A National Congress to create a new consensus on national priorities to eliminate corruption, educational excellence, good governance and international competitiveness

Media  Statement
by Lim Kit Siang  

(Parliament, Saturday): UMNO Youth Leader Dato Hishamuddin Husssein’s speech to the UMNO Youth General Assembly on Wednesday (20^th July 2005)  calling for a revival of the New Economic Policy (NEP) should be a wake-up call to all Malaysians as it  was an acknowledgement of the fact that despite 35 years of social engineering and economic restructuring the Malaysian dream of a just and equitable society remains a faint and hazy dream.  

He acknowledged that ethnic disparities continue to exist and divide Malaysians. This is a ringing indictment of the failed policies that the Barisan Nasional  has pursued for a whole generation.

The analysis Hishammuddin  offered was  shallow, based on misconceptions and outright distortions. His remedies were equally flawed as he offered the same old snake oil as a cure for what ails Malaysia.

Hishammuddin distorted the very nature of the NEP by referring to it as “Growth by Distribution”. It was not so. Malaysians need to be reminded that the NEP was founded on the concept of pursuing a growing economic cake that would be more fairly divided for the benefit of all Malaysians. It had two prongs – a) the eradication of poverty irrespective of race and b) the elimination of the identification of race with occupation and a more equitable ownership of wealth between the ethnic groups.

The  target of 30% ownership of corporate shareholdings by Bumiputras was but one target. It was not the “be-all and end-all”  objective of the NEP. The NEP did not seek to create a sense of deprivation in any community  nor did it seek to rob Peter to pay Paul. Affirmative action was to be a tool to even the playing field. It was never conceived as a policy to promote any kind of economic apartheid.

Malaysians need to be reminded that the implementation of the NEP in the decade of the 70s and continued into the early 80s with its emphasis on the second prong of restructuring adversely affected growth. Distortions were introduced; domestic investment lagged; Foreign Direct Investment was reduced to a trickle; growth was patchy and Malaysia did not achieve its full potential while its neighbours surged ahead.  

The belated recognition  of the negative consequences of the pursuit of distributive policies over pro-growth oriented policies led to a loosening of the rigidities of the equity targets. The opening up of the economy and a somewhat more pragmatic pursuit of the equity targets in the mid-80s and the adoption of the National Development Policy impacted positively on the Malaysian economy. FDI flows surged; domestic investment and expansion of capacity moved rapidly forward; Malaysia made gains by recognizing the importance of globalization. 

These dramatic shifts in policy contributed to rapid growth as the nation took advantage of global trends. Yet this was not without its costs. The economic bubbles that were created resulting from cronyism, ill-conceived mega projects, corporate abuses and rampant corruption burst open in the 1997/8 Economic and Financial crisis and dealt a devastating toll on the economy. The nation lost its competitiveness, FDI fell dramatically, the fiscal position of the government deteriorated with the emergence of unsustainable deficits promoted to paper over the deep cracks in the economy.

Government became the problem, not the solution,  to the problems of the nation.  Rent-seeking and corruption are cancerous features that have intruded into every nook of the economy and society. The AP (Approved Permits)  scandal, the money politics in UMNO and corruption in the police are the fruits of the pursuit of policies that had  their roots in the implementation, not the concept, of the NEP.  Much the same can be said about the devastation to key institutions. The sorry state of our educational system particularly tertiary  with fast-falling standards can also be linked to mismanaged implementation of the NEP. The hiring practices of the Government ran counter to the intent of the NEP and we now reap the inability of the public services to deliver what the public at large expects. Our moral standards have been compromised. The list is long.

There is the  forgotten prong of the NEP – the eradication of poverty irrespective of race.  According to internationally-accepted measures used by the World Bank and UNDP, almost one  in five  Malaysians subsist on an income of US$ 1 per day. That this persists  35 years after the launch of the NEP is a indictment of the Barisan Nasional  record that can no longer be ignored. The failure to seriously address the poverty issue is manifested in the rising crime rate and the loss of personal security by all Malaysians. Hishamuddin spoke not of these concerns but  only a narrow aspect of the NEP.

Much ails Malaysia. There is an urgency to address the acute challenges -  creating a united Malaysian nation, regaining competitiveness, restoring credibility in the capacity of national institutions to be efficient, deliver justice  and  eliminate the cancer of corruption.

What the nation needs is not a return to failed and distorted policies, but a shift towards new instruments that will contribute to improved competitiveness, strengthen institutions to deliver cost-effective services in an efficient manner, eliminate corruption and rent-seeking, and promote ethnic harmony via a Malaysian national agenda rather than promote divisiveness via ill-conceived and failed policies. If Hishamuddin aspires to national leadership he must first free himself from   the shackles of the past.

What the nation needs at this critical stage in its history is not rhetoric but vision. Malaysians need to be brought together and engage in a united war against divisive forces preaching race and separatism. A step in that direction would be the convening of a national congress to create a new consensus about the national priorities,  foremost among which must be  the elimination of corruption, adoption of an educational system based on excellence and meritocracy,  respect for good governance and the rule of law, the enhancement of international competitiveness and last but not least, a return to the core principles of the 1957 Merdeka Constitution and 1963 Malaysia Agreement agreed by the forefathers of the various communities on the basis of Malaysian nation-building as a democratic, secular and  multi-religious nation with Islam as the official religion but not an Islamic state.

(23/07/2005)