POLITICS AND THE NEW ECONOMIC POLICY

As posted by Dr. Mahathir Mohamad at Che Det on August 25, 2011

1. The New Economic Policy has been denigrated by opposition politicians including Dato Seri Anwar Ibrahim until it seems to be the worse policy ever conceived and implemented in Malaysia.

2. While Ramon Navaratnam blames the NEP as being the cause of foreign investors not coming to Malaysia, Anwar has condemned it for the abuses and corruption involved in its implementation.

3. Anwar loudly proclaims that the NEP benefits only the cronies of the Government and that the contracts, Approval Permits and licenses given out under the NEP involve corruption. He makes it sound as if the NEP did not benefit the Malays and other Bumiputera at all.

4. While it must be admitted that a few of the recipients of APs, contracts and licenses may know the leaders of Government or are members of UMNO, and that there may be corruption involved in some cases but the charge is not warranted because in most cases the benefits of the NEP has been enjoyed by almost every Malay and Bumiputera. In fact indirectly and in some cases directly it has benefited the non-Bumiputera as well.

5. For example every Malay child is helped in his education with free text books and often with free meals, Schools are built in the remotest areas where before there were no schools. Hostels are built for mostly Malay and other Bumiputera children so that they can live a better life and are able to study in better surroundings then in their homes in the villages.

6. For the qualified, tertiary education is readily accessible, with huge numbers of scholarships. As a result many of the children of poor families or of families unable to pay high fees, now hold university degrees, are highly qualified and many are professionals. As an example where before only 5% of the doctors in Malaysia were Malays and Bumiputera now 40% of them are Malays.

7. It is the same with the other professions. Just count the number of students in the public Universities in the country and those abroad on scholarships and one will appreciate how the NEP has benefitted the Malays and other Bumiputera in education.

8. It must be remembered that providing good educations, free book, food, hostels, scholarships benefit not just the recipients but also the parents. The NEP contributed most in the education of Bumiputera.

9. When under the NEP shares of companies were allocated to Malay applicants, they invariably sold the shares for capital gains almost immediately. This is because they did not have the money to purchase the shares and they had to repay the bank loans they had taken.

10. To avoid this the Government decided to create unit trusts so that the shares can only be sold back to the managers. Thus was the National Equity Corporation born.

11. Today more than ten and half million (10,500,000) Malays and other Bumiputera hold shares in these unit trusts with total holdings valued at one hundred and thirty-five billion (135,000,000,000) Ringgit. This is a direct benefit from the NEP. The unit trust make up a substantial percentage of corporate wealth held by the Bumiputera.

12. Felda, the Federal Land Development Authority was started before NEP. But under the NEP the role of the authority was greatly augmented. The settlers benefit from the spin-offs into the transport business, refining and marketing of the produce.

13. Felda has been nursed until it has become the biggest plantation company in the world. The settlers have much higher incomes while their children are much better educated. All these are due to the new economic policy.

14. Microcredit is extended to the smallest village enterprises and this has helped tens of thousands of Bumiputera villagers, especially the women in business.

15. There are now thousands of Bumiputera businessmen who benefitted from the importation of used and new cars, from becoming agents and vendors to the national car projects and also in the oil and gas business as a result of the NEP.

16. The best of them have grown big, some very big, becoming car dealers and assemblers, housing developers, steel fabricators, boat and ship builders, IT, transportation, ports and shipping, food and cosmetic manufacturers and many other businesses.

17. The privatisation scheme have also benefited Bumiputera business greatly, including the supply of materials and employment of engineers. Today they undertake multi-million dollar contracts in foreign countries.

18. Are they all cronies, these successful ones? There are far too many of them to be cronies. That some are known to Government leaders is to be expected because Government leaders in Malaysia are accessible to everyone as a matter of policy. They may be UMNO members. But then there are more than 3 million UMNO members. Is the Government expected to exclude them from the benefits of the NEP?

19. The fact is that almost all of those who have succeeded have benefited from the NEP. Those who show capability cannot be excluded from the support under the NEP. In fact it is safer to help those with good records then to give to untried people.

20. Why is it that the Government is doing all these under the NEP? The answer is simple. The Malay businessmen do not get opportunities from the private sector. They never get contracts or sub-contracts or contracts for supplies in the private sector. Even after they have proved their capabilities when carrying out Government contracts, they will not get contracts from the private sector.

