Five reactions on report and resignation

Lim stands by report, quits Asli

From Sun2Surf of October 11, 2006
By Jacqueline Ann Surin, Pauline Puah, B.Suresh Ram and Maria J. Dass

PETALING JAYA (Oct 11, 2006): The research director of the Asli report which concluded that bumiputra corporate equity ownership was much higher than what government statistics showed has resigned after the think tank distanced itself from the findings.
Dr Lim Teck Ghee, director of Asli's Centre for Public Policy Studies, said he stood by the report which stated that bumiputra corporate equity ownership could be as high as 45% and not 18.9% as stated in government statistics.
The resignation came a day after Mirzan Mahathir, the president of Asli or the Asian Strategy and Leadership Institute, issued a statement that the report - Corporate Equity Distribution: Past Trends and Future Policy - was flawed in its methodology and assumptions, and its conclusions could not be "vigorously justified".
"Since I cannot agree with Mirzan's statement, and because of the need to defend the position and integrity of independent and non-partisan scholarship, I regret to inform that I will be stepping down from my position as director at the end of the month," Lim said in a media statement today.
He said as the centre's director, he bore full responsibility for the study, and stood by its findings, and the findings of the other studies the centre submitted to the government in February on the Ninth Malaysia Plan (9MP)
"I hope the public space opened up by the centre's work on this particular issue, as well as other important issues, will be expanded on and vigorously defended by others.
"It is the fundamental right of the Malaysian public to question all government statistics and policies, more so when these are not transparent or defensible," said Lim, a former United Nations regional adviser and World Bank senior political scientist, and the recipient of many international academic awards.
The corporate equity report was part of a bigger report the centre worked on called Proposals for the Ninth Malaysia Plan (9MP) which was submitted to government.
The centre's report had concluded that the National Economic Policy (NEP) target of 30% bumiputra equity ownership had already been exceeded, and said the official methodology inherited from the 1970s to measure corporate equity distribution was "narrowly-based" and "unrealistic".
According to the 9MP, bumiputra equity ownership in 2004, as measured by the Economic Planning Unit (EPU), stood at 18.9%.
The Asli centre report also said it was clear that "selective patronage" had resulted in "serious intra-ethnic Malay cleavages", and the continued promotion of the NEP would only increase antagonisms among bumiputras that some are more favoured than others.
The centre did not receive any feedback from government until the corporate equity chapter was widely reported on a few weeks ago.
Since then, Umno vice-president Tan Sri Muhyiddin Yassin has described the report as "rubbish" and challenging the government's authority, following Prime Minister Datuk Seri Abdullah Ahmad Badawi's statement that the report was "baseless", "inaccurate" and "irresponsible".
On Monday (Oct 9, 2006), Utusan Malaysia also quoted former premier Tun Dr Mahathir Mohamad as saying the centre's findings were "illogical" because bumiputra economic control was far below that of other races.
Mirzan was also quoted in the same paper on Wednesday as saying the report's quality did not reflect Asli's expectation, and had undermined the institute's reputation and diverted attention from its other positive recommendations.
He was also quoted as proposing that an editorial board be set up to vet the quality of future Asli research so that its work would not be undermined.
Contacted by theSun on Wednesday night, Mirzan denied that he issued the statement on Tuesday due to political pressure
“My concern is the good name of Asli. Obviously, I need to correct the misconception of people about Asli,” he said, adding that it was his responsibility as Asli president to protect its reputation.
Asked about speculation that the statement was solely his and did not reflect the views of other Asli directors, he said: “We should not jump to any conclusion. I issued the statement as president. So my statement would be Asli’s statement.”
On Lim’s resignation, he said: “If he disagreed with the centre and if he feels very strongly about it, he’s free to do it (resign). We wish him well in the future.”
Asli CEO Datuk Dr Michael Yeoh said he respected Lim's decision to resign, adding that he stood by Mirzan's statement.
Asli director Tan Sri Ramon Navaratnam said Lim's resignation was unfortunate. "I hope it does not send out the wrong signal to others who want to undertake honest and sincere research on the challenges facing Malaysia," he told theSun.
Opposition Leader Lim Kit Siang said Mirzan had failed to explain how the centre's methodology was flawed, and how the Economic Planning Unit's methodology was valid.
On criticisms of the report, he said: "It is a triumph of brawn over brain and a major setback towards creating a 'first class mentality'."
The DAP adviser called on Abdullah to direct the EPU to make public the methodology it had used to measure corporate equity ownership in the interest of openness, accountability and transparency.
The Centre for Public Policy Studies was set up under Asli in September last year (2005). It has its own research associates but draws on a wide circle of academics nationally and internationally.
Its first project was to work on a report called Proposals for the Ninth Malaysia Plan (9MP) which was submitted to the government in February for consideration before the 9MP was unveiled.
The report focused on five main areas that the centre thought were priority areas - the civil service, educational reform, the plight of the low income communities, the plight of our Malaysian marginalised communities living in the forest focusing on the Penan, and corporate equity.
Although the report was widely circulated, the centre did not get feedback until the corporate equity issue - under the chapter known as "Corporate Equity: Past Trends and Future Policy" - was reported in the media.

