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South Korea’s Reliance On Maximizing Human Resources And Potential Should Warn Malaysia The Correct Path Is Not To Restore The New Economic Policy(NEP) Which Emphasises Ownership Instead Of Competition And Merit.
by Lim Guan Eng
(Petaling Jaya, Wednesday): DAP is willing to fully support efforts by Prime Minister Datuk Seri Abdullah Ahmad Badawi to continue with its education reforms, human capital development and capacity-building to produce Malaysians with the skills to lead the country’s economic growth to become a developed nation by 2020. To do so, Malaysia must learn from the successes of countries without any natural resources like South Korea, Taiwan and Singapore.
South Korea’s reliance on maximizing human resources and harnessing human potential should serve as a warning to Malaysia that the correct path is not to restore the NEP which emphasizes ownership instead of competition and merit. Instead Malaysia must study why Malaysia with all its rich natural resources like rubber, tin, petroleum and oil palm has lost out to those countries not endowed with such advantages.
A study on their successes on the right strategies and policies shows that there is no substitute for excellence and meritocracy. There is nothing wrong with equitable wealth distribution. What is wrong is the distribution mechanism of the NEP not only sacrifices merit and competition, it breeds corruption, cronyism, malpractices and inefficiency.
This is shown by the issuance of millions of ringgit of shares to son-in-laws and sons of Ministers and Deputy Ministers. 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. How many ordinary Malays own shares or APs?
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.
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 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.
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%.
If we continue to deny deserving businessmen of equal opportunities or 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 according to the World Bank., GNP per capita in Korea had far exceeded Malaysia at US$12,033 as compared to Malaysia’s US$3,880.
From a situation where Malaysia was more than 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 even losing out to Thailand.