The Malaysian Insider: Review the NEP
By Ramon Navaratnam

Published 28 November 2014

Umno Deputy President Tan Sri Muhyiddin Yassin made a striking statement at the general assembly on November 25, 2014.

He said a New National Economic Policy needs to be drawn up to bridge the gap between the rich and the poor – regardless of race.

The DPM was right. That was exactly the real intention of the original New Economic Policy and what was also proposed to the Government in the New Economic Model, which has been side lined.

Thus it is most welcome that the DPM has renewed interest in resuscitating the New Economic Model.

For this reason, the DPM's statement at the Umno assembly deserves much more attention than has been given so far. Indeed, it was a telling statement, for the following  reasons:

The important Policy Statement made by our DPM is almost a direct  quote from the original New Economic Policy announced in 1970.

Hence after 44 years (the number 44 in Chinese, means “dead and dead”`), it now appears that we have to go back to our starting point, because the spirit behind the original basic NEP has faded away.

Actually, the recent UNDP Report on Malaysia suggests clearly that the NEP has failed to deliver effectively to reduce the income disparity after the first 20 years of the NEP –  from 1990 onwards.

Why did the NEP fail in improving the widening  income disparity or the serious gap between the rich and the poor?

Is it is largely because we concentrated too much on the second prong of the NEP, relating to equity ownership? The second prong aimed to remove the identity of race with occupation. It was more attractive to many policy planners and implementers. Thus the issue of Equity Ownership was given higher priority, as compared to the priority to raise the incomes of the lower 40% income groups .

Education. Standards have been low and did not help to produce school, college and university graduates of sufficiently high calibre. That is why we have low-productivity graduates and high graduate unemployment. If our graduates were better equipped, especially in science and technology and the English language, they would be able  to  earn much higher incomes. This would have helped to considerably reduce the serious income disparity that have developed.

Corruption. This has badly undermined the noble original aims of the NEP. Much of the land alienation for farming (e.g. Camerons ), equity shares, permits, licences and government contracts, were easily provided to many incapable Malay and Bumiputera Contractors, and went quite quickly to cronies of all kinds.

Thus Malay and Bumiputera businessmen lost out despite the billions of ringgit in tax funds allocated to develop a more active Malay-Bumi and sustainable entrepreneurial class of businessmen and women.

Urban poverty. This was not given the high priority that rural poverty enjoyed under the leadership of Prime Minister Tun Abdul Razak. Today nearly all of our population is settled in urban areas. Yet the financial and human resources directed to Urban Development  to improve the welfare and quality of life of its poor, has been quite  inadequate. This has also caused increasing income disparity.

Competition. It has been curtailed by many continued protectionist policies and practices. Thus a culture of mediocrity has seeped in throughout  the whole socio-economic and even political system. We have to examine the performance of the Malays and Bumis in all fields to understand the debilitating consequences of “Manja-manja and Pampering”.

For instance, we need  to assess how  they fairing generally in Government schools, universities and, businesses, with so much financial support all these  years? Why is there a predominance of graduate unemployment amongst them? Is it not because they are found wanting? Don't we realise that any good businessman or women regardless of race, cannot afford not to employ any competent and competitive graduate?

The  ethos of Bumiputraism and Ketuanan, or Dominance, are in themselves psychologically and emotionally disruptive and self-deprecating.

Why for example should many young people, and even the older ones, want to work hard and excel, if they believe that pampering and progress is their birth right, which the government fulfill for them, regardless of their ability to perform satisfactorily?

The above provide some insights into why there is growing income disparity and why we have to take up the challenge to review the NEP, to move forward, to achieve a Better and more equitable, prosperous and stable Malaysia in the future. – November 28, 2014.

Tan Sri Ramon Navaratnam is chairman of the Asli Centre of Public Policy Studies.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.

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It is essential that Malaysia continues to prioritise inclusive growth and social cohesion, and moves forward with the second generation policies that are needed to support this.
-Frances Stewart