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Umno deputy president Muhyiddin Yassin made a striking statement at the Umno general assembly on Nov 25, 2014.

He said a New National Economic Policy needs to be drawn up to bridge the gap between the rich and the poor - regardless of race.

The deputy prime minister (DPM) was right. That was exactly the real intention of the original New Economic Policy (NEP) and what was also proposed to the government in the New Economic Model, which has been sidelined. Thus it is most welcome that the DPM has renewed interest in resuscitating the New Economic Model.

For this reason, the DPM’s statement at the Umno assembly deserves much more attention than has been given so far. Indeed it was a telling statement, for the following  reasons.

The important policy statement made by our DPM is almost a direct  quote from the original New Economic Policy announced in 1970.

Hence after 44 years (the number 44 in Chinese, means ‘dead dead’), it now appears that we  have to go back to our starting point, because the spirit behind the original basic NEP has faded away.

Actually, the recent UNDP Report on Malaysia suggests clearly that the NEP has failed to deliver  effectively to  reduce the income disparity after the first 20 years of the NEP - ie from 1990 onwards.

Why did the NEP fail in improving the widening income disparity or the serious gap between the rich and the poor?

Is it is largely because we concentrated too much on the second prong of the NEP, relating to  equity ownership? The second prong aimed to remove the identity of race with occupation. It was more attractive to many policy planners and implementers. Thus the issue of equity ownership was given higher  priority, as compared to the priority to raise the incomes of the lower 40 percent income groups.

Education standards have been low and did not help to produce school, college and university graduates of sufficiently high calibre. That is why we have low productivity graduates and high graduate unemployment.

If our graduates were better equipped, especially in science, technology and the English language, they would be able to earn much higher incomes, for their special skills and greater productivity. This would have helped to considerably reduce the serious income disparities that have developed.

 

Corruption has badly undermined the noble original aims of the NEP. Much of the land alienation for farming (eg Camerons), equity shares, permits, licences and government contracts, were easily provided to many incapable Malay and bumiputra contractors, and went quite quickly to cronies of all kinds.

Thus Malay and bumiputra businessmen lost out despite the billions of ringgit tax funds allocated to develop a more active Malay/bumi and sustainable entrepreneurial class of businessmen/women.

Urban poverty not given high priority

Urban poverty was not given the high priority that rural poverty enjoyed under the premiership of then prime minister Abdul Razak Hussein. Today a high percentage 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, has been quite inadequate. This has also caused increasing 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 and even political system. We have to examine the performance of the Malays and bumis in all fields to understand the debilitating consequences of ‘manja manja and pampering’.

 

For instance, we need to assess how they faired generally in government schools, universities and businesses, with so much financial  support all these years? Why is there a predominance of graduate unemployment amongst them? Is it not because they are found wanting? Don’t we realise that any good businessman or women regardless of race, cannot afford not to employ any  competent and competitive graduate?

The ethos of bumiputraism and ketuanan or dominance are in themselves psychologically and emotionally disruptive and self-deprecating.

Why for example should many young people and even the older ones want to work hard and excel if they believe that pampering and progress is their natural birthright, which the government must fulfill for them, regardless of their ability to perform satisfactorily?

The above provide some insights into why there is growing income disparity and why we have to take up the challenge to review the NEP, to move forward, to achieve a better and more  equitable, prosperous and stable Malaysia in the future.


RAMON NAVARATNAM is chairperson of Asli/Centre of Public Policy Studies.

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