King Rats of the NEP, the Never Ending Policy

King Rats of the NEP – William Leong
August 17, 2010

Tan Sri Liew Kee Sin, chairman of SP Setia Bhd provided statistics to show that Malaysian Chinese businessmen have prospered and fared well under the pro-bumiputra New Economic Policy.

He said Chinese individuals controlled 73% of the wealth owned by the top 40 richest Malaysians and make up eight of the top 10 richest Malaysians. The people know who these persons are. Some of them are not only among the richest in Malaysia but in the world.

The people also know how they made their fortunes in the past 40 years. The complaint is not that there is no Malaysian Chinese, Indian, Sikh, Kadazan, Dusun, Iban or other non-bumiputra who has found fame and fortune under the NEP. There will always be those who will thrive even in the most brutal and oppressive regimes.

The complaint is that due to the abuses of the NEP, Malaysians have been deprived of their inalienable right to seek a livelihood with dignity.

Malaysians irrespective of race or religion is entitled to the inherent dignity and inalienable equal right to a livelihood and a standard of living adequate for the well being of himself and his family.

Malaysians are entitled to seek a livelihood with dignity. They need not in the struggle for survival have to be like the King Rat in James Clavell’s novel who engaged in bribery, corruption and black market activities to survive in a Japanese POW camp.

The King Rat, an enlisted man without distinction in civilian life becomes a major power in the prison camp by being the most successful trader through bribery and corruption and black marketeer.

The Japanese gave the prisoners nothing other than filthy huts to live in and the bare minimum of food. Officers were reduced to wearing rags and were closed to losing their humanity. Even the senior officers had to come to the King Rat for help in selling their valuables to buy food.

The King Rat thrived in the brutal environment of deprivation of a prison camp. The abuses of the NEP or its bastardization as described by Datuk Seri Nazir Razak, have created an environment that has spawned King Rats.

The implementation of the NEP required the government to grant wide discretionary powers to officers in approving licenses, permits and other instruments to intervene in economic activities.

By wielding such powers, it allowed such officers opportunities to seek payments from business tycoons to street vendors to obtain licences or approvals. Hawkers and street vendors have to make under counter payments before they are granted licences to eke out their meager earnings.

Business tycoons have to pay much more for their projects to move. This has given rise to both petty corruption and grand corruption. How else can you make a living in a country ranked 56 in the Transparency International Corruption Perception Index?

Malaysians should not be subjected to such indignities.

Tan Sri Liew called on the Chinese businessmen to work with their Malay counterparts. This has been done from the outset of the NEP. The disingenuous did not wait for Tan Sri Liew’s call. Many contracts given to the Malays were subcontracted to Chinese contractors.

Class F contracts are only given to bumiputra contractors selected according to the personal discretion of government officers or local council mayors and not by open tenders. The Ali Baba system has put paid to the noble objective of granting contracts, licenses and permits to Malay businessmen to uplift their economic status.

After 40 years and billions of ringgit in contracts 82 per cent of the rural poor and 67 per cent of the urban poor are still Malays. So long as the majority of Malays remain in poverty, Perkasa and the extremists will claim that the NEP must be continued. The NEP will then stand for the Never Ending Policy.

One cannot blame the Chinese and non-bumiputra contractors taking on the jobs as second, third or even fourth hand sub-contractors. They also have to survive. They also have needs. Many of these sub-sub contractors end up not being paid for the work they have done.

In many instances, the contractors at the top have taken payments upfront leaving nothing for the sub-contractors.

I know of many Chinese and non-bumiputra subcontractors who end up being bankrupts in this way. Why should these sub-subcontractors be forced to earn a living in this way? If Class F contracts are awarded based on needs and not race, much grief and suffering would be avoided for all involved.

Tan Sri Liew pointed out examples of the spectacular gains made by Chinese businessmen under the NEP. It must however be noted that due to the restrictions imposed by the NEP especially under the Industrial Co-ordination Act and key economic areas, Chinese businesses are not a force in manufacturing and they are no longer owners of the number of banks and finance companies they had before the 1970’s.

During the 1980’s the Associated Chinese Chambers of Commerce and Industry have repeatedly complained that if foreign investors were exempted from the obligatory Bumiputra equity participation requirements in their Malaysian enterprises, why were Chinese enterprise forced to bear the same obligation. The complaints fell on deaf ears. The consequential result was the tie up between the Chinese entrepreneurs and Malays who were influential politicians or former top level bureaucrats (including military).

This was not the objective of the NEP. The NEP was intended to be the catalyst for mutually equal tie-ups between Chinese and Malay entrepreneurs to strengthen Malaysian companies’ economic resilience. Instead it became a mix between business and politics.

In the long run this did not portend well for a healthy business or social–economic environment.

Tan Sri Liew said business was all about profits and not politics. Businessmen are in the business to make money. The King Rat when asked by the British captain who liberated the prison why the King Rat was in a far better health and condition than the other ragged, emaciated and sickly prisoners, he replied that there was no harm in looking out for number one.

The British captain retorted it was no harm provided it was not at others’ expense. Similarly there is no harm to continue the NEP provided it is not at others’ expense. In reality the costs and expense is too high and disproportionate to the gains.

A brief example is more than sufficient to illustrate the point. Under the NEP between 1995 and 2000, the Seventh Malaysia Plan for primary education development allocated 96.5 per cent to the national primary schools which had a total environment of only 75 per cent.

The Chinese primary schools which had a total enrollment of 21 per cent was allocated with only 2.4 per cent while Tamil schools with 3.6 per cent of the total enrollment was allocated one per cent of the budget.

Despite announcements by the government on a reduction of reliance on racial quotas for admission to public universities in 2004, 128 students who obtained the best possible grade of 5A’s were denied their first choice of course in medicine. The only thing they have in common is that they are not bumiputras.

Deputy International Trade and Industry Minister Datuk Mukhriz Tun Dr Mahathir informed the Dewan Negara on July 27 2010 that SME Bank from 2006 to June this year approved a total of RM9.8 billion loans involving 5,447 applications and other programmes of which 90 per cent of the beneficiaries are bumiputra SMI’s.

According to the Federation of Chinese Malaysia Youth Section Strategy Research Committee Head Professor Dr Chin Yew Sin there are about 519,000 SMEs in Malaysia and they have not received loans from the SME Bank.

The costs of the NEP to Malaysia among others, is the thousands of primary school children who have to do with less, the lost to the nation of the hundreds of brilliant and talented scholars who cannot realise their full potential and hundreds of thousands of small and medium enterprises who face financial difficulties because of race.

The whole world has recognised that inequality within a nation and between nations leads to poverty and generally poorer living conditions. A socially equal system should achieve fairness in distribution and opportunity among everyone. The NEP cannot drive Malaysia out of its present social-economic quagmire.

Just as in the novel, where the King Rat becomes the strongest in an environment that rewards cunning, luck and strength, he in the end becomes food for someone stronger, Malaysia cannot sustain its development in an environment where the bastardization of the NEP rewards the cunning and the disingenuous.

The nation can only prosper where integrity, ethics and good governance are practised. The few Malaysian Chinese businessmen who have thrived under this restricted environment cannot justify the continuance of the NEP and the social and economic losses suffered by all the others.

William Leong Jee Keen is the Member of Parliament for Selayang

* This is the personal opinion of the writer or the publication. The Malaysian Insider does not endorse the view unless specified.

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