Yet another NEP warning, yet another silence
Yet another NEP warning, yet another silence
When Musa Hitam and Nazir Razak – two respected men - warned about the damaging unintended consequences of the NEP and its successor policies, I had expected it to spark a robust public debate. It didn’t happen.
Two distinguished men associated with the New Economic Policy (NEP) have publicly warned that its prolonged implementation has produced dependency and mediocrity.
At a forum on Sept 8 commemorating second prime minister Abdul Razak Hussein, Nazir Razak—son of the policy’s creator—described the NEP as having fostered a “tongkat culture” of dependency among Malays.
FMT quoted the CIMB Group chairman as saying the NEP was only meant to continue for 20 years, and that former deputy prime minister Dr Ismail Abdul Rahman had even labelled it a 20-year “handicap”.
“We will be in serious trouble if we have to continue. And when it goes on for too long, this ‘tongkat culture’ becomes deeply embedded,” Nazir warned.
Noting that the NEP had focussed excessively on ownership distribution and contracts rather than education and skills, Nazir criticised the absence of genuine competition, saying politicians’ discretion in awarding Bumiputera contracts and the subsequent lack of competition had “weakened businesses” and produced rent-seeking behaviour.
Former deputy prime minister Musa Hitam, who served under Razak, echoed the assessment. He stated that the policy “inadvertently produced a culture of reliance on government assistance” and had made Malays overly “pampered by the government”.
While acknowledging its benefits, Musa observed that recipients developed a sense of insecurity: “People fear receiving nothing, but even when they receive assistance, they say it is not enough and ask for more.”
Musa knows what he is talking about as he was involved in the NEP’s early years of formulation and implementation, and he is one politician who is not afraid to say it as it is.
These critiques highlight a complex legacy, as the NEP undoubtedly achieved notable milestones during its early decades but also caused considerable problems.
Instituted in 1971 in the wake of the tragic May 13 racial clashes, the NEP set out with an egalitarian dual-pronged objective: to eradicate absolute poverty regardless of race and to restructure society to eliminate the identification of race with economic function. It was also intended to unite the people.
Through aggressive state-backed interventions—including massive investments in rural education, the establishment of residential schools, preferential university access, and targeted equity transfers—the policy registered undeniable successes.
It successfully lifted hundreds of thousands of Malays out of poverty and catalysed the emergence of a broad, educated Bumiputera middle class. Professionals, civil servants, and corporate managers from the Malay community filled ranks that were previously inaccessible.
However, the policy also offers a classic case study in the unintended consequences of extended social engineering. By insulating a favoured group from market competition through quotas, political discretion, and automatic entitlements, the state increasingly substituted patronage for internal capability development.
As economist Thomas Sowell has documented in comparative studies of preferential policies worldwide, group entitlements rarely help the most vulnerable members of the target group.
Instead, the substantial benefits disproportionately accrue to those already positioned to exploit them—the political elites, the well-connected, and the upper tiers of the beneficiary group.
It rewards connections over competence and turns people into quota-watchers rather than wealth-creators.
Meanwhile, the costs are diffused across the entire population, manifesting as a sluggish economy, brain drain, diluted meritocracy, and an entrenched culture of rent-seeking.
Thinking Malaysians have noticed the persistent middle-income trap, widening disparities within the Malay community, systemic governance failures where ethnic patronage often enables corruption, and a staggering national debt burden.
It has been reported that the gap between rich Malays and poor Malays is far wider than the gap between the average Malay and the average Chinese or Indian. Rural Bumiputera, Orang Asli, and the bottom 40% in the Malay heartlands are still struggling while a small group of well-connected elites – mostly urban and politically linked – have cornered the benefits.
Cronyism and rent-seeking became the name of the game.
Decades later, Bumiputera companies still contribute only a modest share to the GDP, underscoring that the policy built dependency rather than broad-based capability.
Bright non-Malays emigrate because they perceive a rigid ceiling on their ambitions, while talented Malays sometimes harbour doubts about their own achievements under the shadow of quotas.
As Sowell noted, when competence is subordinated to identity, incentives are distorted: rigorous performance becomes optional for the preferred group, while excellence for others can be rendered futile by administrative decree.
Yet the policy persists because politicians across the political spectrum find immense electoral utility in perpetuating a loop of dependency that keeps voters beholden to state largesse. This systemic patronage has leaked into massive governance failures—such as the 1MDB, Tabung Haji, and Felda scandals—where public accountability is hollowed out behind a wall of ethnic protectionism.
When Musa and Nazir voiced their recent warning, I had expected it to spark a robust public debate on the NEP’s legacy and how to overcome its shortcomings. It didn’t happen.
As the issue profoundly affects the Malays, I had expected it to be hotly contested at the Sept 9 to 12 Umno general assembly. Instead, there was silence.
No one from the government has commented on it either, as far as I am aware.
Everyone, including the media, is treating the warning as another ho-hum event.
A pity really, for Musa and Nazir are no ordinary men and their warning deserves to be acted upon.
If Malaysia is to realise its true economic potential, it must eventually confront an unpalatable economic reality: a dynamic, globally competitive nation cannot be built on a foundation of artificial crutches.
And that progress does not stem from dividing a fixed economic pie based on ancestry, but from expanding it through universal rules, unimpeded competition, and rewards anchored in performance rather than pedigree.
By grounding policies on performance-based evidence, insulating them from populist bargaining, and focusing on measurable national outcomes, Malaysia can move beyond the structural traps identified by Nazir and Musa towards genuine, inclusive progress.
Once one has experienced freeloading with only racial consideration, no amount of warnings would be able to dislodge that idea from the beneficial pact!
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