Umno deputy president Tan Sri Muhyiddin Yassin says a 'new' National Economic Policy is needed. – The Malaysian Insider

The Malaysian Insider: The reality of Malaysia's economic policies
Commentary by The Malaysian Insider

Published 26 November 2014

Malaysia needs a "new" National Economic Policy (NEP), Umno deputy president Tan Sri Muhyiddin Yassin said yesterday, as most Bumiputera were still trapped in the low-income group although economic growth had reached 6.3% – one of the highest in Asia.

Just hours before Muhyiddin gave the idea, a prominent economist revealed that Malaysia's affirmative action policies the past 40 years have created a culture of dependency, corruption and racial envy.

Tan Sri Dr Kamal Salih, an adjunct professor of Economics and Development Studies at Universiti Malaya (UM) said that the benefits of the development policies did not truly extend beyond the first 20 years of the New Economic Policy's (NEP) implementation.

"The problem over the decades involved has not been with the intent nor the content of the NEP and its successors, but the manner of their implementation, which have produced new inequalities, poverty and vulnerabilities in the development process.

Successive policies after the NEP, like the National Development Policy (NDP) and National Vision Policy (NVP), also had the same consequences as inequality in wealth distribution was not addressed, he said at the launch of the Malaysia Human Development Report (MHDR) 2013 in Kuala Lumpur.

Muhyiddin pointed out: "Do we keep our eyes closed and choose not to do anything if the Bumiputera, which comprise 67.4% of the population are still in the low-income group; if four million from 6.5 million employees who contribute to EPF (Employees Provident Fund) earn less than RM2,000 a month?"

"How about if the income gap disparity in our country is among the highest in the region; if the people are still not able to own their own home?" Muhyiddin told Umno delegates last night.

Two men, the same issue. One noting that the NEP has basically failed due to implementation and the other asking for a new NEP to overcome the failure.

But here's the rub. Which government was in charge, from planning to executing the NEP throughout the years? What went wrong?

Think of this failure from a corporate perspective.

The Umno No 2 noted that Bumiputra wealth, salaries are still lagging after all this time although the party has run the government since Merdeka. So, they need a new NEP.

In the words of a The Malaysian Insider reader, that is akin to the management of a listed company producing losses every year and yet have the audacity to ask that shareholders keep their positions while rehashing the same ideas over and over again (NEP), which is completely absurd!

In most listed companies, the shareholders will either dispose of their shares or throw the management out.

In Malaysia's case, voters stop supporting the government and in effect, throw them out of power.

That has not happened in Malaysia although the results of the last two general elections reflect the dissatisfaction with the ruling federal government.

As economist Kamal said, NEP-based ethnic classification was becoming less relevant when tackling equity in development, noting that inequality in Malaysia went beyond race and has become a question of class.

He added that the New Economic Model's (NEM) emphasis on the bottom 40% overlooked "vertical and horizontal equity" in development, such as institutional issues, corruption and rent-seeking behaviour.

"In my view, a piecemeal and project-oriented approach will not do the job, only a comprehensive reform of policies and institutions will set the course of the country's development in its proper path onwards to economic growth and social justice," Kamal said.

There you have it, it is not about a new NEP for just one community. It is time the ruling government listen to the experts and address the issues from a Malaysian point of view.

The economic battle between the races has become a class war of the haves and have-nots. What Malaysia needs is a government with a wider view, not a narrow one. – November 26, 2014.

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It is essential that Malaysia continues to prioritise inclusive growth and social cohesion, and moves forward with the second generation policies that are needed to support this.
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