21. On the other hand even when the NEP was being implemented, many of the Government contracts still go to non-Malays.

22. The accusation of cronyism is made without any real basis. There are far too many benefitting from the NEP at all levels and in all fields for the policy to be benefitting only the cronies.

23. There may be corruption but the NEP would not have succeeded to the extent shown if corruption prevails in every case. The focus on cronyism and corruption is political, not based on the real role and achievements of the NEP.

24. If there is no NEP, the economic position of the Bumiputera would be dismal. There would not be as many Bumiputera professionals as there are now. The disparities in all fields of economic activities would be very much greater as the national economy grows.

25. Some of the Malay beneficiaries of the NEP are supportive of the idea that the NEP should be scrapped. They dislike the benefits they had obtained from it to be mentioned as this would amount to, what the Malays called “ungkit”, i.e. to remind one of a debt of gratitude. Yet in Malay culture one should never forget the “budi” of another. As Muslims they should know that thankfulness for any benefit is enjoined by Islam.

26. Corruption and cronyism should be condemned, but most of the accusation is unjustified. They are motivated by personal and sectarian politics. The fair-minded must consider also the good achieved by the NEP.

27. It is sad that people who had benefitted from the NEP should want to deny it to others who are still in need of it.

28. Admittedly the NEP has not achieved the target to remove the disparities between races in Malaysia completely. But there can be no doubt that it has reduced the disparities enough to keep Malaysia stable even during the financial crisis. What is more, it did this without stifling the remarkable growth.

29. Have the non-Bumiputera benefitted from the NEP? They have. They have simply because invariably what is given to the Bumiputera must spin-off to the non-bumis. In some cases the Ali-Baba phenomena are exhibited, with the Bumiputera merely getting a small portion for just lending his name. But even if a Bumiputera contractor decides to implement the contract, he still has to procure building materials, skilled labour etc from the non-Bumiputera companies. Specialised work must also be given to non-Bumiputera as there are hardly any Bumiputera sub-contractor capable of doing this. In fact a substantial part of the projects during the NEP period went to non-Bumiputera. It cannot be that the non-Bumiputera earn no profits from these contracts, sub-contracts, supplies and skilled labour.

30. If there is no NEP and the contracts etc go directly to non-Bumiputera, then there would be no spin-off to the Bumiputera at all. The non-Bumiputera do not need Bumiputera for their contracts. The result must be increasing disparities in wealth between Bumiputera and non-Bumiputera as the economy grows. The dichotomy already seen in our Malaysian society will become worse when this happens.

31. Politicians must find issues to support their bids for power. But condemning the NEP can only be done by twisting or ignoring the contributions of that policy to political stability and the economic success of Malaysia.

The Arab Spring II

As posted by Dr. Mahathir Mohamad at Che Det on August 17, 2011

1. The Western Press has decided to label the upheavals in the Arab countries as the Arab Spring. But it is no spring as the attempts to overthrow authoritarian Governments in these countries have resulted in bloodshed and serious damage to property and to the economy.

2. While in Tunisia and Egypt the uprising of the people has been successful, the fighting in the other countries is still going on. There is no doubt that one way or another there will be changes political, economic and social before the uprisings come to an end.

3. But overthrowing the Government is not the end of the struggle. A greater struggle lies ahead – that of setting up new Governments; the true purpose of the uprisings.

4. If the choice is to be through the democratic process, those with ambitions will have to seek for popular support. For this political parties would have to be formed.

5. Unfortunately the number of political parties cannot be limited as there would be at best a weak interim Government quite unable to do this. There can literally be hundreds of parties, with none being big enough to win a majority of seats in an election to form a Government.

6. A free for all would follow as the small parties jockey for positions. The likelihood is that no one would be able to form a majority Government and anarchy would set in. This might even lead to violence and break-down of law and order.

7. When the anarchy becomes serious, the only disciplined institution in the country would have to step in. This will usually be the military. A military Government would be set up usually with promises that it would be temporary.

8. To maintain law and order the military Government will have to crack down on disruptive dissensions. There will be arrests and detentions without trial. There will be varying degrees of suppression of opposition.

