Foreign capital doesn’t have to put up with NEP

Here's a letter submitted to www.malaysiakini.com

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Foreign capital doesn’t have to put up with NEP
Feroz Qureshi
Jun 26, 07 4:39pm

I refer to the malaysiakini report EU envoy summoned to explain NEP criticism. After reading the comments made by the European Commission’s top envoy to Malaysia, I can’t help but put my two cents worth into the fray.

I have worked and lived in Malaysia and am well accustomed to its social fabric and political system. As a foreigner, I have a better understanding than Westerners on this issue because I speak Bahasa Malaysia and have been exposed to Malay culture and traditions from young. Still, I am perplexed by the NEP and its predictable ills especially coming from an environment where ‘meritocracy’ is, to a small extent, worshiped.

Essentially, all societies are unequal in some form or other but few in the developing world would attempt to make more equal by legislating a heavy-handed unequal-ness. This is what Malaysia has done. The extreme of this ideology has to be Mugabe’s confiscation of white-owned farm lands in Zimbabwe.

To me and others who swear by free competition, the NEP is flawed from its conception in 1970. What baffles me is that the Malay political elite remains adamant that a redistribution of wealth via such means is the one and only solution.

In my dealings with the Malaysian government, I have learnt that there is a feeling of ‘entitlement’ among Malays that makes for a curious insight. Their behaviour can be as patronising and feudal as kings of old who place themselves above all others on a misguided notion that they were born into the ‘right group’.

All throughout history, when a group of people are content with the status quo, it is only because they are its prime beneficiaries! To the point that even when they see injustice in the system, they are unlikely to get rid of it.

And believe me, education doesn’t change a thing. Human nature is such that when one enjoys ‘unfair advantages’ - be it through the NEP, farm subsidies from the EU or simply having wealthy parents - one is somehow driven to rationalise these advantages as deserving and good.
Malaysia is now experiencing its second generation of NEP legislation and this is where grave danger lies, for it will, if not already, be deeply entrenched in the psyche of the Malay. Far from being more even-handed in its application, the young educated Malays will hijack the NEP. There is already much rhetoric coming from Prime Minister Abdullah Ahmad Badawi’s own son-in-law towards this end.

Efforts by the present government to weed out corruption (smokescreen or otherwise) will be seen in some quarters as depriving new Malays from benefits their parents enjoyed. The late Peter Drucker once famously said, ‘It is foolish to expect change from those who have benefitted from the old order’.

This development, nay, stubborn continuation of a poorly-conceived set of laws, does not auger well for Malaysia among its non-Malay citizens. And although they have put up with it, foreigners and foreign capital don’t always have to. The moment profits are not good enough and the NEP erodes margins, they will pack and go. Thus, the government now finds itself in a quagmire – expectations from both sides are beginning to exceed the ability to deliver.

While there is strong political will to maintain the NEP, the system itself is headed for collapse in the foreseeable future. Fast-forward 30 to 40 years and you will arrive at the same disturbing scenario as a few socialistic European governments of today – overbloated and inefficient civil service, pension schemes defaulting, government subsidies propping up unsustainable businesses, high unemployment from lack of new jobs, healthcare crises, etc, etc.

The lesson here is a simple one. When you do not allow the best and brightest to rise or lead, then you degrade society as a whole.

My assessment of this issue is that the Malay-educated is obsessed with getting a bigger slice of the domestic pie that this outlook seems insular and resentful. His perception of the NEP is nothing short of ridiculous – a sense of righteousness amidst misplaced ideology, borne out of fear and resentment towards others who seem better off economically. It lies somewhere along the lines of, ‘If the Chinese and Indians are unhappy with it, they can leave Malaysia’.

And this belies one of the tragedies of Malaysian society – it is never short of able and bright minds, but ethnic suspicions make all Malaysians under-perform as a collective. Perhaps the NEP should be phased out to blur the lines of ethnicity in the country, albeit gradually to lessen the shock impact.

And my conclusion is that as long as the NEP remains in its present form, the Malay-educated can never rise fully. At best, they become ‘big fish swimming in small ponds’ and will never be able to compete at an international level. Hence, I will not be surprised if Malaysia’s economic pie vis-à-vis the rest of the world’s grows insignificantly. After all, fish in ponds will drown in the ocean.

I use a business pitch when differentiating from Malaysian firms and companies. I tell my clients that in Singapore, everything from education to jobs to business and government contracts, we have to compete with the rest of the world. In Malaysia, the Malay only needs to be better than other Malays.