The government em ploym ent figure in 1990 shows that there are about 885,415 government employees of which 6524 are senior officers, 53,862 are officers, 50,453 are Technical Executives, 262,745 are clericals and 511,831 are industrial m anual workers. Many w ould agree that, across the board, employment in the public sector, in public enterprises and in other governm ent statutory bodies is dom inated by Bumiputra, whereas, the Chinese dominate the private sector and professional occupations. In fact, it has been argued that Malay (Bumiputra) em ploym ent in public sector and agriculture greatly exceeds their overall dem ographic shares.
The basis for such ethnic segregation and ethnically based employment can also be inferred from various reports of several incidents faced by Bumiputra em ployees in the private sector and from studies of M alay attitudes tow ards em ploym ent. A study of the problems of creating a M alay business class w as published not long ago in a local newspaper. An informal survey on "where Malay children were coming from" was conducted among Malaysian school children by a consultant in 1987 (The New Sunday Times, 28th August 1989; 13). It was discovered that Malay students prefer to be bureaucrats or to work in government bodies and in m ulti -national corporations. It was also found that working in the public sector is regarded as bestowing m ore respectability and dignity in Malay society. The opinion survey of Malay attitudes tow ards business also suggests that Malay businessm en are highly dependent on governm ent supports and protections. M oreover, it has been reported that in terms of pay and benefit, according to the W orld Bank, the Malaysian governm ent remuneration is, on average, about 25% higher than in the private sector (Jomo 1989). The Chinese are found to choose
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governm ent organisations as their last preference. They prefer to work in family businesses and in the professions as doctors, lawyers and accountants.
It has been reported that a survey of 7000 unem ployed graduates in 1990 show ed that unemployment among Malay graduates was 91.6 percent, compared w ith 5 percent for Chinese and 3 percent for Indians. Of those surveyed (unem ployed), only 6.7 percent are graduates who are proficient in English, Malay language and M andarin (see The New Straits Times Weekly Overseas, 20.1.90). Thus, the report may indicate more non- Malays were being employed in the many private companies, mainly dominated by Chinese. Other reports also revealed the extent of discrimination against Bumiputra employees in the workplace in the private sector. Personnel m atters were highlighted such as prom otions and increm ents being denied, the replacement of Malay executives with non-Malays, com plaints of work pressure and other mistreatments, all these problems were lodged w ith the Prime Minister's department and the Public Service department (see New Straits Times, 10.4.1990). Public enterprises are therefore an alternative form of em poym ent for Malay (Bumiputra).
In the case of eleven West Malaysia SEDCs, with the exception of Penang, a non-M alay dominated state, the other 10 SEDCs are in predominately Malay states. Thus an influx of Malays particularly into these 10 Malay-controlled government- . ow ned corporations indicates the dom ination of Malays in these organizations. Thus, the role of these "Malay-owned" corporations as "patrons" and "trustees" of Bum iputras and as "umbrellas" to Bumiputra enterprises has evidently influenced the personnel policy and practices of recruitm ent, selection, training and developm ent of Malays. In addition, the prerogative and the discretionary power of
the Chairm an of the Board (Head of the State) and the requirement of the Public Service Department, are all evidence of excessive Malay employment.
2.6 CONTEXTUAL ASPECTS OF THE SEDCs
In public enterprise organizations, the practice of effective personnel practices in recruiting, selecting, rewarding, attracting retaining skilled personnel, in training and developing potential managers and entrepreneurs m ust acknowledge broader political, cultural, legal and organizational concern . This final section of the chapter reviews certain contextual influences on the development of the SEDCs.
2.6.1 Malay Politics and Public Bureaucracy
As m entioned earlier, the emergence and increasing num ber of M alay bureaucrats in the public sector, part of a more general Malay socio-cultural phenomenon, can be inferred as a result not of the latest implementation of the # New Economic Policy but from the historical background of Malay politics, from the pre - British colonial period in the nineteenth century to the period of independence of Malaya in 1957. Such past political history may have significantly contributed to or influenced the existing system of power relationships, both formal and informal,
as well as having consequences which helped determ ine the centralisation of | decision making and direct ministerial control of public sector organisations like the
SEDCs. The political setting of Malay society, in particular, which presum ably resembles the general pattern of Malay bureaucracy, such as its pow er and $ authority structure, has been briefly described by Bruce Gale (1984).
4 2 I Bruce Gale (1984), an Australian scholar who conducted a study of three •Malaysian public enterprises, namely, PERNAS (National Corporation), MARA (Council of Trust for the Indigenous People) and UDA (Urban D evelopm ent C orporation), suggested that the problem s of public enterprises are often a reflection of the nature of society and the political system in which they operate. He also briefly described the historical background of Malay politics. In his book P o l i t i c s a n d P u b l i c E n t e r p r i s e i n M a l a y s i a Gale (1984) describes patrim onialism and political clientelism, which existed in the Malay political system before the British colonisation in the nineteenth century, as the acquisition of power and control through personal staff loyalty and patron-client relationships between the leader who has pow er and resources and the non-powerful and non-resourceful clients.
