PEMANDU not helping Melayu economy

PEMANDU under CEO Dato’ Sri Idris Jala is not doing enough for the Malay business community. Recently, Malay Chambers of Commerce came out with a very strong statement against PEMANDU:

PRESS RELEASE BY THE MALAY CHAMBER OF COMMERCE

“KAJI SEMULA PERANAN PEMANDU”

1. We have lost faith in PEMANDU’s ability to implement the ETP in a transparent and inclusive manner. Specifically PEMANDU has failed to ensure that the Bumiputera community is able to participate effectively in the EPPs and play a meaningful role in Malaysia’s economic transformation.

2. There have been 6 announcements of EPPs by PEMANDU thus far. And we are not impressed. In fact we are alarmed by the scale in which Bumiputera companies have been completely marginalized from the ETP.

3. The ‘elephant in the room’ is the serious Bumiputera disparity in Malaysia’s economic space. Figure 1 below clearly shows this disparity. That explains why the Bumiputera community constitutes the largest segment of Malaysia’s poorest income group. And in the high income group segment, the Bumiputera constitutes the smallest group (see Figure 2). This disparity is not healthy for the country and is certainly not sustainable for our economy.

Figure 1 Equity breakdown in selected sectors

4. The ETP is the last opportunity for the Bumiputera community to build capacity and compete on an equal footing in the Malaysian and Global marketplace. Yet PEMANDU has completely ignored this strategic imperative and has implemented the ETP in a socio-political vacuum.

Figure 2 Income disparity among races

5. Let me give you 3 examples:

6. Example 1: MRT Project – This RM36 Billion project has huge potential to catalyze the development of world class Bumiputera companies in both the construction and services sector. It is very rare that a big infrastructure project like this is developed and here is a tremendous opportunity to build the capacity of Bumiputera companies to becoming global players.

7. As you can see from Figure 1, there is a healthy pool of Bumiputera companies in the construction sector (36%) that can be tapped to participate in the MRT project and build their capacity to become world class companies.

8. Yet, PEMANDU has put forth all manner of obstacles to limit, even prevent, the participation of Bumiputera companies in this project of strategic importance. By using unreasonable selection criteria and dismissing Bumiputera companies as inferior quality PEMANDU has effectively demolished any hope for Bumiputera companies to participate and become globally competitive.

9. Example 2: Oil & Gas Industry – There is a PEMANDU EPP to create O&G regional hub in KL. As per Chart 1: Bumiputera participation in the services sector is only 6.7%. The EPP is designed to liberalise the local O&G industry allowing big foreign players to enter the industry without bumi stake/partner. This will cause 3000 bumi vendors registered with Petronas to be sidelined. This will affect all bumi vendors in all the various sectors of the industry including fabrication, marine services etc. This initiative is cleverly driven by PEMANDU through a uni such as Malaysian Petroleum Resources Corporation (MPRC) promoting liberalisation of the industry. It is funny that PEMANDU reps also sit in MPRC. Where is the transparency?

Figure 3 Taken from Jobstreet website describes PEMANDU’s role in MPRC: http://www.jobstreet.com.my/jobs/2011/5/default/10/1316069.htm?fr=R

10. Example 3: Aquaculture – The agriculture sector is the sector which has the highest potential impact on rural Malays. It is also strategic because Malaysia’s farmers need to modernize their methods and produce to Global standards. That is why it is important to have EPPs targeted to the agriculture sector.

11. Yet, when the recent aquaculture EPP was announced, the DPMM has been inundated with complaints from both Bumiputera and non-Bumiputera companies about the credibility of the company selected and the lack of transparency in the selection process.

12. What we know is that the company awarded the EPP has no direct experience in integrated shrimp farming and is an unknown actor in the Malaysian shrimp industry. It is nothing but a company involved with ‘ikan kering’.

13. Further, the company was awarded the EPP even before they had secured access to land and have not yet received approval from the Ministry of Agriculture. This calls into question the transparency of PEMANDU in making its decisions.

14. So, we question PEMANDU how can such an important project with strategic impact on rural Malays be given to a company with such poor credibility?

15. In conclusion, the above 3 examples illustrate clearly why PEMANDU has failed to implement the ETP in an equitable manner. By marginalizing Bumiputera participation in the ETP, it is impossible for Malaysia to become a high-income nation by 2020 sustainably.

16. The Malay Chamber together with other NGOs will be monitoring PEMANDU very closely and provide the check and balance to PEMANDU.

17. Therefore, we call on the Prime Minister to review the role of PEMANDU and to make the necessary changes in leadership and mechanism to ensure that the ETP is implemented effectively.

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The disparity is very clear. At the current thread and pace, Malay businesses stand no chance against the Non Malays and foreign firms. The widening of economic gap would not be good for the stability of the nation in the middle and long term.

The nation must progress in tandem. PM Dato’ Sri Mohd. Najib Tun Abdul Razak promised that no ethnic groups or communities would be left out as the nation move forward, especially with the bold economic transformation plan towards a high income and value economy. The competencies of all would be harnessed, as how ‘1 Malaysia’ is being articulated by the leader who subscribed previous policies such as ‘Vision 2020’ and ‘Malaysia Inc.’.

