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Identities, Conflict and Cohesion Programme Paper 7: The New Economic Policy and Interethnic Relations in Malaysia

6 Jan 2005

  • Author(s): Jomo K. S.


First announced in 1970, Malaysia’s New Economic Policy (NEP) was the principal policy response to race riots in May 1969. The NEP had two prongs, namely “poverty eradication regardless of race” and “restructuring society to eliminate the identification of race with economic function”. It was intended to set the conditions for national unity by reducing interethnic resentment due to socioeconomic disparities. In practice, the NEP policies were seen as pro-bumiputera (pro-Malay), the country’s largest indigenous ethnic community. Poverty reduction efforts have been seen as primarily rural and Malay, with policies principally oriented to rural Malay peasants. As poverty reduction efforts declined in significance over time, the NEP came to be increasingly identified with efforts at “restructuring society”, to reduce interethnic disparities, especially between ethnic Malay and ethnic Chinese Malaysians.

The NEP has since been replaced by the National Development Policy associated with the Second Outline Perspective Plan for 1991–2000, and then by the National Vision Policy linked to the Third Outline Perspective Plan for 2001–2010. These place greater emphasis on achieving rapid growth, industrialization and structural change. But there is the widespread perception that public policy is still dominated by the NEP’s interethnic economic policies, especially wealth redistribution or “restructuring” targets.

These policies are considered especially important in terms of influencing public policies affecting corporate wealth ownership as well as other areas, notably education and employment. Ethnic discrimination primarily involves the business community and the middle class, where interethnic tension is most acute.

The author finds that ethnic affirmative action policies as implemented and enforced in Malaysia have associated the interests of entire ethnic groups with their respective elites, thus generalizing resentments associated with interethnic, intra-class competition. He concludes that it is unlikely that the ethnic affirmative action policies will achieve the end of improved interethnic relations. An alternative approach yet needs to be found to create more lasting conditions for improved interethnic relations.

Jomo K.S. was, at the time of writing, professor in the Applied Economics Department at the University of Malaya, Kuala Lumpur, Malaysia.

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