Malaysian New Economic Policy - AbsoluteAstronomy.com

For the Soviet New Economic Policy, see New Economic Policy
New Economic Policy
The New Economic Policy was an economic policy proposed by Vladimir Lenin, who called it state capitalism. Allowing some private ventures, the NEP allowed small animal businesses or smoke shops, for instance, to reopen for private profit while the state continued to control banks, foreign trade,...

.

The Malaysian New Economic Policy (NEP or DEB for Dasar Ekonomi Baru in Malay

Malay language

Malay is a major language of the Austronesian family. It is the official language of Malaysia , Indonesia , Brunei and Singapore...

), was an ambitious and controversial socio-economic restructuring affirmative action

Affirmative action

Affirmative action refers to policies that take factors including "race, color, religion, gender, sexual orientation or national origin" into consideration in order to benefit an underrepresented group, usually as a means to counter the effects of a history of discrimination.-Origins:The term...

program launched by the Malaysian government in 1971 under the then Prime Minister

Prime Minister of Malaysia

The Prime Minister of Malaysia is the indirectly elected head of government of Malaysia. He is officially appointed by the Yang di-Pertuan Agong, the head of state, who in HM's judgment is likely to command the confidence of the majority of the members of that House of Representatives , the...

Tun Abdul Razak. The NEP ended in 1990, and was succeeded by the National Development Policy

National Development Policy

The National Development Policy replaced the Malaysian New Economic Policy in 1990 but continued to pursue most of NEP policies. The Malay share of the economy, though substantially larger, was not near the 30% target according to government figures...

in 1991. Although the NEP was hailed in some quarters as having reduced the socioeconomic disparity between the Chinese minority and Malay

Malay people

Malays are an ethnic group of Austronesian people predominantly inhabiting the Malay Peninsula, including the southernmost parts of Thailand, the east coast of Sumatra, the coast of Borneo, and the smaller islands which lie between these locations...

majority, others accused it of having reduced non-Malays to the status of second-class citizen

Second-class citizen

Second-class citizen is an informal term used to describe a person who is systematically discriminated against within a state or other political jurisdiction, despite their nominal status as a citizen or legal resident there...

s by cementing ketuanan Melayu
Ketuanan Melayu
Ketuanan Melayu is a political concept emphasizing Malay preeminence in present day Malaysia. The Malays of peninsular Malaysia claimed a special position and special rights owing to their long domicile and the role of the Malay rulers of the nine Malay states...

(Malay supremacy). The NEP is often invoked as part of the Malay Agenda

Malay Agenda

The Malay Agenda is a concept in Malaysian politics related to the ideal of ketuanan Melayu . Although it did not feature in public discussion for much of the 20th century, in the early 2000s, it came to prominence due to its usage in the discourse of several politicians from the United Malays...

, 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

Bumiputra

Bumiputera or Bumiputra is a Malay term widely used in Malaysia, embracing indigenous people of the Malay Archipelago. The term comes from the Sanskrit word bhumiputra, which can be translated literally as "son of land"...

, 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

Present tense

The present tense is a grammatical tense that locates a situation or event in present time. This linguistic definition refers to a concept that indicates a feature of the meaning of a verb...

because many of the tangible economic benefits it offered the Bumiputra are ongoing. In 2005, some politicians from the United Malays National Organisation

United Malays National Organisation

The United Malays National Organisation, is Malaysia's largest political party; a founding member of the National Front coalition, which has played a dominant role in Malaysian politics since independence....

(UMNO), the leading political party

Political party

A political party is a political organization that typically seeks to influence government policy, usually by nominating their own candidates and trying to seat them in political office. Parties participate in electoral campaigns, educational outreach or protest actions...

of the governing Barisan Nasional

Barisan Nasional

Barisan Nasional is a major political coalition in Malaysia, formed in 1973 as the successor to the Alliance . Along with its predecessor, it has been Malaysia's federal ruling political force since independence...

coalition, called for the restoration of the NEP as part of the New National Agenda

New National Agenda

The New National Agenda is a set of policies and objectives devised by the ruling party of Malaysia, UMNO, as a fresh means to continue the Malaysian New Economic Policy under prime minister Abdullah Badawi. A major proponent of the NNA has been Khairy Jamaluddin, the Deputy Head of UMNO Youth and...

