Malaysia’s New Economic Policy: Issues and Debate (original) (raw)
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Malaysia's New Economic Policy: Fifty Years of Polarization and Impasse
Southeast Asian Studies, 2022
The New Economic Policy has transformed Malaysia since 1971. Pro-Bumiputera affirmative action has been intensively pursued and continuously faced pushback. This paper revisits three key junctures in the NEP's fifty-year history that heightened policy debates-and the ensuing persistent polarization and stalemate in policy discourses. First, at its inception in the early 1970s, despite substantial clarity in its two-pronged poverty alleviation and social restructuring structure, the NEP was marred by gaps and omissions, notably its ambiguity on policy mechanisms and long-term implications, and inordinate emphasis on Bumiputera equity ownership. Broader discourses have imbibed these elements, and they tend to be more selective than systematic in policy critique. Second, during the late 1980s, rousing deliberations on the successor to the NEP settled on a growth-oriented strategy that basically retained the NEP framework and extended ethnicity-driven compromises. Third, since 2010, notions of reform and alternatives to the NEP's affirmative action program have been propagated, which despite bold proclamations again amount to partial and selective-not comprehensive-change. Affirmative action presently drifts along, with minor modifications and incoherent reform rhetoric stemming from conflation of the NEP's two prongs. Breaking out of the prevailing polarization and impasse requires a systematic and constructive rethink.
Fifty Years of Malaysia's New Economic Policy: Three Chapters with No Conclusion
ISEAS Economics Working Paper No. 2021 - 07, 2021
The New Economic Policy (NEP) which focused on poverty reduction and social restructuring has transformed Malaysia since 1971. Pro-Bumiputera affirmative action was intensively pursued and has continuously faced pushback, with heightened debate at key junctures. The NEP was marred by gaps and omissions, notably its ambiguity on policy mechanisms and long-term implications, and inordinate emphasis on Bumiputera equity ownership. Broader discourses have imbibed these elements and tend to be more selective than systematic in policy critique. During the late 1980s, rousing deliberations on the successor to the NEP settled on a growth-oriented strategy that basically retained the NEP framework and extended ethnicity-driven compromises. Since 2010, notions of reform and alternatives to the NEP’s affirmative action programme have been propagated, which despite bold proclamations, again amount to partial and selective – not comprehensive – change. Affirmative action presently drifts along, with minor modifications and incoherent reform rhetoric stemming from conflation of the NEP’s two prongs.
Institutions and Change: The Case of Malaysia's New Economic Policy Abdillah Noh
Working Paper Series, 2007
It is almost impossible to discuss present institutions prevalent in Malaysia’s political economy without mentioning the New Economic Policy (NEP). It is an institution that has consumed the mental make up of most Malaysians and created a fair amount of discourses amongst observers. For the critics, especially neo liberals, the NEP is seen as costly as it blunts Malaysia’s competitive edge. However, what has blunted most arguments on the NEP and introduced circumspection on the part of observers is that despite the NEP’s state centred and ethnic laced development posturing, Malaysia’s overall development has been far from unimpressive. The paper is not about attempting to bridge this paradox. Rather it is an attempt at adding to the discussion by providing an institutional perspective in appraising the New Economic Policy. Applying ideas of path dependence, critical junctures, institutional change and historical significance, the paper views the NEP as an institution that must be appraised from Malaysia’s particular historical, economic and socio-political complexities. Change if there is to be a durable one, must come from the expected payoffs or rewards viewed by various societal actors and it is a function of Malaysia’s political economy dynamics and prevailing institutional arrangements.
How Successful was the New Economic Policy of Malaysia in the years 1971-1990?
NEP programme was initiated in 1971 and the final programme finished in 1990. It aimed to create, within one generation, a society in which Malay and other indigenous people could be full partners in the economic life of the nation (Aun 2004:73). Further outbreaks of ethnic tension were to be avoided via reducing ethnic inequality and alleviating poverty (Sivalingam 1988:39). The programme laid out a wide range of areas to improve upon, however, its primary aims can be narrowed down to four areas: Education, equal employment and pay, ownership of industrial capital and overall reduction of poverty. All these specific aims come under a more encompassing framework; the programme was an attempt at state-led socioeconomic engineering. When considering its success, the NEP should be viewed within this framework, the successes and failures of what should be seen as secondary aims are all contributors to this more all-encompassing goal. To fully understand the NEP, the historical background must be firstly examined as without this its necessity and objectives cannot be truly understood. Following this, the objectives of the programmes will be examined, which will lead into the analysis of its successes and failures in the key areas targeted by the NEP. Success was seen, to a large extent, in its objective of overall poverty reduction, more representative modern sector and education. Its progress was limited in the field of creating more equal pay and employment prospects. Despite this, the NEP as an overall framework for social engineering, should be considered a success; indeed, it set a precedent of what can achieved by the state in times of extreme ethnic tension driven by socioeconomic disparity. The NEP is a programme with a deeply rooted historical context. To understand why the programme was necessary for the countries hopes for functioning as an effective developing nation state, the socioeconomic structures of Malaysia building up to 1969 must be looked at. Following Malaysia's independence in 1957 Malaysia had an extremely diverse social makeup, the country was composed
IDEAS Policy Paper No. 73, 2021
The New Economic Policy’s 50th anniversary in 2021 provides an opportunity to reflect on its achievements and shortfalls, and imagine boldly into the future. Undoubtedly, Malaysia has been transformed by the NEP at all levels and aspects. Its presence has been far reaching, enduring beyond the original timeframe of 1971-1990, and its legacy will continue into the foreseeable future. The debates surrounding the NEP tend to be polarising and often reach a stalemate; however, a more constructive engagement is possible through re-appreciating the NEP’s strengths and examining its weaknesses/omissions, grappling with its policy discourses as well as with its popular but misguided perspectives. This paper suggests that by doing all these, we can ultimately recraft the NEP to forge a cohesive and inclusive Malaysian society.
