SIX years after its creation, the Bumiputera Agenda Steering Unit (Teraju) boasts impressive numbers by way of accomplishments. As at last December, the unit claims to have delivered RM95.7 billion in overall value against RM2 billion in federal funding.
However, the RM95.7 billion figure is based on a very broad and generous definition of “value creation” as most of the amount is not a direct impact of the use from Teraju’s funding. Instead, it takes credit for various indirect results of its coordination and collaboration efforts with other agencies and parties.
For example, such “value creation” includes a claimed RM45.54 billion from the total contract value won by bumiputera companies in mega projects. Teraju takes credit for the contract awards as it says it had negotiated the carving out of a specific proportion of available contracts to be allocated exclusively to these bumiputera players.
Another example includes private bumiputera investments amounting to RM14.09 billion. The unit says it facilitated these investments via its facilitation fund grants.However, the total value of approved grants from Teraju’s fund only come up to RM1.6 billion.
When The Edge asked for the direct impact from the use of its RM2 billion in funding, Teraju declined to provide specifics and reiterated that the value created was RM95.7 billion.
In any case, the claimed achievements surpasses founding CEO Datuk Husni Salleh’s expectations. Starting out six years ago, he said the mandate was given to him on short notice and he effectively only had a little over a month to formulate a framework for the unit.
“Just a few days before Christmas 2010, I was dropped this surprise,” he recalls in an interview with The Edge. “On Feb 8, 2011, just slightly over a month after my meeting with the prime minister, we set up and launched Teraju.”
The first three years, in what he sees as Teraju’s first phase, was a journey of trial and error. When it was launched, Prime Minister Datuk Seri Najib Razak said Teraju was tasked with driving, coordinating and driving initiatives to enhance the bumiputera development agenda.
For the CEO, the immediate question from the get-go was clear: “Many many agencies, initiatives, programmes had been done, so what difference can we make this time around?”
After a quick assessment of the situation via engagements with consultants, numerous high-level meetings and feedback from the Performance Management and Delivery Unit (Pemandu) on bumiputera disparity, Teraju inherited several programmes from existing government entities and set out to increase their effectiveness while formulating its own initiatives.
The initiatives range from grooming entrepreneurs and helping them kick-start businesses to accelerating the growth of high-potential companies. Of the RM95.7 billion, the bulk of it came from RM71.6 billion in business opportunities created through several initiatives for corporates and RM16.56 billion via various funding and human capital programmes.
Other value creation include via grants through the aforementioned facilitation fund to ease bumiputera investments. To date, Teraju has provided grants of up to 15% of individual project cost to 485 projects nationwide, ranging from manufacturing to tourism and services.
Among the programmes it inherited is the Jejak Jaya Bumiputera Scheme, which aims to help float bumiputera companies. Teraju takes credit for nine Bursa Malaysia listings since it took over from the Finance Ministry, the latest being Serba Dinamik Holdings Bhd, which debuted on Bursa Malaysia in February.
However, Teraju also came under fiery criticism from the beginning. Among others, it was accused of being a successor to the much-criticised New Economic Policy (NEP), the affirmative action policy implemented from 1971 to 1991 to address an economic gap between bumiputera and non-bumiputera communities at the time.
In addition, Teraju’s creation also took many by surprise. Its launch in February 2011 was just 11 months after the prime minister unveiled the New Economic Model (NEM), a national economic plan that, among others, aims to offer more targeted assistance to the bottom 40% regardless of race.
Critics say the decision to create Teraju has effectively undermined the NEM, with some wondering whether it was a response to pressure from Malay nationalists who were unhappy at NEM’s lack of bumiputera leaning.
However, Husni disagrees with the connotation that Teraju is a successor to NEP. Instead, he sees the mandate as “embracing the NEM more comprehensively and inclusively” as the disparity that NEP sought to address remains today.
The fact that bumiputeras represent a majority of the population means any larger plan to help the community must be considered a national agenda, he adds.
“You can’t have one country where the income of the majority of the people is so much lower and trailing all the others,” he stresses. “How do we improve the economy without raising the domestic consumption, empowering and raising the income of the majority segment? You can’t.”