(NNA).

In 2008, the chief minister of the state of Penang

Penang

Penang is a state in Malaysia and the name of its constituent island, located on the northwest coast of Peninsular Malaysia by the Strait of Malacca. It is bordered by Kedah in the north and east, and Perak in the south. Penang is the second smallest Malaysian state in area after Perlis, and the...

, Lim Guan Eng

Lim Guan Eng

Lim Guan Eng is the 4th Chief Minister of the State of Penang and Secretary-General of the Malaysian Democratic Action Party . He is the son of Lim Kit Siang, Leader of the Opposition in the Dewan Rakyat from 1973 to 1999 and 2004 to 2008....

, made a breakthrough decision whereby he announced that the new state administration will be free from NEP.

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

Federation of Malaya

The Federation of Malaya is the name given to a federation of 11 states that existed from 31 January 1948 until 16 September 1963. The Federation became independent on 31 August 1957...

(West Malaysia) declared independence in 1957, its Constitution

Constitution of Malaysia

The Federal Constitution of Malaysia, which came into force in 1957, is the supreme law of Malaysia. The Federation was initially called the Federation of Malaya and it adopted its present name, Malaysia, when the States of Sabah, Sarawak and Singapore joined the Federation...

contained a provision called Article 153

Article 153 of the Constitution of Malaysia

Article 153 of the Constitution of Malaysia grants the Yang di-Pertuan Agong responsibility for “safeguard[ing] the special position of the ‘Malays’ and natives of any of the States of Sabah and Sarawak and the legitimate interests of other communities” and goes on to specify ways to do this, such...

that provided special position for the Malays. The Reid Commission

Reid Commission

The Reid Commission was an independent commission responsible for drafting the Constitution of the Federation of Malaya prior to Malayan independence from Britain on 31 August 1957.-History:...

, responsible for drafting the constitution of Malaya, stated that "in due course the present preferences should be reduced and should ultimately cease." When Malaya merged with Singapore

Singapore

Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...

, Sabah

Sabah

Sabah is one of 13 member states of Malaysia. It is located on the northern portion of the island of Borneo. It is the second largest state in the country after Sarawak, which it borders on its southwest. It also shares a border with the province of East Kalimantan of Indonesia in the south...

, and Sarawak

Sarawak

Sarawak is one of two Malaysian states on the island of Borneo. Known as Bumi Kenyalang , Sarawak is situated on the north-west of the island. It is the largest state in Malaysia followed by Sabah, the second largest state located to the North- East.The administrative capital is Kuching, which...

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 population 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.

The Reid Commission stated that the intent of Article 153 was to address economic inequality among ethnic Chinese and Malays. 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. Friction between the Malay and Chinese communities grew, reaching its peak in 1969 during the 13 May race riots

May 13 Incident

The 13 May Incident is a term for the Sino-Malay sectarian violences in Kuala Lumpur , Malaysia, which began on 13 May 1969...

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

National Operations Council

The National Operations Council or Majlis Gerakan Negara was an emergency administrative body which attempted to restore law and order in Malaysia after the May 13 Incident in 1969, when racial rioting broke out in the federal capital of Kuala Lumpur. From 1969 to 1971, the NOC governed the...

(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

Parliament of Malaysia

The Parliament of Malaysia is the national legislature of Malaysia, based on the Westminster system. The bicameral parliament consists of the House of Representatives and the Senate. The King as the Head of State is the third component of Parliament....

. The amendments passed, and remain in effect as of 2006. It should be noted that Malay supremacy and affirmative action are two different concepts, affirmative is time-bound.

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 Bumiputra

Bumiputra

s 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

Ismail Abdul Rahman

Tun Dr Ismail Abdul Rahman was a Malaysian politician from the United Malays National Organisation . He held several Malaysian ministerial posts and was appointed as the second Deputy Prime Minister in 1970 by then Prime Minister Tun Abdul Razak. Three years later, Tun Dr Ismail died in office due...

after the government was unable to come to a consensus on an appropriate policy goal.

