When I started work in 1972, I had a hard choice to make. I was posted to the Implementation, Coordination and Development Administration Unit of the Prime Minister\’s Department and one of my jobs included monitoring and evaluating the success of bumiputera equity accumulation under the New Economic Policy (NEP).
As an Indian, I had to review whether \’I wanted to really help\’ achieve this affirmative action agenda of 30 percent participation and ownership by bumiputeras. Moreover, a good friend had also offered me a job in the private sector which would pay me RM1,250 per month, while the public service salary was only RM750 per month.
By the grace of God, I decided to turn down the other offer and help with developing a \’growth with equity model\’, so as to help the poor and the underdog.
Even then, with a basic degree in economics, I had been able to figure out that what we were trying to do was different from traditional market-driven economics. We could call it the development economics of facilitating or nurturing growth but moderating distribution of the fruits of such development.
With growth and distribution, I was sure that it had very little to do with market per se, but had everything to do with government \’intervening\’ in the marketplace with her very visible hand, in both the supply and demand sides.
The role of government was strategic intervention, but without distorting the marketplace too much; to the detriment of the growth phenomenon. Therefore, our Growth with Equity Model or GEM focused on both aspects of growth and distribution, but never at the real expense of sufficient aspects of marketplace determination of supply and demand, the foundation of all economics.
That was the theory, but what of the practice or implementation? In fact, way back then, after I had discovered through an informal source about corruption in the distribution of the white cloth quota by the then International Trade and Industry Ministry, I wrote a paper to my \’big boss\’ that the NEP as currently then conceptualised could not achieve the 30 percent target, simply because of \’corruption\’ or \’pilferage\’ within the distribution system.
Rather unfortunately, I was told to focus on my real work, and that the issue was a policy matter for the big bosses to worry about. I obliged, as I was taught in the Royal Military College to work \’with obedience\’, to become a good soldier.
NEP revisited
Today, almost 33 years (and after the 30-year original implementation time-frame), we are discussing and debating the same issue, ie, whether we need a \’new NEP\’. But, before we get headlong into the solution options debate, can we agree what is the real problem that we are trying to resolve?
I believe that Dr Lim Keng Yaik may have stated the problem definition as acutely as possible, although not totally. Is this not entirely a Malay problem, he asked? I both agree and disagree.
I agree that it was a \’Malay problem\’ but not anymore! It was a Malay problem 35 years ago after the May 13 riots and racial disturbance in Kuala Lumpur and Selangor. In fact, it was almost entirely a Kampung Baru problem, if the federal government and the Malaysian Armed Forces through the Malaysian Rangers had not stepped in to stop the narrow and emotional definition of the problem.
In the brilliance of the then government leaders, the late Tun Abdul Razak, Tun Dr Ismail and Tan Sri Ghazalie Shafie, they defined the problem fairly accurately and even offered the Malaysian GEM solution called the NEP.
But, as recently very well articulated by Michael Yeoh of the Asian Strategy and Leadership Institute (Asli), the original problem definition and solution had a triple focus: that of an over-riding goal of national unity, and two sub-goals of restructuring society and eradicating poverty.
This was, is, and has to continue to be the Malaysian GEM or the Growth with Equity Model of development economics. The overall target, defined via the Bumiputera Commercial and Industrial Community Report or the BCIC Report, focused on a methodology of \’distribution of growth via the National Trust Institutions, with Pemodalan Nasional Bhd (PNB) being the foremost of it\’.
Today, in theory at least, all the GLCs (government-linked companies) are part of the trust-equity holding for problem resolution. Therefore, as Lim asked, we need to understand why \’there was a failure in the NEP\’ (not in the growth aspects, which was brilliantly done, but in the distribution aspects) even after 30 years?
The issue is serious enough that the son of the second prime minister (and grandson of the late Dato Jaffar Onn) leads the debate on the need for a \’new\’ NEP with a \’keris\’. And the son-in-law of the current prime minister takes on the mantle of his boss to make a younger version of the old argument. And such a dialogue can even be aired over TV3.
The real problem
What then is the real problem? If the problem cannot be agreed upon or argued out rationally (not emotionally this time), we are doomed to failure. Or, as someone else argued on malaysiakini, \’why repeat a failed model\’?
That is the most critical and strategic issue to be discussed, and I hope my \’new bosses\’ would not say to me that is a matter for the bosses to discuss. As suggested by Yeoh, maybe it is time for a third National Economic Consultative Council (Mapen) discussion.
But, my suggestion is that, this time, unlike Mapen II, we do not allow those with vested interests to moderate the discussion. This time also, maybe the under-40s should frame and lead the main discussion, with the above 60s moderating and facilitating the discussion.
All current GLC CEOs, should follow this new discussion as they may repeat the failure of the previous generation as to why the 30 percent distribution target was not achieved. Neither is this an entirely \’Malay problem\’, as one of the writers on the Jeff Ooi blog wrote.
As a global Malaysian citizen, he, too, wants to both participate and ensure that there are both growth and distribution resolutions.
Rather unfortunately, the former bosses neither trusted such early analysis nor were they trustees themselves in the solution, but instead screwed things up and now only need to find a scapegoat.
But positively I will say, the problem was not the non-Malays involved with the ruling party, as we all tried our best with implementation of the resolution even if most of us were emotionally unhappy with it the last 33 years, but as Pak Lah has also said \’enough is enough!\’
The \’new\’ NEP better be really new and the new GEM better contain both growth and distribution aspects, and my real concern is the growth side as I do not yet see where the real new sources of growth are coming from in the 9th Malaysia Plan and beyond, in terms of Malaysian competitiveness!