‘Numbers don’t matter’
Six years on, Teraju may have some numbers to boast about. However, Husni feels the urgency of the agenda transcends measurable impact.
“To be honest, it does not matter to me whether it is RM95 billion or whatever the figure is. But the key thing is, how do we move this bumiputera agenda forward? That is most important,” says Husni.
Teraju’s biggest measureable impact today is on the corporate landscape. From the RM95.7 billion in value creation, RM45.5 billion came from its Carve-out and Compete (COC) programme.
In a nutshell, the COC programme is designed to increase bumiputera participation in local mega projects by carving out segments for bumiputera players only. These players would then compete with each other to win contracts on merit.
For instance, in the mass rapid transit (MRT) Sungai Buloh-Kajang line project, some 47% of the work packages worth RM9.1 billion were allocated to 159 bumiputera contractors via the COC.
There are 13 other mega projects linked to COC, including the RM32 billion MRT Sungai Buloh-Serdang-Putrajaya line and the RM16 billion Pan Borneo Highway project, Husni says.
The COC implementation illustrates a core philosophy behind Teraju’s various initiatives — fostering competitiveness among the bumiputeras. In short, Teraju seeks to avoid the distributive approach of NEP by only helping players who are willing to work hard.
“We want to make sure that everybody embraces the competitiveness. If the government gives a little help, the recipients have to put in much more effort,” says Husni, adding that it is about picking out “winners. Let’s work with the winners”.
In a similar vein, another example Husni cites in how the unit creates value is via its High Performing Bumiputera Companies (Teras) Programme. It currently spans 1,014 bumiputera companies with high potential to be groomed for further growth.
According to Husni, the collective annual turnover of the 1,014 companies currently amount to about RM40 billion. For these companies, one of the issues identified by Teraju is that adequate funding may be difficult to obtain as collateral is an issue.
“So we arranged some RM300 million from the government as collateral” under a financing scheme with more favourable interest rates, at about one to two percentage points below the market average rate, Husni explains.
The idea is that with the fixed deposit as collateral, banks would have a buffer to draw upon should any of the companies default, the CEO adds.
“We raised, I think, over RM3 billion through this using only RM300 million plus funds that we have with the bank. To date, there’s about RM1.4 billion, that has been drawn down,” Husni says.
Corporate focus
However, the corporate impact may spark criticism that Teraju is disproportionately focused on the corporate side of the agenda as opposed to the bumiputera person on the street.
That contrasts with one of the principles driving the Bumiputera Economic Transformation (BET) roadmap — launched in November 2011 — which aims to uplift the bottom 40% of Malaysian households economically.
Husni disagrees, saying Teraju also has numerous programmes aimed at the non-corporate side with some successes so far.
“When we started out, we didn’t know what was to come either,” says Husni. “We were learning day by day, in terms of what [initiative] works and what does not work.”
Among others, Teraju became a coordinator, working to get fragmented and overlapping bumiputera-centric initiatives nationwide to start moving together in lockstep.
Since 2011, it has signed over 130 collaborative agreements with various agencies. One effect has been the consolidation of over 400 entrepreneurship training programmes — spread across four ministries and 16 federal agencies — into 240.
It also implemented a key performance indicator (KPI) initiative among federal ministries and major GLCs to align bumiputera initiatives based on each ministry’s core functions and reduce overlap. The initiative is entering its third year now.
Is there an endgame?
As Teraju begins its seventh year of existence, Husni sees a new phase ahead for the strategic unit. It begins with a series of discussion labs with all 25 government ministries in early March to further streamline their coordination.
The focus will be amplification of what Teraju has been doing, the CEO says, for a broader impact nationwide and across more sectors. “We’ve learned a lot of lessons and we should now use the good parts of what we have done to just really enhance [our programmes further],” Husni says.
However, that raises another question: Is there an endgame that Teraju would seek to accomplish so that one day it would no longer be needed?
Husni feels six years is too short to gauge the impact of the current agenda and declines to speculate on what the ideal longer-term goals may be. He prefers to focus on the execution of Teraju’s plans and says he will leave it up to the prime minister’s judgement.
That said, Husni believes the bumiputera agenda will remain as it is going forward, albeit with evolving implementation. “Nothing is perfect, we just have to fix it along the way. This is what we are doing.”
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