work or education without the support of their parents. Unfurtunately, our we had pariahs who managed our education system whose only goal is to fail those who cannot speak bahasa properly, even if the guy is a physics or maths genius”

      This one I totally agree with you. A beautiful “wawasan” indeed. If these children become full able bodied adult,people like anuar would be laugh off as a joker: nik aziz would only had rocks and trees as captivated audience. Corrupt and incompetence UMNO leaders will be challenged openly.

      Because they know their worth.



  7. Salam JMD,

    At times it is funny to read of such a heavy handed approach. Using government and state might to chase after the elusive 30%. Like a giant battling tiny lilliputians. Why the magic number, it is still unclear to many.

    Just a distraction here, hope you don’t mind.

    How did the others came about to the position that they are in today? Given most of them arrived to flee whatever hardship they had back then. Things must have been about the same for everyone when the Brits were here. Please spare the thousands of years old civilization and genetics hypothesis.

    But it is interesting to note that the Chinese and their ‘kedai runcits’ existed even in 19th century Jamaica during British rule. If a study had been conducted, I suppose we can find them playing the same role over and over again in the many commonwealth countries. And from there perhaps some insight into their rise and wealth accumulation, despite coming from humble backgrounds.

    Selamat Hari Raya to you and family, JMD.

    JMD : Thank you for the Raya wishes Msleepyhead. To learn from the chinese regarding their industrious ways is what many people should strive for and this was told, suggested and preached even by Tun Mahathir Mohamad during his tenure as the PM (that is why he is always early to the office and meetings, working hard, read a lot, exercise and live healthily – follow by example).


  8. Salam JMD,

    Majoriti usahawan Melayu adalah terdiri dari peniaga2 kecil yang modal pusingan tidak lebih dari 50k. Selama ni kita dengar bermacam2 projek, semua main juta2..bagi kami peniaga kecil yang tidak menjadi ahli mana2 parti politik, cuma mampu mendengar, dan telan air liur je. Tapi takpelah, kalau benar semua itu untuk menolong bangsa Melayu, besar projek, ramailah yang turut sama merasa. Mungkin kami peniaga2 kecil tidak layak untuk diberi kepercayaan begitu besar, yalah, duit rakyat.

    Tapi apa yang benar2 buat saya terkilan sangat2 – setiap kali pengumuman projek juta2, begitu gah perasmian, lepas beberapa tahun semuanya senyap… bila ada pihak pembangkang yang bunyi barulah nak umumkan sekian2 kerugian, salahkan semua pihak dan keadaan kecuali diri sendiri. Yang nyata, majoriti projek juta2 semuanya rugi !Dan tidak ada siapapun yang dipertanggungjawapkan atas kerugian tersebut !

    Apalah salahnya diberi peluang yang lebih pada peniaga2 kecil seperti saya. Iya, dana2 disediakan melalui bank2 untuk tujuan pinjaman…but seriously, berapa banyak permohonan yang diluluskan ? Dengan segala macam karenah dan syarat2, semuanya hanya melemahkan semangat.

    Bila bising, pihak bank akan keluarkan statistik berapa2 juta pinjaman yang telah diberi melalui dana2 tersebut tapi dari jumlah itu berapa sebenarnya dari kategori peniaga2 kecil (modal 50k kebawah) ? Saya mungkin salah tapi saya syak permohonan yang diluluskan kebanyakkannya dari mereka yang berkepentingan dan punya pengaruh politik, pinjaman besar2. Akhirnya, berapa kerat dari kami yang dapat merasa bantuan dana2 tersebut ?

    Skim2 yang diperkenalkan seperti skim amanah ikhtiar, tekun dan lain2 saya akui memang bagus. Tapi ada juga masalah2nya, tak perlu di tulis disini. Yang penting ingin saya katakan disini –

    Kalau dari pengalaman dah memang teruk rugi segala projek juta2 kerajaan yang diberikan kepada peniaga2 ‘besar’ /ahli2 korporat yang cuma beberapa orang saja, bukankah lebih baik segala juta2 tersebut diperuntukkan kepada ribuan peniaga2 kecil Melayu dalam bentuk pinjaman mudah dan segera. Takadalah kami merujuk kepada dana along yang mana menjerut leher sendiri kemudian hari.

    Cara ini taklah sehebat ekuinas tapi yang saya yakin, lebih ramai yang dapat merasa, ekonomi juga dirangsang secara lebih meluas dan dalam pelbagai sektor. Kesannya kearah menaikkan taraf hidup orang Melayu begitu besar dan amat cepat. Dan jika ada peniaga2 yang tidak dapat membayar balik atas apa jua sebab, tidaklah seteruk kerugian korporat2 yang dipertanggungjawab mengurus projek juta2 selama ini. Paling tidak, mereka ni tetap bertanggungjawap atas pinjaman itu.

    Contoh – Bayangkan RM500juta, kalau pinjaman Rm50k, seramai 10ribu peniaga kecil dapat dibantu ! Pakej ransangan sebelum ni yang menelan belanja billion2 tu apa dah jadi ? Bayangkan berapa puluh ribu peniaga kecil dapat dibantu dan bayangkan betapa besarnya ekonomi negara dapat diransang !

    Entahlah.. telan air liur je saya baca ekuinas ni. Cuma pandangan seorang peniaga kecil yang tahu mengira setakat RM50k saja

    JMD : Terima kasih Din. Berkat kesabaran dan susah payah, saya percaya saudara akan ‘mengira’ lebih tinggi dari RM50K satu hari nanti 🙂 Namun begitu, sokongan dari pihak berkuasa amat penting agar usaha saudara didokong untuk boleh berdaya saing. Ini membolehkan saudara merangsangkan ekonomi apabila sudah berjaya kelak. Malah, suatu hari nanti, saudara pula yang akan memberi bantuan kepada mereka yang memerlukan sedikit pekerjaan atau modal ransangan. Kita lihat apa Belanjawan 2010 akan membentangkan tidak lama lagi.


  9. Hi JMD,

    The Malays are industrious enough as it is, whether toiling the paddy fields under the heat of our tropical sun, out fishing at dawn, or even drive a taxi around for long hours just to cari makan. The myth of the lazy native is definitely just that, a myth.

    IMHO, it’s about wealth accumulation and seeing money as the sole gauge for success, status in society, and prosperity – in the abundance and materialistic sense. And working is no longer about cari makan, but how to cari makan and the same time make it big.

    Even looking at new year greetings alone, reveals the different cultural perspective when it comes to money. CNY is always associated with prosperity, fortune, wealth, etc but Aidilfitri is tied to spirituality, forgiveness, gratefulness… Which is of course appropriate as it is a religious event. Still, January 1st, is just Selamat Tahun Baru – a safe new year.

    This cultural legacy of humility (or lack of ambition) is observed in the absence of ancient mega structures on our land. Our neighbors fare better with Borobodur, Angkor Wat, golden temples, etc. Even the Zaman Kegemilangan Kesultanan Melayu Melaka did not leave many remarkable traces of its prime time.

    If we compare the Malays to the Ibans, also from the same Nusantara, could it be they are both peoples who do not care much for economic prosperity in the monetary sense? The Ibans still have their longhouses in Sarawak, and don’t seem to be abandoning them for the cities.

    But now that we have an urban population of Malays together with the rural ones, it will be interesting to see how the changed mindset of the urban ones (materialistic, part of the modern economy) will affect their accumulation of wealth in the years to come. That’s when the success of the NEP and social engineering will be seen.

    JMD : A good comment. Thank you.


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