Friday, September 20, 2013

Latest race-based wealth aid not going to work too, declares prominent economist

Latest race-based wealth aid not going to work too, declares prominent economist

Malaysian Insider
September 20, 2013
Latest Update: September 20, 2013 09:00 am
The new race-based cash aid and uplift plans aimed at Bumiputeras are off-tack – just like the old policies – and Malays would be better off if the prime minister targeted aid at the poor instead, said Professor Emeritus Datuk Dr Mohamed Ariff (pic) yesterday.
He pointed out that Malays form 80% of households which earn less than RM2,000 per month.

So, for example, the idea to increase the Bumiputera share of unit trusts under the Amanah Saham Bumiputera programme would not help the poor Malays as they could not even afford to buy into the unit trust, he said in an interview with The Malaysian Insider.

Referring to the previous long-term, race-based effort, he added, "The New Economic Policy had noble aspirations but the wealth generated through it did not filter to the Malays who were underprivileged. The wealth was retained within a small group."

That is what is going to happen again, he argued, echoing the same point made by former minister Zaid Ibrahim yesterday to The Malaysian Insider.

Zaid said, “They have to make people understand that a fairer, transparent policy should be promoted for the interest of all. We don’t need this so-called protection. If the majority of the Malays are still poor, then something is wrong with the policy.”

Last Saturday, Prime Minister Datuk Seri Najib Razak launched the Bumiputera Economic Empowerment Council, which has a five-pronged thrust to strengthen Bumiputeras in the fields of capital, corporate sector equity ownership, non-financial assets, entrepreneurship and commerce, and service delivery and eco-system.

The new effort includes a slew of economic programmes as well as cash aid, which Putrajaya said was aimed at helping Bumiputeras.

Analysts saw this as Najib's attempt to shore up support ahead of the Umno party polls next month, while respected law expert Dr Azmi Sharom said it was a violation of the Federal Constitution which promises equality.

Yesterday, Ariff added his voice to the small group of influential Malays who reject such race-based policies, saying they had not worked.

"The NEP had outlived its usefulness and the government must move affirmative action policies from race-based to needs-based. This policy shift will ultimately benefit the Malays as they form the bulk of 40% of households in the lower-income bracket."

The NEP, or New Economic Policy, introduced in 1971 to eradicate poverty and restructure society, was replaced by the New Economic Model that placed greater emphasis on meritocracy while retaining the special economic privileges of the Malays, which were the key features of the old NEP.

Ariff pointed out that the government's policies seemed to be populist in nature and were not focused. He said handouts should only be given in crises, such as famine, as they remove the incentive to work hard.

The Malays would not be able to compete in a globalised environment if they continued to depend on handouts, he added.

Zaid too had alluded to this, saying yesterday that the new agenda was “discriminatory” and “unfair”. He dismissed the notion that Bumiputeras cannot compete effectively without such help from the government, pointing out that the affirmative action policy is an “addiction” which makes the dominant Malay population lazy.

“It’s a choice to do something less, no need to strive so much because it is easier not to. However, we don’t need special treatment, but reasonable help based on needs. If you want to help them, help them the right way,” Zaid said. – September 20, 2013.

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