New Economic Model
Encyclopedia
The New Economic Model is an economic plan in Malaysia unveiled on 30 March, 2010 by Malaysian Prime Minister
Najib Tun Razak
which is intended to more than double the per capita income
in Malaysia by 2020. In summary, this programme aims to shift affirmative action from being ethnically-based to being need-based hence becoming more competitive, market and investor friendly.
, approximately $7,000 in US currency
; under the plan that figure would more than double to RM49,500 (US$15,000).
The keys to the plan as described by Najib at the 30 March unveiling are "high income, sustainability and inclusiveness". The goal is to stimulate economic growth by improving worker productivity across all sectors of society, in part through an improved system of affirmative action
, with an eye towards sustainability. Among other reforms meant to accomplish this goal, the NEM seeks to empower the private sector
and to reduce fiscal disparity between the wealthiest and poorest of Malaysians.
The plan is intended to replace the New Economic Policy
(NEP). Najib criticised the way that the NEP had been implemented over its 40 year history, arguing that affirmative action policies of the NEP needed to be better targeted.
released a statement supporting the plan. Opposition leader Anwar Ibrahim
responded to the plan's announcement by arguing the plan was "devoid of substance" and was designed as a publicity tool for the Barisan Nasional
government. Malay activist group Perkasa
expressed concerns that the proposed Equal Opportunity Commission could be unconstitutional if it did not accord with the protection of Malays afforded by Article 153 of the Constitution
.
A spokesman for Khazanah Nasional
Berhad, a government agency, stepped out to support it as a "realistic outline", provided that it is effectively implemented and embraced by the public. Democratic Action Party
spokesperson Tony Pua
said that Najib's launching of a new unit to strengthen Bumiputera economic participation has nullified his own New Economic Model and is nothing more than an endorsement of the controversial NEP, which favours the influential elite, and a copycat of Mahathir’s mega-projects and privatisation policies of the 1990s.
Prime Minister of Malaysia
The Prime Minister of Malaysia is the indirectly elected head of government of Malaysia. He is officially appointed by the Yang di-Pertuan Agong, the head of state, who in HM's judgment is likely to command the confidence of the majority of the members of that House of Representatives , the...
Najib Tun Razak
Najib Tun Razak
Dato' Sri Haji Mohd Najib bin Tun Haji Abdul Razak is the sixth, and since 2009, Prime Minister of Malaysia. He previously held the post of Deputy Prime Minister from 7 January 2004 until he succeeded Tun Abdullah Ahmad Badawi as Prime Minister on 3 April 2009. Najib is President of the United...
which is intended to more than double the per capita income
Per capita income
Per capita income or income per person is a measure of mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate and dividing it by the total population...
in Malaysia by 2020. In summary, this programme aims to shift affirmative action from being ethnically-based to being need-based hence becoming more competitive, market and investor friendly.
The plan
The goal of the NEM, according to Najib, is to "transform the Malaysian economy to become one with high incomes and quality growth" by 2020. At the time of the plan's unveiling in 2010, per capita annual income in Malaysia stood at 23,100 Malaysian ringgitMalaysian ringgit
The Malaysian ringgit is the currency of Malaysia. It is divided into 100 sen...
, approximately $7,000 in US currency
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
; under the plan that figure would more than double to RM49,500 (US$15,000).
The keys to the plan as described by Najib at the 30 March unveiling are "high income, sustainability and inclusiveness". The goal is to stimulate economic growth by improving worker productivity across all sectors of society, in part through an improved system of affirmative action
Affirmative action
Affirmative action refers to policies that take factors including "race, color, religion, gender, sexual orientation or national origin" into consideration in order to benefit an underrepresented group, usually as a means to counter the effects of a history of discrimination.-Origins:The term...
, with an eye towards sustainability. Among other reforms meant to accomplish this goal, the NEM seeks to empower the private sector
Private sector
In economics, the private sector is that part of the economy, sometimes referred to as the citizen sector, which is run by private individuals or groups, usually as a means of enterprise for profit, and is not controlled by the state...
and to reduce fiscal disparity between the wealthiest and poorest of Malaysians.
