PUTRAJAYA, March 2 — Economy Minister Rafizi Ramli today suggested the Anwar administration could expedite the drive to mobilise private Bumiputera capital that would be used to invest in potential startups run by members of the community.

The move could signal a shift away from the focus of raising Bumiputera equity as the core objective of a decades-long race-based economic framework that critics argue is dated, but remains popular among Umno leaders who are now Rafizi’s colleagues in Prime Minister Datuk Seri Anwar Ibrahim’s national unity government.

Addressing the seventh edition of the Bumiputera Economic Congress here, the economy minister said the 30-per cent ownership target is no longer an effective metric to gauge Bumiputera economic success. He called for more holistic indicators to be used, among them the rate of "value creation” by measuring how many Bumiputera have started successful businesses.

"The biggest professional class in this country is actually the Bumiputera... but when we measure in terms of value creation, by that I mean the rate of their participation in businesses, we see a glaring gap between the Bumiputera and other communities,” he said.

"The difference between the Bumiputera middle class and those from other communities is that more of the former prefer to depend on salaried jobs. What happens after a few decades is they merely add value to existing businesses like government-linked companies, multinational companies — their workforce are filled with a world class Bumiputera professional class,” he added.

"But if you look at the parity of those with more specialised skills in certain fields, those who have created their own value by starting their own specialised businesses and services, that is bigger among the non-Bumiputera.”

What these new indicators might look like Rafizi did not explain or whether or not they would be greenlit by his own Cabinet colleagues also remains to be seen. Anwar is expected to receive a report that outlines the resolutions and recommendations that could either improve or repeal existing Bumiputera policies from the congress later this evening.

In his pitch, Rafizi suggested a privately run Bumiputera-based VC or private equity firm could be the impetus to spur interest in Bumiputera startups. Because of the risk linked to startups, buy-in from institutional investors like pension funds and investment banks have been discouraging because they tend to be risk-averse.

Only about a third of Malaysian startups are profitable In terms of numbers, according to the most recent Global Startup Ecosystem Report. From 3,000 startups, just 900 are successfully thriving. The sector has a 60 per cent failure rate, with most folding within the first three years of setting up.

Still, the economy minister said Putrajaya doesn’t intend to create new VCs for now, and instead would look to drive the project through government investment companies. The ultimate goal of the project, Rafizi pointed out, would be to create a large Bumiputera entrepreneurial class.

"If you look at the congresses from the 70s one of the key goals has always been to create a Bumiputera entrepreneurial class. But we must accept the reality... the success model is still based on being CEOs of this GLC or that,” he said.

"It’s rare to find a Bumiputera who looks at the path of business by starting from scrap as opposed to joining companies in industries that are established. Then there are those who think business is just the answer to their inability to find good paying jobs. I think this is something we need to change.”

VC investment in the local market remains small relative to richer countries but is growing significantly.

Total VC investment rose from RM150 million in 2013 to an estimated RM1.3 billion in 2022, according to Malaysia Venture Capital Management Bureau’s statistics, an annual increment rate of about 25 per cent over the past decade.