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

Second Malaysia Plan

The Second Malaysia Plan was an economic development plan introduced by the government of Malaysia with the goal of implementing the Malaysian New Economic Policy...

.

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.

Implementation

The abstract policies and goals of the NEP were implemented by the Second

Second Malaysia Plan

The Second Malaysia Plan was an economic development plan introduced by the government of Malaysia with the goal of implementing the Malaysian New Economic Policy...

, Third, Fourth and Fifth Malaysia Plans.

Some specific requirements were introduced to achieve the 30% Bumiputra equity target set by the NEP. Amongst these was a requirement that all initial public offering

Initial public offering

An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...

s (IPOs) set aside a 30% share for Bumiputra investors. These investors could be selected by the company being listed on the stock exchange

Stock exchange

A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...

, or the Ministry of International Trade and Industry, which would normally recommend such state-owned trust agencies as Permodalan Nasional or the Armed Forces pension fund. These shares were initially heavily discounted, as IPO prices were often significantly lower than prices after the listing had taken place. However, this advantage has disappeared in recent years. Nevertheless, this regulation has been criticised, especially as the 30% target continues to apply after the IPO has occurred; if the Bumiputra investors divest their shares, the company must issue new shares to maintain the proportion of Bumiputra shares above 30%.

Results

Wealth in the hands of the bumiputras went from 4% in 1970 to about 20% in 1997. The overall wealth of the country as a whole also grew; per capita GNP

GNP

Gross National Product is the market value of all products and services produced in one year by labor and property supplied by the residents of a country...

went from RM1,142 in 1970 to RM12,102 in 1997. During the same period, absolute poverty in the population as a whole dropped from 50% to 6.8%. It is unclear what role the NEP played in these changes.

NEP Benchmarks	1970	1990	2004
Bumiputra equity	2.4% (RM477m)	19.3% (RM20.9b)	18.7% (RM73.2b)
Overall poverty	52%	17.1%	5%
Rural poverty	59%	21.8%	11%
Household income	RM660	RM1,254	RM2,996

The effects of the NEP on wealth distribution are disputed. The Gini index declined from 51.3 in 1970 to 44.6 in 1997, and 1987 figures indicated the mean income of the Malays had improved relative to both the Chinese and Indian communities. However, some have used 1997 statistics with 70.2 percent of households in the bottom 40 percent income group as Bumiputra, and 62.7 percent of households in the top 20 percent income bracket as non-Bumiputra, to argue that inequities remain. The Gini index also began to increase in the 1990s, going from 44.6 to 46.4 between 1990 and 1995; meanwhile, 1997 figures indicated that Chinese incomes were increasing at a rate double that of Malays'. Intra-ethnic income differences also increased markedly, especially among Malays.

Bumiputra participation in the professions and private sector increased as well, although Bumiputras remain somewhat under-represented. Between 1970 and 1990, the Bumiputra share of accountants doubled from 7 to 14 per cent, engineers from 7 to 35 per cent, doctors from 4 per cent to 28 per cent, and architects from 4 to 24 per cent. The Bumiputra portion of the share market — a figure frequently cited as "a measurement of overall community wealth", despite claims that it was misleading — increased from 2 to 20 per cent over the same period according to one academic's measurements. The Chinese share also increased from 37 to 46 per cent, at the expense of foreign participation. Official Kuala Lumpur Stock Exchange

Kuala Lumpur Stock Exchange

The Kuala Lumpur Stock Exchange dates back to 1930 when the Singapore Stockbrokers' Association was set up as a formal organisation dealing in securities in Malaya...

figures from 1998 were even more optimistic, indicating Bumiputra share ownership stood at 28.6% in 1990 and 36.7% in 1996.

The Chinese community in Malaysia accepted the NEP as a necessary evil to avoid Indonesian-style

Jakarta Riots of May 1998

The May 1998 Riots of Indonesia were incidents of mass violence that occurred throughout Indonesia, mainly in Medan in the province of North Sumatra , the capital city of Jakarta , and Surakarta in the province of Central Java...

aggression. Furthermore, the Chinese community generally moved away from the public sector and set up businesses in the private sector, where the impact of the NEP was less pronounced.

