KUALA LUMPUR – A declassified Central Intelligence Agency (CIA) report concluded that Malaysia’s dependence on heavy industrial policy during the implementation of the New Economic Policy (NEP) in the 1980s was ill advised.
It said then Prime Minister Tun Dr Mahathir Mohamed’s vigorous push towards industries such as manufacturing and financial services at a time when the country did not have any competitive advantage would not be well received.
“Dr Mahathir’s economic policy thus far emphasises heavy industry, resource-based development, government financial assistance and joint ventures in sectors where private businesses appear reluctant to invest.
“Recognising this, Malaysians themselves have begun to debate the wisdom of Mahathir’s approach, but the prime minister showed little inclination to reconsider his plans,” it said in a 17-page report.
The report titled Malaysia: Economic Policy at the Crossroads also said that such policies contributed to the country taking on more foreign debt between 1981 and 1983.
Debate on the Mahathir administration’s push for industrialisation remains until today.
Among others, Dr Mahathir launched a national car programme and supported this with protectionist policies that led to Malaysians paying among the highest prices for cars in the world.
High vehicle prices have contributed to existing difficulty among Malaysians to afford homes.
The CIA report was part of a trove of 13 million pages from 800,000 of the agency’s files that were declassified and posted online last week.
The NEP was an affirmative action plan launched by the country’s second prime minister Tun Abdul Razak Hussein following violent racial riots on May 13, 1969.
It was originally planned to eradicate poverty among Malaysians and narrow the economic gap between the Malays and the ethnic Chinese, by redistributing wealth to promote a 30 per cent economic ownership by the Bumiputera.
Although technically expired in 1990, many of the NEP’s race-based policies continue to be enforced and even expanded, resulting in simmering discontent among the non-Bumiputera communities, who complain that it deprives them of equal treatment and opportunities.
In 2015, Dr Mahathir had defended the NEP for creating a society that he claimed was more equitable than other multiracial nations, including even the United States, since treating multiracial communities equally using meritocracy has failed to produce tangible results.
– Malay Mail