Malaysia and the NEP

Since there is nothing interesting in the local news today, besides crime, I thought that I will blog a little on the NEP article in TheStar yesterday. Our dearest PM was rightfully quoted as saying that many people regard the NEP as cost of doing business. In my experience, that's exactly what every businessman in Malaysia treats it. As such, it's the customer who has to pay for it at the end.

I once worked for the local rep of a multi-national. There, I learned that it was difficult to sell their products to certain parties in Malaysia as these parties required their vendors to have a certain amount of bumiputera ownership. This company was, unfortunately, wholly owned by non-bumis. In order to fulfill that requirement, they tried to look for a bumi partner. However, in the end, the deal fell through as the partner was only interested in being a front, selling the system with a high markup. All support and services would still fall onto the company I was working for.

I would agree with our PM that, "the expansion of an educated and multi-ethnic middle class, thanks to affirmative action policies, has mitigated the risk of mass unrest," and that was the original idea behind the NEP. However, just like he said, "perhaps the most difficult question we must address is to improve equity without sacrificing competitiveness," the question is whether the NEP is helping improve equity or sacrifice competitiveness.

Affirmative action policies like the NEP are like crutches. When a person has broken their leg, the crutches are useful for a time. But after the leg has healed, the crutches merely hinder a person from running. Therefore, the question is a fairly valid one. After 36 years of affirmative action, the question is whether or not the NEP is still relevant and necessary. According to our PM, "great disparities in income and social mobility still exist between ethnic groups," and this is something that I cannot totally agree with. I would replace between with within instead.

If after 36 years of affirmative action, there has been little improvement in the conditions, then it's high time that the policy be re-examined. Maybe there are better policies that could help better conditions. Malaysia always spouts the prosper thy neighbour line when it comes to regional dealings. We have believed that if we help each other, we will all lift each other up in a win-win situation. So, if that's the case, there is really no reason why we should discriminate against each other. Maybe that's the reason why the situation has not improved much even after 36 years.

One possible improvement might be to favour bumi companies instead of non-bumi ones, without it being a pre-requisite. So, with all other things being equal, the tender could be preferentially awarded to the bumi company instead. This would encourage both bumi and non-bumi companies to improve their bids. Instead of offering discounts for bumi property purchases, offer discounts to anyone who comes from a lower income bracket, in order to improve social mobility for everyone.

The current form of affirmative action doesn't seem to be doing a good job. So, maybe it's time to consider making improvements to the system. However, before this can happen, we will still need to work on the transparency bit of governance. That's one election promise that our dearest PM has still not delivered on.