My Say: Thinking beyond the NEP

This article first appeared in Forum, The Edge Malaysia Weekly, on November 14, 2022 - November 20, 2022.
My Say: Thinking beyond the NEP
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For some time, Malaysia’s New Economic Policy (NEP) has been touted as a successful case of “affirmative action” by world standards. The term “affirmative action” originally came about during the US civil rights struggles in the middle of the 20th century. It was meant to replace the more negative connotations of the term “positive discrimination”, which had emerged much earlier in other contexts.

For instance, such measures had been introduced in British India, ostensibly to address problems, including (presumably “negative”) discrimination faced by “scheduled castes” and “scheduled tribes”.

When first announced to the Malaysian public in mid-1971, the NEP was presented as being needed to build “national unity” following the divisive events of May 1969.

The NEP has often been presented, both officially and by others, as responding to “race riots” following the young nation’s third general election in which the incumbent multi-ethnic Alliance coalition lost its electoral majority.

This perspective implies inter-ethnic economic disparities were responsible for “May 1969”. It is important to remember several other developments that preceded the bloody episode.

As in many other colonies, ethno-populism was actively promoted by the British to undermine anti-imperialist opposition. The main opposition to the ruling elitist Alliance in the early 1960s was “left of centre” rather than ethno-populist. 

They were largely eliminated through repression and demonisation for their criticisms of the “neo-colonial” Malaysia project originally intended to include all British-controlled territories in the region.

Sudhir Anand of Oxford in his 1982 study, Inequality and Poverty in Malaysia, found less than a tenth of overall income inequality in 1970 (before the NEP) could not be explained by various non-ethnic factors such as education. 

Thus, over 90% of income inequality cannot be attributed to ethnicity. His analysis implies limited scope for reducing overall income inequality by eliminating inter-ethnic disparities.

The NEP’s primarily ethnic focus for over half a century is hence unlikely to significantly lower economic inequality. Unsurprisingly then, despite over half a century of the NEP, total income inequality remains high.

Equating “social justice” with efforts to reduce inter-ethnic disparities is problematic. The new Malaysian regime defined “restructuring society” as one of two NEP targets.

This has been mainly understood as affirmative action, along ethnic lines, to eliminate the identification of “race” with “economic function”, primarily by advancing the newly emerging Malay “middle class” and capital ownership.

But should social justice be seen in terms of ethnic affirmative action? Such a definition effectively rejects other possible interpretations of distributional justice, for example, in terms of “abolishing exploitation”, or lowering income or wealth inequality, or reducing disparities among different regions.

Sabah and Sarawak state rights within the Malaysian federation did not preoccupy then prime minister Tun Abdul Razak Hussein in 1969-1971. However, this NEP omission is unacceptable to many from the two states who believe they have not had a fair deal from the demographic majority in Peninsular Malaysia.

Others would insist that overcoming gender and other inequalities is fundamental to any comprehensive social justice agenda.

How do we compare other affirmative action policies, such as the contemporary Black Economic Empowerment (BEE) in South Africa? What about the pro-Afrikaner apartheid policies, which also claimed to help them catch up with the previously dominant “Anglophone” white minority?

What are the implications of such policies when introduced and implemented by demographically and politically dominant cultural majorities, as in South Africa, Malaysia and Hindutva India?

BEE in South Africa is generally acknowledged as having been inspired by Malaysia’s NEP. Ironically, BEE has since been re-imported into Malaysia as “Bumiputera economic empowerment”, even using the same BEE acronym.

And how does a society decide on what is a legitimate and acceptable social justice agenda? Who decides and how? Invoking notions of “equality” and “fairness” hardly addresses the difficult issues that need to be resolved.

Affirmative action seems to imply the acceptability of otherwise unequal societies in which aggrieved groups are no longer disproportionately under-represented. It also begs the question of affirmative action for aggrieved minority groups that are not politically dominant.

What then does social justice in India imply, especially for its scheduled castes and tribes? Or for US ethnic minorities, including the descendants of Native Americans or African American slaves?

And when does addressing a grievance support distributional justice? After all, apartheid was a means for white Afrikaners to try to achieve parity with Anglophone white South Africans decades after they lost the Anglo-Boer war.

Various efforts to extend the NEP, especially “restructuring”, preclude a more progressive and comprehensive approach to accelerate development more equitably.

As he presented the Rukun Negara and the NEP to the nation in mid-1971, Razak envisaged a “bangsa Malaysia”, or Malaysian nation, inspired by nationalism, even socialism. To this end, in 1972, he set up the Social Security Organisation (Socso), offering a comprehensive vision of universal social security to be achieved incrementally.

Jomo Kwame Sundaram, a former economics professor, was UN assistant secretary-general for economic development. He is the recipient of the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought.

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