NEP’s socialist origins and the deep state

Last week, I wrote about the origins of the New Economic Policy (NEP) and how a group of civil servants and others worked out the details.

This week, I want to look at the bigger players, the “ideas men” behind NEP.

What many rural voters and youngsters, including those who have benefitted from NEP, may not know is that there’s a strong element of socialism in the policy.

I was speaking to a few young people and they were unaware that the main man behind NEP, Razak Hussein – who was National Operations Council director just after the May 13 riots and who, shortly after that, became prime minister – had socialistic leanings.

Even as a law student in London, Razak was a member of the British Labour Party and the Fabian Society – which promote democratic socialist ideas.

In fact some of those who played a prominent role in NEP’s formulation had democratic socialist leanings too, or were influenced by socialist ideas. This included “Razak’s men” such as Abdullah Ahmad and Abdullah Majid.

Others such as Just Faaland, a Norwegian who was then with the Harvard Advisory Group attached to the Prime Minister’s Department, and Rais Saniman, an economist, were also not opposed to socialistic thinking.

By bringing big government into play, NEP was the first large-scale experiment in democratic socialism in the country.

Unfortunately, I believe, the birth of NEP also gave rise to the “deep state” that we have recently been hearing so much about. More about it later.

There were two camps in Umno then – one backing then prime minister Tunku Abdul Rahman and another aligned to his then deputy, Razak. While Tunku’s camp wanted to move gradually without alienating the other races, the impatient young turks in the Razak camp were pushing for fast results.

It was, to put it in a simple way, a battle between those advocating free enterprise and those wanting a controlled economy. We know which side won, of course.

The germ of NEP, however, probably came from the socialist-minded James Puthucheary whose ideas had an impact on the elite Malay group in the corridors of power around 1969.

Johor-born Puthucheary was a lawyer and an anti-colonial activist who helped found the Peoples Action Party. His activism landed him in prison and he was later banished from Singapore.

His seminal “Ownership and Control of the Malayan Economy”, written while incarcerated in Changi prison by the British, is believed to be the seed from which the NEP ideas bloomed.

Puthucheary called for state intervention to right economic inequality. He also said it was a myth that the Chinese as a community were rich or that they were rich because they exploited the Malays.

After May 13, the young turks in Umno felt radical changes were needed to put the Malays in an unassailable position, not just in politics but also in the economy.

Some of them were attracted by Puthucheary’s thoughts and would meet up with him for discussions. According to Puthucheary’s brother Dominic, the group included Abdullah Majid, Agoes Salim and Samad Ismail, all of whom were close to Razak

I wonder what Puthucheary would say about the NEP now if he were alive. Especially since he said “exploitation and poverty are class problems, not communal problems”.

How would he, or Razak, who, by all accounts, was genuine about wanting to improve the lives of all Malaysians, answer the question: Why is it that after close to 50 years of affirmative action – despite the creation of a Malay middle class and some very wealthy Malays – the Bumiputeras are still not equipped to compete on a level playing field?

How would they react to the fact that Malaysians are farther apart today than they were, although the overarching aim of Razak’s NEP was to unite the people?

Tengku Razaleigh Hamzah, one of those involved in the making and initial implementation of NEP, is certainly not happy with the way things have turned out.

During the launch of “No Cowardly Past: James Puthucheary, Writings, Poems, Commentaries” in 2010, Razaleigh said: “The NEP was a unity policy. Nowhere in its terms was any race specified. It has been reinvented as an inalienable platform of a Malay Agenda that at one and the same time asserts Malay supremacy and perpetuates the myth of Malay dependency.”

He added: “The NEP was a 20-year programme. It has become, in the imaginations of some, the centre of a permanently racialised socioeconomic framework.”
Razaleigh said that Razak and his deputy Dr Ismail Abdul Rahman thought 20 years would be enough.

Talking about Puthucheary, he said: “James was concerned about economic development in a way that was Malaysian in the best sense. His thinking was motivated by a concern for socioeconomic equity and for the banishment of communalism and ethnic chauvinism in our politics.”

The former finance minister said the architects of NEP saw poverty as a Malaysian problem, adding: “People like James Puthucheary were at the forefront of articulating this concern. Its present-day proponents portray poverty as a communal problem.”

Another key player in devising NEP was economist Agoes Salim, the first secretary-general of the ministry of national unity.

In 2009, Agoes lamented that “we are farther apart now than we were in 1969”.

“The NEP was a policy for all Malaysians; not just for the Malays. But we wanted to restructure the economy so that the Malays would come out of the rural agriculture sector into the commercial sector. We wanted Malay participation at all levels of economic activity. We wanted to uplift the Malays without reducing the position of the others – ‘eradicating poverty regardless of race’.”

“We never thought that we would produce multi-billionaires. That was never the intention of the NEP. If some people can come up as everyone comes up, it’s okay. But it wasn’t supposed to be about some people getting contracts.”

Agoes said NEP architects wanted Malays to be dominant in the sense of being involved in all sectors but not for the Malays to dominate, adding: “But we seem to be dominating; and I don’t think that’s healthy for the nation. It’s not about taking your share and not caring about the rest.”

Another key NEP player, Rais Saniman was reported as saying last year that NEP was meant as an inclusive socioeconomic policy to reunite Malaysia after May 13, but that the implementation later deviated from the original purpose.

But there is one aspect of NEP that has not been discussed at all – that it probably laid the foundation for the “deep state”.

Not too long ago, several Pakatan Harapan leaders, including Foreign Minister Saifuddin Abdullah, alluded to the existence of a “deep state” or “state within a state” which was thwarting government intentions.

A “deep state” as I mentioned in an earlier column, is described as a clandestine network entrenched within the government – and which can include senior civil servants, espionage agencies, police and military officials – which exerts some control over a nation’s government.

Now that I think of it, it is very possible that the attempts at liberalisation promoted by former prime minister Abdullah Ahmad Badawi failed because of resistance from the “deep state”.

His successor Najib Razak also started enthusiastically, announcing a slew of reforms when he took over as prime minister but soon gave up due to resistance from politicians, NGOs and the “deep state”.

We know that NEP’s initial plans were designed by a circle close to Razak. Then the bureaucrats and economists were brought in to flesh out the ideas. But, not all members of the government were aware of this.

Tan Siew Sin certainly wasn’t; he first heard of it from one of his officers in the ministry. We must remember that he was the finance minister, overlooking the economy.

Would it be wrong to assume that the seeds of the “deep state” were planted in 1969?

A Kathirasen is an executive editor at FMT.