By Henry Srebrnik, [Charlottown, PEI] Guardian
This year marks the 50th anniversary of the most important public policy ever implemented in Malaysia, the New Economic Policy (NEP).
It reconfigured the country’s political economy and created preferential programmes to promote the majority group’s participation in higher education, highlevel occupations, enterprise management and control, and wealth ownership.
Since 1990, the commanding heights of the economy, notably the banking sector, have been in the hands of ethnic Malays.
While everyone agrees that the NEP fundamentally transformed the country, opinion toward its continuing presence is polarized. Advocates assert that the NEP has achieved tremendous success but remains an unfinished business; detractors assert that it has overstayed beyond its expiry date.
Malaysia is a Southeast Asian country of 28 million people occupying parts of the Malay Peninsula and the island of Borneo. It was cobbled together in 1963 when the imperial power, Great Britain, left its remaining colonial possessions in the region.
Most ethnic Malays live on the Malay peninsula, where they constitute some 60 per cent of its 22 million people. The rest are ethnic Chinese, at 28 per cent, and Indians, at 10 per cent.
Article 160 of the constitution defines a Malay as someone who is a Muslim, speaks the Malay language, and adheres to Malay customs.
The states of Sabah and Sarawak have a population of six million, mainly Indigenous peoples such as the Dayak, Dusun and Kadazan.
Peninsular Malaya suffers from deep ethnic divisions. In 1969, widespread ethnic riots broke out after a disputed election, and thousands died. The country was put under emergency rule and parliament was suspended.
In 1971 parliament was restored, and the government decided that the cause of the riots was the economic disparity between Malays and non-Malays.
The Malay share of corporate wealth back then was estimated to be less than three per cent, and the Chinese 34 per cent, with the remainder said to rest in foreign hands. The professions were also dominated by non-Malays, while Malays mostly ran the civil service and the security services.
This divide was a real and largely deliberate consequence of British colonial rule, which imported both Chinese and Indians to help run the economy under the theory that they would be easier to control.
After the country became independent, many Chinese and Indians stayed, using their existing skills, prior advantages, and personal and family connections to become dominant in many nongovernment sectors.
To remedy this situation, the government promulgated the NEP in 1971. It had two main aims: to eradicate poverty regardless of race, and to “restructure society” so that all ethnic groups would be represented in every profession and throughout the economy.
The Malay community was legally given a 30 per cent minimum share across all economic and social spheres, with quotas imposed to ensure that it was represented in all professions. Many government procurements and licenses were reserved for Malay businesses. An affirmative action program like the NEP would “correct” a historical inequality.
As the 1970s wore on, the feeling rose among the Malay establishment that they wanted to reconstitute Malaysia as a Malay state. As the NEP set aside billions to promote the Malay community via direct subsidies, the elite quickly found that almost anything could be justified in the name of “Malay rights” and “the Malay Agenda.”
The new ethnic basis of the Malaysian economy and society in turn gave rise to an official national narrative in which the Malays were the indigenous people of Malaysia and thus entitled to certain benefits, while the Chinese and Indians were unofficially “pendatang,” or “newcomers.”
This all-encompassing ideology became widely known as “Ketuanan Melayu,” meaning Malay supremacy. In administrative terms, the government labeled Malays and other Indigenous tribes as “bumiputera,” a term meaning “sons of the soil.”
The ongoing transfer of wealth from non-Malays to Malays over the past 50 years received an added boost when select Malays were given opportunities to own large corporations via the privatization of state assets in the 1980s and 1990s.
The Malay “businessmen” who profited hugely from the NEP soon became wholly dependent on government contracts and patronage, to which they now felt entitled. Non-Malay businessmen who wanted government contracts
relied on business model which required a joint venture. But the company was in fact run by the non-Malay (usually Chinese) operators.
One important and intentional side effect of Malaysia’s economy has been the use of the NEP to enrich Malay nationalist political parties. They expect Malay businessmen to donate to them, especially during elections.
For many Malaysians of Chinese and Indian origin, the best possible solution is to move to another country. Since the introduction of the NEP, it is estimated that more than two million Malaysians, at least 90 per cent of whom are non-Malays, have emigrated. Those who leave are usually the most educated and talented.
But the working class and the poor among them have had to cope with a life of abject poverty and marginalization.
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