EL CONSTRUCTIVISMO, REALIDAD EDUCATIVA Y POSIBILIDADES DE DESARROLLO

Chinese business, clearly the dynamics at those levels to date are less well known and understood than they are at the level o f big business. See Tan (1982: Ch 8) & Jesudason (1989: Ch 5).

43 For some valuable insights regarding the role and importance o f Business Groups in LDC's see Doner 1991:833; Leff 1979:46-64 and Mackie 1992 (b):56.

major business groups during the last twenty years, it is useful to look briefly at two seminal works based on data in the 1970's. They are Lim Mah Hui (1981) Ownership and Control of the One Hundred Corporations in Malaysia and Tan Tat Wai's (1982)

Income Distribution and Determination in West Malaysia. The most striking impression for a reader of these books in the 1990's relates to the extraordinary changes in the Malaysian business world during the past two decades.

Lim's study focusses on changes in ownership patterns in the mid-1970's. Principal characteristics of the corporate sector at that time highlighted by Lim were that: it was foreign dominated in terms of ownership; that it was dominated by a few large corporations (Lim's 100 largest corporations); that there was a high degree of concentration of both ownership and control within the largest corporations; and that through interlocking directors and share ownership 8 major cliques could be identified. Besides ownership, Lim provides a valuable socio-economic profile of directors in the corporate sector in the mid seventies. His principal findings included that, of the 579 directors of the 100 corporations studied, two-thirds were non-Malaysians. Of the 33 per cent who were Malaysian, twenty-one per cent were non-Malays and 12 per cent were Malays. Three occupational categories predominated among the directors - businessmen, professionals and politician-civil servants. Comparing the Malaysian directors, 6 per cent of the non-Malay directors had political or civil service backgrounds while 50 per cent of the Malay directors had such a background (Lim,

1981:69-70).

Lim (1981:66-67) also identified three types of directors. First, executive professional directors who were basically high ranking employees engaged to run the company. An overwhelming majority of executive-professional directors were foreigners and of the Malaysians more than two-thirds were Chinese and the rest were Malays. Secondly, there were owner-directors who, as their title implies, did not simply manage companies but owned them as well. According to Lim (1981:67) a majority of owner-directors were Malaysian and Singaporean Chinese. (In another study, Sieh found that Malays occupied 30 per cent of the ordinary Malaysian directorships but accounted for only 4.6 per cent of the capital owned by Malaysian directors.44 Finally a third type of director identified by Lim were what he termed functional directors. Functional directors were mainly former civil servants who were hired for their

44

In her sample o f 538 Malaysian ordinary directors Sieh-Lee found that the Chinese accounted for 50 per cent of the directorships but almost 95 per cent o f the capital owned by Malaysian directors. See Sieh-Lee Mei Ling (1982).

experience and connections and who performed advisory and brokerage functions for companies. An overwhelming majority of functional directors were Malays (Lim,

1981:69).

Tan's research also confirmed the concentration of wealth and its control as well as the strong position of foreign ownership in the economy. At the same time he pointed to changes (circa the mid-1970's) 'as the government gained dominating control of the financial and tin mining sectors and appeared to be making important inroads into the plantation and property sectors' (Tan, 1982:328). In his examination of the origins, nature and outlook of Malaysian businessmen Tan noted that the role of the non-Malay (almost all Chinese) businessmen had expanded in almost every field, although they tended to occupy the medium to large enterprises and in only a few cases had they been able to penetrate the tight control of the large foreign-owned corporations (Tan, 1982:190). Some of the big Chinese businessmen had already established partnerships with Malays but such partnerships invariably involved close ties with the government or a leading Malay politician or bureaucrat as few Malay tycoons had yet emerged.

As for the Malays, Tan found that, although significant headway had been made regarding their ownership of the corporate sector since 1970, most of that had been made by the government on their behalf and was particularly apparent in the finance, mining and petroleum sectors though important inroads had also been made in the plantation, property development, manufacturing, trading and services sectors (Tan, 1982:191). Finally from the perspective of the mid-1970's Tan saw the prospects of more economic nationalism as likely to increase as the young Malay professionals- politicians-civil servants sought to establish an independent economic base in juxtaposition to the foreign and big local (Chinese) businessmen (Tan, 1982:306).

