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Saturday, November 29, 2014

Why we need a new NEP with no race bias

The DPM's recent statement deserves serious attention.
COMMENT
By Ramon Navaratnam
DEBUmno Deputy President Muhyiddin Yassin made a striking statement last Tuesday at the opening of the Umno Youth, Wanita and Puteri assemblies. He said a new national economic policy needed to be drawn up to bridge the gap between the rich and poor, regardless of race.
That was exactly the real intention of the original New Economic Policy and what in fact was also proposed to the government in the New Economic Model (NEM), which has unfortunately been sidelined.
For this reason, Muhyiddin’s statement deserves much more attention than it has been given so far.
Interestingly, his statement was almost a direct quote from the original New Economic Policy (NEP) announced in 1970. Hence, after 44 years, it now appears that we have to go back to our starting point because the spirit behind the original NEP has faded away.
Actually, the recent United Nations Development Programme Report on Malaysia suggests clearly that the NEP has failed to reduce the gap between the rich and the poor.
Why is this so? Is it largely because we concentrated too much on the second prong of the NEP, which relates to equity ownership? The second prong was aimed at removing the identity of race with occupation. For many reasons, it was more attractive to many policy planners and implementers. Thus the issue of equity ownership was given higher priority than the issue of raising the incomes of the lower 40% income groups .
Education standards have been low and they have not helped to produce graduates of sufficiently high calibre. That is why we have low-productivity graduates and high graduate unemployment. If our graduates, at levels from schools to universities, were better equipped, especially in Science, Technology and the English language, they would be able to earn much higher incomes for their technical skills and greater productivity. This would have helped to considerably reduce the serious income disparities that have developed over the years..
Cronies of all kinds
Corruption has badly undermined the noble original aims of the NEP. Much of the land alienated for farming (for example, in Cameron Highlands), equity shares, permits, licenses and non-tendered government contracts, were easily provided to many incapable Malay and Bumiputera contractors and to cronies of all kinds. Thus Malay and Bumiputera businessmen lost out despite the billions of ringgit of public funds allocated to develop a more active and sustainable entrepreneurial class among them. Incomes therefore did not rise much for Malay and Bumiputera participants, except for a few.
Urban poverty was not given the high priority that rural poverty enjoyed under the premiership of Tun Abdul Razak Hussein. Today, the vast majority of our population is settled in the urban areas. Yet the financial and human resources directed to urban development to improve the welfare and quality of life of the urban poor have been quite inadequate. This has also increased income disparities.
Competition has been curtailed by many continued protectionist policies and practices. Thus a Culture of Mediocrity has seeped in throughout the whole socio-economic system and even the political system.
We have to examine the performance of the Malays and Bumiputeras in all fields to understand the debilitating consequences of pampering or “manja manja”. For instance, we need to assess how they fare in education and business, after so much financial support given so liberally for so long. Why, people ask, is there a predominance of graduate unemployment amongst them? Is it not because they are found wanting in their abilities? Don’t we realise that any good businessman or woman, regardless of race, cannot afford not to employ competent and competitive graduates, regardless of race?
The Ethos of Bumiputeraism and Ketuanan are in themselves psychologically and emotionally disruptive and self deprecating.
Why, for example, should young people – and for that matter even the older ones – want to work hard and excel if they believe that pampering and progress in their careers or businesses, are their birth rights which they may feel is the government’s responsibility to provide for them regardless of their ability to perform?
The observations above provide some insights into why there is growing income disparity and why we have to take up the challenge to review the NEP and move towards a better and more equitable, prosperous and stable Malaysia.
We hope that the DPM’s call for a review of the NEP will help to narrow the gap between the rich and the poor, without any race bias, as we are all Malaysians first and foremost.
Tan Sri Ramon Navaratnam is Chairman of the ASLI Centre of Public Policy Studies.

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