Craft a needs-based policy

I REFER to the news reports quoting Economic Affairs Minister Datuk Seri Mohamed Azmin Ali that the government will undertake a review of the New Economic Policy (NEP) to meet the aspirations of New Malaysia. He deserves praise for taking one of the most important steps to lead the country on a sustainable growth trajectory.

As the New Economic Model (NEM) report states, Malaysia needs to review the NEP to be competitive in the domestic and external sectors in order to grow at least 6%-7% annually in the next few years. Only with steady sustainable growth can we expect to become a fully developed economy in the true sense of the word.

The review is part of Pakatan Harapan’s reform manifesto to create the favourable conditions that will motivate all Malaysians to have confidence in the future of the country.

The reforms on governance and rule of law will ensure that whichever party rules the country in future, there will be justice and fairness for all Malaysians. The key institutions of government will be made independent to protect the people against abuse of power.

All these reforms will create a stable democracy which is important not just for its own sake but as a necessary condition for sustainable growth. The review of the NEP to make it needs-based instead of race-based will result in it being fair to all races.

Malays will still be the main beneficiaries of the revised interventionist policy because they are the largest community and comprise a higher percentage of the poor.

Whether it’s about business licences and permits, government contracts, housing, education or public sector employment, all will get the opportunity to apply on the basis of their poverty and need for government help. Thus, no one will feel a sense of loss or deprivation in the way the government helps the poor.

This phrase about avoiding “a sense of loss and deprivation” was introduced into the wording of the NEP when it was first written into the Second Malaysia Plan (SMP 1971-75) document to assure fair treatment for all races. It was further stated in the SMP document that the NEP should not “kill the goose that lays the golden eggs”, meaning that its second strategy of restructuring society through the creation of a “Bumiputera Commercial and Industrial Community” and the establishment of state enterprises to support this objective should not stifle the private sector as it is the engine of economic growth.

The government took steps from the mid-80s onwards, after the country was severely hit by the “twin deficits” recession, to relax the equity conditions imposed under the NEP on foreign as well as local companies.

Privatisation was introduced to provide opportunities for private capital and entrepreneurship to take over certain public functions and thereby expand the private sector scope in the economy. The Industrial Coordination Act and later the Foreign Investment Committee and the Capital Issues Committee were abolished to reduce bureaucracy in doing business in the country. These measures helped to revive private sector activity.

The government should now go further to facilitate business decisions. One major issue is the role of state enterprises and GLCs in the economy, particularly those that are competing unfairly with privately owned companies. Redundant GLCs should either be privatised or closed down.

These structural reforms are important to reduce the risks private companies face in diversifying and restructuring their operations in the Malaysian economy. They dare not take risks if the GLCs are in their way.

Malaysia needs to retain the best talents for its development efforts to succeed. I hope the revised NEP will lead to diversity of employment in the civil service and public sector based on the principles of meritocracy and commitment to serve the nation.

Those who are talented should be promoted to the highest positions in public service irrespective of race or religion.

At the same time, efforts should be made to implement the Equal Opportunities Commission in view of claims that there is racial discrimination in the private sector, particularly in the traditional family-controlled Chinese companies. The Commission will help to dispel racist suspicions and would be conducive towards implementing the meritocracy policy with wide public acceptance.

The NEP was implemented with so much politics behind it that the quality of services delivered to the public has deteriorated. For example, so many taxi licences were issued to political favourites that Kuala Lumpur ended up having more taxis per capita than New York City or London. As a result, taxi drivers have to compete so fiercely for passengers that many resort to unfair practices at the expense of quality of service.

In public works, government contracts were awarded to doubtful companies with no track record in business. Projects were delayed for years with no penalties imposed as the Public Works Department was not allowed to apply Treasury procedures to terminate non-performing contractors especially if they were political party warlords.

Another example of political patronage in the NEP is the huge number of Approved Permits (AP) issued to favoured applicants for the import and supply of certain goods, including cars and essential food items, and foreign unskilled labour. This monopoly is a major obstacle to free trade and has resulted in consumer prices being higher than normal for an open economy like Malaysia.

Instead of blaming the GST for price increases, the government should review all the restrictive trade and regulatory policies that result in high costs to the public.

In education, university entrance qualifications and examination standards were made easier in the emphasis on quantity over quality especially in politically sensitive courses like medicine, engineering and accountancy. In addition, university appointments and the teaching curricula are controlled by the Education Ministry to ensure the right racial balance and political attitudes in the higher academic and administrative ranks. Due to ministerial interference under the guise of the NEP, the quality of teaching and skills of graduates entering the employment market have deteriorated so much that employers complain about difficulty in finding the right talent for their business.

These are some examples of the ugly side of government policy that need to be rectified in the revised NEP. Undoubtedly, the review will require strong political courage to bring about the structural changes as there will be opposition. The reality is that these changes are essential to create a strong economy that will make us more stable socially and politically and act as a shield against extremists.

It will inspire the poor of all races with hope that while it may be too late for some to change their life, their children’s future will be much brighter.