An interview with Dr Lim Teck Ghee
In an interview in his office on Oct 4, 2006, head of the centre Dr Lim Teck Ghee said although reforming the civil service was far more crucial for the centre than the corporate equity ownership issue, the latter was still an important issue.
"It's one which, if you talk to investors, bankers, people in the economic spheres, you will hear a great deal of concern about it. So, this is not an academic issue. It's an issue which has been articulated by many quarters for a long time, since this target (30% bumiputra equity ownership) was set," he said.
"And what we did in our study was we focused on new data, new methodologies and we've arrived at a number of findings which we thought would be of interest to policy makers."

Excerpts from the interview ...
theSun: Were you surprised at the kinds of criticisms that were levelled at the report?

Yes, I was. I must say that first of all, we were not expecting the furore. Ours was an objective academic study. We undertook the study with the best of intentions. We are not the cat's paw of any interest or group.
The centre is an independent, non-racial, non-partisan body. We stand by our findings and we stand by the methodology that we used. We would be happy to engage in a discussion, a technical discussion on the issues of methodology and definitions, and our view that the (present) methodology used by the government is narrow, is outmoded, and is not realistic. And we'll be happy to sit down with scholars and technicians to discuss this.
Is this centre the first organisation to actually put up a view like that, that the methodology used by government is outmoded and too limited?
I think individual scholars in the past have alluded to this. But, to my knowledge, our centre is the first body, think tank, research organisation to work on this issue.
Were you surprised at all by the findings after the report was completed, that the (bumiputra) corporate equity (ownership) could be as high as 45%?
Well, yes and no. I must say that, we thought that the government figure of 18.9% was underestimated, but we didn't expect to find, using our definitions, that high an achievement.
And I must say that this high achievement shows that the government has been successful in redistributing wealth as defined by equity. So, it's something that the government should be proud of, and it's a finding which shared with the rest of the country, can allay some of the concerns and insecurities (of some groups).
So, we're a little surprised that our critics have accused us of having a particular agenda. The only agenda that we have is that of a non-partisan analysis of scholarly inputs into policy-making.
(We're saying that) in terms of the corporate equity share objective, that very specific target - using our methodology - has been achieved.
By the NEP (New Economic Policy)?
The corporate equity share target has been achieved. We're not saying that the NEP, you know, in all its fullest ramifications has been achieved. But in terms of the corporate equity share, it has, to my mind, reached its target and been successful.
But, quite apart from that, the point that I'd like to stress is that, in no other country in the world, has a marginalised community such as the Malays come up so quickly and attain this position of, economic and social and political, I wouldn't use the word "dominance", but success. Amongst all the countries in the world, the rise of the Malay middle-class and upper-class has been unrivalled.
But at the same time, the poor Malays continue to be poor?
There are many poor Malays and they continue to be poor. And we should prioritise this issue but continuing with the system of corporate equity distribution doesn't help the poor Malays. Giving places in the elite schools, scholarships to middle-class and upper-class, the children of middle-class and upper-class Malays who have benefited from the NEP does not help the poor Malays.
So, what the centre is advocating, and we're not the only ones, is that we need to change our strategy of development which is race-based to one which is race-neutral and more class-based.
What about the criticisms that you shouldn't be using GLCs (government-linked companies) as part of the calculation of corporate equity ownership?
You know, if you want to go into the calculation of it, if you take out the GLCs, like they said. If you take the Malay share of it, of companies, limited companies, and if you add in the Malay part of the nominee, it's 18.9% plus another four or five already. So, you're bringing it up to about 23% or 24%.
And also that doesn't take into account the foreign part of it which may have Malay proxy shares - Malay ownership using foreigners as proxy.
But, perhaps we don't need to get into the details of it (here). We're more than happy to have an open discussion about methodology with anyone.
What kinds of feedback were you hoping for that you thought might be constructive in terms of using this report more effectively?
Well, we were hoping that, as we indicated in the report, our database is, has been limited and we hoped that there would be fuller access to data provided by the authorities. We hoped that the authorities when they undertake their work will come out with a fuller, if not complete, explanation of how their statistics are derived.
We think that this kind of exchange would be more important. There's also the issue of the impact of the bumiputra quota of 30%. Now, there has been very little said in the official reporting on this, but there's very clear evidence that this 30% or more has accrued in the hands of a very small group.
So, we hope that the discussion can be widened into the areas of how to ensure that equity wealth, for example, can be more widely shared with a much larger circle of Malaysians. We hope that the issue of rent-seeking and market distortions which have come about as a result of this ruling can be dealt with. In other words, we welcome a full discussion of all the complex dimensions of this issue from technical, to social to political.