In spite of the policies implemented under the NEP, the share of the national wealth owned by the non-Bumiputra races increased beyond the 40% mark. This figure, however, does not reflect that certain segments of the non-bumiputra population live in dire poverty. The Malaysian Indian and Orang Asli

Orang Asli

Orang Asli , is a generic Malaysian term used for people indigenous to Peninsular Malaysia...

in particular form the lowest strata of the population in terms of economic ownership. The Orang Asli

Orang Asli

Orang Asli , is a generic Malaysian term used for people indigenous to Peninsular Malaysia...

of Peninsular Malaysia are not considered Bumiputra under the Federal Constitution despite their indigenous status (see Bumiputra

Bumiputra

for further information).

Reimplementation

Officially the term of the NEP ended in 1990. However, much of it remained in effect through other governmental policies; the New Straits Times
New Straits Times
The New Straits Times is an English-language newspaper published in Malaysia. It is Malaysia's oldest newspaper still in print , having been founded as The Straits Times in 1845, and was reestablished as the "New Straits Times" in 1965. The paper served as Malaysia's only broadsheet format English...

reported that this was because as of 2007, "the government believes the aim of having 30 per cent Bumiputera equity has yet to be achieved". In 2006, it was reported that the NEP would be reinstated under the Ninth Malaysia Plan

Ninth Malaysia Plan

Ninth Malaysian Plan abbreviated as '9MP', is a comprehensive blueprint prepared by the Economic Planning Unit of the Prime Minister's Department and the Finance Ministry of Malaysia with approval by the Cabinet of Malaysia to allocate the national budget from the year 2006 to 2010 to all...

, the ninth in a series of five-year economic plans. Originally, the NEP was replaced by the National Development Policy

National Development Policy

(NDP), which ran from 1990 to 2000. The NDP was supposed to have then been replaced by the National Vision Policy (NVP), which would reportedly have lessened the aggressive affirmative action of the NEP and NDP. However, UMNO later called for the NEP to be reinstated.

Criticism

In recent years, the NEP has come under attack as being an inefficient system that promotes a laid-back attitude among the Bumiputras; it is racial-based and not deprivation based. Several policies of the NEP which give economic advantage to the rich Bumiputras, such as Bumiputra quotas in ownership of public company stock, and housing being sold exclusively to Bumiputras, are viewed as discriminatory.

Many of the NEP policies strive for equality of results rather than equality of opportunity, with NEP proponents justifying the concentration on results rather than opportunity as by pointing out that measuring equality of opportunity is difficult or impossible. When the NEP was implemented, for example, it was announced that one of its goals was to have 30% of all equity in Bumiputra hands.

NEP critics have argued that setting a target of 30% of Bumiputras trained and certified to run companies would represent a better equality in terms of opportunity. Still others suggest this target may not work as training and certification does not necessarily guarantee equality of opportunity. Tun Abdul Razak's predecessor as Prime Minister, Tunku Abdul Rahman

Tunku Abdul Rahman

Tunku Abdul Rahman Putra Al-Haj ibni Almarhum Sultan Abdul Hamid Halim Shah, AC, CH was Chief Minister of the Federation of Malaya from 1955, and the country's first Prime Minister from independence in 1957. He remained as the Prime Minister after Sabah, Sarawak, and Singapore joined the...

, also opposed the 30% target, writing in the 1980s that "[a]n attempt was made to fill the target without thought for the ability and the capability of attaining it. ... Some became rich overnight while others became despicable Ali Baba

Ali Baba (Malaysia)

Ali Baba is a business practice in Malaysia, where a Malay company obtains a contract from the government-sponsored affirmative action system for the Bumiputera and subcontracts it to an ethnically Chinese-owned company. The “Ali” refers to the Malay; the “Baba” the Chinese, from the Baba-Nyonya ...

s and the country suffered economic setbacks".

