Yesterday I described the politicising of the distribution of ASB income as both malicious and ignorant.
But the Government too needs to consider a few improvements to ASB as per its original aims to increase the economic wealth of the Bumiputera community and contribute to national growth and prosperity for the benefit of all Malaysians. The need to improve has existed for quite some time, and did not just come about during New Malaysia.
There are a few facts regarding ASB that needs us to refocus on the poor and middle-class Malays, not the few rich elites.
Nearly 80 percent (7.4 million) of ASB unitholders have units worth less RM5,000 in 2018. A small 0.24 percent has RM500,001 and above.
The B40 and M40 of ASB unit holders have only RM4.1 billion whereas the top 9.15 percent has RM127.5 billion in the unit trust fund.
Thus while nationally our Gini coefficient (the measure of inequality) has improved from 0.513 in 1970 to 0.399 in 2016, but the Gini coefficient in ASB is a staggering 0.84 or highly unequal.
There is a need to consider capping dividend pay out to the maximum allowable investment (rather than basing it on the actual account balance, even when it exceeds the maximum allowable investment of RM200,000). The former benefits everyone, but makes it insanely tough for PNB to properly mark the investments to market, and the latter benefits the richest 10 percent of depositors, who account for something like 60 to 70 percent, if not more, of the ASB fund pool.
One move that could be considered in the medium term is for ASB dividends to be tiered, with unitholders classified as socio-economically in the B40 and M40 groups be given higher dividends than their T20 counterparts. The Singapore Central Provident Fund operates on a similar basis.
This move should not be considered as an attempt to “penalise” or “punish” T20 Bumiputeras, especially if they have been willing and able to save their money as well as support the ASB.
Rather, it is, as noted, to ensure that the ASB becomes an efficient engine to uplift B40 Bumiputeras and give the M40s an added boost when they need it.
The fact is that, contrary to conventional wisdom, wealth disparity is multi dimensional: including between the ethnic groups, but also within each ethnic group— Bumiputeras included.
There is hence no point in having high ASB dividends if it simply makes the T20 Bumiputeras richer while the B40s and M40s cannot catch up.
Loan schemes by banks for Bumiputeras to borrow and invest in ASB should also be reconsidered as there is a concern that it will exacerbate the situation if the global and local market take a further turn to the worse. Banks should not benefit from the losses of the common rakyat.
There’s no use creating or obtaining wealth for the Bumiputera if it is concentrated in the T20, or if such wealth is distributed in a way that dilutes its effectiveness.
Changes are needed to ensure that the wealth that PNB generates will be impactfully and visibly applied, i.e. by moving the B40s and M40s forward.
It also goes without saying that any change will need careful study with careful engagement and communication. More often than not, New Malaysia has not been effective in this regards. This is even more so in such sensitive and emotive issues such as ASB and the Bumiputera economy.
I hope that the Ministry of Economic Affairs, Yayasan Pelaburan Bumiputera and PNB will give this matter careful consideration as we move into the year 2020.
NIK NAZMI NIK AHMAD
KEADILAN CHIEF ORGANISING SECRETARY
KEADILAN CENTRAL LEADERSHIP COUNCIL MEMBER
SETIAWANGSA MEMBER OF PARLIAMENT