NEP widened wealth disparities, says new book

The New Economic Policy (NEP) had created new intra-ethnic inequalities and dramatically increased income and wealth disparities in Malaysia.

This is one of the many findings disclosed in a new book, ‘The New Economic Policy in Malaysia’, authored by 12 academicians from various universities in both Malaysia and Singapore. The book will be released next week.

One of the editors of the book, Universiti Malaya economist Dr Edmund Terence Gomez, said however, overall poverty had fallen and the NEP goals had been achieved in part rather than in their entirety.

NEP was an ambitious affirmative action programme launched by the government in 1971. While NEP nominally ended in 1990, its successors pursue similar affirmative action policies.

It is noted in the soon-to-be launched book that the most prosperous bumiputeras had made substantial economic gains, contributing to serious intra-ethnic wealth and income disparities.

“Spatial inequalities, that are disparities between beneficiaries in different regions, or between urban and rural beneficiaries, had similarly increased. This spatial disparity was partly attributable to the government’s active support of neoliberal policies, such as privatisation of mega-infrastructure projects, and inordinate attention to heavy industrialisation.

“Since the ultimate aim of these policies was to nurture big businesses owned by bumiputeras, this inevitably meant that the poor, including those involved in rural enterprises, had been neglected. Crucially too, a subset of targeted group had become politically powerful, allowing them to also become economically well off,” Gomez told Malaysiakini in an exclusive interview.

Spatial disparities, Gomez (left) added, had worsened after the NEP was implemented because the preferences designed to encourage bumiputera entrepreneurship were disproportionately utilised by members of the targeted group in urban and prosperous rural areas.

“These areas had a level of infrastructural support that was not present in rural regions, including those in Sabah and Sarawak. Affirmative action had not helped develop rural enterprises, even though this was one implicit objective of the NEP.

“Spatial differences have also been exacerbated by the limited ability of the rural poor to take advantage of access to higher education, an issue conditioned on high quality primary and secondary education. This was a further indication of poor infrastructure development in rural areas as well as the capacity of the government to maintain or deliver high quality education in rural areas.”

Only 12% of poor bumi surveyed get scholarship

The issue of the limited capacity of the poor to gain access to higher education was noted in a study that only 12 percent of the bumiputera students surveyed and who had received government scholarships, had come from poor families.

This poor capacity of the education system to foster well-equipped graduates was also noted in this study, drawing attention to a key problem that was also recently acknowledged by the government that of “institutional decline” involving public sector institutions, said Gomez.

In Malaysia, affirmative action programmes targeted at the highest levels of education, adult employment and enterprise development have not resulted in productive outcomes because the government has not ensured that quality education is accorded at primary and secondary schools, the book noted.

“New poverty”, arising from unemployment with the decline of manufacturing, regional under-development and intra-ethnic class differences, has been exacerbated by the limited capacity of the rural poor to make good use of their access to higher education, an issue reliant on a sound primary education.

In business, preferential treatment have led to serious wastage of government resources, according to the book.

The Vendor Development Programme (VDP) and the Global Supplier Programme (GSP), said Gomez, were introduced to help SMEs become manufacturers and suppliers of industrial components, machinery and equipment used by large-scale industries and multinational companies.

“The VDP and GSP were hardly successful in nurturing entrepreneurial bumiputera SMEs as they were based on selective patronage, while non-bumiputera-owned companies were not allowed access to the domestic and foreign markets created by the government through these vendor programmes,” said Gomez.