Ex-MIER chief questions Dr M’s NEP views

By Lee Wei Lian
Malaysian Insider
July 11, 2010

KUALA LUMPUR, July 11 — The country’s premier economic think tank’s ex-chief questioned Tun Dr Mahathir Mohamad’s assertion that the country grew rapidly due to the New Economic Policy (NEP), and instead said Malaysia should thank external factors.

Professor Datuk Dr Mohamed Ariff, distinguished fellow at the Malaysian Institute of Economic Research and its former executive director, also suggested that Malaysia could have grown even faster if the NEP restrictions were absent.

“Mahathir’s argument that the country had developed more rapidly under NEP is questionable,” Ariff told The Malaysian Insider.

“Yes, Malaysia under Mahathir’s leadership did post impressive growth rates, but that cannot be attributed to NEP. A counter argument would be that the economy grew rapidly — not because of, but in spite of NEP.

“The high growth rates Malaysia registered during Dr M’s premiership was largely due to very favourable external circumstances, driven mainly by strong external demand for exports.”

He also warned that the external factors are much less favourable now and NEP type policies could not help the nation.

“NEP constraints will impair the country’s competitiveness in an increasingly competitive environment,” said Ariff.

Mahathir said on Thursday that the country has developed more rapidly under the NEP and the country’s performance outpaced other developed nations.

The former prime minister had also said that the controversial NEP, which was introduced in 1971 and gave economic and other privileges to the Malays, was to help them catch up to other communities and prevent racial riots.

Ariff said that affirmative action was relevant but Bumiputeras were shortchanged by the NEP as it benefitted the elite rather than the poor masses.

“The NEP version of affirmative action could not trickle down as the lion’s share of the benefits were arrested at the top by politically well connected people,” said Ariff. “No one would deny that all Bumiputeras have got something out of it one way or another, but what they got was crumbs falling out of the table.”

Malaysia, once counted as among Asia’s most prosperous countries in the 1960’s and even through parts of the 1970’ fell behind in the following decades.

Despite relatively high growth rates it is not kept pace with its Asian counterparts such as Singapore, South Korea, Hong Kong and Taiwan which are now regarded as developed high income countries.

Prime Minister Datuk Seri Najib Razak has said however that affirmative action will be made more transparent and market friendly as part of his new economic reforms to boost the country’s competitiveness.

  1. #1 by johnnypok on Sunday, 11 July 2010 - 1:01 pm

    It was unfortunate that Malaysia was under a “corrupt” PM during the good times.

    Just look at Singapore … No NEP

  2. #2 by limkamput on Sunday, 11 July 2010 - 1:34 pm

    After the Plaza Accord (where currencies were realigned), there was massive foreign investment flows out of Japan and subsequently out of Taiwan and other newly industrialised countries – a phenomenon generally referred to as waves of flying geese that benefited many developing countries not just Malaysia. In fact, Thailand, Indonesia and even the Philippines too have enjoyed high growth during the later part of 1980s and almost the whole of 1990s. For Mahathir to attribute the success of Malaysia to his efforts is bullsh!t. In fact this country could have grown even faster if there was no massive wastage, piratisation and corruption during his reign.

    The error of Mahathir is not just confined to his view on high growth rates achieved during the NEP period. His so-called “success” using the unorthodox method to contain the Asian financial crisis (in 1997/98) was also questionable. Because of currency control and massive bail out, there was no real restructuring of excesses and crony capitalism in our economy. Hence, unlike Korea which has become lean and mean, the Malaysian economy is still saddled with inefficiency and unwanted industries even until today. Our high infrastructure costs such as toll roads, inefficient company like Proton and Perwaja and high bail out costs like MAS and other government/crony related companies can all be attributed to Mahathir.

  3. #3 by habis on Sunday, 11 July 2010 - 1:59 pm

    Our Maverik is just plain Lucky that during his time and at that period the External Factors and Circumstances favoured him But without the NEP our country would have Progress even Faster and Acheived Greater Height of Success with all our Rich Natural Resources And allowing Other Communities Uninhibited growth.It is a Fact that the NEP Benefited all those in the Higher Hierarchy in UMNO and those Well Connected Important Familes in their Fraternity Circles AND Neglecting all the Poor Bumis.When compared with other Asian tigers like Korea, Japan,Singapore, Taiwan and Hong Kong we are left Far Behind So Mr Maverik Nothing to be Proud off Because you just happened to be there at the right time.

  4. #4 by Bigjoe on Sunday, 11 July 2010 - 2:01 pm

    What is so special about the conclusion except its said by a Malay MIER reseacher? Critics of Mahathir have said it even at his height of success in the 1980s.

    It is Mahathir insistent that Malaysia would not be stable without the NEP is the issue. I say it need not be so. I say it would have been better today for the Malay if the NEP was not around.

    At the crux of it is that the patriots who ran this country, the true followers of Tunku, Tan Cheng Lok and Sambanthan would not tolerate a nation deeply divided. It was their main goal. In the short run the difference between the races could have widen temporarily say in the 1970s but it would have been immediately dealt with the same way Singapore dealt with issues of Malay academics and economics when they saw signs of problems. But with petroleum reserve, we could have done more.

    The big revelation is not that this country grew despite the NEP, that is a given. The bigger revelation is that NEP was a easy way out of a difficult problem and Mahathir in the end is but a leader who took easy ways out. We could have done without Mahathir, we could have been better. Mahathir con an entire country we could not. He convinced an unconfident nation to prostitute itself for short-tem ‘shiok’. Like it or not Mahathir sold our modesty and self-respect in return for his own interest.

    The question is can a prostituted nation redeem herself? Can we stop being a victim? Can we regain our self-respect and dignity from the political pimps who disguissed themselves as our leaders.

