The Economist: Benefits of NEP unclear, but costs are plain to see

According to a UK-based magazine, race-based affirmative action has diminished Malaysia socially, academically and economically. — Reuters picAccording to a UK-based magazine, race-based affirmative action has diminished Malaysia socially, academically and economically. — Reuters picKUALA LUMPUR, May 19 — Race-based affirmative action has diminished Malaysia socially, academically and economically but with little gain to the poor Bumiputera who are the intended beneficiaries, according to UK-based The Economist.

In two editorial pieces on the continuation of policies to narrow the gap between the dominant Bumiputera community and the country's other races, the business magazine pointed out that most of the privileges derived from the New Economic Policy (NEP) appeared to aid only the wealthy.

“The ambition to improve the lot of Malaysia’s neediest citizens is a worthy one. But defining them by race is a mistake,” it said in the piece titled “Malaysia’s system of racial preferences should be scrapped”.

“It allows a disproportionate amount of the benefits of affirmative action to accrue to well-off Malays, who can afford to buy the shares set aside for them at IPOs, for example, or to bid for the government contracts…”

Other special privileges include discounts for property purchases that apply to all Bumiputera, regardless of whether it is for a low-cost home or luxury unit.

The Economist went on to say that the NEP and other policies of its ilk have fostered a sense of dependency and entitlement, when its intent was to encourage competitiveness and equality.

Other indirect costs to the country were a brain drain among communities not entitled to these privileges, particularly with the country's academia, as well as a sense of resentment from the same groups.

“As schools, universities and the bureaucracy have become less meritocratic, Chinese and Indians have abandoned them, studying in private institutions and working in the private sector instead,” the magazine wrote.

“Many have left the country altogether, in a brain drain that saps economic growth.”

In another piece titled “Race-based affirmative action is failing poor Malaysians”, the magazine cited the MARA Digital Mall, introduced as an exclusively-Bumiputera retail space, as more evidence of the questionable manifestations of the NEP.

In the second piece, however, it suggested that while the Opposition would use the NEP to accuse Umno of enriching its own leaders, they would not criticise the programme in the manner it “deserves”, due to the desire to appeal to the rural Malays.

The NEP was introduced as a response to the May 13, 1969 race riots, which authorities concluded were caused by income inequality between the Bumiputera community and the country’s other races.

Although it technically expired in 1990, many of the NEP’s race-based policies continue to be enforced and even expanded.