KUALA LUMPUR, May 19 (Bernama) -- Even though the New Economic Policy (NEP)
has been subjected to intense scrutiny in the past, there is little doubt that
the affirmative policy has contributed tremendously to poverty eradication, as
well created several millionaires in the country.
Most importantly, the NEP has contributed to the political stability of the
nation.
However, the policy also turned into a punching bag for critics whenever the
nation’s economy underwent rough patches, noted former Finance Minister Tun Daim
Zainuddin.
The truth, he said, is that the NEP actually promoted economic growth, while
ensuring equitable distribution of wealth and incomes.
"Several nations that gained independence about the same time as we did
experienced declining living standards, despite similar or even better resource
endowments," he pointed out.
For instance, Myanmar, Ghana, the Philippines and Sri Lanka were once
relatively ahead, but now lag Malaysia.
On the other hand, South Korea’s per capita income, which was 40 per cent
lower than Malaysia''s in 1970, is now three times more than Malaysia''s.
"We used to beat them in soccer in the 1970s, but now their football team
participates in the Olympics. Where did we go wrong?" asked Daim during the 6th
Lecture of the Tun Abdul Razak Lecture series.
POVERTY ERADICATION
There are several compelling reasons that make it necessary for Malaysia to
view its economic and social development from the perspective of the political
economy.
This includes its political structure as a federation, its population
composition along ethic lines, regional and urban disparities, as well as the
position of Malays and Bumiputras.
The Chinese community, which dominates urban areas and commercial
activities, will only be content if their economic position is guaranteed,
despite the current global economic scenario, Daim said.
"Similarly, the Indian community is also asking for a bigger share in the
economy," he added.
Ethnic aspirations, expectations and the economic sharing along ethnic lines
are seen as critical elements of Malaysia''s public policy formulation and will
continue to remain so for many years to come.
Political parties that are insensitive to the situation and do not take the
effort to address or incorporate these issues in their approach cannot hope to
rule Malaysia, he noted.
THE NEW ECONOMIC MODEL
However, the NEP has now been replaced by the New Economic Model (NEM) with
the objective of achieving a high-income nation status by 2020, especially since
Malaysia has been straddling the low middle-income group for too long.
The NEM does not absolve itself of the objective of equitable distribution,
said Daim, adding that the goal of assisting Malay entrepreneurship continues.
"Given my business background, my main concern is the need to conceptualise
and develop a new model for Malay entrepreneurship. In the past, we used
different instruments, such as licensing, price margin preferences, government
procurements and AP (approved permits), in addition to financial assistance.
"Has this model brought about sustainable entrepreneurship? I think the
answer is no," Daim added.
A new approach has to be developed towards the development of Bumiputra
entrepreneurship, which has increased its relevance during these challenging
times.
"There is an important need to ensure sustainable Bumiputra entrepreneurship
class that is less dependent on government support. This model must include
Islamic values that encourage strong commercial interests among its adherents,"
Daim pointed out.
THE WAY FORWARD
Going ahead, Daim said that the society''s concerns about accountability,
transparency and good governance would be important as the country becomes
politically mature and the urbanisation ratio reaches developed-country
proportions.
New voters, especially in urban areas, are demanding greater transparency,
better governance and zero corruption.
The most recent issues of concern involve good governance, transparency and
greater accountability in order to curb mismanagement and corrupt practices.
The lack of concern over these issues has often led to accusations of
corruption, cronyism and nepotism in other developing countries.
The increasing demands for an open tender or open bidding system,
competition policies and fair trade laws also illustrate the emphasis on
adequate economic regulation.
MODERN APPROACH
However, Daim pointed out that since social imbalances exist in our society
even today, total meritocracy, in the classic sense, could not be practiced
here.
"There is still no level playing field yet. So, there is no harm in
assisting sections of industry that have traditionally been associated with low
technology, low skills and low productivity, as well as poor infrastructure," he
added.
Nonetheless, these efforts must be undertaken with transparency and
accountability, and should withstand rigorous public scrutiny, even by the
Public Accounts Committee.
A more modern approach to this is implementing a vibrant economic regulatory
regime that supports competition and fair trade practices, as well as
understands the role of monopolies and the government sector.
Recently, Malaysia passed the competition law and launched an agency to
handle issues that impinge on the rights and obligations of players in the
market place.
The new law is expected to nurture a fair trade culture, which is a feature
of every developed country. Indeed, in most developed countries, the regulatory
environment aims to prevent companies from indulging in unfair trade, while
consumer movements monitor such practices as well.
This also calls for a legal system capable of understanding economics,
competition and the role of the market, so that it can adjudicate cases of
unfair trading practices, such as cartels and price-fixing collusions.
Daim said that Malaysia ultimately would have to move towards a ''developed
country'' culture, in which the rule of law is supreme and democracy benefits
all.
-- BERNAMA
SOR PR CR INE RON
