The proposal to revive the NEP as part of a Malay agenda is a step backward, divisive, breeds corruption and malpractices as well as contrary to the national economic interest of the country. Malaysians, both non-Malays and poor Malays, will not be convinced that the NEP has fulfilled its function of wealth creation and equitable wealth distribution.

The New Economic Policy(NEP)  must recognize its failure to unite Malaysians. The NEP’s stated goal of eradication of poverty and economic restructuring so as to eliminate the identification of ethnicity with economic function. However its discriminatory quotas in housing, ownership of public company stock, government contracts, university places and government scholarships, has not only failed to achieve these twin objectives but deeply divided Malaysians between bumis and non-bumis.

Eradication of poverty has succeeded only in absolute terms. Relative poverty persists and is particularly evident in urban areas. How NEP has failed can be shown by the latest United Nations Human Development (UNHDP) Report 2004 that shows Malaysia has the worst income disparity between the rich and poor in South East Asia. The UNHDP Report 2004 shows the richest 10% in Malaysia controls 38.4% of our economic income as compared to our poorest 10% controlling only 1.7%. 

The reason why ordinary Malays do not benefit is that the distribution of this bumi equity is not fair or equitable due to corruption and inefficiencies as it is concentrated only amongst the few.. The NEP has been exploited to breed corruption, malpractice and cronyism. This is shown by the issuance of millions of ringgit of shares to son-in-laws and sons of Ministers and Deputy Ministers. How many ordinary Malays own shares or APs?

The recent AP controversy exposed by former Prime Minister Tun Dr Mahathir Mohamad where 12,600 Approved Permits(APs) were given to 82 companies but 54,600 APs to only 20 “selected” companies is another example of malpractice and abuse of power. By asking for the full 30% ownership equity, only the few rich Malays benefit from such cronyism and government patronage.

We should not forget that this bumi equity ownership is basically Malay dominated and neglects bumis from Sabah, Sarawak and orang Asli. Stressing on a Malay agenda ignores the reality that bumis from Sabah, Sarawak and orang Asli are marginalized and do not have any equity ownership.

Another beneficiary of the NEP is former Sabah Chief Minister Datuk Osu Sukam who instead of using his wealth fruitfully, found it fit to gamble RM 160 million in a London casino and incurring losses of RM 31 million. Malaysians are fed up of such accumulation of wealth by questionable means.

Allocative efficiency requires competition and merit rather than ownership in ensuring wealth creation and and a fair distribution of wealth.

Another example of such distortion is reflected by the high number of Indians professionals in proportion to their population but hides the large number of Indian poor. Indians hold only 1.5% of equity ownerhip or RM 3.2 billion. By stressing on race, the government also ignored the plight of non-bumi lower class and poor, in particular the Indians who were completely marginalized. Such neglect breeds resentment as shown by the violence and high incidence of crime involving the poor Indians.

There is no substitute for excellence and meritocracy. If we continue to deny deserving students of their university places because of the colour of their skin, then not only will innocent young Malaysians be victimized but the country’s international standards and economy will lose out. The government should learn that as far as allocative efficiency is concerned, competition and merit rather than ownership is the crucial issue in ensuring wealth creation and a fair distribution of wealth.

South Korea is a very good example of making the correct choice on allocative efficiency. In 1966 annual per capita GNP was less than US$ 150 as compared to Malaysia’s US$350.. By 2003 GNP per capita in Korea had far exceeded Malaysia at US$12,033 as compared to Malaysia’s US$3,880 in 2003 according to the World Bank. From a situation where Malaysia is twice more prosperous than Korea in 1966, Korea is now more than 3 times more prosperous than Malaysia. Malaysia would do well not to make the same mistakes by resorting to the NEP and set us even further back.

So Long As Malays Can Sell Their Shares To Realise Short-term Profits, Malay Equity Ownership Would Never Reach 30% Even If NEP Was Extended For Another 100 Years

So long as Malays can sell their shares to realize short-term profits, Malay equity ownership would never reach 30% even if the NEP was extended for another 100 years. If the Malays had held on and not sold the shares, the Malay equity would have reached 30% by its stated period of 1990.  An estimated 40% of the Malay preferential shares given were sold for profit gains.

Documented verification is provided by an academic working paper titled, “Privatisation of Ports: A Malaysian Case Study” by Associate Professor Malcolm Tull and Dr James Revely of Murdoch University in January 2001,

“… By 1995 the privatised companies accounted for 22.1 per cent of the total market capitalisation of the KLSE. Many shareholders took advantage of the opportunity to realise short-term capital gains and sold their shares. The sale of shares in Klang Container Terminal and other privatised companies has, however, led to a dilution of Bumiputra equity: between 1983 and 1990 it declined from 65 per cent to 38 per cent of total paid up capital on the KLSE.”

This Australian study showed that almost 41% of the shares in privatized companies held by the rich Malays were sold. Applying this rough ratio would mean that the 19.3% of Malay shares in 1990 only represented 60% of the shares given by the government. In other words Malays  had sold 12.9% equity stake.  If Malays had held on to every share given, they would have a total 32.2% equity stake, far exceeding the 30% target in 1990.

Instead of stressing on a divisive Malay-only agenda, DAP calls for a Malaysian agenda that benefit and unite all regardless of race and religion to build a harmonius society and  seek social justice for all Malaysians whether poor bumis, poor Malays, poor Chinese, poor Kadazans, poor Ibans and poor orang Aslis?

The time has come to build a nation on the bedrock of needs, merit, hard work, moral and ethical values and not appeal to keris-wielding, extremist and destructive emotions. Let me quote former Prime Minister Tun Dr Mahathir Mohamad’s words when introducing the Third Outline Perspective Plan 2001-2010:-

“High on our priority list is forging a united nation consisting of a progressive and dynamic Bangsa Malaysia that lives in harmony and imbued with strong moral and ethical values. Diligence, discipline, credibility, pride in one’s work and achievements, as well as the relentless pursuit towards continuous self-improvement and output are important values and attitudes for all Malaysians to develop. It is also important for the Malaysian society to show political maturity by avoiding extremism or parochialism. We must never cease to remember that the vital ingredient for sustainable growth is a harmonious society.           “                                                                                                                                         

Let me therefore close with the hope for this conference the immortal words of St Francis of Assisi, "Where there is discord may we bring harmony, where there is error may we bring truth, where there is doubt may we bring faith, and where there is despair may we bring hope.”

(13/08/2005)