Debate rages over NEP revival

Debate rages over NEP revival
Pauline Puah, Malaysiakini
Nov 7, 2005

Those who understand Malaysia’s economic and political landscape will
agree that the New Economic Policy (NEP) is not merely an instrument to
achieve equitable economic growth.

Born in the aftermath of the 1969 racial riots, it was intended to create
national unity within a multi-ethnic scenario by removing the causes of
socio-economic disparities inherited from the colonial government’s
administration.

The policy, which took effect in 1970, rested on two planks - eradication
of poverty regardless of race, and restructuring of society to eliminate
the identification of race with economic function.

Particular emphasis was placed on assisting bumiputeras to come out of
poverty by allocating them 30 percent corporate equity over a period of
20 years.

In 1991, the NEP was replaced with the National Development Policy (NDP),
which nonetheless picked up the main objectives, as Asian Strategy and
Leadership Institute chief executive officer Dr Michael Yeoh pointed out.

By then, government data showed that bumiputera equity had risen from 1.5
percent to about 18-20 percent. It is this objective that continues to
generate dispute.

So, when Umno Youth called for it to be revived in July, sparks flew yet
again.

Time needed

Interviews with several entrepreneurs revealed strong and often opposing
views, as well as embedded suspicion and resentment.

Federal Territory Malay Contractors Association president Mokhtar Samad
argued for continuation of government support to those in this sector.

“I have 30 years’ experience as a contractor. Without the government’s
support, by awarding big projects, even Chinese contractors will not be
successful,” he said.

He resorted to metaphor to explain why he thinks Malay entrepreneurs, in
particular contractors, need help to succeed.

“Even if you think your son’s IQ is low, you can send him to school. But
if you demand good results, you must give him tuition. Malay contractors
are very new in the field...of course their results are bad because they
are being asked to compete in a smart school.

“Malay still need help but not because their IQ is low....To train them in
businesses, you need time. To help Malay entrepreneurs to grow is not an
overnight work.”

Syed Amin Aljeffri, president of the Kuala Lumpur Malay Chamber of
Commerce, agreed that most Malay entrepreneurs in the organisation have
not been successful.

“Their foundations are not strong or solid, so how can they advance? They
need assistance and accommodation so that they can grow,” he said.

He asserted that the affirmative action policy must continue because it
has yet to achieve the objective of helping the bumiputera community to
advance in economic terms.

“A lot of people like to say that we (bumiputeras) have achieved some
(success), but I say ‘No’. The NEP does not state that (achieving) 15
percent is okay or 19 percent is also okay. The objective is 30 percent
(equity). If it’s not 30 percent, it means we have not succeeded.

“I don’t like to comfort myself with the fact that we now see a greater
number of Malay professionals. This is not what the NEP is about. The NEP
is about getting 30 percent (equity).”

He said the NEP requires time to get past the “experimental” stage.

“Why haven’t we met the target? This is because, from 1971 to 1990, we
were experimenting with the policy. We were searching for a formula, so
we wasted a lot of time,” he said.

Opposing views

Both views, however, were not well received by non-bumiputera
entrepreneurs like Selangor Chinese Assembly Hall president Bong Hon
Liong.

“I don’t agree with reviving the NEP. It goes against reality. It also
goes against international developments that are more conducive today for
open market competition,” he said.

One aspect is that non-bumiputeras will have wider opportunities to take
their business to newly-opened markets like China and India if they feel
stifled at home.

“Does the government still want to set a 30 percent equity rule? Does it
know that countries like China, India, Thailand and Indonesia allow for
100 percent foreign equity?

“Malaysia would lose its competitiveness if it insists on a fixed
bumiputera equity, and investors will be frightened off.”

The call to restore the NEP also did not go well with J F Jerome, who owns
a financing company in Kuala Lumpur.

“Any plan or policy must benefit all races. No single race should be
superior,” he said while highlighting a hidden hazard of decisions that
benefit those with a narrow interest.

“If the Chinese, for example, transfer all their business to Singapore,
Malaysia’s economy will be gone (destroyed).”

Bong buttressed this sentiment with a Chinese proverb to describe the
possible flight of entreprenuers as a result of too many restrictions
being imposed.

“Ci chu bu liu ren, zi you liu ren chu. (If we are not welcome here, we
can always go somewhere else)...this will be a loss for the country.

“If the policy is revived, Chinese entrepreneurs will have no choice but
to look for opportunities abroad. I hope our political leaders will take
this into account.”

Jerome is certainly one such entrepreneur - 90 percent of his investments
are in countries like India, South Africa, Hong Kong and Taiwan.

“I am not interested in getting government contracts because I have to
give away 30 percent (of the business) to bumiputeras. You know,
corruption (in this sector) is beyond imagination...It’s no secret,” he
claimed.

Selangor and Federal Territory Engineering and Motor Parts Traders’
Association cultural and education bureau chief Ting Chee Seng was
equally adamant that the shelf-life of the NEP has long expired.

“Malays have been very progressive in economics and education. I think
it’s time for them to be truly independent,” he said.

Last word?

Asked if the NEP should be brought back, each interviewee stuck to his
stance.

Syed Amin said: “No Malay will question the fact that bumiputera
entrepreneurs must become established in business. The pro-bumiputera
policy must be continued, but we need not call it the NEP.”

Mokhtar too urged the government to continuously help bumiputera
entrepreneurs.

Asked to respond to the view of the current and previous premiers that
bumiputeras should not rely on the government, he said: “I too want my
son to be independent. But before (this can happen), I must send him to
school, give him knowledge and let him experience how to survive. If he
is still not smart, then I have to think again.”

Ting disagreed: “The policy was implemented in 1970. I think bumiputeras
have been given enough opportunities to develop themselves. They should
not wait for opportunities, but must be more progressive. They can’t
request others to stop and wait for them or the nation’s economy would be
jeopardised.”

Jerome had even stronger feelings, saying flatly: “I don’t agree. This is
2005 and they have been given a handicap for 35 years already. Do they
want it to continue until 2020? Do you think this is fair? I don’t think
this is fair.”

Bong said he does not mind helping other races to advance economically
“but this should be done on the basis that the benefits that should
accrue to other races are not sacrificed”.

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