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PART IV: The unheard story behind the New Economic Policy

In Part Four of our six-part special, TAN SRI RAMON V. NAVARATNAM explores the roots of dissent between Bumiputeras and non-Bumiputeras, looking closely at the reported marginalisation of various ethnic groups in Malaysia and the inability of some Bumiputeras to break the cycle of poverty.

Restructuring and rent-seekers

The second reason for the extension of the NEP was the restructuring of human resources and equity ownership for Bumiputeras. The restructuring goals succeeded enormously in removing the identity of race with occupation or function, but apparently fell far short of the target of 30-percent Bumiputera corporate equity ownership (although if we include government-linked companies, then the target would be exceeded).

Massive budget allocations for education have helped to produce large numbers of Bumiputera with diplomas and degrees all over the country, with the aim of restructuring human resources. The MARA residential schools for Bumiputera students have produced thousands of good graduates, many of whom have gained admission to both local and foreign universities and colleges. The government has also awarded thousands of scholarships, mainly for bright Bumiputera students to complete their education at some of the top universities in the U.K., U.S. and Australia.

Recent research organised by the ASLI Centre for Public Policy Studies has indicated that the 30 percent equity ownership target could already have been achieved some time back, if not for the following reasons:

1. The financial crisis in 1997 had caused severe losses to most Bumiputera investors and businessmen.

2. Large allocations of shares were made to some Bumiputera businessmen who did not keep the shares for long, but sold them off instead for quick profits.

As such, most of these liberal government measures to help Bumiputeras realise the 30 percent equity target failed. Most of the selected Bumiputeras thus denied themselves the opportunity to expand their business and share of the corporate equity to achieve the target of 30 percent. Prime Minister Dato’ Seri Abdullah Ahmad Badawi has called these people “rent-seekers,� who have failed the Bumiputera community and the country because of their greed.

The prime minister promised in his momentous speech at the UMNO General Assembly in July 2005 that the 9th Malaysia Plan will address these serious weaknesses, and will ensure that only qualified and capable Bumiputeras will be allocated preferential shares in future.

E. Failure to properly implement the NEP: Implications on national unity

The NEP was primarily introduced to promote national unity. However, it has unfortunately also caused some disunity and polarisation. Some of the reasons for this polarisation from the point of view of the major ethnic groups are discussed below.

The Bumiputera view
The failure to wipe out poverty, especially among Bumiputeras, and the perceived shortfall in the 30 percent equity ownership target, have brought about rising dissatisfaction and disillusionment among many Bumiputeras, particularly the non-Malay Bumiputeras in Sabah and Sarawak. The old resentment against the Chinese and now even the Indians is emerging, as many Bumiputeras blame the perception of non-achievement of the 30 percent equity target on non-Bumiputeras.

In addition, non-Muslim Bumiputeras, who are mainly from Sabah and Sarawak, feel they have been somewhat neglected and marginalised. Similarly, the orang asli (aborigines) in Peninsula Malaysia also feel they have not received their fair share of the benefits of Malaysia’s rapid economic growth, or from the many poverty eradication and restructuring programmes.

However, as former Prime Minister Tun Dr. Mahathir Mohamad has repeatedly pointed out, the fault is mainly with the Malays for not seizing the vast opportunities that have been provided to them to break out of the shackles of poverty. The Bumiputeras have also not taken full advantage of the business opportunities presented to them through preferential treatment in the awarding of licences, permits, government contracts, preferential bank lending and all the other Bumiputera privileges in housing, education and transport.

The Malays in the Malay heartland of Kelantan and Terengganu have also felt a strong sense of marginalisation. The withdrawal of the petroleum royalty in Terengganu has been a particular source of misgivings among the people of that state.

The non-Malay view

On the other hand, the non-Malays have felt a sense of alienation in all these areas of special privileges for the Bumiputeras, although non-Malays have not been deprived of their rights to what they already own, in accordance with the safeguards in the constitution.

However, the difficulties they face – for instance, in getting various approvals from government officials for business activities, matters pertaining to land alienation and opportunities in the field of education – have, over time, made them feel a sense of being deprived of their rights and of being marginalised. These negative perceptions and feelings cause polarisation and do not contribute to national unity.

Hence, below the surface of tranquillity, peace, stability, national economic progress and prosperity, there is considerable racial polarisation, discomfort, disillusionment and even uncertainty over the prospects for real national unity and integration. This uncertainty could slow the advance to achieving the goals of Vision 2020.

To be continued in Part Five…
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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.