Malaysia's New Economic Policy and the 30% Bumiputera Equity Target: Time for a Revisit and a Reset ; ISEAS Perspective ; Issue: 2021 No. 36
The New Economic Policy (NEP) has scripted Malaysia's development for 50 years, with the 30% Bumiputera equity target as the main protagonist. The NEP's imprint remains deep; its legacy endures long beyond the initial 1971-1990 timeline. While followed by a raft of other long-term plans, the NEP reigns supreme, its successors consigned to historical footnotes. The draft of the Shared Prosperity Vision (SPV) 2030, Malaysia's next grand plan, makes the most substantive reference to the NEP, while cursorily acknowledging the National Development Plan (1991-2000) and the National Vision Policy (2001-2010). Bumiputeras have steadily progressed toward policy targets in education and employment, but the persistence of Bumiputera equity holdings below the 30% threshold, according to the official estimations, is continuously reiterated as the NEP's defining – but elusive – quest (Lee 2019). Perpetuation of this target is problematic, from historical, empirical and strategic perspectives. In 1971, the NEP originally aspired to a complex mix(?) of Bumiputera development objectives, but 30% equity ownership was placed on a pedestal from the mid-1970s. This has allowed quick gains and political patronage to prevail over longer gestation pursuits focused on building capability and competitiveness. In recent years, policy emphasis has principally shifted toward productivity-driven, bottom-up Bumiputera enterprise development, deepening the disconnect between these broad priorities and the narrow 30% target. Empirical flaws also mar the target setting and progress monitoring processes. A sub-target within the overall 30% has been surpassed, without acknowledgement. The official accounts, which include foreign ownership and opaque nominee companies while excluding Malaysian government ownership, have continuously provided a partial picture that demands more clarity and completeness. From strategic standpoints, persisting with a single macro equity target detracts from the more crucial attention needed in dynamic and competitive Bumiputera enterprise. This calls for a thorough policy revisit of priorities and targets, and a reset that coherently and effectively aligns policy actions with those priorities and targets.