The plan is intended to replace the New Economic Policy
Malaysian New Economic Policy
The Malaysian New Economic Policy , was an ambitious and controversial socio-economic restructuring affirmative action program launched by the Malaysian government in 1971 under the then Prime Minister Tun Abdul Razak. The NEP ended in 1990, and was succeeded by the National Development Policy in...
(NEP). Najib criticised the way that the NEP had been implemented over its 40 year history, arguing that affirmative action policies of the NEP needed to be better targeted.
Reaction
The Malaysian Chinese AssociationMalaysian Chinese Association
Malaysian Chinese Association is a uni-racial political party in Malaysia that represents the Malaysian Chinese ethnicity; it is one of the three major component parties of the ruling coalition in Malaysia called the Barisan Nasional in Malay, or National Front in English.Along with the largest...
released a statement supporting the plan. Opposition leader Anwar Ibrahim
Anwar Ibrahim
Anwar bin Ibrahim is a Malaysian politician who served as Malaysian Deputy Prime Minister from 1993 to 1998. Early in his career, Anwar was a close ally of Prime Minister Mahathir bin Mohamad but subsequently emerged as the most prominent critic of Mahathir's government.In 1999, he was sentenced...
responded to the plan's announcement by arguing the plan was "devoid of substance" and was designed as a publicity tool for the Barisan Nasional
Barisan Nasional
Barisan Nasional is a major political coalition in Malaysia, formed in 1973 as the successor to the Alliance . Along with its predecessor, it has been Malaysia's federal ruling political force since independence...
government. Malay activist group Perkasa
Perkasa
Pertubuhan Pribumi Perkasa Malaysia or Perkasa is a non-governmental Malay Supremacy organization that was formed by Ibrahim Ali in the aftermath of the Malaysian general elections in 2008...
expressed concerns that the proposed Equal Opportunity Commission could be unconstitutional if it did not accord with the protection of Malays afforded by Article 153 of the Constitution
Article 153 of the Constitution of Malaysia
Article 153 of the Constitution of Malaysia grants the Yang di-Pertuan Agong responsibility for “safeguard[ing] the special position of the ‘Malays’ and natives of any of the States of Sabah and Sarawak and the legitimate interests of other communities” and goes on to specify ways to do this, such...
.
A spokesman for Khazanah Nasional
Khazanah Nasional
Khazanah Nasional Berhad is the investment holding arm of the Government of Malaysia entrusted to hold and manage the commercial assets of the government and to undertake strategic investments. Khazanah was incorporated under the Companies Act 1965 on 3 September 1993 as a public limited company...
Berhad, a government agency, stepped out to support it as a "realistic outline", provided that it is effectively implemented and embraced by the public. Democratic Action Party
Democratic Action Party
The Democratic Action Party, or DAP is a secular, multi-racial, social democratic Malaysian political party.The DAP is one of the three major opposition parties in Malaysia, along with the PKR and PAS, that are seen as electable alternatives to the Barisan Nasional coalition of parties...
spokesperson Tony Pua
Tony Pua
Tony Pua Kiam Wee is a Malaysian politician, currently the Member of Parliament for Petaling Jaya Utara. Pua was the former Malaysian CEO of Cyber Village Sdn Bhd, a SESDAQ -listed company...
said that Najib's launching of a new unit to strengthen Bumiputera economic participation has nullified his own New Economic Model and is nothing more than an endorsement of the controversial NEP, which favours the influential elite, and a copycat of Mahathir’s mega-projects and privatisation policies of the 1990s.
Further reading
- The New Economic Model — Najib Razak, The Malaysian InsiderThe Malaysian InsiderThe Malaysian Insider is a bilingual news site popular in Malaysia. It has been consistently ranked as one of the top 100 most popular websites in the country with a strong following in Singapore. Alexa ranked The Insider as the 57th most popular website in Malaysia in June 2009...