Ideas: Reframe the NEP debate, or be deadlocked another 50 years

This article first appeared in Forum, The Edge Malaysia Weekly, on November 29, 2021 - December 05, 2021.
Ideas: Reframe the NEP debate, or be deadlocked another 50 years
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As 2021, the 50th anniversary of Malaysia’s New Economic Policy, draws to a close, some will say that five decades is not quite enough, others that half a century is way too long.

Malaysia has never resolved these differences, and habits of thought set up the country for another 50 years of deadlock. The “continue versus terminate NEP” debate can never reconcile — not just because the issue is sensitive, emotional and contentious, but because the clash itself stems from serious misconceptions.

Malaysia’s policy conversations should instead focus on the NEP’s underlying principles and enduring objectives. The more meaningful and constructive question is: How does Malaysia build on the NEP to safeguard equality and foster fairness in the decades to come?

Before that, we must consider — and dispel — three misconceptions about the NEP.

The first is a popular stance that Malaysia should stop the NEP and just help the poor of all races. “Poverty reduction irrespective of race” is actually the first of the NEP’s “two prongs”, so to call for the country to do this instead of the NEP is a contradiction. Indeed, if there is one thing people unanimously agree on, it is that Malaysia should keep doing the NEP’s first prong.

More importantly, the NEP did a lot more than help the poor. Its second prong sought to restructure society so as to “eliminate the identification of race with economic function”. Unlike the first prong’s focus on basic well-being and social provisions for all, such as primary and secondary education, rural development and public healthcare, the second prong promoted bumiputera participation and achievement in four key areas: higher education, high-skilled occupations and management, business, and wealth ownership. In contrast to the first prong’s universal provisions, the second prong operated through special, group-targeted measures such as quotas and preferential access.

The NEP aspired to make bumiputeras “full partners” in the economy, which entailed expanding bumiputera capability and competitiveness. This would enable them to participate in upper layers of the economy, increasing diversity and ethnic integration in specific places. These ultimate goals are fundamentally distinct from the first prong’s simple mission of poverty reduction.

In other words, Malaysia should continue doing both universal pro-poor policies, and targeted policies for identified groups. Indeed, it already runs special programmes that facilitate Orang Asli and Indian participation in higher education and entrepreneurship, and increase women’s presence in decision-making positions. Advocating to eliminate bumiputera policies entails eliminating all these group-targeted programmes as well.

That is at best an inconsistency, at worst double standards.

The second misconception arises from the NEP’s official timeframe of 1971-1990. Did the NEP promise to expire in 1990?

Emphatically, though perhaps surprisingly, the answer is “no”. A careful reading of the NEP will see that there was never a clear commitment to terminate in 1990. A critical consideration of its implementation will realise that it was impossible for the entire edifice to be dismantled at one go. True to form, the NEP was succeeded only in name by the National Development Plan (NDP, 1991-2000), and every successive long-term plan has recommitted to the NEP.

The NEP was opaque and non-committal about what would happen in 1990. Moreover, its myriad programmes rolled out piecemeal through the 1970s and 1980s, not in one big bang in 1971. Its closure could not happen in one big bang in 1990. Even if it was possible to commit to a 20-year limit for special pro-bumiputera admissions, how can we subject Universiti Malaya, the only existing university in 1971, and Universiti Utara Malaysia, founded in 1984, to the same deadline of 1990? The discourse needs to move beyond sweeping generalisations and grievances, and deal with the complexities on a case-by-case basis.

The third misconception pertains to a popular claim: the NEP only benefits the Malay elite and has failed the Malay masses. The statement is demonstrably false: millions of Malay and bumiputera households have gained access to higher education and scholarships, micro, small and medium business loans, government and government-linked company (GLC) procurement, and more. The policies have fallen short in grooming talent and enhancing capacity, but the distribution of benefits is unquestionably extensive.

Household income trends are instructive. Rich-poor disparities still need to be narrowed, but we should note that the most authoritative statistics, based on the nationwide Household Income Survey, show inequality declining in the past 15 years — with the bumiputera population experiencing a larger drop compared with the Chinese and Indian populations. In 2019, bumiputeras also recorded the smallest rich-poor gap of the three ethnic categories.

It may be convenient to presume that the system neglects ordinary people and only helps the elite, because this means that abolishing it comes at no cost to real people. But it does. The system lavishly provides bumiputeras access to education, loans, employment, and upward mobility in general. Where it decisively falls short, again, is in cultivating capability, competitiveness and resourcefulness — such that the prospect of discontinued protection feels too disruptive and intimidating for the vast majority of the bumiputera, especially Malay, population.

NEP debates remain antagonised because critics habitually ignore the overwhelming Malay support for the NEP and their anxiety when people demand its removal — opinions that are repeatedly documented in opinion surveys. Calls to terminate the NEP overwhelmingly spring from the experiences and sentiments of minorities, but neglect to engage empathetically with the Malay society, who also have experiences and sentiments on the matter. At the same time, NEP advocates can be dismissive of the concerns of minorities towards unfair opportunity in certain areas, especially public university entry.

Can Malaysia break out of the polarised, ‘continue versus terminate NEP’ deadlock?

One possible way is to build on the NEP’s two prongs by establishing national principles. This approach acknowledges the NEP’s strengths but also accounts for the ways that Malaysia has transformed since 1971. Everyone agrees with helping the poor, and the poverty rate of 50% in 1971 warranted poverty reduction as a defining national priority.

Malaysia in 2021 is thoroughly different. Poverty remains a problem, but increasingly, the country is confronted with larger challenges of public health provision, social protection, universal quality schooling and socioeconomic rights. Meanwhile, group-targeted policies that promote participation, achievement and diversity — targeting bumiputeras, and also Orang Asli, Indians and minority ethnic groups, and women — have become increasingly accepted by society. The challenge for today is not to terminate these policies, but to clarify and enhance them, balancing majority and minority interests, and making the system more inclusive.

Building on the NEP’s first prong, national policy can be guided by the principle of safeguarding equality, with a focus on well-being, dignity and rights. For the second social restructuring prong, a systematic rethink involves reconfiguring the current massive bumiputera agenda and tokenism for minorities into an integrated system of group-targeted policies fostering participation, achievement and diversity — anchored on the principle of fairness.

Of course, there is a mountain to be deliberated further, but isn’t it better to work towards common ground instead of duelling over the non-issue of the NEP’s expiry? The principles of equality and fairness are broad, deep and durable — and worth labouring for new compromise and consensus.


Dr Lee Hwok Aun is senior fellow at the Institute for Democracy and Economic Affairs (IDEAS), and senior fellow at the ISEAS-Yusof Ishak Institute. This article is condensed from the author’s IDEAS Policy Paper, “The NEP beyond 50: Assessing its Strengths and Weaknesses to Chart a Cohesive Malaysian Society”.

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