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A bit of good news in that the ruling of needing to have 30 percent equity for those planning to list in Bursa Malaysia has been relaxed. The company must show proof that the allocation was not fully subscribed after two levels of offering exclusive to bumiputras. After that, it can be opened to general public (which of course include the bumiputras as well).

Companies seeking listing on Bursa Malaysia can now open their shares to the public if all efforts to get the 30% bumiputra equity participation fails.

Finance Minister Datuk Seri Najib Tun Razak said while the 30% bumiputra equity participation policy was being maintained, the shares could be offered to the public through the initial public offering (IPO) balloting process, should they not be fully subscribed.

“There is a change in the way it (the policy) is being implemented,” he told reporters after a briefing by the Securities Commission (SC) here yesterday.

“This is part of our efforts to make our capital markets more competitive.”

He said there would now be two tiers for bumiputras to acquire their 30% equity.

The first tier was through International Trade and Industry Ministry-approved bumiputra institutions and the second would be the bumiputra public.

If the 30% equity was still not taken up, it would be opened to others.

“In the event the allocation is not fully subscribed by the bumi public as well, then the company concerned would be deemed to have fulfilled the 30% bumiputra NDP (National Development Policy) requirement,” he said.

“So this takes out the element of uncertainty.”

When asked if this would jeopardise the bumiputra equity in the long run, Najib replied:

“I don’t think so. Actually, this will allow bumi individuals to participate as well.”

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Another glimmer of success is in sight after the PM and his deputy agreed “in principle” to MIC’s proposal (actually many other people suggested this idea as well especially via media and forums, but never mind, we give the honor to MIC) to set up a mechanism under Permodalan Nasional Bhd (PNB) to increase the equity ownership among Indians in the country by three per cent in 2020, from the current 1.2 per cent.

According to Samy Vellu:

…the matter was agreed to by both Prime Minister Datuk Seri Abdullah Ahmad Badawi and his deputy, Dauk Seri Najib Tun Razak, who is also finance minister, when he met the two leaders recently.

“The special mechanism to be set up under PNB will use a similar model as the one used to assist the bumiputera community.

“I have asked the government to set aside an allocation as a form of partial grant and loan to be given to the Indians under the said mechanism,

Another success due to Makkal Sakthi I guess - MIC becoming a bit more relevant and improving a bit on their achievements. Perhaps they will even surpass their past 20 years achievement in the next one year itself.

But I still believe that it should be set at 10%, not 3%. Together with the grants and loans, the recipients should also be provided with some education and awareness on what are they getting into. No point the recipient getting RM1000 worth of units, but selling it off the next day to cover his/her daily expenses.

If can, the units may be linked to some sort of insurance scheme as well.

If done properly, this can be one of the channels to improve the financial status of the poor and underprivileged. However, it must be stressed that providing equity sharing is not enough. It will be falsity to think that the problems faced by the community will go away by giving RM500 million per year (yup, I’m expecting nothing less than that!) in loans and grants. There must be some fail-safe mechanism the amount is not misused by middlemen like MIC, or the recipients themselves. For example, we can put a 3 year “no sell back” clause.

Secondly, how to ensure the correct people get the help? As it is, even the poor and underprivileged are not properly tracked by Welfare Department, so what database are the authorities going to use? How about a list from KWSP? Take the employees of estates, public utilities providers, factories. The government’s employees list can also be obtained. From there, filter those who are earning XXX or less per month. This will be a start, but it would not include self-employed or the unemployed (like housewives).

While waiting the “agreement in principle” to be realised, better some think tanks start their research.

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I was surprised to read in both Star and NST today that the 3% reduction in EPF contribution will be done automatically “for the ease of members and to facilitate implementation measures”. That means it is not an opt-in choice as implied by Deputy PM Najib, but its an OPT-OUT choice. Your contribution is reduced (means you get back more money) UNLESS you inform EPF. How to inform? Fill in the form KWSP 17A (AHL) and give it back to your EMPLOYERS. The form can be obtained from all EPF branches or download them from their website at www.kwsp.gov.my from Dec 1 onwards.

The reduction will run until end of December 2010, meaning two years.

Now, what would you do? Opt for the extra 3% cash in hand or choose not to reduce the contribution? Those who think cash in hand is better, can make use of the reduction and perhaps invest the money in other investment vehicles. Or you can use it to reduce yourloans. As long as the extra cash is not wasted on unwanted expenses. OR if you think that better to keep the money in EPF, then fill up the form and cancel your reduction.

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