The New Economic Policy (NEP), introduced in 1970, was a move undertaken to correct extreme economic imbalances present at that time. About 66% of bumiputeras were living below the poverty line (compared to 27% of the Chinese and 35% of the Indians). The mean household income of bumiputeras was only 65% of the national mean (Chinese: 149%; Indians: 115%). Furthermore, bumiputeras owned only 2.4% of the nation’s corporate equity and were mainly employed in the traditional rural sector (74%). With national unity as its aim, the objectives of the NEP were to eradicate poverty and eliminate the identification of race with economic function.
While the NEP has come under constant attack, the government has never published an overall report on how the NEP has fared on its objectives, what has been the unintended impact of the NEP and what form the NEP will take, if any, in the future. Data suggests that results have been mixed. Poverty has been significantly reduced, but not eliminated, at 3.6%.
Malaysians are still living below the poverty line. High incidences of poverty are still observed in states with a majority bumiputera population, such as Sabah (23%), Terengganu (15.4%) and Kelantan (10.6%). Bumiputera representation in key professions has certainly improved significantly and between 1970 and 2005 (pardon my dated stats), the percentage of bumiputera doctors increased from 4% to 39%, engineers from 8% to 46%, architects from 5% to 45% and accountants from 8% to 17%. However, bumiputera representation in senior management is only 31%. On the equity front, the various unit trust schemes introduced have successfully increased bumiputera shareholding in listed companies to 36%, but ownership of non-listed entities remains relatively small at 8%, reflecting the poor performance of bumiputera entrepreneur development programmes.
The question is, should the objectives of the NEP continue to be met as Malaysia embarks on new growth strategies?
Against the above backdrop, the Malaysian Government still thinks of a revamped NEP. The newly launched Bumiputera Economic Transformation Plan 2035 (PuTERA35), aims to significantly increase Bumiputera participation in high-skilled jobs and equity ownership over the next decade.
PuTERA35, launched by the Prime Minister, outlines the government’s goal to have 70% of the country’s high-skilled jobs occupied by the Bumiputera, up from 61% in 2022. The plan also seeks to raise Bumiputera equity ownership, both by individuals and through Bumiputera-mandated agencies, from 18.4% in 2020 to 30% by 2035. PuTERA35 aims to lift the contribution of Bumiputera companies to the country's gross domestic product (GDP) to 15% in 2035, from 9.1% in 2022.
PuTERA35 encompasses three core areas, 12 growth drivers and 132 initiatives to advance and empower Bumiputera development towards making Malaysia a regional economic leader.
According to the Economy Minister, Bumiputera ownership in public listed companies stood at just 7% as of 2022, representing 62 companies out of the 945 listed on Bursa Malaysia. In terms of labour participation, the number of unemployed Bumiputeras totalled 387,800, or 61.5% of the national total of 630,400 as of 2022. Notably, 70.8% of unemployed Bumiputeras are from the youth demographic, aged between 15 and 30 years.
People are tired. A never-ending NEP saga. In the private sector, someone will resign, or the company will collapse if a plan or strategy fails. That’s not for the public sector. After more than 50 years of affirmative plans and more than RM1 trillion spent (this is just a rough estimate, no one writes on the cost of the policy), the targets are not met. Surely you can’t continue on a failed track. Couldn’t we do a Malaysia B40 Plan?
References:
Govt aims to have Bumiputera holding 70% of high-skilled jobs, a 30% equity ownership by 2035, Emir Zainul, theedgemalaysia.com, 19 August 2024
My say: Are NEP distributive goals still valid? The Editor/TheEdge, updated 21 August 2014
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