Thursday, August 25, 2011


As posted by Dr. Mahathir Mohamad at Che Det on August 25, 2011

1. The New Economic Policy has been denigrated by opposition politicians including Dato Seri Anwar Ibrahim until it seems to be the worse policy ever conceived and implemented in Malaysia.

2. While Ramon Navaratnam blames the NEP as being the cause of foreign investors not coming to Malaysia, Anwar has condemned it for the abuses and corruption involved in its implementation.

3. Anwar loudly proclaims that the NEP benefits only the cronies of the Government and that the contracts, Approval Permits and licenses given out under the NEP involve corruption. He makes it sound as if the NEP did not benefit the Malays and other Bumiputera at all.

4. While it must be admitted that a few of the recipients of APs, contracts and licenses may know the leaders of Government or are members of UMNO, and that there may be corruption involved in some cases but the charge is not warranted because in most cases the benefits of the NEP has been enjoyed by almost every Malay and Bumiputera. In fact indirectly and in some cases directly it has benefited the non-Bumiputera as well.

5. For example every Malay child is helped in his education with free text books and often with free meals, Schools are built in the remotest areas where before there were no schools. Hostels are built for mostly Malay and other Bumiputera children so that they can live a better life and are able to study in better surroundings then in their homes in the villages.

6. For the qualified, tertiary education is readily accessible, with huge numbers of scholarships. As a result many of the children of poor families or of families unable to pay high fees, now hold university degrees, are highly qualified and many are professionals. As an example where before only 5% of the doctors in Malaysia were Malays and Bumiputera now 40% of them are Malays.

7. It is the same with the other professions. Just count the number of students in the public Universities in the country and those abroad on scholarships and one will appreciate how the NEP has benefitted the Malays and other Bumiputera in education.

8. It must be remembered that providing good educations, free book, food, hostels, scholarships benefit not just the recipients but also the parents. The NEP contributed most in the education of Bumiputera.

9. When under the NEP shares of companies were allocated to Malay applicants, they invariably sold the shares for capital gains almost immediately. This is because they did not have the money to purchase the shares and they had to repay the bank loans they had taken.

10. To avoid this the Government decided to create unit trusts so that the shares can only be sold back to the managers. Thus was the National Equity Corporation born.

11. Today more than ten and half million (10,500,000) Malays and other Bumiputera hold shares in these unit trusts with total holdings valued at one hundred and thirty-five billion (135,000,000,000) Ringgit. This is a direct benefit from the NEP. The unit trust make up a substantial percentage of corporate wealth held by the Bumiputera.

12. Felda, the Federal Land Development Authority was started before NEP. But under the NEP the role of the authority was greatly augmented. The settlers benefit from the spin-offs into the transport business, refining and marketing of the produce.

13. Felda has been nursed until it has become the biggest plantation company in the world. The settlers have much higher incomes while their children are much better educated. All these are due to the new economic policy.

14. Microcredit is extended to the smallest village enterprises and this has helped tens of thousands of Bumiputera villagers, especially the women in business.

15. There are now thousands of Bumiputera businessmen who benefitted from the importation of used and new cars, from becoming agents and vendors to the national car projects and also in the oil and gas business as a result of the NEP.

16. The best of them have grown big, some very big, becoming car dealers and assemblers, housing developers, steel fabricators, boat and ship builders, IT, transportation, ports and shipping, food and cosmetic manufacturers and many other businesses.

17. The privatisation scheme have also benefited Bumiputera business greatly, including the supply of materials and employment of engineers. Today they undertake multi-million dollar contracts in foreign countries.

18. Are they all cronies, these successful ones? There are far too many of them to be cronies. That some are known to Government leaders is to be expected because Government leaders in Malaysia are accessible to everyone as a matter of policy. They may be UMNO members. But then there are more than 3 million UMNO members. Is the Government expected to exclude them from the benefits of the NEP?

19. The fact is that almost all of those who have succeeded have benefited from the NEP. Those who show capability cannot be excluded from the support under the NEP. In fact it is safer to help those with good records then to give to untried people.

20. Why is it that the Government is doing all these under the NEP? The answer is simple. The Malay businessmen do not get opportunities from the private sector. They never get contracts or sub-contracts or contracts for supplies in the private sector. Even after they have proved their capabilities when carrying out Government contracts, they will not get contracts from the private sector.

21. On the other hand even when the NEP was being implemented, many of the Government contracts still go to non-Malays.

22. The accusation of cronyism is made without any real basis. There are far too many benefitting from the NEP at all levels and in all fields for the policy to be benefitting only the cronies.

23. There may be corruption but the NEP would not have succeeded to the extent shown if corruption prevails in every case. The focus on cronyism and corruption is political, not based on the real role and achievements of the NEP.

24. If there is no NEP, the economic position of the Bumiputera would be dismal. There would not be as many Bumiputera professionals as there are now. The disparities in all fields of economic activities would be very much greater as the national economy grows.

25. Some of the Malay beneficiaries of the NEP are supportive of the idea that the NEP should be scrapped. They dislike the benefits they had obtained from it to be mentioned as this would amount to, what the Malays called “ungkit”, i.e. to remind one of a debt of gratitude. Yet in Malay culture one should never forget the “budi” of another. As Muslims they should know that thankfulness for any benefit is enjoined by Islam.

26. Corruption and cronyism should be condemned, but most of the accusation is unjustified. They are motivated by personal and sectarian politics. The fair-minded must consider also the good achieved by the NEP.

27. It is sad that people who had benefitted from the NEP should want to deny it to others who are still in need of it.

28. Admittedly the NEP has not achieved the target to remove the disparities between races in Malaysia completely. But there can be no doubt that it has reduced the disparities enough to keep Malaysia stable even during the financial crisis. What is more, it did this without stifling the remarkable growth.

29. Have the non-Bumiputera benefitted from the NEP? They have. They have simply because invariably what is given to the Bumiputera must spin-off to the non-bumis. In some cases the Ali-Baba phenomena are exhibited, with the Bumiputera merely getting a small portion for just lending his name. But even if a Bumiputera contractor decides to implement the contract, he still has to procure building materials, skilled labour etc from the non-Bumiputera companies. Specialised work must also be given to non-Bumiputera as there are hardly any Bumiputera sub-contractor capable of doing this. In fact a substantial part of the projects during the NEP period went to non-Bumiputera. It cannot be that the non-Bumiputera earn no profits from these contracts, sub-contracts, supplies and skilled labour.

30. If there is no NEP and the contracts etc go directly to non-Bumiputera, then there would be no spin-off to the Bumiputera at all. The non-Bumiputera do not need Bumiputera for their contracts. The result must be increasing disparities in wealth between Bumiputera and non-Bumiputera as the economy grows. The dichotomy already seen in our Malaysian society will become worse when this happens.

31. Politicians must find issues to support their bids for power. But condemning the NEP can only be done by twisting or ignoring the contributions of that policy to political stability and the economic success of Malaysia.