Bumiputera Congress: Don’t dwell on poverty, focus on start-ups

Will it look after the interests of the marginalised?

With the Bumiputera Congress about to commence this week, all eyes and ears will be focused on what remedies will be promoted to lift up the marginalized in the B40 group out of poverty.

The marginalized Bumiputeras are domiciled in rural and semi urban environments, where development is behind the rest of the country, and consequently exhibit sluggish economic growth. Most inhabitants live on modest family incomes, where there are elevated levels of poverty. Its most likely only some of the younger generation have undertaken any post-secondary education.

Common to all these areas is the perceived lack of economic opportunity, which allows poverty to continue on, from generation to generation.

This cohort of Bumiputeras are grossly disenfranchised. The effects of the New Economic Policy (NEP) have not reached these communities. Consequently, people living in these areas significantly lack resources, and are unable to borrow. They also don’t posses any other forms of capital, or at least capital that could be utilized to earn any meaningful income. They lack skills and the capabilities needed to embark upon any new business enterprise. They lack the networks needed for any such business, so don’t have the opportunities that other Malaysians may have.

This is the poverty of lack of opportunity, a poverty that brings with it a sense of hopelessness and despair.

Members of the forthcoming Bumiputera Congress must not be lured into any false sense of reality while drinking lattes in cafes around the venue. According to Khazanah Research, the size of the informal economy back in 2019, before the Covid pandemic was 34-39 percent. This would be higher in the regions I am talking about.

Another estimate from the Malaysian Department of Statistics put the informal economy at 3.5 million people in 2021. Informal employment was 57 percent of the workforce.

Which figure one takes doesn’t matter, the informal economy is the key in raising the prospects of Bumiputeras. However, this is a complex problem and must be solved with complex solutions, that are varied to suit the different geo-socio-economic terrains of the Malaysian economy.

There is a solution

There is a solution but it won’t come from Industry 4.0, online and virtual marketing channels, or university education. The problem won’t be fixed by handouts, subsidies, or giving GLCs social responsibility to assist. Obtaining FDI to build factories in these areas, will only attract foreign workers. None of these are silver bullets.

Malaysia must embark upon a drive to nurture new entrepreneurs, who can become self-sufficient and add value to the regions they live in. Adding value is the best way to improve productivity, which is currently a major issue facing the Malaysian economy.

This means educating marginalised people and reframe the way they think. They must learn (entrepreneurship can’t be taught) to think entrepreneurially. This means they must learn to think strategically, practically, how to acquire resources, develop capabilities, and to be able to network. This is the entrepreneurial mindset.

We know the university system has failed to achieve this. The TVET system would be a much better forum for entrepreneurship learning. Yet this must be completely reconfigured, so that people are assisted to think the way an entrepreneur should, and later run their business when it is established, which requires yet another set of skills.

However, nurturing an entrepreneurial mindset is only half the story. People need to be taught a craft, technical skills, and have access to technology they can use, which requires minimal capital.

Thus, any entrepreneurship courses must be grounded in both mindset and the technology they will need.

This will definitely not be Industry 4.0 technology, but rather appropriate technology, that is homebuilt on a shoestring budget. University research could play a massive role here and work directly with these novice entrepreneurs. Research grant schemes must be restructured accordingly.

There also needs to be new ways to finance, where community banking could be introduced. Community banking has been very successful in neighbouring countries, it should also be successful in Malaysia.

This is a new vision for Bumiputeras. This will empower the marginalized. The risk in the coming Bumiputera Congress is that it may focus upon the Bumiputera community, which is already wealthy.

The solution is not about calling for more research into the marginalised, but move straight into action research, producing new start-ups in marginalised Malaysia straight away.

This is my hope for the Bumiputera Congress.

Originally published in FMT 28th February 2024.

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