Government launches PuTERA35 – the new Bumiputera Economic Transformation Plan

27 August 2024

The Prime Minister of Malaysia, Dato Seri Anwar Ibrahim, launched PuTERA35, the new Bumiputera Economic Transformation Plan 2035¹ on 19 August 2024.

Background

PuTERA35 is a comprehensive plan developed to provide opportunities for the Bumiputera² community to take advantage of sectors and industries that are focused on by the Government, especially the high growth high value (“HGHV”) sectors based on advanced technology. Eleven sectors of potential for Bumiputera have been identified. These include, inter alia, the Energy Transition-Based HGHV Industry, Technology-Based and Digital HGHV Industry, High value HGHV Electrical & Electronics Industry, HGHV Agriculture and Agro-based Industry, Halal and Food Industry, Islamic Finance-Based Professional Services Industry, Healthcare Services and Venture Capital and Private Equity Industry.³

PuTERA35 also identifies and seeks to redress structural issues, such as education, training and skills development to improve the economic and social well-being of the Bumiputera.

Recognising that Malaysia is a multiracial and multicultural society, the Government has stated that PuTERA35 is not exclusive to Bumiputera, but also provides spillover benefits to other races.⁴

Below are the highlights of PuTERA35:

Theme and Vision

The Theme of PuTERA35 is “Meaningful Bumiputera participation, ownership and control” whilst the Vision of this plan is “To uplift the status and dignity of Bumiputera”.

Cores, Thrusts and Initiatives

PuTERA35 is supported by the following three core areas:

Core 1 : Strengthening the economy;
Core 2 : Edifying governance and institution; and
Core 3 : Upholding social justice.

The three Cores are underpinned by 12 thrusts (or drivers) as set out in the Table below:

PuTERA35
Core 1 Strengthening the Economy	Core 2 Edifying governance and institution	Core 3 Upholding social justice
Thrust 1 Economic control	Thrust 6 Service delivery and governance	Thrust 9 Eradicating hardcore poverty
Thrust 2 Better competitive advantage and economies of scale	Thrust 7 Participation of private companies, GLCs and GLICs⁵	Thrust 10 Strengthening the social security system
Thrust 3 Talent development and strengthening the education ecosystem	Thrust 8 Realising the Bumiputera philosophy	Thrust 11 Orang Asli⁶ socio-economic development
Thrust 4 Wealth generation		Thrust 12 Strengthening the development of Sabah and Sarawak to achieve regional parity
Thrust 5 Increasing equity ownership

The 12 thrusts of PuTERA35 are supported by 132 initiatives⁷ of which 71 are existing initiatives and 61 are new initiatives. Some of these initiatives are set out in the Table below:

Core 1
Thrust 1 - Economic control	This Thrust comprises 16 initiatives including the following: Increase industrial capacity of Bumiputeras Increase Bumiputera participation in creative content industry Increase Bumiputera participation in advanced technology relating to healthcare Increase Bumiputera participation in services relating to data protection and security and cybercrime prevention Evaluate opportunities for Bumiputera participation in carbon trading in ASEAN through carbon tax incentives to be introduced Increase the size of funds to facilitate access to financing under venture capital models and Bumiputera start-ups
Thrust 2 - Better competitive advantage and economies of scale	This Thrust comprises 20 initiatives including the following: Create a new generation of Bumiputera entrepreneurs by carving-out existing GLC and GLIC funds for new entrepreneur development programmes Introduce tax incentives to boost research, development, commercialisation and innovation (“R&D&C&I”) activities among Small and Medium Enterprises Implement the Halal Business Transformation Programme through provision of special financing funds, industrial facilities and facilitate the halal certification process to increase Bumiputera participation in the halal industry Introduce entrepreneurial initiatives and programmes that are able to upscale and create value for Bumiputera enterprises
Thrust 3 – Develop talent and strengthen the education ecosystem	This Thrust comprises 16 initiatives including the following: Create a Bumiputera development study centre by involving the network of Higher Education Institutions through empowerment of existing centres of excellence Empower talent by creating scholarships and special training programmes based on structured career development pathways Increase Bumiputera participation and control in high-value and professional employment sectors that are not yet controlled by Bumiputera Formulate policies that prioritise Bumiputera expertise in strategic industries Strengthen the preschool, technical and vocational education and training (TVET) and higher education systems
Thrust 4 - Wealth generation	This Thrust comprises 11 initiatives including the following: Maintain Bumiputera land ownership in strategic locations Identify available and suitable lands for agricultural purposes to increase Bumiputera participation in the food security sector Increase housing construction on Malay Reserve Land Improve financing terms for property purchases by Bumiputera
Thrust 5 - Increase equity ownership	This Thrust comprises eight initiatives including the following: Strengthen equity financing institutions, capital markets and Islamic trust funds Propose mandatory disclosure on ethnic breakdown in terms of diversity, equity and inclusion in public listed companies Improve implementation of the Companies Act 2016 and the Malaysian Anti-Corruption Commission Act 2009 in relation to beneficial ownership, including enforcement aspects Increase the listing of more Bumiputera companies

