National Economic Plan

Topics: Affirmative action, Malaysia, Economics Pages: 4 (1257 words) Published: February 2, 2013
NEP in a simple definition , The New Economic Policy is Malaysia’s socioeconomic affirmative action plan. New Economic Policy (NEP) in Malaysia was initiated and develop in response to massive economic disparities along ethnic lines. It was implemented in 1971 in the aftermath of the 1969 racial riots. The two objectives of NEP are the eradication of poverty for all Malaysians irrespective of race and restructure society to eliminate the identification of race with economic function through rapid expansion of the economy over time. The strategy was to accelerate economic growth , but at the same time will redirect the benefits more to the disadvantages. Malays had been given certain privileges by the British , especially quotas for public scholarships and civil service employment even from the colonial days before Merdeka. The British rules was left behind some remnant effects on the society and economy. At that tme , economic system and geographical location of where people lived and worked were divided among racial lines. Malays were largely place in the traditional agricultural sector where the income was the lowest and poverty was the highest. While , Chinese was concentrated in mining , manufacturing and construction where the income was much higher. Labourers in estates and mining were the Indians. It was clear that the problem of poverty and the economics differences along racial lines was unfavourable to social stability.

In 1970 , at that point of time ; the recorded number of households living in poverty was 49.3%. The top 5% richest households were obtaining 30% of the total income. About 74% were Malay , 17% were Chinese and 8% were Indian , recorded living in poverty. Aim of introduction of NEP was to reduce overall poverty. In terms of restructuring the economy , the target was to increase Bumiputera share of corporate capital from 2.4% to 30% , the share of the Chinese , Indians and others to increase from 34.3% to 40% , while that of...
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