by Dr. Chen Man Hin
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THE NEP IS NOT GLOBAL FRIENDLY AND HAS CAUSED FOREIGN INVESTORS TO AVOID MALAYSIA AS A PLACE FOR INVESTMENT
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.
NEP – NO ENDING PROBLEM
NEP – NOT ECONOMICALLY PLAN
NEP – NO ENDING POLICY
Again and again, foreign investors are saying that the NEP is out of sync with the reality in the global marketplace. The NEP is the very antithesis of the doctrine of laissez faire where market participants are free to choose their partners and determine their activities in the marketplace based on the free movement of capital, goods and labour!
When NEP imposes 30% equity (or whatever other %) for the Malays and rules that management staff must be at least xx%, surely this infringes the freedom of choice of one’s business partners and the personnel who will determine the success or failure of an enterprise.
So it is rather clear that investors who have alternatives would take their investments elsewhere…After all, there are more investment opportunities in the whole wide world than there is money! And all nations compete for the same FDI.
I suspect that the NEP has succeeded to shrink the economic cake that might have been in Malaysia because of its repressive and myopic policies.
Our political leaders take the opposite view-
“The global economy is not friendly to NEP”
NEP – Nefariously Enriched Parasites
It is very obvious that why BN will abolish NEP when they are the ones who reap in all the benefits! Things will only change by changing the government!
See what Rafidah says:
http://asia.news.yahoo.com/070629/kyodo/d8q2bkjo0.html
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Quote:
Rafidah also stressed that the NEP will not be sacrificed for the sake of foreign investment.
“For us to ignore economic inequality just to attract foreign investments is irresponsible,” she said.
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You think BN will change its policy anytime soon? Maybe in 1000 years’ time they might reconsider!
If the majority of Malaysians realise that NEP and BN have become one helluva gargantuan nation-sapping parasite that is draining the life blood of Malaysia until Petronas runs out of oil money, they must also do the next essential task to save the nation.
Make sure that BN loses their majority and has to form a coalition government at the national level and also give a few states for the opposition to rule.
After 50 years it is time for Malaysians to test new leadership for it is our responsibility and duty to ensure we move away from the racist parties that are strangling Malaysia’s progress.
http://www.unctad.org/sections/dite_dir/docs/wir06_fs_my_en.pdf
Malaysia’s FDI report:
“When NEP imposes 30% equity (or whatever other %) for the Malays and rules that management staff must be at least xx%, surely this infringes the freedom of choice of one’s business partners and the personnel who will determine the success or failure of an enterprise.”
I have not come across foreign investors who say that this guidance issued by MIDA, Bank Negara and the Ministry of Trade is counter productive. In fact at least those that I talked to welcome it agreeing with the host government that it is good for the long term political stability of this country. They have never tried to interfere nor take direct actions to circumvent the rule and guidance issued by these bodies. Their complaint is that they cannot find enough bumiputera partners i.e. companies and individuals with the necessary capital and experience.
Occasionally they do however grumbled or silently protested that they were being forced to deal with local banks and were being made to give a proportionate share of their foreign exchange business to local institutions without adequate record of exposure to foreign trade financing. Their connections with foreign banks are developed over many years and they do not need to offer landed collateral or local securities in many cases – just their parent company guarantee would be sufficient. Local banks usually require landed collateral in return for their long term facilities – term loans rather than letter of credit and bills discounting and other documentary credit, trust receipts and bank guarantees.
As for globalization and free trade, unless this is properly regulated there will be massive unemployment at home in which case it is our local work force that would suffer. Foreign companies do what foreign companies do i.e. remit their profits to their parent companies at the end of the day rather than ploughing back those profit to expand their investment locally. As a country we will be very vulnerable to events in countries thousands of miles away and decisions made by people who have no interest in the welfare of Malaysians beyond the issue of profit or monetary gains to them.