  5. #5 by monsterball on Sunday, 11 July 2010 - 5:25 pm

    You can expect that devil to claim all credits and accused others first before being accused for all wrong doings.
    That has been his style..besides instigating ..twisting and his dirtiest politics and massive corruptions are legendary…under his 22 years as PM.
    Sad to say…he is getting worst and will never change…but Malaysians are quite tired his stunts and tricks…except the UMNO B ultras keep hero worshiping him…for reasons they know best.
    Any true and sincere Malaysians will not respect Mahathir anymore.
    He is a continuous pain in the a…s ….a shameless worm with no dignity at all….keep wanting Malaysians to be divided.. to be ruled by his party forever.
    Najib not smart enough…is now a dealer..making deals with voters…to try his style…with same objective….to rule forever.
    Only idiotic voters will want a party to keep ruling them forever…stealing their natural inherited wealth.
    Hurting fella Muslims by UMNO B’s methods of helping Muslims…they choose…yet those being rewarded are feeling so happy…with money stolen from another Muslim to give to him/her?
    Anyway…lets hope the more they pray…the more real truths they will know….unless they already know and are trully hypocrites..not God fearing at all.

  6. #6 by yhsiew on Sunday, 11 July 2010 - 6:35 pm

    Some people still have not woken up to challenges brought about by globalization and the online economy.

  7. #7 by dagen on Monday, 12 July 2010 - 9:17 am

    Jib said affirmative actions will be made transparent and market friendly. He is not happy at all with the fact that in the past deals were negotiated and sealed behind closed iron clad doors. And now folks do expect to see more pictures and images of umno people shaking hands or signing big fat documents in the news. Nah tu dia. Transparent. Nampak tak? Kalau tak u memang buta. Itu pasal u sendiri. Bukan umno.

  8. #8 by on cheng on Monday, 12 July 2010 - 2:41 pm

    Look at what this 4th PM did
    Oct, 1981, RM100=SG$91, HK$333, TW$1560
    Oct, 2003, RM100=SG$43, HK$220, TW$930
    How good is he?????

  9. #9 by Loh on Monday, 12 July 2010 - 3:24 pm

    ///Ariff said that affirmative action was relevant but Bumiputeras were shortchanged by the NEP as it benefitted the elite rather than the poor masses.///

    Affirmative action as practised elsewhere outside Malaysia is meant to alleviate the situation of a class of persons who fall within a certain criterion where such affirmative action is deemed required. To be included into that class a mean test is needed. Bumiputras includes those who are rich and are in a noble position, such as the relatives of the royal houses, for example, it would be disrespectful to imply that the rich and powerful among the bumiputras required assistance, or affirmative action. In fact it is the right and powerful among the so-called bumiputras who hijacked opportunities that should have been reserved for the poor.

    If there are still poor people around among the Malays who need help, they would naturally qualify for assistance based on a mean test. Through mean tests, those rich and powerful among bumiputras would not be able to hijack assistance given to poor Malays. Whether poor non-Malays should be helped or not is a matter for UMNO leaders to consider. If they believe and have the sense of compassion for the poor and needy, they have to explain why poor non-Malays should be neglected. If UMNO leaders believe that the poor have nothing to lose, and the sense of jealousy could move Malays to run amok and cause May 13, they should believe the same could happen when the poor are the non-Malays simply because they react as human as like Malays do.

    Article 153 was included in the Constitution because more Malays needed help then and the Constitution framers did not have the prescience that a mean test criterion would have spared the nation the pain of polarisation resulting from opportunists capitalising on the letter rather than adhering to the spirit of the Constitution. The mistake of the pre-1957 constitution was seized upon in NEP implementation. No one could tell whether Tun Razak would have argued like Mamakthir that NEP should be utilized to create rich Malays to match the rich non-Malays to prevent another May 13, as if the powerful and noble royal houses could not do Malays proud as would some ‘Malay’ billionaires who included mamak-type Malays. Mamakthir claimed that he needed to make Malays millionaires, and later, billionaires at the expense of other Malaysians. One rich Malay family was created when millions of Malaysian motorists pay more for their Proton or other makes because of the AP scheme. Despite the thousand billion ringgit windfall through Petronas unforeseen in NEP the first objective of alleviating poverty among the Malays could not be achieved. That too is after the NEP has doubled its life time. It seems UMNO needed to have Malays to stay poor so that NEP can remain relevant, forever.

    NEP spawns corruption because it makes government service an extension of UMNO which allows UMNO leaders to manipulate government funds with impunity. Government service and hence government of Malaysia is not different from secret society except that it has the added advantage of being recognised outside as a nation.

    If the government declared assistance to be given to the poor, those so classified through a mean test would qualify and becomes beneficiaries; Malays poor cannot be denied. NEP is superfluous in terms of helping the poor. NEP is retained by UMNO to divide the country by discriminating against the minority and thus demonstrate to the majority that they are the favoured people. To retain that status quo, UMNO tells the Malays they should vote UMNO, just like Mamakthir told Malays that they would lose political power without UMNO. To UMNO leaders NEP provides the excuse of helping Malays and more to help them. To the government servants the practise over the past decades where they could ‘rule’ as they please with impunity was made possible with NEP. They do not want change.

    Mahathir argues now that NEP contributed to economic development though he said in the past while power what use was economic development if Malays, his type perhaps, did not benefit without NEP. The two statements said at different time do not jive. Mahathir told Barry Wain that he had two spoonfuls of Pakistani blood though at one time he claimed that he was 100% Malay. Clearly the two spoonfuls of Pakistani blood has corrupted his Malay blood and he can never be 100% Malay.

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