Malaysian New Economic Policy

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Under the Malaysian New Economic Policy, Bumiputras are given discounts on real estate.

The Malaysian New Economic Policy is an ambitious and controversial socio-economic

restructuring affirmative action program launched by the Malaysian government in 1971 under
the then Prime Minister Tun Abdul Razak. The NEP ended in 1990, and was succeeded by the
National Development Policy in 1991. Although the NEP was hailed in some quarters as having
reduced the socioeconomic disparity between the Chinese minority and Malay majority, others
accused it of having reduced non-Malays to the status of second-class citizens by cementing
ketuanan Melayu (Malay supremacy). The NEP is often invoked as part of the Malay Agenda,
which is in turn part of the Malaysian social contract granting Malays special rights in return for
citizenship for non-Malays.

The NEP's success is a subject of heated debate. The NEP targeted a 30% share of the economy
for the Bumiputra, but according to official government statistics, the NEP did not succeed in
reaching this target. Although the policy ended officially in 1990, Malaysians often refer to the
NEP in the present tense because many of the tangible economic benefits it offered the
Bumiputra are ongoing. In 2005, some politicians from the United Malays National Organisation
(UMNO), the leading political party of the governing Barisan Nasional coalition, called for the
restoration of the NEP as part of the New National Agenda (NNA).

In 2008, the chief minister of the state of Penang, Lim Guan Eng, made a breakthrough decision
whereby he announced that the new state administration will be free from NEP.[1]

History

During British colonial rule, Malays were given certain privileges over their non-Malay
counterparts, such as quotas for public scholarships and employment in the civil service. When
the Federation of Malaya (West Malaysia) declared independence in 1957, its Constitution
contained a provision called Article 153 that provided special rights for the Malays. The Reid
Commission, which had drafted the Constitution, stated that "in due course the present
preferences should be reduced and should ultimately cease." When Malaya merged with
Singapore, Sabah, and Sarawak in 1963 to form the Federation of Malaysia, the new Constitution
retained Article 153, and the definition of Bumiputra was expanded to include all the indigenous
tribes of Sabah and Sarawak in East Malaysia. Due to increasingly strained relations between the
federal and state governments, and a dispute over the special rights of Malays, Singapore
separated from the Federation in 1965. [2]
The Reid Commission specified that the intent of Article 153 was to address the imbalance
between the Chinese and Malays in terms of economic equity. In the period following Malaysian
independence, however, the Bumiputra share of the economy did not substantially increase; as
late as 1970, it was estimated that Bumiputras held only 2.4% of the economy, with the rest in
Chinese and foreign hands. [3] Friction between the Malay and Chinese communities grew,
reaching its peak in 1969 during the 13 May race riots.

NEP Launch

In the wake of the riots, the government declared a state of national emergency, and Parliament
was suspended. The government formed a National Operations Council (NOC), led by Tun
Abdul Razak. The implementation of the NEP was one of the NOC's first decisions, and the plan
had the stated goal of "eventually eradicat[ing] poverty...irrespective of race" through a rapidly
expanding economy, which would reduce the non-Malay share of the economy in relative terms,
while increasing it in absolute terms. The net "losses" of the non-Malays would go to the Malays,
who held just 1.5% of the economy at the time of the 13 May riots. In 1971, Parliament
reconvened, and Tun Abdul Razak officially became Prime Minister. That same year, Tun Razak
also announced the NEP, as well as some controversial amendments to the Sedition Act that
prohibited discussion of repealing certain articles of the Constitution, including Article 153, even
in the Houses of Parliament. The amendments passed, and remain in effect as of 2006. [4]

Goals

The NEP had the stated goal of poverty eradication and economic restructuring so as to eliminate
the identification of ethnicity with economic function. The initial target was to move the ratio of
economic ownership in Malaysia from a 2.4:33:63 ratio of Bumiputra, Other Malaysian,
Foreigner ownership to a 30:40:30 ratio. This was to be done by redistributing the wealth to
increase the ownership of enterprise by Bumiputras from the then 2.4% to 30% of the share of
national wealth. The 30% target for Bumiputra equity was proposed by Ismail Abdul Rahman
after the government was unable to come to a consensus on an appropriate policy goal.[5]

Alongside this redistribution of wealth was the goal of increased economic growth. This
economic growth would allow the non-Bumiputra share of the economy to decrease, while
permitting the growth of non-Bumiputra business interests in absolute terms. In some quarters,
this was referred to as "expanding pie theory": the Bumiputra share of the pie would increase,
without reducing the size of the non-Bumiputra slices of the pie. This theory was first enunciated
in the Second Malaysia Plan. [6]

In 1975 the government created incentives to expand large-scale manufacturing industries and
energy-intensive industries, targeting these industries and building policies around them. The
Heavy Industries Corporation of Malaysia (HICOM), for example, was formed in order to assist
in the manufacture of pig-iron, aluminium die casting, pulp and paper, steel, cement, motorcycle
and heavy engineering. At the same time, export incentives were initiated.

Changing mindsets

Some Bumiputras have spoken of reducing or eliminating the NEP; for example, Datuk Seri
Abdullah Ahmad Badawi, Prime Minister of Malaysia, in his maiden speech as United Malays
National Organization (UMNO) president to the UMNO general assembly in 2004 stated "Let's
not use the crutches for support all the time, the knee will become weak". Badawi went on to
state that continued usage of crutches would eventually result in needing a wheelchair instead.
As of October 2004, Badawi has not addressed any significant concerns about the NEP.

Not all Bumiputra political leaders shared Badawi's views. For example, Badruddin Amiruldin,
who was elected as UMNO's Deputy Permanent Chairman, waved a book about the 13 May
incident at the assembly during his speech while declaring, "No other race has the right to
question our privileges, our religion and our leader", continuing that any such action would be
akin to "stirring up a hornet's nest". The following day, Dr. Pirdaus Ismail, a UMNO Youth
Executive Committee member, stated, "Badruddin did not pose the question to all Chinese in the
country. Those who are with us, who hold the same understanding as we do, were not our target.
In defending Malay rights, we direct our voice at those who question them."

Agreement on the continued implementation (or reimplementation) is not always unanimous

within the ruling Barisan Nasional coalition. In 2005, Khairy Jamaluddin, the UMNO deputy
youth chief was debated by then MCA (the major Chinese component party of the ruling Barisan
Nasional) vice-president Chua Jui Meng on a nationally televised debate - both leaders agreed to
Chua's proposal to set up a national committee to review the NEP. However, as of the 8 March
2008 general elections, this has yet to be implemented.[15]

Because of the controversy over affirmative action policies in Malaysia, especially the NEP, it
has been feared that the NEP may indirectly contribute to a decrease in foreign investment. In
2005, foreign investment fell by USD4 billion, or 14% — a decrease some commentators
attributed to the controversy over the government's ethnic policies.[16]

NEP for the southern Thailand Muslims

The chief minister of Malaysia's Kelantan State also PAS (Islamic Party of Malaysia) spiritual
leader Nik Aziz said that Thailand should consider introducing an affirmative action policy like
Malaysia's to narrow the social and economic gap between the Muslims and non-Muslims and to
put a plug to the surging violence in southern Thailand.