Open letter to delegates of the Bumiputra Economic Congress

I agree that the economic status of the bumiputra community in Malaysia is still lagging compared to the ethnic minorities.

This fact is displayed in the figures of total Employee Provident Fund savings by ethnic breakdown, before and after the first movement control order. These statistics were reported in the House of Representatives in early 2023.

Because of this reality, it is necessary that we craft measures to handle the economic problems faced by the ethnic Malay and other indigenous communities. I hope that this economic congress will come up with effective policies. (Stating this is not to deny that there are also ethnic minority groups who are poor and are facing economic problems).

To enact accurate and effective policies, it is essential to first understand the causes of poverty in the bumiputra community. Based on my experience as the Sungai Siput MP for two terms, the causes of poverty in the Malay community there are:

1. Lack of job opportunities

Although there are many job opportunities in the plantations, the Felda scheme in Lasah and in the factories in Sungai Siput and in the adjacent Kanthan industrial area, unemployment is a major problem for the Malay community in Sungai Siput.

Factory employers are predisposed to hire foreign workers because these foreign workers will work 12-hour shifts continuously. Foreign workers are also easier to control as they are afraid to question the employer, for example, if the overtime payment is wrongly calculated.

Oil palm harvesting contractors, small farmers and fish breeders prefer to hire undocumented migrant workers because this group can be paid much lower wages. And in Malaysia, there is no short supply of this category – we have three to four million undocumented migrant workers.

The oversupply of undocumented foreign workers pushes wages in the informal sector to below the minimum wage level and is a major reason why the bottom 40% of Malaysians face difficulties in finding decent work with reasonable wages. The Bumiputra Economic Congress should address this issue.

In my analysis, the main reason for this oversupply of labour is because the migrant labour importing agencies earn RM 5,000 to RM 10,000 from each foreign worker they bring in. So, they use their strong ‘cables’ with the Ministry of Home Affairs and the Immigration Department to get inflated quotas and thus make good profits, but as a result, the bottom 40% of locals (ethnic Malays and Indians as well) face difficulties in finding work.

2. Weak gross demand among the Malay community

Entrepreneurship is promoted by several government agencies as a way to escape from poverty. There are several hundred small traders in Sungai Siput. They run stalls in the night market and on the sides of roads in the village areas. But the majority of them get small and uncertain returns and continue to be enmeshed in poverty. The problems they face are:

• Their customers, the kampong folk, earn low incomes. Thus, they are unable to buy many products
• There are too many stalls selling the same products.

Due to anaemic demand, the net income of most small traders in Sungai Siput (and I believe in many areas throughout the country) does not even reach RM1,500 per month, and they remain poor.

3. The dishonesty of contractors who are given the responsibility of implementing projects or policies to ‘help’ the villagers

Two examples:

• The replanting of oil palm has, in many Felda schemes, been ‘outsourced’ to private companies. The agreement between Felda settlers and the replanting company is that
  • The company will bear all costs of replanting
  • The company will pay a monthly stipend of RM1,500 to the settler until the smallholding is returned to the settler to manage
  • The smallholding will be managed by the company and the produce sold to cover the cost of replanting and to settle the Felda settler’s debt to the replanting company
  • The smallholding will be returned to the settler to manage once the debt has been paid up

The problem with this arrangement is alleged fraud in the accounting process – returns from the sale of produce are not recorded in full, but the expenses of managing the plantation are fraudulently augmented. Hence, the settler’s debt takes a long time to be paid back.

Felda, a good scheme targeting rural poverty, has been hijacked by replanting companies (with the cooperation of the Felda management).

• The replanting of rubber plantations has also been outsourced to contractors certified by Risda, the rubber industry smallholders development authority. These contractors are paid to replant rubber smallholdings using high-yielding clones. These clones have to be purchased by the contractor. Many rubber smallholders complain that contractors have cheated by using normal rubber seedling to save costs and increase their profit margins, instead of the high-yielding clones they were supposed to use. Similar things happen in many of the other programmes that have been enacted to help poor bumiputras, such as the supply of fertiliser to rice farmers, the rice floor price guarantee scheme and the PPR house-building programme in village areas. Programmes to help the poor bumiputra have now been turned into a source of quick profits for the contractor group.

Class differentiation in bumiputra community

The bumiputra congress delegates should remind themselves that the bumiputra community has evolved in the past 60 years and now exists as various strata and classes.

At the peak of the community are the millionaires, politicians and CEOs of large government-linked companies.

At the second level are the professional groups – lawyers, accountants, doctors, engineers, professors – and government employees with a monthly salary exceeding RM10,000 per month.

The total of these two upper classes is about 20% of the number of bumiputras in the workforce. They make up the top 20%.

Below this top 20% layer, there is the middle 40% layer, with monthly incomes between RM 3000 and RM10,000. They consist of government employees, employees of large companies and small traders.

The next strata is the bottom 40%, who are made up of lower-grade government employees, factory workers, government-linked company and private company workers, gig workers, micro-business people, contract workers in schools, hospitals and other sectors, farmers, fishermen, young people who are looking for work, those who do ‘village work’ (kerja kampung) and the unemployed.

One of the questions I would like the to ask the delegates of the economic congress is – are the economic problems of the bottom 40% and middle 40% of the bumiputras the focus of this congress? Or are the interests of the top 20% layer the main focus?

This question should be taken seriously, because the interests of the different strata are different and, in some cases, there are conflicts of interest. For example,

• A small number of bumiputras control the companies that bring in excess foreign workers and depress the wages of the bottom 40% bumiputra layer, making it difficult for the bottom 40% to find work with a decent salary
• A small number of bumiputra investors and managers of private hospitals promote the development of private hospitals. This increases the exodus of specialist doctors from government hospitals and affects the quality of treatment for the bottom 40% and middle 40% of bumiputras who depend on government hospitals
• Several thousand bumiputra businessmen who get school and hospital cleaning contracts are oppressing bumiputra and other workers by not complying with the minimum wage, cheating in EPF payments and overtime calculations, etc

Which is the bumiputra category that will get the support of the congress when there is a conflict of interest – the millionaires and contractors, or the bumiputra marhaen [ordinary people from the lower social classes]? Will such cases of conflicting interests be identified and discussed?

One last question – wouldn’t it be better for the bottom 40% of bumiputras if we returned to Abdul Razak Hussein’s approach, which implemented programmes to help the bumiputra poor through non-profit government agencies?

Under Dr Mahathir Mohamad’s administration, almost all schemes to help poor bumiputras were outsourced to private contractors to manage. And as described above, the non-transparency and abuse of power have become the norm, and the intended assistance does not fully reach the target groups.

I hope the issues raised in this brief letter will be taken into account in the Bumiputra Economic Congress which starts on 29 February and that the bumiputra marhaen will get some benefits from this congress.

This is a slightly edited version of the original open letter

The views expressed in Aliran's media statements and the NGO statements we have endorsed reflect Aliran's official stand. Views and opinions expressed in other pieces published here do not necessarily reflect Aliran's official position.

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