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Time for New Economic Policy (NEP) to be abolished following criticism by European Union Ambassador to Malaysia that the NEP is discriminatory to both foreign and non-Malay investors
by Lim Guan Eng
(Petaling Jaya, Friday): The surprising frank criticisms of Europe’s top envoy to Malaysia urging urging the government to reverse the NEP because it is discriminatory and amounts to protectionism against foreign companies. In a report filed by the Associated Press yesterday.
Clearly the foreign investor community see the NEP as a stumbling block and an impediment of world trade. This may have an adverse impact on foreign investment and the time has come for the NEP to be abolished following criticisms by the EU ambassador to Malaysia that the NEP is discriminatory to both foreign and non-Malay investors.
The NEP and Malaysia’s declining oil reserves that will make Malaysia a net oil importer in 5 Years will damage future economic growth and prosperity
The NEP and Malaysia’s declining oil reserves, that will turn Malaysia from an oil exporter to a net oil importer in 5 years, will damage future economic growth and prosperity. The twin impediments of the anti-competition, anti-growth and anti-trade NEP as well as declining oil reserves are huge challenges that the Malaysian government has not even begun to address.
Oil revenues make up 40% of our yearly national income. According to the 2007 Budgetary estimates by the Ministry of Finance, Malaysia revenue’s this year is estimated to be RM 134,815 million in 2007. Of this, oil and gas amounts to RM 53,730 million comprising: -
This does not include the taxes paid by oil related companies or companies in the oil industry, which can be quite substantial.
This oil revenue has allowed Malaysia to cushion the negative impact from mismanagement, wastage of public funds and corruption scandals that have plagued Malaysian society and would otherwise have crippled Malaysia’s economy. Without oil revenues in 5 years time, one wonders where Malaysia is going to find the RM 54 billion or fill in the 40% gap in the nation’s finances.
Without oil resources, a country’s economic growth would depend on comparative and competitive advantages. As comparative advantage has been fully utilized in all countries, economic growth is now fuelled by competitive advantages especially in producing goods and services which are of good quality and reasonable prices. As indicated by the EU Ambassador to Malayisa, the NEP has harmed instead of helped Malaysia to improve our competitive advantages.
With the advent of Malaysia being an oil importer, it is more crucial and critical that anti-competitive economic practices and policies such as the NEP must be dumped. The BN government has to put aside the political, racial and historical burdens and stop being stubborn in continuing with outdated policies if Malaysia is to progress in the market economy and globalised world of the 21st century.
* Lim Guan Eng, Secretary-General of DAP