December 4th, 2014
UMNO deputy president Tan Sri Muhyiddin Yassin made a striking statement during the Umno general assembly last week.
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.
Muhyiddin 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 Muhyiddin who is also the Deputy Prime Minister has renewed interest in resuscitating the New Economic Model.
For this reason, Muhyiddin’s statement at the Umno general assembly deserves much more attention than has been given so far.
The important policy statement made by Muhyiddin is almost a direct quote from the original 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 that the NEP has failed to deliver effectively to reduce the the income disparity after its first 20 years of implementation from 1990.
Why did the NEP fail in improving the widening income disparity or the serious gap between the rich and the poor?
Is it 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 compared to raising the incomes of the lower 40% income groups .
Education standards have been low and did not help to produce graduates of high calibre. That is why we have low productivity and high unemployment among graduates.
If our graduates were better equipped, especially in science, technology and the English langauge, they would be able to earn much higher incomes. This would have helped to considerably reduce the serious income disparities that have emerged.
Corruption has badly undermined the noble aims of the NEP. Much of the land alienation for farming, equity shares, permits, licences and government contracts, were easily provided to many incapable Malay and bumiputra contractors and went quite quickly to cronies.
Thus Malay and bumiputra businessmen lost out despite the billions of ringgit allocated to develop a more active Malay and bumiputera and sustainable entrepreneurial class of businessmen.
Urban poverty was not given the high priority that rural poverty enjoyed under the premiership of Prime Minister Tun Abdul Razak.
Though a high number 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 political systems.
We have to examine the performance of the Malays and bumiputras in all fields to understand the debilitating consequences of “pampering”.
For instance, we need to assess how they are faring in Government schools, universities and businesses with so much financial support all these years?
Why is there a high number of unemployed graduates amongst them? Is it not because they are found wanting?
We must realise that any good businessman, regardless of race and religion, cannot afford not to employ competent and competitive graduates.
The ethos of bumiputraism and ketuanan or dominance, are in themselves psychologically and emotionally disruptive and self-deprecating.
Why 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 birth right, which the Government must fulfil for them, regardless of their ability to perform satisfactorily?
There is growing income disparity and that is 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.
TAN SRI RAMON NAVARATNAM
ASLI Centre of Public Policy Studies
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