The studies by Lim and Tan elucidate well the principal characteristics of Malaysia's corporate sector in the mid-seventies. However some fifteen years later some of their major findings regarding structures and relationships in the corporate sector no longer apply or require considerable qualification, a fact that indicates the quite extraordinary degree of socio-economic change that has taken place in Malaysia between then and now. For instance, of Lim's 8 major business cliques (Overseas Chinese Banking Corporation-Sime Darby; London Tin-Charter Consolidated; Malayan Banking; Kuok Brothers; Pan Malaysia Cement; Harrisons and Crosfield; Lee Loy Seng and the Sung Chi Fang) only three - Malayan Banking, Kuok Brothers and Lee Loy

Seng - have retained their earlier character and prominence.45 Besides significant shifts in ownership patterns there have also been important changes regarding the typology of Lim's directors, particularly Malay directors. With the emergence in the eighties of Malay business groups, the background of Malay directors and the nature o f their partnerships with Chinese (as described by Tan), have also undergone fundamental change. The emergence of Malay business groups has also transformed the relationship between the Malay politico-bureaucratic elite and Chinese as well as foreign business. Another major change between the 1970's and the 1980's has been the extensive use of the stockmarket to raise capital by business groups, whether Malay or Chinese in the course of their development into conglomerates.

It is in regard to such change and transformation that this study takes its point of departure from earlier work. It will, however, be less concerned than the earlier studies with the formal structures of ownership and control, and the formal linkages between business, politics and the state than with providing a sense of the dynamics between them in the growth of business groups and the development of Malaysian capitalism.46

To this end the thesis will examine a cross-section of business groups, Malay and

45 For developments in the Kuok Brothers and Lee Loy Seng groups since the 1970’s see chapter 9. Malayan Banking, although still a major group, no longer has the earlier links ascribed to it by Lim. Since Lim's study the two components of the Overseas Chinese Banking Corporation (OCBO and Sime Darby clique have gone their separate ways. According to Lim, at the end of 1976, OCBC had the largest block of shares in Sime however in the eighties OCBC was replaced by the Malaysian Government and trust agencies as the dominant shareholders in the company. As of end 1990 government corporations and trust agencies held 28 per cent of Sime's shares. See (Lim:1981:84) and KLSE Annual Companies Handbook, Vol X V I1, 1991: 435. London Tin-Charter Consolidated Between 1976-77 state-owned Pemas through New Trade winds became a major partner in Charter Consolidated. New Tradewinds later changed its name to Malaysian Mining Corporation (MMC). During the 1980's some of the principal companies previously under Charter Consolidated such as Aokam Tin and Ayer Hitam Tin Dredging that had passed to MMC were spun off to the UMNO- controlled Halimtan network of companies. See chapter 4. The Pan Malaysia Cement Clique In March 1980 this clique broke up when a key component, Pan Malaysia Cement (PMC), became a member of Khoo Kay Peng's MUI group. See chapter 8. The Harrisons and Crosfield Clique This foreign (British) dominated clique passed to Malaysian Government control in July 1982 when PNB the national equity corporation became the dominant shareholder. See KLSE, Annual Companies Handbook, Vol XI 1:1263. The Sung Chi Fang Clique Taiping Textiles, one of the key companies in the trio that made up this clique passed to the control of Malay entrepreneur, Azman Hashim in 1982. Taiping Textiles was later renamed Arab Malaysia Development Bhd. Ownership of the two remaining companies in the clique - Selangor Dredging and Malayan Flour remains largely unchanged. See chapter 6 and KLSE, Annual Companies Handbook, Vol XV: 651, 855, 307.

46 In a review of Lim Mah Hui’s book Khoo Kay Jin (1983) persuasively argues how over emphasis on formal linkages can miss the dynamics both within business groups as well as in their relations with each other and the state. He notes how too economistic an approach can ignore informal links of great importance and which are often a more accurate guide as to the real locus of power.

Chinese, and the changes occurring in each from the 1970's to the 1990's. It will show that the nexus between politics and business has blurred the distinctions commonly made between 'real' capitalists or entrepreneurs on the one hand and such categories as rent-seekers, pariah entrepreneurs, client capitalists and speculators, on the other. It will argue that we need to consider Malaysian capitalists, both Malay and Chinese, as occupying positions along a spectrum rather than placing them in either/or categories. At the same time Malaysian capitalism itself has to be viewed as being in a continuing process of change and evolution.

THE HISTORICAL CONTEXT: