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The NEP is a major cause of why non-Malays feel they have no future in the country

Media Statement
by Dr Chen Man Hin


(Seremban, Saturday): Prime Minister in his speech to the UMNO assembly on 8th November said that there is a future in the country for all Malaysians. This is a laudable promise.

Unfortunately, he self- aborted the promise when in the same breath he said that the NEP will continue because it has benefited all the people.

This is a misleading statement, because World Bank indicators have shown that the economy has lagged far behind the Asian dragons, causing the GDP/per capita income of the average citizen to be very low.

The NEP might have succeeded in creating a substantial Malay middle class and removed the association of race with economic function, but it has not benefited the average citizen whose income is still low.

Below are statistics and a chart by World Bank indicators:



1960 (US$)

1967 (US$)

2006 (US$)









S. Korea




Hong Kong









Malaysia in 1960, GDP/per capita was US 300 for Malaysia and 482 for Singapore in 1973 it was US 3088 for Malaysia and 5372 for Singapore in 2005 it was US 5042 for Malaysia and US 26,836 for Singapore. In 2006, Singapore GDP/per capita had soared to US 32,900 from almost same baseline in 1960, Malaysia GDP/per capita crept slowly up to 2005, but Singapore rocketed up.

From the World Bank chart it was obvious that after 1971, the year of the NEP launch, the Malaysian economy was weighed down all the way to year 2005, and hence the wide disparity between the GDP/per capita income in Malaysia and Singapore. The statistics indicate that the national economy grew at a much slower pace than the Asian dragons.

Therefore, the statistics show that the NEP has not benefited the average Malaysian, who on the contrary has been marginalized.

Look at the average household income in 2004 in Malaysia. Bumiputras RM 2711, Chinese 4437, Indians 3456 and others 2312. This is very low credit is given to NEP for boosting over 60% of Malays to middle class level, but most of the Malays are still poor.

The NEP has made many cronies very rich but it has marginalized all Malaysian poor, whether Malays, Chinese or Indians.

This is because the NEP failed to increase the national cake. The NEP merely redistributed a small national cake, causing the poor to be marginalized.

The present NEP is not suitable in a global era. More and more foreign investors are avoiding Malaysia. Foreign direct investments have dropped drastically. In 2006 only US 3.9 billion FDI was invested in Malaysia. With low foreign investments, economic growth will be affected and the national cake will not grow bigger at all.

Bear in mind that oil reserves are getting less. By 2011, Malaysia will become a net importer of oil. There will be less income for Petronas, which means it cannot continue to subsidize the Malaysian budget.

A major cause of the failure of the NEP to stimulate the economy is because there is no economic freedom. The NEP weighs down the economy with regulations and restrictions, such as quotas, 30% bumi participation and other racial preferences.

Economic freedom is a powerful magnet for investment. The NEP restricts economic freedom, and drives away both foreign and local investments.

The PM and national leaders must devise an alternative to the NEP. Think out of the box.

The alternative is a K-economy - An economy based on knowledge and economic freedom.


*Dr Chen Man Hin, DAP Life Advisor

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