NEW ECONOMIC POLICY

New Economic Policy.

It's not easy to debate about the NEP. Sincere arguments to reason out will be taken as attempts to abandon policies that were put in place to help out Malays. It is universally accepted that as at 1970 and even now, Malays have remained, comparatively speaking, economically behind. We can argue back and forth as to the reasons why this is so. The fact remains that they are indeed economically challenged compared to the greater economic advancements made by the Malaysian Chinese and to a lesser extent, the Malaysian Indians. I am skeptical however that much has improved for the Indians. The Indians to my mind are suffering even greater intra ethnic economic disparities.

For a Malay to speak about the weaknesses of the NEP is hazardous. It can be misconstrued as being less Malay or even treasonable for a Malay to discredit policies that are claimed to be helping out your brethren. You can be labeled an ingrate.

This attitude must be rejected because it can be used as an excuse to justify the injustice committed by a few in the name of the race and sometimes religion. Sitting idly by when you are aware that something is terribly wrong, is even more treacherous to the Malay cause.

The basic question is whether we tolerate a set of policies that perpetrate the enrichment of a small group of Malays or rationalize such arrangement as a small price to pay, for a greater cause.

Everyone knows that the overriding objective of the NEP is to achieve racial unity. To achieve this overriding objective, the methods were:-

1. To restructure society so that no one race is identified with a particular economic vocation. Simply means, no one race must be allowed to have a monopoly over any particular economic activity.
   
2. To eradicate poverty irrespective of ethnic origins.
   

To rectify the imbalances, the two ways that were accepted as more or most effective were education and business.

The link between educational standards and economic standing is well established. The better educated you are, the better chances you have to earn higher incomes. The other way is to speed up the entry of Malays into the business world. Many ways were carried out- Malays given priority in certain businesses; Malays were given licenses and quotas, given direct awards of contracts and so forth. The most contentious is the granting of 30% equity to selected Malays. Most of them cashed out to realize higher capital gains. Indeed as admitted by the PM, out of the 54b allocated only RM 2b remains. That means, those Malays who cashed out have betrayed the Malay economic cause. They and the over 1 million UMNO members who did not vote UMNO candidates should be called traitors by number 2 bossman.

The government must have known this sort of behavior. To circumvent this act of sabotage, they created unit trusts so that the trusts can buy shares on behalf of Malays and have them sold to Malays in the open market. Ordinary Malays gaining access to buy share from unit trusts can still enjoy capital gains when selling. Because of this opportunity, the Malays are said to enjoy better income.

These two mean that catapult Malays to higher income brackets must be judged differently. You get good education; you enjoy a steady stream of income. You sell your stock, it's a one off addition to your stock of wealth. Unless of course, you are in the business of buying and selling shares. The first, advancement through education guarantees you lifelong earnings. It's a flow. The second, selling shares acquired confer one off benefit. One is long term, the other short. One empowers you by converting you into a wealth creating actor. The other doesn't generate wealth creating capacity.

This main difference is what troubles us.

Advancement through education.

As we have said, the government regarded educational opportunities as a means to jump-start Malays into higher incomes bracket. In the 60s and 70s, entry into 6^th forms was made easier for Malay students. Those with grade 2 could enter form 6 as a pass at HSC or STP was the entry requirement into the universities. Malays students with minimum principal passes entered universities and most of them took advantage of the chance given. The general feeling was, Malays were handicapped in terms of education because they lacked many amenities. Many went on to train under INTAN to become MCS officers and went on to become head of departments, MCS officers and District officers. Of course they were fast tracked to become these. Even those who did not have the proficiency in English were also able to enter the job market. Many became professionals- lawyers, engineers and so forth. Private companies were eager to absorb qualified Malays and employ them where they received further training and gained experience.

It would be interesting if the government can produce data showing the number of Malays who got into the higher incomes bracket as a result of education with those who became richer as a result of getting and cashing out shares. We will then be able to compare the efficacy of the two approaches. It's a good guess however to say that those succeeding through education are bigger in number than those receiving goodwill.

Which route is better?