Full statement released by Asian Strategy and Leadership Institute (Asli)'s Centre for Public Policy Studies (CPPS) director Dr Lim Teck Ghee:
Encik Mirzan Mahathir, President of ASLI, yesterday issued a press statement on the study conducted by the CPPS on "Corporate Equity: Past Trends and Future Policy". The ASLI statement was in response to various comments arising from the study's finding on the level of Bumiputera equity ownership. As Director of the CPPS, I take full responsibility, and stand by the findings of the study and the other studies that were submitted in our report to the Government on the 9th Malaysia Plan in February 2006.
Since I cannot agree with Encik Mirzan's statement, and because of the need to defend the position and integrity of independent and non-partisan scholarship, I regret to inform that I will be stepping down from my position as Director at the end of the month.
I hope the public space opened up by the Centre's work on this particular, as well as other important, issues will be expanded on and vigorously defended by others. It is the fundamental right of the Malaysian public to question all government statistics and policies, more so when these are not transparent or defensible.
I would like to thank ASLI for giving me the opportunity to work with it in providing service to the country.
Dr. Lim Teck Ghee
11 October 2006

Mingguan Malaysia reported that Umno vice-president Tan Sri Muhyiddin Yassin wanted the Asian Strategic and Leadership Institute (Asli) to retract its 45% bumiputra equity ownership estimation.
Muhyiddin said the report was a challenge to the Government’s integrity and described the report as irresponsible and “rubbish”.
He said the Government should take action against Asli if it failed to retract the report.
He said Asli should also admit that the report was wrong to prevent a polemic that would affect racial unity.
“The report is rubbish and cannot be used. As a Malay, I am angry and I think it was done with malice.
“The report may have an agenda that aims at forming a polemic among those who believe the report to be true. They will definitely blame the Government for revealing the wrong facts,” he said.
(Extracted from The Star Online of October 9, 2006)

Asli president Mirzan Mahathir, who had earlier retracted the report, was interviewed by V. Vasudevan of Business Times:
Q: Why did it take so long for you to realise that the study was flawed? From March until now, that is quite some time.
I must admit I was given a copy, but I did not go through it in detail. It slipped past me. If I had, I would have queried it. Dr Lim Teck Ghee (Centre director) was convinced it was correct and it was submitted...
Q: Were you pressured into questioning the findings of the study?
Nobody called me up and said ‘Look, you have to back down’. We just felt that we had to look after the interests of Asli...
Q: Where did the report go wrong?
I feel some of the statements in the report were not substantiated. There was no flow in the report...
For example, if you say that government-linked companies are considered Bumiputera companies, there should be justification. This is a 20-page report. There is no reference as to why a GLC should be considered a Bumiputera company...
(Extracted from Business Times of October 13, 2006)

"...What is most unfortunate about this incident is that the genuine attempt by the CPPS and its director, Dr Lim, to foster new research and debate on issues of crucial importance to the nation has been so thoroughly undermined.
The resignation of Dr Lim from the CPPS was a noble act, for by so doing he has refused to concede to the totally unwarranted demands that the centre retract its report and admit that it was a flawed scholarly exercise. The denunciation of a report that was aimed at helping to generate a serious review of public policies may now deter other academics from pursuing similar research for fear of inviting an adverse reaction from the government.
This incident does not augur well for the government as the CPPS report was undertaken solely in the spirit of responding to the prime minister's call to all Malaysians to speak the truth to him."
- TERENCE GOMEZ, research coordinator at the United Nations Research Institute for Social Development (UNRISD) in Geneva and associate professor of political economy at the Faculty of Economics, Universiti Malaya.
(Extracted from his analysis in Malaysiakini of October 12, 2006)

KUALA LUMPUR, Malaysia Malaysia's decades-old affirmative action policy is still needed to help ethnic Malays improve economically, but the government will be fair to other races, Deputy Prime Minister Najib Razak said Friday.
Najib said the government stood by its statistical claims that Malays control only 19 percent of Malaysia's corporate equity, despite a controversial study by an independent think tank that claimed the figure was as high as 45 percent.
The report by the Asian Strategy and Leadership Institute, or ASLI, sparked a furor because it suggested the government's system of privileges for Malays in areas such as government jobs, housing, bank loans and contracts may be misplaced...
On Friday, Najib denied the government pressured ASLI to withdraw the report and defended its data. "The government still maintains our figure ... these are the correct figures," he told reporters...
(Extracted from an AP report published in the International Herald Tribune of October 13, 2006)

PETALING JAYA (Oct 13, 2006): The government's rejection of the report on bumiputra corporate equity published by Asli's Centre for Public Policy Studies, which challenges the official data, has sent the wrong signal that dissent is not tolerated and honest pursuit of knowledge discouraged, says state executive councillor Datuk Dr Toh Kin Woon...
Toh, a University Malaya-trained economist and Gerakan central committee member, said this was a sad development and seemed at odds with the government's professed aim of wanting to make the country a more open, transparent and liberal society...
"His resignation was due to the unprincipled position taken by Asli president Datuk Mirzan Mahathir that the study done by CPPS was based on so-called 'faulty assumption' and hence its conclusions 'faulty' as well.
"Dr Lim disagreed and stood by his methodology. Being the honest scientist that he is, he took the honourable way of resigning, rather than meekly complying with the views of his president.
"His stand is a very refreshing departure from the culture of compliance and subservience that the ruling elites in our country attempt to cultivate," Toh said.
(Extracted from Sun2Surf of October 14, 2006)

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