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Conclusion: The unheard story behind the New Economic Policy

In the conclusion to our six-part special series, TAN SRI RAMON V. NAVARATNAM comes full circle in his analysis of the New Economic Policy. He writes about what needs to be done in the 9th Malaysia Plan to restore national unity in Malaysia, and explores the issues that must be addressed by the Plan in order to be successful.

The continuation of the NEP?

The most important statement to date on the continuation of the NEP was given by Prime Minister Dato’ Seri Abdullah Badawi in a written reply to Member of Parliament Ahmad Shabery on 23 Nov. 2005. The PM stated that the NEP will continue to be needed as long as economic disparity exists among the races in the country.
His statement therefore means there will be no timeframe for the NEP, although a timeframe was envisaged when the NEP was first introduced in 1970.

This was because, the Prime Minister added, the economic gulf between the Bumiputeras and the non-Bumiputeras was still wide. He explained that “for every ringgit earned by a Bumiputera, a non-Bumiputera will get RM1.80.�

He also pointed out that if discontent exists among some quarters, it does not mean they do not agree with the policy, but that they are just unhappy over the implementation.

However, it is well known that that there are many who are not happy with the NEP itself – and especially with its deviant implementation.

Furthermore, the economic gulf is greater between Bumiputeras and the Chinese - compared to the Indians - and even wider in the case of the Bumiputeras in Sabah and Sarawak. Even more telling is the widening income differences between the rich and the poor within all the racial groups!

However, the real extent of the dissatisfaction with the continuation of the NEP is difficult to ascertain, as serious questioning of the NEP itself is discouraged and even disallowed. But there is broad agreement that the NEP has been poorly implemented.

Therefore the PM’s proposal to strengthen the monitoring of the implementation of the NEP or the proposed New National Agenda is welcome and will be strongly supported by all fair-minded Malaysians.

It must, however, be remembered that the NEP aimed to “eradicate poverty – regardless of race.� As such, it is hoped that the letter and spirit of the NEP will continue to be monitored carefully.

Although most of the poor are Bumiputeras, especially the non-Malay Bumiputeras in Sabah and Sarawak, one must realise there are also very poor Chinese and Indians whose basic human rights and needs must also be cared for and meticulously monitored in the interests of fairness to all Malaysians.

It is significant that the PM did not touch on the restructuring of the corporate sector to attain the 30% Bumiputera equity target. Is it because the Bumiputera equity share is well over 30% and could be nearer 50% if the Government-linked companies and nominee companies are taken into account?

All these issues have to be professionally analysed and reflected in the 9th Malaysia Plan if Ahmad Shabery’s question as to whether the NEP would adversely affect Malaysia’s global competitiveness is to be fully answered.

Indeed, Malaysia’s national unity and international competitiveness will depend on these answers, which have to be clearly and comprehensively spelled out in the 9th Malaysian Plan in order to achieve our ambitious goals under Vision 2020.

Is the New National Agenda for all Malaysians?

The Minister in the Prime Minister’s Department Datuk Mustapa Mohamed announced in Parliament on 21 Sept. 2005 that “the government is considering adopting UMNO’s New National Agenda (NNA) to improve the economic wellbeing of the Bumiputeras.� presumably for the forthcoming 9th Malaysia Plan.

This was the first time that some details of the NNA had been made public. This statement was therefore useful since there had been considerable uncertainty as to what was meant by the NNA when it was first mentioned at the UMNO General Assembly of 2005.

Regrettably, no mention was made of the improvement for low-income non-Bumiputeras. What about the underclass? They comprise Malaysians from all races who earn incomes just above the present inadequate poverty line of RM529 per month for a family of five!

These are the vulnerable groups who are susceptible to drugs and crimes as they are often “misfits� in society. They constitute, for example, the displaced estate workers of all races who have been forced to leave the more settled living conditions of the rubber and oil palm estates because of “fragmentation policies.�

In fact, Dato’ Mustapa said that one of the main strategies of the NNA is “reducing the income gap among the ethnic groups.� This issue must be clearly spelled out as it can cause major problems especially in its implementation. This goal could mean pressing down the higher average incomes of the non-Bumiputeras and raising the present lower average incomes of the Bumiputeras.

How is this to be done? Will it be done through the awarding of the vast majority of government contracts, licences, and permits to the Bumiputeras, and denying them to non-Bumiputeras? Will the anti-poverty policies and measures be concentrated on the Bumiputeras while non-Bumiputeras are left out? If so, this approach will not then look after the “legitimate interests� of non-Bumiputeras!

These are vital questions which beg serious answers. If these issues are not explained in time, there will be growing doubts which could lead to a further decline in public confidence. This will then raise questions of credibility and subsequently undermine ownership and acceptance of the 9th Malaysia Plan by ALL Malaysians.

Moreover, another aspect of the NNA was highlighted as “ensuring Bumiputera entrepreneurs participate and control new growth sectors.� This would refer to the new fields of biotechnology, nanotechnology, and in the downstream petroleum and plastic industries. Does this mean that these new growth areas will be exclusively reserved for the Bumiputeras to “control?�

It may be speculation at this stage, but doubts and uncertainty will increase as long as these concerns are not made transparent and addressed soon enough. The question may well be asked: is the NNA meant to look after the interests of all Malaysians, or just the interests of Bumiputeras in Malaysia, or even just the Malays?

The minister mentioned that the Bumiputera share ownership dipped recently “due to inefficiency in implementation and Bumiputera entrepreneurs who wanted to reap instant rewards.� It is therefore hoped that the NNA would show how past wasteful leakages will be stopped.

Some of these issues in the NNA could discourage foreign and, in particular, domestic investment. They would have negative implications on the economic growth and income equity for all races.

It is thus vital that the 9th Malaysia Plan (for the years 2006-2010) be seen by non-Bumiputeras as a Plan for all Malaysians and not mainly - or worse still only - for the Bumiputeras!

If that turns out to be the case in the content or even in the implementation of these policies, then the non-Bumiputeras will feel a sense of “deprivation and alienation.� Consequently, domestic private investment will decline due to the lack of confidence in the future.

In fact, this comment was expressed widely by the non-Bumiputera members of the National Unity Advisory Panel when briefed recently on the 9th Malaysia Plan. They felt strongly that the 9th Plan would cause disunity rather than build national unity if it did not have a balanced approach to serve the interests of both Bumiputeras and non-Bumiputeras in our country.

Hence, it is hoped the government will soon further refine and explain the NNA so it will be strongly supported by all those who want to see Malaysia moving more steadily towards becoming a peaceful and prosperous developed country by 2020, for the benefit of ALL Malaysians. Otherwise, the aspirations of Vision 2020 will be difficult to achieve, and could well be undermined.
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Tan Sri Navaratnam was directly involved in the formulation of many major public policies during his distinguished career in the civil service, from the New Economic Policy in 1970 to the preparation of annual budgets and economic plans. He retired from the government in 1989.

Since then he has continued to serve in the National Economic Consultative Council and the National Economic Action Council working groups, as well as other non-governmental agencies like Transparency International Malaysia, of which he is president.

The articles he shares with theCICAK are from his latest book, Quo Vadis: Where to, Malaysia?. The book addresses these hard issues and provides solutions for the challenging management of our nation. Click here to learn more about him, and Where to, Malaysia?

He is on the judging panel for theCICAK’s “Write It!” Competition 2006.