Core 2
Thrust 6 - Service delivery and governance	This Thrust comprises eight initiatives including the following: Create a Gig Economy Commission Inculcate the value of integrity and improve work ethics among Bumiputera agencies Set key performance indicators for Ministries in relation to the Bumiputera empowerment agenda Realign the direction and roles of the three Bumiputera mandated agencies under the Ministry of Economy
Thrust 7 - Participation of private firms, GLCs and GLICs	This Thrust comprises seven initiatives including the following: Expand the provision of funds for start-ups to venture into the HGHV sectors through allocations from GLCs and GLICs Increase participation of Bumiputera enterprises in modern agriculture and high-tech organic agriculture with the involvement of GLCs, GLICs and the private sector Boost Bumiputera economic growth through investments in strategic sectors and new economies in collaboration with GLCs and GLICs Review the role and mandate of GLC and GLIC development to support the implementation of the Bumiputera agenda Study the setting of conditions for private companies to contribute to and develop Bumiputera communities and rural areas
Thrust 8 - Realising the Bumiputera philosophy	This Thrust comprises five initiatives including the following: Increase awareness programmes to continuously inculcate the spirit of patriotism and the Bumiputera identity Increase the level of financial literacy and investment among micro, small and medium enterprises (MSMEs), students and graduates of higher education institutes Protect traditional community knowledge through intellectual property registration and increase the commercialisation of community-based products

Core 3
Thrust 9 - Eradicate hardcore poverty	This Thrust comprises four initiatives including the following: Enhance and diversify the sources of income for poor households Improve access to basic necessities such as housing, education and healthcare for Bumiputera Formulate more comprehensive rural development plans
Thrust 10 - Strengthen the social security system	This Thrust comprises six initiatives including the following: Encourage the implementation of Health Waqf⁸ and Education Waqf as a contributor to continuous health and education services to Bumiputera Increase Bumiputera savings and investment through planned activities Improve social protection including social assistance, employment insurance, and health benefits
Thrust 11 – Orang Asli socio-economic development	This Thrust comprises 19 initiatives including the following: Study proposals to gazette more Orang Asli reserve areas Formulate policies for the socio-economic development of the Orang Asli Amend the Federal Constitution to place the development of the Orang Asli under List 3 – Concurrent List Diversify the economic activities of the Orang Asli, especially the less developed tribes Strengthen the development of the mindset and attitude of the Orang Asli to be more progressive Upgrade existing infrastructure including roads, water supply, electricity and telecommunications Increase Orang Asli involvement in high-value economic activities
Thrust 12 - Strengthen the development of Sabah and Sarawak to achieve regional parity	This Thrust comprises 12 initiatives including the following: Increase participation in the HGHV industry and focus sectors at the state level Increase participation in the halal industry and cooperative movement Increase the participation of Sabah and Sarawak Bumiputera in entrepreneurship Study the setting of conditions for companies to contribute and develop communities and rural areas in Sabah and Sarawak

Implementation

The Bumiputera Economic Council (“MEB”) chaired by the Prime Minister and comprising elected Cabinet Members (including non-Bumiputera Cabinet Ministers), representatives of the state governments of Sabah and Sarawak as well as representatives of GLCs and GLICs, is fully responsible for the implementation and monitoring of PuTERA35.

The MEB will be assisted by two committees, namely the Jawatankuasa PEMANDU (Steering Committee) chaired by the Deputy Prime Minister and Minister of Rural and Regional Development, and the Jawatankuasa Kerja (Working Committee) which is chaired by the Minister of Economy.