The NEP is also criticised for not dealing directly with issues of wealth distribution and economic inequality; that it no longer helps the poor but is instead an institutionalized system of handouts for the largest ethnic community in Malaysia as the NEP does not discriminate based on economic class. Bumiputras of high and low economic standing are entitled to the same benefits. The statistical problems of categorising wealthy and disadvantaged Bumiputras in one group also meant that the NEP's goal of having 30% of the national wealth held by Bumiputras was not indicative of a median 60% of Bumiputras holding 28% of the national wealth, but could theoretically translate into one Bumiputra holding 29% of the national wealth, with the remaining Bumiputras sharing 1%. Some have alleged that because of this imbalance, some Malays remain economically marginalised. Criticisms also arose from the fact that there was no planned assistance for Malaysian Chinese and Indian communities to achieve their 40% goal during the actual implementation of the NEP.

The manufacturing sector is exempted from the Foreign Investment Committee (FIC) Guidelines, the 30 per cent Bumiputera equity and restrictions in market entry have been removed for all sub-sectors.(pdf)

Education

The education policy of the NEP is one of the plan's more controversial points.

Bumiputras were accorded quotas for admission to public universities until 2002. These quotas were fixed, however, and in later years meant that the Bumiputra were allotted a significantly lower percentage of places originally intended, as the population figures used to calculate the quotas were based on 1970s numbers. Despite this, the quotas were still considered by many non-Bumiputra as unfairly rewarding the Bumiputra. The government removed these quotas in 2003.

The removal of the quotas has done little to remedy the perceptions of Bumiputra bias in the public tertiary education system. Most Bumiputras opt to enter a one year matriculation

Matriculation

Matriculation, in the broadest sense, means to be registered or added to a list, from the Latin matricula – little list. In Scottish heraldry, for instance, a matriculation is a registration of armorial bearings...

programme, which is considered by some to be less intensive than the two year Sijil Tinggi Pelajaran Malaysia (STPM) or Malaysian High Certificate of Education, which is equivalent to the British A-levels). Although the 'grade' standards required for admission are the same for both programmes, there is no moderation to ensure the difficulty of achieving a grade standard is the same between both programmes. The Malaysian High Certificate of Education is open to all races, but the Matriculation programme has a 10% quota for non-bumiputras. In practice significantly more Bumiputra enter the matriculation program, even after normalizing for ethnic demographics.

These differences predate the removal of hard quotas. The difference in academic routes in fact begins in secondary school. Many Bumiputra enter public boarding secondary schools (sekolah asrama) whereas most non-Bumiputra remain in normal public secondary schools. The exams taken are the same until form 5 but then most Bumiputra go on to matriculation, whereas non-Bumiputra do STPM. However, even Bumiputra who remain in 'normal' secondary schools usually do matriculation instead of STPM. The lack of public transparency in grading of the papers contributed to this criticism.

The removal of quotas was largely reported to have resulted in an increase in the percentage of Bumiputra entering public universities. The perceived bias towards Bumiputras has meant that non-Bumiputra who can afford to do so choose to enter private colleges or to go overseas to further their education. There is a significant proportion of non-Bumiputra who do not enter into contention for admission to public universities. It is also alleged that during the marking of examination scripts in the Government exams, that Malay/Bumiputra students are given additional points even before the students sit for the exams. As a result despite the removal of the Quota system, this alleged unfair advantage gives more places to the undeserved students of Malay origin.

Critics argue that this policy of the NEP has also contributed to a brain drain

Brain drain

Human capital flight, more commonly referred to as "brain drain", is the large-scale emigration of a large group of individuals with technical skills or knowledge. The reasons usually include two aspects which respectively come from countries and individuals...

. Others suggest that the NEP has contributed to racial polarisation and a feeling of marginalisation among the non-Malays.

However, as of 2007, Chinese Malaysians dominate the professions of accountants, architects and engineers while Indian Malaysians dominate the professions of veterinarians, doctors, lawyers and dentists well exceeding their respective population ratios compared to Bumiputra. http://www.indianmalaysian.com/economy.htm http://books.google.com/books?id=Cjb9Qhbbv9sC&pg=PA193&lpg=PA193&dq=bumiputra+accountants&source=web&ots=jJE06d68dT&sig=hwuMfFprb4XFVk_IQRXbl47JOIs#PPA194,M1

Changing mindsets

Some Bumiputras have spoken of reducing or eliminating the NEP; for example, Datuk Seri Abdullah Ahmad Badawi

Abdullah Ahmad Badawi

Tun Abdullah bin Haji Ahmad Badawi is a Malaysian politician who served as Prime Minister from 2003 to 2009. He was also the President of the United Malays National Organisation , the largest political party in Malaysia, and led the governing Barisan Nasional parliamentary coalition...

, 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

Wheelchair

A wheelchair is a chair with wheels, designed to be a replacement for walking. The device comes in variations where it is propelled by motors or by the seated occupant turning the rear wheels by hand. Often there are handles behind the seat for someone else to do the pushing...

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

Badruddin Amiruldin

Dato' Paduka Hajji Badruddin bin Amiruldin is a Malay Malaysian politician. He was born in 1951. He is currently the Deputy Permanent Chairman of the United Malays National Organisation , the largest Malay political party in the country and the leader of the ruling Barisan Nasional coalition...

, 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

Barisan Nasional

coalition. In 2005, Khairy Jamaluddin

Khairy Jamaluddin

Khairy Jamaluddin Abu Bakar is a Malaysian politician, and the son-in-law of former Malaysian Prime Minister Abdullah Ahmad Badawi. Since 2008, Khairy has been a member of the Malaysian Parliament representing the constituency of Rembau...

, the UMNO deputy youth chief was debated by then MCA (the major Chinese component party of the ruling Barisan Nasional

Barisan Nasional

) vice-president Chua Jui Meng

Chua Jui Meng

Dato' Chua Jui Meng ; born October 22, 1943) is a Malaysian politician from the state of Johor. He was the country's longest serving Minister of Health, holding that position from 1990 to 2004....

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.

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.

Equity calculation

The calculation of Bumiputra-held economic equity has been frequently disputed, with a number of allegations from some quarters that the government intentionally underestimated the share of Bumiputra equity to justify the NEP and its related policies. Although many affirmative action measures of the NEP were continued under the National Development Policy which ran from 1990 to 2000, and later by the National Vision Policy set to run from 2000 to 2010 — leading many Malaysians to refer to the NEP in the present tense — the official Bumiputra equity share remained less than the original 30% target.

In 2006, a major dispute arose when the Asian Strategic and Leadership Institute (ASLI) issued a report calculating Bumiputra-held equity at 45% — a stark difference from the official figure of 18.9%. The report's publication triggered a relatively vocal public debate about the status of the NEP and its related policies, with many from UMNO questioning the methodology used by ASLI. One strongly disputed issue was ASLI's decision to consider government-linked companies (GLCs) as Bumiputra-owned, inflating the calculated figure of Bumiputra equity. Although ASLI later withdrew the report, citing unspecified errors in its methodology, the debate did not die down. One political analyst suggested that "If Bumiputra equity is 45 per cent, then surely the next question is, why the need for Bumiputera rights? It has implications for government policy and it (removing indigenous rights) is one thing UMNO will never accept at present." Others have argued that the debate over inter-ethnic disparities has obscured intra-ethnic inequities, citing the increased Gini coefficient

Gini coefficient

The Gini coefficient is a measure of statistical dispersion developed by the Italian statistician and sociologist Corrado Gini and published in his 1912 paper "Variability and Mutability" ....

for Bumiputras (from 0.433 in 1999 to 0.452 in 2004), Chinese (0.434 to 0.446) and Indians (0.413 to 0.425).

A major point of dispute was the government's use of par value

Par value

Par value, in finance and accounting, means stated value or face value. From this comes the expressions at par , over par and under par ....

(as opposed to market value

Market value

Market value is the price at which an asset would trade in a competitive auction setting. Market value is often used interchangeably with open market value, fair value or fair market value, although these terms have distinct definitions in different standards, and may differ in some...

) of shares to calculate the equity held by Bumiputras. Many questioned the ASLI study on the basis that it had not used par value; conversely, others criticise the government for not using market value http://sean-the-man.blogspot.com/2006/11/whats-wrong-with-neps-par-value.html http://limkitsiang.com/archive/2006/oct06/lks4078.htm. On another note, some critics later noted that a 1997 University of Malaya

University of Malaya

The University of Malaya is located on a campus near the centre of Kuala Lumpur, and is the oldest university in Malaysia. It was founded in 1905 as a public-funded tertiary institution...

study had calculated the Bumiputra share of equity to stand at 33.7%, using par value.

UMNO critics, contend that the official figure does not take into account the huge volume of shares, amounting to 7.9 percent in 1999, that is held by nominee companies. Independent studies have revealed that politicians and political parties, including UMNO, have resorted to using nominee companies to conceal their ownership of corporate equity from public scrutiny. Also, branded conglomerates like Proton and Petronas

Petronas

PETRONAS, short for Petroliam Nasional Berhad, is a Malaysian oil and gas company that was founded on August 17, 1974. Wholly owned by the Government of Malaysia, the corporation is vested with the entire oil and gas resources in Malaysia and is entrusted with the responsibility of developing and...

are not regarded by the government as Bumiputra companies. This approach tends to exaggerate non-Malay purchasing power. It is also not clear if the government calculations included the 2.7 million unincorporated businesses in the country.

At the UMNO General Assembly that year, Education Minister and UMNO Youth Chief Hishamuddin Hussein quoted a local study indicating that at current rates, it would take the Malays "120 years to achieve income parity". He also cited a 2004 statistic indicating that for every RM

Ringgit

Ringgit mostly refers to the Malaysian ringgit, which is the local currency in Malaysia, but it can also refer to the Brunei dollar or Singapore dollar in the Malay language. The word ringgit was originally used to refer to the serrated edges of Spanish silver dollars widely circulated in the area...

1 earned by a Malay, a Chinese earned RM1.64 as evidence that the income gap had not been eliminated. The Deputy Youth Chief, Khairy Jamaluddin

Khairy Jamaluddin

, proposed increasing the target "quota" if non-Malays continued to allege that the 30% target had been met, as "By any yardstick, the Malays are still left behind".

NEP for the southern Thailand Muslims

The chief minister of Malaysia's Kelantan

Kelantan

Kelantan is a state of Malaysia. The capital and royal seat is Kota Bharu. The Arabic honorific of the state is Darul Naim, ....

State also PAS (Islamic Party of Malaysia) spiritual leader Nik Aziz said that Thailand

Thailand

Thailand , officially the Kingdom of Thailand , formerly known as Siam , is a country located at the centre of the Indochina peninsula and Southeast Asia. It is bordered to the north by Burma and Laos, to the east by Laos and Cambodia, to the south by the Gulf of Thailand and Malaysia, and to the...

should consider introducing an affirmative action

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. http://findarticles.com/p/articles/mi_m0WDP/is_2007_April_16/ai_n19022365

Poll shows most Malaysians want NEP to end

71% of Malaysians agree with the statement that Barisan Nasional

Barisan Nasional

's "race-based affirmative action policy is obsolete and must be replaced with a merit-based policy", the survey poll was conducted by the independent Merdeka Centre between 18 June 2008 and 29 July 2008, the result showed that up to 65 per cent of Malays who were asked the question agreed that race-based affirmative action should be done away, compared with 83 per cent of Chinese and 89 per cent of Indian respondents.

Najib ready to end special privileges for Malays

On October 2008, the deputy prime minister Datuk Seri Najib Razak said "if we do not change, the people will change us". "In the not-too-distant future, we will see all the elements of the New Economic Policy being replaced." "It's a huge challenge," "There must be this political will and desire to change within UMNO. I don't think we can expect people to look at us in more favourable terms unless we change, unless we rectify our weaknesses."

External links

TimeAsia's A Working Racial Bias published on 20 August 1990, asking about NEP For years, the rules favored Malays. Should they continue?
Malaysia's New Economic Policy and "National Unity" presented by Jomo K. Sundaram at UNRISD conference in Durban, South Africa, 3–5 September 2001.

The source of this article is wikipedia, the free encyclopedia. The text of this article is licensed under the GFDL.

History

NEP Launch

Goals

Implementation

Results

Reimplementation

Criticism

Education

Changing mindsets

Equity calculation

NEP for the southern Thailand Muslims

Poll shows most Malaysians want NEP to end

Najib ready to end special privileges for Malays

See also

Other references

External links