Hence, DPMM asked 60% of specific business programs under ETP be allocated for the Malays:

Govt asked to set aside 60pc ETP projects to Bumi contractors


KUALA LUMPUR: The Malay Chamber of Commerce Malaysia (DPMM) has asked the government to set aside at least 60 per cent of all Economic Transformation Programme (ETP) projects for its 36,000 Bumiputera contractors.

Its president Syed Ali Alattas (pix) said the government should look seriously into this as at present only four per cent of the contractors had been awarded contracts to participate in any of the ETP projects including the RM36 billion MRT (mass rapid transit) project.

“One must realise that when anything 100 per cent is given to a Bumi company, the bottom line that a Bumiputera contractor receives is only 10 per cent.

“Close to ninety per cent is shared with others (races). The Malays are a general lot and we have been practicing the 1Malaysia concept way before it was invented, ” he told reporters at a press conference held at its chambers, yesterday.

The ETP is established under the government’s Performance Management and Delivery Unit (PEMANDU).

To date, the government has announced 15 initiatives with nine new projects being unveiled at its sixth progress report earlier in this week.

“They have been six announcements of entry point projects (EPPs) by Pemandu thus far and we are not impressed. In fact we are alarmed by the scale in which Bumiputera companies have been completely marginalised from the ETP,” the chamber said in a press release.

Syed Ali explained that when a Bumiputera contractor received a job, he or she was more likely to engage local partners as suppliers creating a win win situation for all.

“For instance, when a construction project is awarded to a Bumiputera, 60 per cent of the cost goes towards buying the materials, the pilling work and whatever not which we outsource among other local players who are not necessary Malays. That is why at the end of the day, we only get 10 per cent.

Syed Ali said the chamber is also bemused that Jefi Aquatech Resources Sdn Bhd was chosen under the ETP to make Malaysia a leading global shrimp producer, although it had no experience in the industry at all.

“It is nothing but a company involved in ikan kering (salted fish).

“Further, the company was awarded the EPP even before they had secured access to land and have not yet received approval from the ministry of agriculture. This calls into question the transparency of Pemandu in making decisions,” the chamber said in a press release.

Read more: Govt asked to set aside 60pc ETP projects to Bumi contractors http://www.btimes.com.my/Current_News/BTIMES/articles/20110617211330/Article/#ixzz1Q7H1gO7F

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The game is simple. DPMM is asking for the 60% allocation is for competency and capacity building. Some of these firms needed this because it would bring their level into ability to compete in the regional if not bigger markets in the middle term. It makes a lot of economic sense and some of the existing firms already proven themselves to develop for the regional market as the opportunities for competency and capacity building were given to them.

Much more needed for more qualified and highly potential Malay firms to be given the nudge and opportunity for competency and capacity building. Especially in specific industries where they actually proven themselves. Especially with the right strategy, proper controls and pro-active development program, which include technology and talent management.

So if only a marginal number of Malay firms are able to participate the EPPs, then they should be given the fullest opportunity to develop their position in the market. Of course, these awards must come with strict conditions. These selected firms must ensure a very pro-active and progressive business-development programs for smaller but potential Malay firms.

PEMANDU in their foreign-consultants-induced mindset conveniently is missing out all these in their radar scope. In their zest to translate the ‘liberalisation of the Malaysian economy’ coupled with the flavour of foreign consultancy firms as the basis of their economic compass such as McKinsey, PEMANDU bulldozed the ETP agenda without the consideration how it will affect the balance of the socio-economy and disparity. In the past, socio-economic disparity have proven to be a setback of the nation’s most important ingredient to progress; stability.

PEMANDU seems to be more interested to support foreign firms in mega EPP projects instead of developing the comprehensive competency and capacity building of Malay firms. Example is the RM 36 billion extension of LRT project.

A lot of Malay firms could participate in this project, either as stand alone or consortium had the opportunity been given to them. This would allowed these firms even as consortium to develop the capacity and eventually embark on bigger projects elsewhere. For example several LRT infrastructure projects in Mecca and Medinah, which would naturally be extended as the capacity requirement grows bigger with demand of pilgrims increases in time.

This competency and capacity building program for the Malay firms is a good extension and derivative of the ‘Malaysian Inc.’.

It is strongly believed PEMANDU advice to the Cabinet is taking the projection of the economy without the consideration on the development of Malay business entities even though they actually had the competency. The economic planning chartered by PEMANDU is taking the figures and formulas without extrapolating the interest of the Malays factored in the macro economic planning. It is clear they are just taking the task to deliver as a focal point, even though it means that foreign firms are taking the lead of the said projects.

As a performance monitoring unit, PEMANDU should embark on a comprehensive competency and capacity building of potential Malay firms. They could invoke the right strategy and all the controls for this program to be kicked off and follow through. Unless Idris and his PEMANDU boys are not serious. Otherwise, they could have misled PM Najib in moving the ETP through these EPPs.

Then, Idris should not be there. The nation should not progress into high value economy without a program to ensure Malay firms are able to reap the success of the economic progress and growth, across the board in all dimension.

Published in: on June 23, 2011 at 23:14  Comments (14)