MIER chief blames rent-seeking politicians for NEP’s failure

(FMT) – Kamal Salih chuckles before answering the question of why the New Economic Policy (NEP) has failed to fully realise its objective of improving the lot of Bumiputeras, even 50 years after its introduction.

“Pagar makan padi (the fences have been destroying the rice crops),” he said, quoting the Malay proverb about the betrayal of trust.

According to the Malaysian Institute of Economic Research (MIER) chairman, the people responsible for implementing the NEP caused its failure by letting political interests take over economic interests.

Once this happened, he told FMT, the rent-seeking mentality among politicians started growing and has since infested every layer of society, leading to corruption and various forms of leakage.

“You can make a quick buck without doing anything. People in other countries do it too, but we have become very good at it,” he said.

“The Bumiputera economy is what it is, stuck at a level that is not representative of Bumiputera numbers, because the pagar has been eating the padi.”

He said the NEP got off to a strong start because of good groundwork laid by Tun Abdul Razak and a strong civil service in the few years that followed its introduction in 1969.

However, he added, the poor implementation of good policies, such as those related to education and technology adoption, would see the NEP not only failing to serve Bumiputera interests but also hampering the growth of the country’s economy.

He said investors would be deterred by the rent-seeking and politically driven economy and, because of this, no jobs would be created and no skills or technology would be transferred, resulting in the deprivation of people in the Bottom 40 (B40) income group.

He noted that Bumiputeras constituted the majority in the B40 group.

Kamal estimated that rent-seeking was costing Malaysia more than 2% of its gross domestic product (GDP), saying the economy should be growing at 7% of the GDP per year, not 4.7%.

“We need less politics,” he said. “We need to let technocrats plan allocations and oversee implementation.”

Kamal also said rent-seeking had had an effect on racial equality.

He said the solution to the problem of inequalities was to enlarge the economic pie, but he alleged that members of the political elite were eating the pie, leaving the people to fight for scraps.

“Until that is resolved, we are going to be stuck in a time warp of racially-based decision making.”

He said this was why the Bumiputera agenda would continue to feature in the Malaysian economy although it was time to move towards a needs-based agenda.

“So Shared Prosperity Vision 2030 has to be a very radical transformation,” he said, adding that this required, among other things, a change in the government’s approaches.