9. To ensure the loyalty of the junior officers and the rank and file of the military, privileges must be accorded to them. In a situation where the economy is disabled and there are shortages of food etc. the military Government would ensure that their men would not be without these essentials. Fairly rapidly the privileges will increase. There will be a black market for the food and goods supplied to the military men. Various degrees of power will be wielded by the military personnel. And power corrupts.

10. The division between the military and the people will widen. Complaints or adverse reaction by the people would meet with ever increasing suppression. Soon the military Government would be hated as much as the overthrown predecessor.

11. Having oppressed and suppressed the people, having thrown dissidents into detention and having executed some of them, the interim Government will find itself unable to keep the promise to hand back power. The interim Government has now become permanent, exercising power without being answerable to anyone but itself.

12. Egyptians should know this cycle. The military overthrew the king for various reasons. The people supported the military coup. But soon the military Government became authoritarian. As the leader aged, attempts would be made to create a dynasty. The leader wants to be succeeded by members of his family. The situation becomes intolerable again.

13. To ensure that this cycle would not repeat, democracy must be made to work. There cannot be too many political parties. The most successful democracies have very few parties, often only two. Somehow or other the leaders of the many parties must come together so as to form big parties with the capacity to gain a majority of the seats in Parliament.

14. The people too need to reject sectarian interests, be they racial, religious, ideological or territorial.

15. The most important mindset for everyone to accept is that no one would get everything that he or his sect considers as being their entitlement. Everyone has to make some sacrifice so that there would be room for the others to participate.

16. With this it would be possible for the many small parties to come together and form a unitary party or a coalition. The enlarged party would then have sufficient support to win a majority of the seats in order to form a credible Government.

17. The other need is for everyone to accept that in a democratic contest there will be winners and losers. It is important that everyone should accept losing. If not the winners would find themselves unable to govern the country as the losers would undermine the stability of the country which is required for a Government to function.

18. If the leaders and the people accept these two things, i.e. the willingness to downplay sectarian rights or entitlements at least partially and the willingness to accept defeat in elections, then democracy will work and elections will identify the party and the leaders who will form the Government.

19. If a unitary party is not possible than a coalition of parties should be formed.

20. This is a pre-election coalition. It is different from a coalition formed after elections when no party has won a majority to form the Government. A coalition of convenience such as this will always be held to ransom by the smaller party or parties which help to make up the necessary majority. A defection would result in the Government falling. The smaller party could then join the opposition to give it enough seats to form a Government. Clearly a post election coalition results in the tail wagging the dog.

21. A pre-election coalition would be more stable. The parties in the coalition could agree to the allocation of seats so that the coalition members would not contest against each other. Instead they should all support the coalition candidate no matter from which party he comes. This will ensure there will be no split in the votes of the coalition. By voting for a candidate from another coalition member, the party and its supporters can expect the other parties to vote for its candidates in the constituency allocated to it. Thus even if the number of supporters of a small party in the allocated constituency is not sufficient to ensure winning, the support of the supporters of the other coalition members can be sufficient to give its candidate a majority.

22. On the other hand if the individual parties put up candidates against each other in a constituency, the votes would be split. There will still be a winner but the split among voters would mean that the winner’s votes would often be less than a real majority of 50 per cent plus.

23. Assuming that there is understanding of the workings of democracy on the part of the people and the leaders, there would still be the minority extremists in all the groups who would object to any dilution of their beliefs or ideology. Extremists wield a far bigger influence in politics than is warranted by their numbers.

24. They frighten the moderates and the rationalists into undermining efforts at reconciling with others.

25. Usually no one among the moderates would want to take an open stand against the extremists. They fear being accused of betrayals and so losing support. In extreme cases the extremists may become violent to the point of assassinating the alleged betrayers of the cause.

26. A great deal of skill and diplomacy would be required to nullify the influence of the extremists. In countries where violence is a way of life; a creed, it will be very difficult. Such countries will be unstable when adopting democratic ways. There will be some degree of anarchy. And as has been pointed out earlier, anarchy is likely to result in military coups and authoritarian military Governments.

27. In the end it is up to the people whether they want a good Government or not. Democracy will give them a choice but democracy requires an understanding of its limitations. If this is understood and the rights are not abused, then democracy will give a good Government.