Malaysia Toward an Islamic State
1. INTRODUCTION
The unit trust scheme known as Amanah Saham Nasional (ASN) is a scheme for mobilising Malay savings for equity investment. It was launched in 1981 as a major vehicle for implementing the transfer of corporate assets held under trusteeship to the Bumiputera. Unlike BIMB and TH, ASN is aimed mainly at improving the economic conditions of the Bumiputera, especially the Malays and therefore, the ethnic aspects overshadow the religious ones. Nevertheless, as the relationship between Islam and Malayness are so intertwined, ASN has also been associated with the Islamisation package of Dr. Mahathir.
As discussed in the previous chapters, the government adopted the NEP to restructure society so that the economically backward Malays would be able to own at least 30 per cent equity in the corporate sector. Previous experience shows that the Malays were more interested in capital appreciation than in equity ownership. In other words, the shares allocated to the Malays were sold when the price went up, thus defeating the objective of the NEP. Research also indicated that when Malay shareholders sold their shares, the proceeds were used for consumption and not for investment purposes.
In order to find a more effective way of achieving the aims and aspirations of the NEP, the Government established a Working Committee in 1977 under the chairmanship of Tun Ismail Mohamed Ali. The committee drew up policies for the establishment of a Bumiputera Investment Fund. Among these were:
a) The information of a fund as a business entity with the authority to invest in all forms of investment and the authority to obtain loans;
b) The establishment of a unit trust fund to distribute these investment to the Bumiputera community
As a result, the Bumiputera Investment Foundation (BIF), or Yayasan Pelaburan Bumiputera (YPB) was set up on 9 January 1978 under the Companies Act, 1965, as a company limited by guarantee. The YPB provides funds for the purpose of subscribing to shares in companies which wish to issue their shares to the Bumiputera community in compliance with the NEP. It also formulates policies and guidelines for Bumiputera equity investment participation. It has acted as a catalyst in encouraging the savings habit, developing entrepreneurship and investment skills among the Bumiputera community.
To further the YPB's objectives, in March 1978, the National Equity Corporation
(NEC) or Permodalan Nasional Berhad (PNB) was incorporated as a wholly
owned subsidiary of the foundation. PNB is a commercial organisation, managed
by professionals who are responsible for selecting and operating the portfolio of shares of limited companies in Malaysia to be
held in trust
for subsequent sale to individual Bumiputera investors. In May 1979, National
Unit Trust Limited also known as Amanah Saham Nasional Berhad (ASNB) was
then incorporated as a wholly owned subsidiary of PNB to establish and
manage a National Unit Trust (NUT) or Amanah Saham Nasional (ASN) scheme
as an intermediary for the channeling of
shares to
the Bumiputera community .
To launch ASN, the Government instructed the Bumiputera companies (eg. PERNAS) and statutory bodies (eg.SEDCS) to sell part of their equity portfolios to the PNB at book value. Thus, it was reported that PERNAS had to suffer a substantial loss for the year 1982 because it had been forced to transfer more than RM 1 billion of assets to PNB. This government-imposed sale of assets resulted in serious opposition from PERNAS and other affected Bumiputera Companies.
2. ASN SCHEME: SOME SALIENT FEATURES
The main features of the scheme have been carefully devised to encourage the widest possible individual participation based on PNB's preparatory research to ascertain the socio-economic profile of the typical Bumiputera unit holder. At the same time, incentives are provided in the scheme, as a form of savings and investment. Therefore, the scheme does not have exactly the same features as other ordinary shares. In ordinary shares, the buying and selling prices of each unit are quoted on a daily or weekly basis. The unit-holder, as a risk-taker, can expect to make capital gains in addition to a certain level of investment yield as dividend. It is the prospect of capital gains rather than investment which is the typical motivation behind participation of in such shares. Unlike ASN, until 1991, the scheme holder could only resell their units to ASNB at the original par value of RM . This condition was designed to build a strong Bumiputera equity ownership.
The ASN scheme is based on a clear separation of equity ownership from corporate control. Ownership is controlled by its unit holders, but they do not have the right to appoint or change the managers. Immediate control, as distinct from ultimate control, including decisions regarding the investment portfolio, rest with a management team appointed by PNB and the YPB. By way of compensation for this separation of ownership and control, unit- holders were guaranteed a minimum annual dividend of 10 percent until 1990. In addition, the first RM 400 of investment income is tax-exempt resulting in earlier yield of up to 15 percent.