The function and role of MEB include setting the policy direction for the socio-economic development of the Bumiputera and planning across ministries and agencies for the short, medium and long term. The MEB will also assess the achievements and effectiveness of Bumiputera-related policies and strategies and make decisions on the necessary improvements.

To ensure that the initiatives under PuTERA35 are achieved and effectively coordinated, a Ministry or Government Agency has been designated as coordinator for each initiative. Further, specific Ministries and Government Agencies have also been tasked with the responsibility for implementing the same.⁹ The Bumiputera Agenda Empowerment Unit is also tasked with the implementation and close monitoring of the initiatives at the ministry and agency level.¹⁰

Implementation Period

The initiatives under PuTERA35 will be implemented from 2024 until 2035. The time frame within which each initiative is to be implemented will depend on the availability of resources and the complexity of the initiative. Broadly, the initiatives are categorised into short term, medium term and long term initiatives, as follows:

Implementation period for the PuTERA35 initiatives
Time frame	Period	Explanation
Short	2024 – 2026	Initiatives that can be implemented within two years under the Thirteenth Malaysia Plan, 2026-2030 (“13MP”)
Medium	2024 – 2030	Initiatives that can be implemented between two and five years under the 13MP and the 13MP Mid-Term Review
Long	2024 - 2035	Initiatives that can be implemented within 10 years under the 13th MP and the Fourteenth Malaysia Plan, 2031-2035

The time frame within which each initiative comprised in PuTERA35 is to be achieved is set out in Part 6.0 of PuTERA35.

Quantifiable Objectives

Based on existing data from 2020 to 2022, the Government has set the following nine quantifiable objectives to be achieved under PuTERA35¹¹:

Objective	% / ratio & Base Year	% / ratio in 2035
Bumiputera participation in the Skilled Employment Category	61% (2022)	70%
Equity Ownership by Bumiputera Individual and Agency	18.4% (2020)	30%
Bumiputera participation and control through GLC and GLIC Equity	18.7% (2020)	20%
Percentage of Bumiputera hardcore poverty	0.3% (2022)	0%
Salary and monthly wage ratio of Bumiputera to Chinese	0.78:1 (2021)	0.9:1
Percentage of Bumiputera graduates in the workforce	85% (2022)	97%
Percentage of Bumiputera households owning residential unit	73% (2021)	75%
Bumiputera Enterprises' contribution to GDP	8.1% (2022)	15%
Monthly income ratio of Bumiputera to Chinese households	0.71:1 (2022)	0.9:1

Comments

PuTERA35 is undoubtedly the most wide-ranging and detailed plan launched by the Malaysian Government to promote the Bumiputera agenda since the launch of the New Economic Policy in 1971. As PuTERA35 has consolidated the existing initiatives under other plans that seek to further the Bumiputera agenda, it can be regarded as a “roadmap” for that purpose. The plan is forward thinking and leverages on areas identified to have high growth potential such as food security, energy transition, cybersecurity, healthcare, the Halal industry and R&D&C&I. The successful implementation of the initiatives under PuTERA35 will no doubt bring a welcome change to Malaysia’s socio-economic landscape.

A particularly commendable aspect of PuTERA35 is the inclusion of 19 initiatives under Thrust 11 that seek to alleviate the social-economic well-being of the Orang Asli, a group that has often been overlooked or given insufficient consideration in the country’s development plans.

Article by Francine Ariel Paul (Senior Associate) of the Corporate Practice of Skrine.

¹ As at the date of this article, PuTERA35 is only available in Bahasa Malaysia.

² The term “Bumiputera” generally refers to the Malay and indigenous people of Malaysia.

³ See Table 4 at page 34 of PuTERA35 for the list of the 11 sectors of potential identified by the Government.

4 Page 12, PuTERA35.

⁵ The terms “GLC” and “GLIC” refer to “Government Linked Company” and “Government Linked Investment Company” respectively.

⁶ “Orang Asli” is one of the categories of Bumiputera.

⁷ The list of all 132 initiatives is set out in section 6.0 of PuTERA35.

⁸ The term “waqf” refers to an Islamic endowment typically linked with social development and public good objectives.

⁹ See section 6.0 of PuTERA35 for details of the coordinator and the ministries and agencies responsible for implementing each of the 132 initiatives.

¹⁰ Page 14, PuTERA35.

¹¹ See Table 15 at page 66 of PuTERA35.

This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.

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Government launches PuTERA35 – the new Bumiputera Economic Transformation Plan