During the pre-colonial period, even though the Sultan (the Malay ruler) was the head of state, the local district chief administered each district w ithout the military help of the Sultan. The administration of the district was carried out by the sons, brothers and other aristocratic kinsmen of the local chief. In addition, the local chief's ability to provide his followers (peasants) with economic assistance and |
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protection in return for service and loyalty and his skill in preventing the emergence
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of rivals had made him the so-called patrimonial ruler. However, this decentralised ^ power of the local chief (within the Malay community) had been shifted aw ay from j the local district chief to the Sultan by the influence of the British during the ^ extension period of British colonial rule. Further changes in adm inistrative structure | took place in the early twentieth century. During that period, the M alayan Civil Service (MGS) - the British adm inistrators who ruled M alaya- had grow n and members of the Malay elite (English educated Malay aristocrats) were draw n into both the MGS and the MAS (Malayan Administrative Service), thus beginning a longstanding alliance between aristocrats and adm inistrators w ithin the Malay
community. In 1926, the Malay ruler was replaced by the Malay civil servants on the -Federal Council, representing the 'M alay interest". Thus, the emergence of Malay political leadership from the aristocratic English Malay civil servants through their political involvement while performing their civil servant duties had m arked the development of a politically bureaucratic system - an overlapping of political and administrative functions. During the period leading up to Malayan independence in 1957, it was found that the Malay political leaders had complete confidence in the bureaucracy simply because of their close informal personal ties with many Malay adm inistrators who were relatives and were formerly their friends and supporters during the pre-independence period.
In relation to patron-client relationships, two argum ents ■ have been highlighted by Roth and Scott (in Gale 1984: 6 & 11). Roth, for instance, has argued.
Personal rulership rather than m odern legal-rational authority w as the predom inant factor of the Third World polities. The foremost task of these states is the political integration of greatly disparate elements - ethnic, tribal, religious, linguistic and even economic. The 'problem of empire' was fundamentally different from the 'nation-building' which had taken place in Europe since the latter had simply involved the integration of states with a common language and culture.
Scott further argued that patrim onial regimes which tend to survive the patron-client relationship are able to do so in conditions of:
1. continuing inequalities of wealth, status and power which are regarded as legitimate.
ii. uncertainty regarding personal security and the retention of wealth, status and position.
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Evidently, such personal ties foster a patron-client netw ork of inform al cliques of political leaders and civil servants which seems to highlight an im portant feature of Malaysian politics. The appointment of certain persons in key positions in the public enterprise sector is a reflection of such relationships. M oreover, patrim onialism - m utual obligation, personalism , paternalism and protection (Redding 1990: 155) may be possible barriers to effective personnel practices in public enterprise, particularly in selecting, promoting and rewarding individuals.
In the case of State Economic Developm ent Corporations (SEDCs), the prevailing legal and organizational constraints such as the legal status, m anagement structure, the power of the Chairman and the Board of Directors w ould suggest possible barriers to effective personnel m anagem ent. These barriers w ill be discussed in detail in chapter 6.
2. 6.2 Legal Status of the SEDCs
The State Economic Development Corporations (SEDCs) are one of the state agencies which are mostly involved in trading, manufacturing, agricultural business, construction and other physical development and related activities. The sources of SEDCs' finance are from the state government, borrowing and profit earning from the operations (Thillainathan 1976:64). Each state government controls its ow n SEDC established under the State Enactments (Raja Mohammed Affandi 1973: 45). The only general law which applied to state level corporations is the em ergency (Essential pow ers) O rdinance No. 87 of 1971, which provides for federal participation in state corporations established by state law, for their access to federal resources and as elements of federal control over the corporations. It m ust, however, be noted that not all public enterprises are under the jurisdiction of Federal ministries. For example, the state companies which are set up by the SEDCs
are not placed under the Ministry of Trade and Commerce. In such a case, these companies have complete freedom to exercise their personnel policies regarding recruitm ent, selection, pay, promotion and training. Thus there is a variation in personnel practices among public enterprises, viz. departm ental agencies, public corporations and state companies.
The M inistry of Public Enterprises, created in 1974, is entrusted w ith the responsibility of coordinating, m onitoring and evaluating the performance of 13 SEDCs. There is also a federal committee, with the Implementation, Coordination, and Development Administration Unit (ICDAU) which serves as the secretariat to coordinates the activities of SEDCs and assists them in the provision of financial assistance at reasonable terms, provides expertise in marketing, project plarming and evaluation, organises training programmes for SEDC officials and coordinates requests for foreign technical and material assistance. Another m ain aim of this federal committee is to draw out the process of chanelling federal funds to SEDCs. Besides, the politicians, the state government or other federal government agencies often determine and dictate SEDCs' operation..
2.6.3 M anagement and Structure of the SEDCs
Each State Economic Developm ent Corporation (SEDC) has a Board of Directors, comprising a Chairman, a Deputy Chairman, ex-officio members and ordinary members. The Chairman is usually the Chief Minister (Menteri Besar) of the state and the State Secretary is the Deputy Chairman. The number of ex-officio
members on the Board varies between states. They are appointed from among % those who hold the office of State Secretary, State Legal officer. State financial officer | and State Commissioner of land and Mines. The num ber of ordinary members in
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the Board varies between 5 to 9, depending on each individual SEDC. Every member of the Board, other than the ex-officio members, holds the office for a term i of three years, and they may be reappointed upon expiry of their term of office.
The Chief Minister of the state, who is also the Chairman of the Board, can
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exercise considerable influence over the running of the SEDC. Thus the Board is | likely to be a very strong one in influencing and executing the day-to-day ^ management and policies of the SEDC (Truong 1976: 66-67). The Chief M inister has | the power to appoint and dismiss members of the Board and top-level personnel, as f well as to direct and approve the decisions of the Board. It also appears that the ,| M inister appoints a senior civil servant to its Board, as a ministerial representative, % who has the power to give orders to the enterprises on the M inister's -behalf. For
instance, there have been occassions where the chief Minister, as Chairm an of the # Board, made decisions on projects and programmes without referring to the Board. * In some cases, he has little consultation w ith the management, and was reluctant to com ply w ith the m inistry's instructions, suggestions and im posed conditions pertaining to matters, such as hiring of experienced managers and the submission of feasibility study of projects to be undertaken (Truong 1976: 115-116). Thus, the degree of political interference and the excessive power of the Chairm an and the Board appear to shape personnel management practices of the SEDCs.