by Dr. Chen Man Hin
The NEP has been under attack by many foreign investors the latest critic was Thierry Rommel, a top envoy from the European Union, who commented that trade relations with Malaysia has been hampered by its policy of bumiputraism which is racial and not acceptable by global standards.
What Rommel said was embodied in a 34 page European Commission report titled Malaysia-European Community Strategy Paper for the Period 2007-2013 which stated “Crucial policies are an open stance towards FDI, not least in the services sector which needs to be opened up; human capital development , innovation and research capabilities; more competition and less interference of government-enforced Bumiputra–related concerns in the functioning of markets.”
It is not only the European Union that is critical. The US Department of State also stated “one source of impediments to Malaysia’s economic growth is its complex network of racial preferences to promote the acquisition of economic assets by ethnic Malays (bumiputra). The public aim of these programs is to encourage a more even distribution of wealth among races. despite th stated goal of poverty alleviation, these raced based policies.. in practice wealthy and well-connected bumiputera receive the lion’s share of the benefits. The resulting economic distortions in the property, labor and stock markets inhibit growth and deter both foreign and domestic investment.”
The world opinion of NEP is negative and is shown by statistics of FDI inflows into Malaysia and other countries.
UNCTAD figures show that FDI into Malaysia have been low for many years. In 2006 FDI to Malaysia was US$3.5 billion, by comparison Singapore US$30 billlion, China US$ 75 billion. The figures from UNCTAD indicate foreign investors do not have Malaysia on its radar.
UNCTAD ranked Malaysia as the 6th largest destination for FDI in 1995; based on final 2005 figures, Malaysia now ranks 62nd.
All these go to show that the NEP is not a global friendly policy. The trading countries of the world, most importantly USA and European Union have said so in clear distinct terms.
Malaysia should welcome the criticisms of friendly world countries, and take measures to correct its policy of NEP and bumiputraism.
If the NEP is stubbornly implemented, then the DAP hereby warns that the Malaysian economy would be affected severely, as in the case of the Proton car saga which did not follow a global strategy, and is now in deep soup, and is seeking foreign car manufacturers to rescue it.
Back in Malaysia, there is widespread opposition to the NEP. Within the country the NEP which was launched in 1970 has been extended although the 30 per cent target in corporate equity was achieved many years ago, it is allowed to continue. Opposition parties and Keadilan are opposed to the NEP and propose that for the poor a new form of affirmative policy could be implemented which would benefit poor Malaysians of all races.