We can judge which of these two approaches and the principle/s behind them are better. My own thinking is that advancement through education is more democratic and closer to libertarian views while the route taken to enrich Malays by more or less arbitrary selection process isn't. How do you select who shall get your windfall? On the basis of you know them? That would certainly exclude a large number of Malays who can't even get close to leaders, decision makers and head of departments. The general thinking is, because the selection process isn't democratic, it has led to a belief that such policies only lead to enriching a few.

Giving educational opportunities to Malays is the same as empowering them. With education they can take a firmer place in society because now they have the tools to at least compete. But more importantly, it elevates their dignity because now, after education and training, they can advance by leveraging on their skills and individual efforts. The form of government assist takes the shape of an impersonal selection system. You offer your educational levels based on what you have put in up against a selection system. You gain access by offering the only asset you have- the education that you have attained.

In that way, the distribution of educational opportunities is more just and fair. The relaxation of entry rules into learning institutions, are faced by all Malays. Malays compete among themselves through their educational attainments. Against a selection system, the competition is only between you and the system.

But more importantly, access to educational opportunities, training and acquiring skills allow individuals to acquire wealth generating capacities. In the final analysis, the educational levels you get will depend on the efforts you put in, the discipline under which you subject yourself to. The more you put in, the more you can take out. You compete one to one with your brethren, and that makes your chances to succeed fairer.

You can't argue on these terms when your advancement is gotten through a gratuitous windfall in the form of being given almost free at times, shares in ongoing businesses. What have you offered to acquire them? Nothing except by being who you are. That makes the selection process highly subjective- because you now operate under a system that promotes you on the basis of who you are and not on the basis of what you can do. Can the government publish the list of the recipients of the RM54 billion shares and also publish the names of those who have cashed out? It is highly likely that the majority who got and later sold out are personages of the higher order.

Take the case of the 30% equity requirement. We don't have an impersonal system that filters who shall get and who shall not. What we have is a highly subjective assessment. This person deserves so, and therefore we give kind of thing. Who gets therefore depends on how well one knows the giver. We have a subjective system that is judgmental as to who shall be given. Access is not opened to everyone simply because the requirement of who you are is most probably inherited or acquired as a result of being known to decision makers. Decision makers decide who they shall enrich. Allowing that, means that our advancement now depends on the charity of others. Being dependent of others for our advancement goes against the principle of being a free man.

Access to the privileged head start isn't opened to everyone. Indeed, most times they are known well ahead among policy makers and it's impossible to set aside the suspicions that they will take first.

The biggest difference then is that while access to educational facilities is more democratic ad depend on what you can do, access to who gets what business advantages such as acquiring 30% shares is not democracy friendly. It depends on being who you are and depends on who you know.

Access to educational facilities and opportunities is opened to everybody and we need only one qualification which is we offer the educational attainment that we have. Access to getting business privileges does not operate that way. The government through the agency of various intermediaries such as politicians, government officers and so forth determine who shall get rich. It's a system of picking winners based on ascriptive norms. (Being who we are as opposed to what you can do).

Education gives a direct impact on wealth creating potential while distribution of assets on the basis of subjective criteria will only frustrate wealth creating potentials. Simply because you haven't developed the sustaining and supporting skills to manage the windfall you unexpectedly get.

Stepping up the ladder is achieved by way of individual efforts by each and one pursuing his/her own vocational interests. On the other hand, social advancement through gratuitous gifts involves expansive government intervention. In the pursuit of advancement through education, we compete one to one against an impersonal system. We use our abilities. But when government gets involved by conferring privileges on those who get so by being who they are, you are no longer competing one to one. What you have now, is you are competing one with another plus government behind him. Surely that cannot be fair play? In addition, bigger involvement by government will often lead to bad side effects such as abuse of power and corruption. Not to mention, the god playing mindset acquired by decision makers.

We object to this kind of strategy of selecting winners based on subjective assessments because we want a system which facilitates social advancement that rewards us on the basis of what we can do. That is the principle behind advancement through education. You are competing on your own using what skills you have acquired. We want to compete one to one and not against another one with the might of government behind. That's not fair.