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The New Economic Policy (NEP) (Malay: Dasar Ekonomi Baru (DEB)) was a social re-engineering and affirmative action program formulated by the National Operations Council (NOC) in the aftermath of 13 May Incident in Malaysia

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The New Economic Policy (NEP) (Malay: Dasar Ekonomi Baru (DEB)) was a social re-engineering and affirmative action program formulated by the National Operations Council (NOC) in the aftermath of 13 May Incident in Malaysia. This policy was adopted in 1971 for a period of 20 years and it was succeeded by the National Development Policy (NDP) in 1991. This article looks into the historical context that gave rise to the formulation of this policy, its objectives and implementation methods as well as its impact on the Malaysian economy in general. The New Economic Policy (NEP) which began with the Second Malaysia Plan (1971–1975), and lasted until the Fifth Malaysia Plan (1986–1990), had three main objectives, namely

• To achieve national unity, harmony, and integrity
• Through socio-economic restructuring (of the society)
• To minimize the level of poverty in the country (poverty eradication)

The NEP was conceived as a two-pronged strategy for eradicating poverty for all Malaysians as well as reducing and subsequently eliminating identification of race by economic function and geographical location. The Policy sought to achieve its objectives through rapid expansion of the economy over time and set its target of substantially reducing the incidence of absolute poverty by 1990. To achieve this, the Policy called for aggressive improvement of economic status and quality of life for all Malaysians through:

• Access to land
• Physical capital
• Training
• Public facilities

Concurrently, the Policy also called for fairer distribution of opportunities to participate in the widening range of economic activities. The Policy opined that the core problem that stood in the way of national unity was compartmentalization of racial groups by economic function, particularly the association of Malay and other indigenous races with subsistence agriculture. To dissociate Malay and other indigenous races with traditional agriculture, the Policy called on the Malaysian Government to provide assistance to all Malaysians in:

• Finding employment
• Securing participation in economic activities
• Acquiring ownership in various economic sectors

As Malay and other indigenous races progressed in the modern economic sector, other Malaysians were encouraged to introduce modern agriculture to eliminate the identification of Malay and other indigenous races with subsistence agriculture.

The overarching principle of the Policy was the creation of "a socio-economic environment in which individual Malaysians find self-fulfillment within a system which provides for proportional participation, management and control in the economic life of the nation”. The abstract policies and goals of the NEP were implemented by the Second, Third, Fourth and Fifth Malaysia Plans.

Some specific requirements were introduced to achieve the 30% Bumiputra equity target set by the NEP. Amongst these was a requirement that all initial public offerings (IPOs) set aside a 30% share for Bumiputra investors. These investors could be selected by the company being listed on the stock exchange, or the Ministry of International Trade and Industry, which would normally recommend such state-owned trust agencies as Permodalan Nasional or the Armed Forces pension fund. These shares were initially heavily discounted, as IPO prices were often significantly lower than prices after the listing had taken place. However, this advantage has disappeared in recent years. Nevertheless, this regulation has been criticised, especially as the 30% target continues to apply after the IPO has occurred; if the Bumiputra investors divest their shares, the company must issue new shares to maintain the proportion of Bumiputra shares above 30%.Wealth in the hands of the bumiputras went from 4% in 1970 to about 20% in 1997. The overall wealth of the country as a whole also grew; per capita GNP went from RM1,142 in 1970 to RM12,102 in 1997. During the same period, absolute poverty in the population as a whole dropped from 50% to 6.8%. It is unclear what role the NEP played in these changes.The effects of the NEP on wealth distribution are disputed. The Gini index declined from 51.3 in 1970 to 44.6 in 1997, and 1987 figures indicated the mean income of the Malays had improved relative to both the Chinese and Indian communities. However, some have used 1997 statistics with 70.2 percent of households in the bottom 40 percent income group as Bumiputra, and 62.7 percent of households in the top 20 percent income bracket as non-Bumiputra, to argue that inequities remain.[citation needed] The Gini index also began to increase in the 1990s, going from 44.6 to 46.4 between 1990 and 1995; meanwhile, 1997 figures indicated that Chinese incomes were increasing at a rate double that of Malays'. Intra-ethnic income differences also increased markedly, especially among Malays.

Bumiputra participation in the professions and private sector increased as well, although Bumiputras remain somewhat under-represented. Between 1970 and 1990, the Bumiputra share of accountants doubled from 7 to 14 per cent, engineers from 7 to 35 per cent, doctors from 4 per cent to 28 per cent, and architects from 4 to 24 per cent. The Bumiputra portion of the share market – a figure frequently cited as "a measurement of overall community wealth", despite claims that it was misleading – increased from 2 to 20 per cent over the same period according to one academic's measurements. The Chinese share also increased from 37 to 46 per cent, at the expense of foreign participation. Official Kuala Lumpur Stock Exchange figures from 1998 were even more optimistic, indicating Bumiputra share ownership stood at 28.6% in 1990 and 36.7% in 1996.

The Chinese community in Malaysia accepted the NEP as a necessary evil to avoid Indonesian-style aggression, which the ruling party consistently instigate and deemed appropriate as their threat-based policy. Furthermore, the Chinese community generally moved away from the public sector and set up businesses in the private sector, where the impact of the NEP was less pronounced.

In spite of the policies implemented under the NEP, the share of the national wealth owned by the non-Bumiputra races increased beyond the 40% mark. This figure, however, does not reflect that certain segments of the non-bumiputra population live in dire poverty. The Malaysian Indian and Orang Asli in particular form the lowest strata of the population in terms of economic ownership. The Orang Asli of Peninsular Malaysia are not considered Bumiputra under the Federal Constitution despite their indigenous status.

However, and this is a major "yet", the NEP has likewise been overflowing with deficiencies and misuses. These started not long after the NEP was executed and, truth be told, provoked Tun Razak to state, "Some became rich short-term while others became detestable Ali Babas, and the nation endured financial misfortunes."

Today, the NEP stays a wellspring of much disappointment while remaining likely the most safeguarded strategy of the public authority. To such an extent, any endeavor to improve it is seen from a slanted viewpoint, regardless of whether the progressions would bring the NEP closer to its unique reason.

Questions: Paraphrase the above essay