I agree however it is not the duty of any government to dictate the terms of how we go into business, who with and how we spend our money. Those are questions best left to the private sector.
Hornbill mentions the issue of laissez faire but we have left laissez faire en masse as long ago as the early 70s with the emergence of government bodies like FAMA, UDA and SEDCs. Since then more such bodies have proliferated the local scene.
And then there is the usual argument against laissez faire about which students of economics should be familiar with.
NEP stood for “new” economic policy specifically tailored for the advancement of Malays in the economic development vis-a-vis other races, especially the Chinese, who received no protection at all from day one.
What had been achieved by other races were through blood and sweat, and nothing else.
However after 50 years of independence, the “new” is no longer “new” but utterly “stale”!
Who would be convinced that after 50 years of protection and favouritism, Malays are still under developed economically in this country?
What can it be then? for this so-called “new economic” policy to be “remoulded” and continued with vengence, instead of being demolished and be done away with, to create a more level playing field for all the poeple in the country?
All races are human beings, they are all the children of God, all are citizens in their own country, and all should enjoy equal protection under the laws and policy of their own country.
By alienating others, NEP was creating distinct discrimination among the citizens in Malaysia. Over 50 years and on, the NEP culture is already ingrained in the brains and minds of those who enjoyed the utter benefits of the “new” policy.
Even the simple task of not giving the 10% Bumi discount to those who own more than one medium-cost house is not discontinued.
This means that all the other house buyers may have to pay more for their first homes to subsidise millionaires.
No wonder the rich can only get richer.
The NEP had noble intentions but those implementing it and the practices have been abused so that possibly 80% of the benefits go to 20% of the elite.
The rest get some crumbs.
http://malaysiawatch2.blogspot.com/2007/06/nice-gesture-but-it-shows-how-nep-has.html
The effect of a policy that requires bumiputera equity participation in private businesses built up over generations by Chinese families is not fair. Steps were never taken to reduce the severity of the consequences of the implementation of such a policy. This is a valid criticism leveled against the policy.
In many cases, such family companies chose not to expand their investments because that would make their companies subject to the policy which requires bumiputera equity participation. There have been companies seeking public listing but have been forced to abandon the idea because of this policy.
“Even the simple task of not giving the 10% Bumi discount to those who own more than one medium-cost house is not discontinued.” H J Angus
This bumi discount should have been discontinued because it is being abused. You are creating a permanent underclass of non-Malay buyers of landed properties who deserve equal treatment.
I really wonder, if Thierry Rommel’s comment has anything or everything to do with the Proton-Volkswagon talks?
Did our idiots throw the bumiputera equity issue into the negotiations? Volkswagon is known to only accept 100% or least, controlling interest.
Take it or leave it.
Proton is not about bumiputra participation in the automobile industry. It is about government participation in an industry in which the private sector with its emphasis on profit is unwilling to enter.
Non Malays have long been disappointed with how the government treat them as second class citizens. They withheld from voicing their grievances for the sake of a higher good – peace and national unity. They have succumbed to the unfair treatment hoping that one day that they too, will be acknowledged as true Malaysians, where everyone will enjoy the same priviledges. If not for the love of the country, why have they silently endured their grievances for the past 50 years ? Is this not a form of sacrifice? Is this not patriotism? What sacrifices have the Malays offer to this country? By changing history, not acknowledging the contributions of the non-Malays for this country? Without the non-Malays, will Malaysia have independence in the 1st place? Non-Malays can only look into the eyes of the Malays with despair, they have suffered long enough. They cant bear the thought of their children’s lives being threatened by the keris – again. Although unwilling, they have no other choice but to pack their bags and leave.
Referring to…
“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.”
While it is claimed that NEP is the root-cause of ranking drop from 6th-62nd, afterall NEP (or any of it kinds) has been there since ~1970. In my opinion, NEP is just one of the many many reasons Malaysia fails to attract FDI.
