New Economic Policy: Impact of Social and Economic Engineering on Malaysia’s Development

Abstract

The chapter showcasing Malaysia looks into the transition that could be expected in the past but did not materialise transition to a democracy from authoritarian modes of governance and mindset. The central piece for analysis is the New Economic Policy (NEP) that justified discrimination in favour of the majority of the population as a means to fix the problem of economic inequality between different racial groups in the country. Becoming a response to the racial riots of 1969 that were seen as largely caused by the existing inequality between the indigenous population (Malays and other Bumiputera groups) and the rest (mostly Chinese), NEP was supposed to reach its goal by the 1990s. Instead, each subsequent government carried on with the policy under different slogans, as it helped to maintain the façade of the unsolved problem, even if the majority has long established control over a large portion of the economy. The inequality now became more pronounced between the state-affiliated businesses and individuals with access to decision-makers and the rest within the Bumiputera category itself, but that is not the finding suitable for successfully contesting in the elections. The preferential policy towards the majority was barely questioned or subjected to criticism, as the ruling elites desperately tried to please the majority in each electoral cycle, blaming inequality on minorities. Being initially inspired by Gramsci’s concept of cultural hegemony, this chapter arrives at rather Foucauldian pessimistic conclusions about how governmentality is practiced in this particular case and how futile expectations for reforms upon each change of government have proven to be. It is as if Malaysia struggles with the path dependency inherited from colonial times which prevented it from breaking out from the group of authoritarian states and transition to democracy, and the major question is how the ruling elite adhered to more a less the same practices and instruments for many decades managed to provide for compliance without serious resistance. Analysis of the discourse around NEP provided a clear sight of how the policy was turned into a political instrument which with time divided the society further along racial and religious lines.

The chapter starts with the origins of the NEP in Malaysia, proceeding to the state control over the corporate sector which became a result of the NEP. It then explores the cultural underpinnings of the NEP, as well as the race-religion refrain in the cultural discourse. Methodologically the chapter relies on discourse analysis from Malaysia’s independence until the present day. For that, it explores the conditions of wealth distribution, policies that targeted its redistribution and rhetoric that provided the rationale for such policies, including the official documents like Malaysia Plans—the five-year outlines of government development policies and strategies—and existing legislation.