Par Value

How on earth can the government calculate the wealth/ownership of the Malays based on par value and not market value. Scared to expose the super rich individuals in the country right? From what I understand after reading some stuff on par value, I'm feeling digusted at the government even more. Alright, the thing is, if par value is used then that would mean Malays's wealth is still measured based on the initial investment since time started. So lets say, back in the 1970s a nasi lemak stall would cost $10 to start and today this Mr. Ali has build a chain of nasi lemak restaurants would still be worth $10. Hello my dear Malay friends, you have been called a poor jerk by your own government. Thank goodness, the government thinks that Chinese and Indians are rich...read on to see what Lim Kit Siang has to say:

EPU’s Methodology is seriously flawed!

It’s very normal for a company to start with a paid up capital based on par value and remains so for a long time. It doesn’t need to increase the paid capital (as long as the company is not short of new capital injection) because the accounting and business fraternities value the shares on market value. Par value of shares have little significance except for a archaic company law disclosure requirement.

For example, a company starts with a paid up (par value) capital of $1 million in 2006, and is awarded a 10 years contract to build a bridge. Say, it makes a profit of $10 million for the duration of 10 years and keeps the profits intact. The market value of the company in 2016 is $11 million but its par value still remains intact at $1 million. The shareholders of the company can extract the profits through directors’ emoluments, dividends, management services, etc

EPU’s methodology of calculation of bumi equity is shrouded in secrecy. From what has been disclosed in the press, it is gathered that the methodology uses the par value of shares and exclusion of GLC companies.

Until things can be clarified, basing on generally accepted accounting principles and present accounting norms, EPU’s methodology is seriously flawed as demonstrated below.

Example 1 :

Ali owns 100 Tenaga shares. Par value $100 ($1 per share). Market value $1,000 ($10 per share).

Ah Chong owns 1,000 Farlim shares. Par value $1,000 ($1 per share). Market value $430 ($0.43 per share).

EPU Methodology :

Ah Chong is 10 times richer than Ali. Therefore, Ali needs help to be on par with Ah Chong.

Flaw:

Par value has no relation to the actual value of shares. In fact, Ali’s is richer than Ah Chong. If EPU does not take relative wealth into the equation, how does it know who to help to redress the equal distribution of wealth? Obviously, as this case shows, EPU may be helping the wrong guy!

See what this summarised table shows if you are really lazy to read. Source: Malaysiakini