Yesterday, Najib announced in his budget speech that the Bumiputera corporate equity ownership is around 10%. This announcement by Najib contradicted earlier statement by Minister in Prime Minister Department Datuk Seri Abdul Wahid Omar on 12 June 2014, that Bumiputera equity ownership stood at 24%. How could the figure change so drastically in less than 4 months time? Is Najib manipulating Bumiputera equity figure to justify his pro UMNO cronies policies?
Najib must explain how did he ended up with the 10% Bumiputera equity ownership. Is Najib trying to imply that non-Bumiputera owns the rest of the 90% equity? This could not be further from the truth as the government shareholding and foreign equity has not been accounted for.
Putrajaya has in the past conveniently left out the government equity and foreign equity when making announcement on the Bumiputera equity figure. This has spurred unwarranted calls from quarters to increase the Bumiputera equity target to 70% which is wishful thinking. Unless the government reduces its equity holdings and restricts foreign equity ownership, the 70% Bumiputera equity target is unrealistic and unachievable.
I urge Najib to come clean on the Bumiputera equity figure and reveal the methodology to calculate the figure. Putrajaya has in the past used par value instead of market value when calculating the Bumiputera equity figure. This is misleading and has incorrectly understated the true Bumiputera equity figure.
In accounting and finance, par value refers to the value stated in the memorandum of association where the company is prohibited to sell the shares below this value during initial offering. Par value has absolutely no relationship to the market value of the shares.
Let us use Apple Inc as an example to show how absurd it is to use par value to calculate the Bumiputera equity figure. Apple Inc has a total outstanding 5.988 billion shares, and the market price per share is USD100.73, making it the largest company in the world in terms of market capitalisation at USD603.17 billion. However, Apple Inc only has a par value of USD0.00001 per share.
If Apple Inc were to be wholly owned by Malaysian Bumiputera, based on Putrajaya’s methodology of using par value, the total equity owned will be a mere USD 59,880 (RM 191,616). In which a handphone shop selling iPhone might be even worth more than it.
I urge Najib to stop using Bumiputera equity figure as a smokescreen to continue dishing out more shares to UMNO cronies. Malaysians are now suffering due to the rising living cost and it will not help the poor by giving out more shares to the already wealthy UMNO cronies.
Media Statement by Chong Zhemin, DAP Perak Economic Development Bureau Chief and Political Secretary to the Taiping MP on 11 Oct 2014