The Economy of Malaysia
The New Economic Policy
After ethnic riots in 1969, the government launched the New Economic Policy in 1971 to reduce poverty and raise the economic share of the Malay majority, called bumiputera.
Malaysia’s most debated policy.
Aims
Eradicate poverty and restructure society so that economic roles were no longer tied to ethnicity.
Tools
Quotas in education, business licences, housing discounts and a target of 30 per cent bumiputera corporate equity.
Results
Poverty fell sharply and a Malay middle class emerged.
Criticism
Critics argue quotas fostered rent-seeking, cronyism and resentment and reduced competitiveness.
A company bidding for a government contract may need bumiputera participation.
It brought progress and problems.
- The NEP began in 1971.
- It set a 30 per cent equity target.
- Poverty fell.
- Critics point to cronyism.
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