MALAYSIA'S NEW ECONOMIC POLICY AND AFFIRMATIVE ACTION: A REMEDY IN NEED OF A RETHINK
Handbook on Economics of Discrimination and Affirmative Action, 2023
Malaysia maintains one of the world's most extensive affirmative action regimes, buttressed by the transformative and iconic New Economic Policy (NEP). Constitutional provisions, political imperatives and socioeconomic conditions gave rise to the establishment of preferential policies in four broad sectors-higher education, employment, enterprise and ownership-favouring the political dominant but economically disadvantaged Bumiputera majority. This chapter elucidates the origins, programmes, outcomes and implications of affirmative action in Malaysia. A brief historical overview explains the language and context of the constitutional authorization of Bumiputera quotas and the modest implementation in the early post-independence years, followed by policy expansion, centralization and intensification from 1971 under the NEP, which was forged in the aftermath of May 13 th , 1969 racial conflagration. The NEP judiciously conceptualized a two-pronged strategy of poverty eradication regardless of race, and "social restructuring" through Bumiputera-targeted affirmative action, as distinct but complementary elements of the ultimate goals of national integration, which entails redressing imbalances and ultimately rolling back overt preferential treatment. However, the NEP lacked a systematic articulation of policy objectives, instruments and outcomes. Malaysia has registered immense progress in facilitating Bumiputera access, participation and upward mobility in the four designated policy sectors. Recent discourses have popularized misguided notions of reform that conflate the NEP's twin elements, and omit attention to the decisive shortfall of affirmative action-its inefficacy in building capability and competitiveness among the Bumiputera beneficiaries, which are requisite for Malaysia to attain the ultimate NEP goals. Malaysia has substantially remedied destabilizing inequalities, but moving forward, must fundamentally rethink affirmative action.
Group-Based Redistribution in Malaysia: Polarization, Incoherence, Stasis
Social Inclusion, 2024
Group-based redistribution is extensive and embedded in Malaysia, and has comprehensively transformed the country since the introduction of the New Economic Policy (NEP) in 1971. The NEP established a "two-pronged" framework of poverty reduction irrespective of race and social restructuring to redress racial inequalities primarily through preferential programmes targeting the disadvantaged Bumiputera majority. The debate surrounding the NEP has under-appreciated its strengths and augmented its omissions and misconceptions, which in turn have shaped policy discourses and attitudes in two ways. First, there is marked polarization, largely along ethnic lines, with the majority group overwhelmingly predisposed in favour of Bumiputera policy and minority groups generally wary of its continuation. The polarization unduly reduces the debate to monolithic pro-NEP vs anti-NEP dispositions, and constricts the solutions to a false binary question of continuing vs terminating the NEP. Second, a broad but incoherent consensus has consolidated around the notion that "need-based" policies should comprehensively replace "race-based" policies. While "need-based" policies are widely embraced, they emphatically do not constitute a substitute for "race-based" policies, or group-based redistribution more generally. Surveys have captured the ethnic polarization surrounding "Malay privileges," but also show that Malaysians unanimously support universal basic assistance. A systematic policy reformulation with universal basic needs and group-based interventions as enduring and distinct domains might hold out possibilities for new and constructive compromise.
ISEAS Perspective, 2019
The Mid-Term Review (MTR) of the Eleventh Malaysia Plan (11MP) was an opportunity for the Mahathir government to recalibrate its predecessor’s economic strategy. Unsurprisingly, it recommits priority to Bumiputera empowerment, but significantly designates some attention for minority groups. In three ways, Malaysia sets reasonable and timely objectives, but lacks clear perspective and systematic plans commensurate with the scale and complexity of these policies. First, the MTR appropriately emphasizes Bumiputera educational access and attainment. However, the programme of action falls short of a systematic framework for expanding need-based assistance in place of race-based preference and for promoting Bumiputera capability and self-confidence. Second, the MTR affirms Bumiputera enterprise development and wealth ownership, and boldly commits to acting against abuse and rent-seeking. But again, the policy agenda lacks focus and consistency in developing capability and competitiveness. Third, in allocating a segment for minority group empowerment, the MTR distinguishes itself from the Eleventh Malaysia Plan, but follows through in a fragmented and piecemeal fashion.