Amanah Saham Bumiputera 2: Is this the best investment option for Malaysia’s Generation Y?

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The Amanah Saham Bumiputera 2 (ASB2) was officially launched on 2nd April 2014. Also known as ASB2, the unit trust fund is an extension of a program of the same name originally launched by Permodalan Nasional Berhad (PNB) on 2nd January  1990. PNB manages the fund which stands at a total of 10 billion units.

Amanah Saham Bumiputera 2

For the Bahasa Malaysia version of this article click here.

The initiative is especially designed for the Bumiputeras and meant to boost the community’s economy by providing an alternative savings and investment vehicle. ASB’s goal was to offer long-term, competitive, and consistent returns. To achieve this, the fund was designed as a fixed-price equity income fund at RM1.00 per unit, with no sales fees and no charges for unit redemption. It is the same for ASB2, except that ASB was equity and ASB2 is a mixed-type fund. This system ensures that investments never fall below RM1 per unit even if the market is bad.

The unit trust fund is part of the five-part Bumiputera Economic Empowerment Agenda. It aims to strengthen the native ethnic group in fields like capital, corporate sector equity ownership, entrepreneurship and commerce as well as in non-financial assets like service delivery and ecosystem.

ASB2 has two types of accounts. ‘Akaun Bijak’ is for investors aged 6 months up to 18 years, with the investment cap set at 50,000 units. ‘Akaun Dewasa’, on the other hand, is suited to investors 19 years and older, with a maximum limit of 200,000 units.

ASB is particularly popular with investors because of its low cost and high returns. The funds have never provided returns lower than 8.5% annually. Dividends are computed monthly, based on the minimum amount of the month, and distributed annually.

Buying into ASB is possible through authorised agents like banks. Maybank, for example, provides ASB investment services through its branches.

Its online banking platform, Maybank2U, makes the process even more convenient. Investors need only log in to their bank accounts and use their ASB membership number to purchase additional units for themselves or a third party.

Several loans are also available especially for investing in ASB.

young malaysiansDespite all its good intentions and positive qualities though, the initiative still has its fair share of doubters. One of the issues that investors and other stakeholders must grapple with is whether the practice is allowed in Islam. An announcement in 2012 by Muzakarah Jawatankuasa Fatwa declared that ASB, and consequently other investment schemes, are considered “harus”. This means since they are neither prohibited nor encouraged by the teachings of the faith.

PNB’s Shariah panel, meanwhile, ensures that the fund’s investments are within the amount allowable by Islam.

ASB also faces opposition from Bukit Bendera MP Zairil Khir Johari, who says that the scheme only benefits rich Bumiputera.

According to Zairil, the bottom 40% of Bumiputera households earn a mere RM 1,686 a month. Referencing PNB’s annual reports, Zairil noted that three out of four shareholders can only afford an average investment of RM611 per person. This leaves the rich and politically well-connected Bumiputera, who make up the top quartile of the community, free to take advantage of the available units.

Zairi says this is completely opposed to the ASB’s apparent goal of providing average Malaysians with the opportunity to invest.

A study by the economist Dr. Muhammed Abdul Khalid supports Zairi’s claim: he found that the accumulated portfolio of the top 0.1% of Bumiputera investors amount to 1,526 times more than the total of the bottom 80%.

Making more ASB units available ostensibly to average Bumiputera, in reality, only benefits the rich and elite because they are the only ones who can afford to heavily invest, and therefore profit, from it.

However, despite doubts, the ASB2 is still largely met with optimism because of the excellent track record set by the project’s predecessor.

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