3. PROGRESS AND DEVELOPMENT
The year 1990 marked the passing of an important phase in the operation of PNB. During the past decade, the operations of PNB have been expanded and its original objectives have been achieved. PNB started the decade as an investment organisation and by 1990, it had grown to become an important institution for the mobilisation of Bumiputera savings.
In December 1990, ASN had a total of 2,460,977 unit holders as compared with only 841,200 on 31 December 1981, the year which ASN was launched (PNB Annual Reports 1981 and 1990). Net investment of ASN unit holders rose from RM 299.1 million as of 31 December 1981, to RM 8, 511.4 million as of 31 December 1990. Through prudent investment of the portfolio of ASN, the unit holders been rewarded with satisfactory returns. During the decade, the return on investment ranged from 13 percent to 20 percent a year comprising dividends and bonus units provided by the PNB. The total dividends and bonuses paid out to unit holders rose from RM 75.4 million in 1981 to a cumulative amount of RM 4,135 on 31 December 1990 (PNB annual report 1990).
In December 1990, the PNB appointed an independent actuary to survey the investment return of pooled funds and savings institutions in Malaysia over the previous 10 years. The results of the survey showed that ASN provided the highest annualised rate of return on investment. As an example, an annual investment of RM 1,000 a year in ASN from 1981 would have accumulated to RM 31,762.67 on January 1991.
In view of the growth of PNB during the last decade up to 1990, it undertook a strategic review of its operations. As a result, various programmes were implemented which would provide the necessary preparations to position PNB and to enhance its expected role in the decade of the nineties.
A major work program was to enable transactions in ASN to be conducted at variable unit prices from 2 January 1991 as specified by its Deed of Trust. Another project was the launching of a new scheme called Bumiputera Trust Scheme (Amanah Saham Bumiputera or ASB) on 2 January 1991 with a fixed transaction price. This was to enable Bumiputera unit holders to continue investing in a scheme with a similar features to that of ASN before the latter commenced operations based on market prices on 2 January 1991.
In 1991, PNB faced a new challenge, that of managing two unit trusts with different characteristics. The challenge included transforming ASN, the original scheme, into a conventional unit trust scheme while at the same time promoting ASB, a new scheme with guaranteed buying and selling prices similar to the old pre-1990 ASN.
On 2 January 1991, ASN began transactions at variable unit prices. ASN's pricing is subject to the market performance of the shares of companies quoted on the KLSE. The new pricing system thus requires unit holders to follow the movements of share prices on the KLSE and the various factors affecting them. The new pricing was well received by unit holders as reflected by the overall performance of ASN in 1991. As of 31 December 1991, the total number of unit holders in ASN was 1,310,499 with a total investment of 1,666.82 million units (PNB Annual Report 1991: 11) ASN unit holders have also begun to adapt themselves as investors to the new pricing arrangement and have been able to take advantage of the capital appreciation of ASN units as indicated by the large number of units sold, when they considered the prices to be attractive.
To ensure separate management of ASN's investments, a new company, Pengurusan Pelaburan ASN Berhad (ASN Management Investment Limited) was incorporated on 20 June 1991. This separate structure enables the investment managers of ASN and ASB to concentrate entirely on their respective portfolios.
PNB's main investments is in four main sectors, i.e. industry, plantation, mining, property and finance (PNB Annual Reports). Its sources of investment can be divided into four:
a) Purchases from stock-market and institutions;
b) Allocation of shares through companies;
c) Restructuring from the Ministry of Trade and Industry;
d) Transfer Scheme from government to Bumiputera
ASN: CONNECTION WITH ISLAMISATION
As stated in the previous chapter, Dr. Mahathir seems to show much concern in promoting Malay capitalism and development. He is seen as a champion of Malay rights and has tried very hard to convince the Malays that their economic condition can be uplifted if they possess the right attitude and get proper opportunities. Compared with other PMs, it could be stated Dr. Mahathir has a strong interest in Islam and has always associated Islam with Malay economic development. Islam has been seen as the basis for change and modernity. Therefore, ASN (along with BIMB and TH) is a tool to develop Malay Muslims especially in fulfilling the aspiration of the NEP, i.e. 30 percent Malay equity ownership of the corporate sector:
