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Speech

by Lim Guan Eng

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(Teluk Intan, Saturday): Malaysia’s RM2.7bil loan agreement from China to build the RM 3 billion Penang second bridge reflects the reality of a dramatic shift in the relationship with China but holds important lessons for Malaysia to learn from China in discarding political and historical burdens that stands in the way of economic progress and expansion. The loan obtained by Malaysia is the largest given by China for a single project in a foreign country so far, reflecting the close bilateral ties enjoyed by both countries.  

The terms of the agreement, which include an interest rate of three per cent per annum over 20 years is the most favourable offered to a foreign country.  Upon its completion in 2011, the 23 km bridge, 17km on water, would be the longest such link in South East Asia. As early as 10 years ago, China would be expecting to get economic help or loans from China, However China’s burgeoning trade surplus has made China the next economic power that can not be ignored by any trading nation on earth. 

More importantly are lessons that can be learnt by Malaysia how China made such tremendous achievements in a single generation since Deng Xiao Peng opened China to reforms in the 70s. The most important lesson is that China would not allow any historical or political burdens to become a cost or impediment to doing business. For example the Nanking city administration wants Japanese investors despite the horrors committed by Japanese soldiers in the Nanking massacre during the Second World War. 

Whilst many Nanking businessmen are neither willing to forgive nor forget the atrocities by the Japanese, such personal sentiments are set aside for the sake of greater progress and prosperity. Such positive mentality and internationalist world-view are the principle reasons why I am so confident about the future progression of China as the next economic giant. 

For this reason, Prime Minister Datuk Seri Abdullah Ahmad Badawi is wrong to say that the New Economic Policy (NEP) was not a cost to doing business. Not only the European Union Ambassador to Malaysia Dr Thierry Rommel but even the director of the  business analysis group Economic Intelligence Unit (EIU) Justin Wood, have severely criticized the NEP as anti-competitive and an unacceptable cost of doing business in Malaysia. 

Even Abdullah has conceded that the NEP is a severe cost to doing business in Malaysia when it exempted investors in the Iskandar Development Region in Johor from the NEP. The universal opprobrium with the NEP is that NEP is a corrupt policy used to coddle the rich without helping the poor. What is the point of the NEP if inefficient Malay enterprises continue to be granted huge contracts without open tenders merely because of connections. The granting of the contract to build the RM  3 billion second Penang Bridge to UEM World without an open tender is a damning indictment of the failure of the NEP.  

Non-Malays are not angry with the NEP for helping poor Malays. Similarly Malays are not angry with the NEP if it helps poor non-Malays. What all Malaysians are angry with the NEP is that the NEP is used as a tool of crony capitalism to enrich the wealthy. For that reason many Malaysian, including Malays, have voted with their feet by emigrating.

A million Malaysians who voted with their feet by emigrating overseas for the last 35 years is the strongest indictment of the failure, injustices and discrimination of the New Economic Policy (NEP)

A million Malaysians who voted with their feet by emigrating overseas for the last 35 years is the strongest indictment of the failure, injustices and discrimination of the NEP implemented in 1970. This figure of a million Malaysians emigrating overseas is seen as conservative estimate of the 30,000 Malaysians leaving yearly. What is unexpected is that there are more Malays than non-Malays emigrating where 70% giving up their citizenship are Malays. 

According to Deputy Home Affairs Minister Datuk Tan Chai Ho, some 106,000 Malaysians had given up their citizenship between 1996 and April this year. Of the figure, 70% or 79,100 were Malays, 25,107 Chinese, 1,347 Indians and 350 of other races. Marrying a foreigner was the main reason given by women while most men cited better career options. The preferred top five destinations of ex-Malaysians were the United States, Australia, Taiwan, Singapore and Indonesia. These figures are believed to be understated as they do not include those citizens who do not inform the Malaysian authorities so that they can secretly enjoy dual citizenship or are Permanent Residents in foreign countries. 

For these Malaysians to cite better career options proves the failure of Malaysia human resource policy where there is no room for talented Malaysians. Now even Malays, the target of preferential treatment by the NEP, feel the same way as non-Malays that there is no equal opportunity for them to promote their career. 

Such a loss of human resources may be the reason why Malaysia has lagged behind in development as compared to countries such as South Korea or Singapore and is slowly being overhauled by Thailand and Vietnam. In 1966 annual per capita Gross Domestic Product(GDP) of South Korea was less than US$ 130 as compared to Malaysia’s US$350. By 2005 according to the International Monetary Fund., GDP per capita in South Korea had far exceeded Malaysia at US$16,421 as compared to Malaysia’s US$5,040.                               

The New Economic Policy(NEP) and the 30% bumi equity requirement are the principal reasons why Malaysia performed worse than South Korea. Instead of promoting transparency, we promote corruption. Instead of technical “know-how” we have political “know-who”.  

Abdullah’s vision of modeling our economy propelled by skilled human capital and innovation will remain a pipe-dream if he continues to rely on quotas instead of merit. Lack of competitiveness, inefficiency and poor productivity is the price we pay for the government’s continued reliance on the NEP.  

By denying talented Malaysians from realizing their potential, the government has caused a massive brain-drain of qualified Malaysians to foreign countries. Singapore is a good example where Malaysians comprise such a critical component of the country’s workforce, that Singapore’s economy and health system would collapse without Malaysians. 

The time has come for the abolition of the NEP. When we are celebrating our 50^th Merdeka anniversary, Malaysia should be looking forward to the next 50 years instead of looking backwards by relying on policies such as the NEP that has failed. We are now in the 21^st century and should be using 21^st century ideas of merit, competitiveness and efficiency to increase economic productivity instead of racial quotas and crony capitalism.