11/13/2008

NEP Revisited...

37 yrs ago the Malaysian government launched the New Economic Policy (NEP), or Dasar Ekonomi Baru (DEB) in Malay. There is increasing talk of ending the Policy & this has received mixed responses from the general public. So what's the hoo ha about, eh?

The NEP
The NEP was devised to achieve several goals, mainly:
  • to reverse the social imbalances created under centuries of colonial rule - reduce poverty.
  • to increase economic growth.
Looking back, it's seen that the NEP is pro-bumiputera (the largest ethnic group), focusing on rural & Malay communities. The plans carried out under the NEP has undoubtedly strained the interethnic relations of Malaysians, especially between the Malays & Chinese.

Implementation
There are several key implementation steps taken:
  • Redistribution of wealth: targeting ownership of enterprise by Bumiputera to 30%
  • Education: providing more opportunities to Bumiputera students to study at public universities/abroad via entry requirements, scholarships etc.
  • Employment in the civil sector is virtually Bumiputera-exclusive.
  • Various quotas/subsidies on car loans, house loans etc.
Results
1. In 2000, the estimated corporate stock ownership by Bumiputeras is 20%; certainly more than the initial 2% yet less than the target of 30%. Yet is it still relevant today to achieve that 30%? It seems that the number of successful Bumiputera entrepreneurs & businessmen represent a small fraction of struggling Bumiputeras that the government originally aimed to help. A huge bulk of government bureaucracy was generated, covering up political cronyism & the many failures of ill-prepared Malay entrepreneurs.

2. At the risk of maintaining that 30% target, there may be less foreign participation in local industries. This discriminatory policy has ignited negative perceptions about the government, not only locally but overseas as well. The NEP is no longer about helping the poor; its seen as a discriminatory system of handouts to a selected ethnic group. However, this setback hasn't really affected the economic growth: Malaysia is now the 2nd most prosperous country after Singapore, with a reported GDP of $186.7 billion.

3. Education-wise, who wouldn't want to further their studies at public universities where the 90% of the fees are subsidized by the government, or better yet, go abroad? NO ONE. Yet, despite the removal of the quota system favoring Malays, there is a significant number of non-Bumiputeras who do not enter public universities, despite having good academic results. This biasness is also present in public scholarship awards. The concept that non-Bumiputeras can afford private education is lost as many middle-class families struggled against the discriminatory policy & expensive college/university fees.

4. The NEP has caused a brain drain, some say. More than 30 000 Chinese had emigrated to Australia since 1982. Many have left Malaysia for supposedly greener pastures; even Singapore is snapping up bright & intelligent youths who have no patience for the NEP in their future. Despite the NEP "helping" out the Bumiputeras, the professional sector is dominated by non-Malays exceeding their respective population ratios compared to Bumiputeras.

5. Politically speaking, the NEP is putting the current government (the ruling coalition Barisan Nasional/BN) in a sore spot. With dwindling support from the Malays due to dissatisfaction over other policies, BN now needs the support of the Chinese to maintain governing power. Stronger pro-bumiputera policies (in line with the NEP) may coax the undecided Malay voters, but deter the much needed Chinese votes. Being marginalized doesn't make anyone happy.

Summary
There are many conflicting views on this matter.
  • The younger generations of Bumiputeras do not understand the purpose of the NEP: instead they visualize an easier route in life; expecting cheap education abroad, a pretty much guranteed job in the civil service, cheap cars & the like. The mentality now is that despite slacking, you can still get ahead in life. How do we head to Vision 2020 with this mentality?
  • Non-Malays have been unhappy with this marginalization for a long time. The goals of the NEP has been achieved: increased bumiputera participation, increased GDP & reduced poverty. The NEP is now too risky to follow: foreign investment dropped by $4 billion in 2005; strained ethnic relations brings us closer towards the edge that brought the bloody tragedy on May 13, 1969.
  • The NEP has reinforced, rather than dissolve, racial barriers. The system of classifying an ethnic group has its loopholes: a 1st generation Indonesian who is Muslim & perhaps with a drop of Malay blood in him can be considered a Bumiputera, whereas a 5th generation Chinese or Indian Malaysian is still classified as an immigrant.
  • A major flaw in the NEP is that it differentiates based on race rather than economic class. Malaysian Indians are still among the the poorest & worst-educated. Despite the high incidence of poverty among Indians, their plight has seemingly gone unheard by the government for the past 50 yrs & the NEP has not done much, if anything, to reduce this plight.

I personally hope that the NEP will be revised, if not abolished. First, it should act on difference of economic class. Racial discrimination is INVALID. The issue of defending Malay rights is redundant & doesn't address the key problems of the policy. Second, it should be transparent. How the hell do they expect to make a rational/informed opinion when the information available is limited/filtered?

I believe the NEP had certainly helped to restructure the social-economic composition & has restored some sense of balance, so that's been achieved at a cost. It's time to remedy that & the sooner it is done, the better.

So what do you think? Should the NEP be a figment of the past or a constant reminder of the difference between Malays & non-Malays?

10 comments:

Ir. aSuRaMaRu™ said...

what a hot topic rowan....
i also agree with your statement....
so i hoping that our government will revised back the effect of the NEP....
maybe restructuring it will may lead to economy growth of Malaysian no matter bumi or non-bumi.... xp

Rowan said...

Yeah...I can't deny that the discrimination makes me unhappy, but reading on WHY it was enforced makes sense.

However the NEED for that discrimination has passed, I feel; it's time to REALLY help the poor, like you said, regardless of race, whether bumi or non-bumi

aMMerZ said...

~nO douBTS~irrelevent & social imbalance resulted,too bad it causes the rustiness of society.Damn!!This "collision" might be the HUGE threat to achieve vision 2020. Dr M might not like it.About"together we stand, together we fall" seems not relevant at all(in this CASE!).The spirit of "Malaysian" should be consider & alter for a good reason,that's how Malaysian really felt now, rite??
~i'm liberal & neutral,don't get me wrong~
~hehe~

Rowan said...

We can't expect to diminish the racial barriers if the NEP continues to exist the way it is today. We can't have our children going to school feeling that there's no difference between everyone when the reality is there.

Farani Mustafa said...

At last... They are using their head... Not their stomach... Haha :D

Rowan said...

^Huh? Use stomach? I don't quite get that hehe...

denchoooit said...

Very true. I like the thought of that.

Radin87 said...

used their stomach means that the lawmaker just used it for their personel gain.
The major factor why malay still not achieve 30% is because the lack of experienced.
Most this new entrepreneur usually need 2 @ 3 years to become stable.
And some of this entrepreneur that get the NEP priviledges are datuk and datins....

Rowan said...

Yeah the NEP benefits doesn't reach the people who need them the most...As if the Datuk & Datin REALLY needs the NEP benefits...

Rwi Hau said...

i was a staunch supporter of the NEP. apparently, i was led to believe that it was good for the masses until someone came out and viciously attacked me on a racial issue, saying the Chinese have dominated the business sector, what more could they want!! now i don't see it did any good in the past nor will it do any good now. just scrap the whole dubious and corrupt policies laid out by the NEP blueprint. i want equality for all the races in malaysia. policies that are partial to only ONE PARTICULAR RACE is totally unacceptable no more.