Malaysian New Economic Policy

The New Economic Policy (NEP) (Malay: Dasar Ekonomi Baru (DEB)) was a social re-engineering and affirmative action program formulated by the National Operations Council (NOC) in the aftermath of 13 May Incident in Malaysia. This policy was adopted in 1971 for a period of 20 years and it was succeeded by the National Development Policy (NDP) in 1991. This article looks into the historical context that gave rise to the formulation of this policy, its objectives and implementation methods as well as its impact on the Malaysian economy in general.

The New Economic Policy (NEP) which began with the Second Malaysia Plan (1971-1975), and lasted until the Fifth Malaysia Plan (1986-1990), had three main objectives, namely:

The NEP was conceived as a two-pronged strategy for eradicating poverty for all Malaysians as well as reducing and subsequently eliminating identification of race by economic function and geographical location. The Policy sought to achieve its objectives through rapid expansion of the economy over time and set its target of substantially reducing the incidence of absolute poverty by 1990. To achieve this, the Policy called for aggressive improvement of economic status and quality of life for all Malaysians through:

Concurrently, the Policy also called for fairer distribution of opportunities to participate in the widening range of economic activities. The Policy opined that the core problem that stood in the way of national unity was compartmentalisation of racial groups by economic function; particularly the association of Malay and other indigenous races with subsistence agriculture. To dissociate Malay and other indigenous races with traditional agriculture, the Policy called on the Malaysian Government to provide assistance to all Malaysians in:

As Malay and other indigenous races progressed in the modern economic sector, other Malaysians were encouraged to introduce modern agriculture to eliminate the identification of Malay and other indigenous races with subsistence agriculture.

The overarching principle of the Policy was the creation of "a socio-economic environment in which individual Malaysians find self-fulfilment within a system which provides for proportional participation, management and control in the economic life of the nation".

During British colonial rule in Malaya, Malays had always been in close contact with British officials by virtue of being the subjects of the Sultan's Court. Administratively, Malays displayed a highly structured system, which enabled the British to embed themselves into the existing structure with ease. To communicate effectively with the Malay Rulers, Malays were employed by the British to work in Resident's Offices as clerical staff. However, Malays were mostly educated in Islamic madrasah, with little exposure to Western education. To ensure a competent administrative workforce, the British established Malay schools to teach to basic clerical knowledge.

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