Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily on May 21, 2018

Since the New Economic Policy (NEP) was introduced by second prime minister Tun Abdul Razak in 1971, the idea that the bumiputera community needs to be given priority in national development has dominated the social, political and economic discourse in the country.

While the NEP’s twin goals of poverty eradication and restructuring of society to eliminate identification of economic function with race have brought fundamental changes to the nation, over the years, the policy has been seen to benefit the well-connected far more than it improved the lot of the underprivileged.

According to economist Dr Nungsari Radhi, the NEP was not intended to be a race-based affirmative policy, but rather needs-based, as it was formulated to lift Malaysians of all races out of absolute poverty.

“The bumiputera policy, indeed the provisions in the Constitution that allude to quotas on contracts and employment in the public sector, is primarily for safety net purposes,” says Nungsari, who is managing director of Prokhas Sdn Bhd.

“It is a recognition that as a group, the bumiputeras were — and given their present proportion still are — laggards in the development story and public policy is to address this matter via these policy instruments,” he says in an email to The Edge.

The provisions in the Federal Constitution, which become the basis of the NEP and the bumiputera agenda, do not mean a safety net that only covers the bumiputera community, says Nungsari.

They also do not mean that bumiputeras and anyone else who is above the poverty income threshold should be beneficiaries of safety net programmes and preferential public policy treatment, he adds.

However, as the bumiputera community was the most economically backward when the NEP was introduced, more assistance was extended to the group in areas such as access to land, capital, training and education.

While the NEP was replaced by the National Development Plan (NDP) in 1991, and then by the National Vision Policy 2020, its spirit was retained.

Over the years, a section of the bumiputera community grew accustomed to getting preferential treatment regardless of need.

The policy became a means for Umno, the linchpin of the previous Barisan Nasional government, to secure the political support of the bumiputeras. In the process, it created a rentier economy that fed a privileged class of beneficiaries.

This created a wedge between the bumiputera and non-bumiputera communities. The latter felt marginalised in getting government assistance, while the bumiputeras saw it as their right as enshrined in the Federal Constitution.

The division was used by Umno to control the political equation. At its worst, questions such as whether one is “Malay first” or “Malaysian first” became a means to emphasise the racial tone of national politics.

However, in light of Pakatan Harapan’s (PH) shock victory on May 9, when Malaysians of all races and creeds came together and voted for change, there is hope that the new government will be able adopt measures to help bridge the ethnic divisions.

But how it can achieve this without inviting a backlash from Malay nationalists will need to be given careful thought.

PH will have to address this racial sentiment to ensure voters’ support beyond its first five-year term to bring real changes to Malaysia’s economic and social fabric.

In examining the need for a recalibration of the country’s socioeconomic policies, the constitutional provisions for positive discriminatory policies need to be acknowledged.

Unfortunately, over the years, a policy meant to be implemented based on needs was turned into a platform for ultra-nationalists to insist on “exclusive rights” for the bumiputeras. Those who raised questions about the misuse of these “rights” risked being demonised.

This has been cited as a factor contributing to the talent flight that has deprived the country of a significant pool of skilled workers who migrated in search of greener pastures.

A pet peeve is that many bright students among the non-bumiputera communities failed to secure places in public universities due to the quota system that favours bumiputera students.

Economists say this has led to a serious brain drain problem as non-bumiputera students seek to further their studies overseas and stay on afterwards.

In its election manifesto, PH promised to return autonomy to public universities. However, it stopped short of promising to relax the quota system or make university enrolment more meritocratic.

Observers say this was so that conservative Malay voters would not feel their Constitutional position would be threatened if they voted for an alternative to Umno-led Barisan Nasional (BN).

However, as Malaysians united on May 9 to vote for a change in the management of the country’s affairs, there is hope for a new look at its socioeconomic policies.

According to Hisommudin Bakar of ILHAM Centre, the PH manifesto includes the remodelling of the country’s economic structure beyond race-based socioeconomic policies.

“PH’s economic policy is aimed at improving the standard of living and income level of those in the B40 through measures such as abolishing GST, which is among the 10 main thrusts of the manifesto,” says Hisommudin, the executive director of the political think tank.

“These steps, which focus on an income-focused socioeconomic policy, do not totally negate the existing race-based policy,” he tells The Edge.

To start with, PH’s socioeconomic strategy includes measures such as targeted fuel subsidies and the deferment of repayment for National Higher Education Fund loans until the borrowers earn more than RM4,000 a month.

Hisommudin opines that race-based policies have actually been reduced, especially in the education sector. Needs-based eligibility in the education sector has been more than sufficient to cover the needs of the different communities, he adds.

Nevertheless, according to Nungsari, outside the safety net measures, policies such as the development of a sizeable and sustainable bumiputera commercial and industrial community will be more challenging to recalibrate.

“If safety net objectives are based on need, here, it has to be based on merit, and in today’s interconnected world, on a collaborative model. Businesses cooperate more than they compete and policy interventions should be similarly designed.”

According to social policy analyst Wan Ya Shin of the Institute for Democracy and Economic Affairs, the key lies in policy instruments that do a better job of reaching the target groups.

“Needs or income-based policies would be able to target the measures at the most vulnerable people,” she says.

“It is important to identify the profile of the poor to understand better how to formulate policies that would reach them. Race-based policies would leave some of the poor of other races behind. If the purpose of the socioeconomic policy is to help the poor, then it should focus on need or income,” she tells The Edge via text message.

“This is the right time for socioeconomic policy to change. However, changes need to be planned out thoroughly, implementation must be done in gradual stages and transparency is required to have a smooth transition. Change can only happen if we recognise that we have to work together as Malaysians for growth and development to happen and to help the poor, regardless of race.”

Nungsari notes that mere distribution of economic rents created by quotas, permits and licences have failed to create a bumiputera commercial and industrial community. The policy has, in fact, created a symbiotic relationship between the rent-seekers and the political class, which has corrupted public institutions.

The effectiveness of public institutions determine the success of national policies, including the bumiputera policy, he says. Therefore, Malaysia cannot have a dual national-bumiputera policy riding on two separate sets of institutions. “Both the bumiputera and national policy objectives will fail otherwise.”

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