China, Vietnam, India, and even Indonesia have been progressing well in attracting FDI. What have we done, what have we changed to compete with other emerging countries? …. we are just too slow to adopt to changes, and react quickly ….
“The way to stop discrimination on the basis of race is to stop discrimination on the basis of race.” Chief Justice John Roberts US Supreme Court. June 29, 2007.
Nation’s
Economy
Poverty
Malaysia is telling the world that she is still poor.
The fat lady rudely told off Thierry Rommel by saying the NEP was endorsed by all races.The NEP was implemented by force and compulsion.There is no such thing as it is accepted by all races now.Probably yes during its inception 37 years ago.But after 37 years,we can see so many bumis flashing their wealth by their display of big bungalows,expensive cars,gigantic business conglomerates,large numbers of overseas as well as locally trained professionals,ubiquitous impressive title holders.Now look at the common and poor Chinese and Indians.They are everywhere in the rural areas and in the big towns and cities of the country.Yet the fat lady so impudently lied that the NEP is still agreed by all races.
A severe case of dysthrophy has already set in for a certain segment of the population. Owing to the lack of use for decades, their brains and limbs have become useless. This condition is known to have passed from generation to generation.
“…But after 37 years,we can see so many bumis flashing their wealth by their display of big bungalows,expensive cars,gigantic business conglomerates…”
I hope this is a deliberate exaggeration to prove a point.
The truth is there are poor Chinese as there are poor Malays (despite the NEP which has been pretty much hijacked by UMNO politicians and those politically connected to benefit family and business cronies and to build business empires) and poor Indians. Poverty does not recognize race, religion nor political affiliations.
““The way to stop discrimination on the basis of race is to stop discrimination on the basis of race.†Chief Justice John Roberts US Supreme Court. June 29, 2007.”
To show that we can never completely factor out race from our calculations in every day life, here it is!
The United States the beacon of the free world, after some 237 years is still struggling with racism despite their Constitution and all the laws.
Compared to the United States, Malaysia is a young fart arrogant enough to be telling the rest of the world that it is doing OK with her large minorities – that they are treated fairly and everybody is living happily ever after.
The truth is those who are living happily ever after are those who fly business class to destinations like Paris, London and New York, and live in huge mansions with more rooms then they care to count and more cars than they can drive and more mistresses than they have time to share with and more share than they have time for (huh?).
Very funny. In 1995, the NEP has been in practice for 25 years and yet Msia was 6th largest recipient of FDI. So how does this prove that NEP has led to Msia’s ranking dropping to 62nd in 2006? And could you please quote your source of UNCTAD ‘figures’?
And who on Earth is Dr Chen Man Hin? What is ‘world countries’? What is ‘global friendly’? And what is ‘deep soup’? Enlighten me if you can, but if you can’t write well in English, it makes your arguments much less credible.
M’sians need to learn how to think and reason, and not be easily influenced by those with special motives.
Special motives?? Vested interests you mean.
///The fat lady rudely told off Thierry Rommel by saying the NEP was endorsed by all races.///
The NEP was forced down the throat of the component parties in the 1970s, and that was to last for 20 years. MCA, MIC, and Gerakan should now come out openly to confirm whether they ‘endorsed’ the extension of NEP and gave UMNO the PA to decide when to further extend it, forever.
The fat lady has learned from her ‘father’ TDM in making the same statement. That is why when the BN component non-Malays remain in BN, BN needed to claim that all policies, including those that were against the interests of non-Malays were welcomed by non-Malays, because their representatives agreed to them, and thus all non-Malays agreed to them by extension.This shows that to stop BN from resorting to the simple excuse, the non-Malays should make sure that they do not vote for any non-Malays in BN component parties.
The fat lady is telling the non-Malays a fact that the non-Malay parties in BN not only could not stop umno from doing what she pleases, but worse, BN does not have to justify their unfair actions because non-Malay representatives agreed to the policies.