EU envoy wrongfully calls for end of NEP

The special envoy for the EU to Malaysia, HE Thierry Rommel made a nasty sweeping statement against the National Economic Policy, an affirmative action plan adopted and implemented by the Malaysian Government since 1971. He said this infront an audience of local and foreign businessmen which surprised many. He also urged the Malaysian Government to rescind the NEP, a protectionism and discriminatory practices against foreign firms.

The Associated Press has the story:

June 21, 2007, 4:48AM

EU envoy blasts Malaysia’s NEP

KUALA LUMPUR, Malaysia — Europe’s top envoy to Malaysia Thursday urged the government to roll back its affirmative action policy for majority Malays, saying it is discriminatory and amounts to protectionism against foreign companies.

In unusually frank comments that ignored diplomatic niceties, Thierry Rommel openly criticized Malaysia’s 37-year-old New Economic Policy, or NEP, that gives a host of privileges in jobs, education, business and other areas to ethnic Malays.

“In a dominant part of the domestic economy, there is no level playing field for foreign companies,” Rommel, the ambassador and head of the European Commission Delegation to Malaysia, said in a speech to local and foreign businessmen.

Ethnic Malays and other indigenous groups, known as Bumiputras, comprise more than 60 percent of Malaysia’s 26 million people. The government says they have a disproportionately low share of the corporate wealth compared to the minority Chinese, and need the NEP to increase their standard of living.

The government did not immediately respond to Rommel’s comments.

Rommel said the government is using the NEP as an excuse to practice “significant protectionism of its own market,” including the automotive sector, steel, consumer goods, agricultural products, services and government contracts.

Malaysia claims these are “infant” industries that need to be protected but “in reality .. it is the Malay-centered Bumiputra policy that drives protectionist policies,” Rommel said.

As part of the NEP, all public-listed companies are required to allocate 30 percent of their shares to Malays. Companies without Malay directors or employees are excluded from lucrative government contracts. Employers have quotas for hiring Malays.

Eric Reuter, sales and marketing director of freight forwarder ABX Logistics, said the Belgium-based company has a 51 percent Bumiputra partner and is required to work with local companies on government-related projects.

The limitations have eroded his profit margin, he said.

“We cannot be as flexible as we want to be and chances that corruption comes into play is higher. It is an interruption to the free market,” Reuter told The Associated Press.

Besides foreigners, minority ethnic Chinese and Indians also see the NEP as a discriminatory tool. Many Malays also have complained the policy has benefited only a few well-connected people.

NEP was started in 1970 when the Malays’ corporate ownership was 2 percent. The aim was to raise it to 30 percent by 2010, from 19 percent now. Chinese, who form a quarter of the population, control 40 percent of corporate wealth.

Rommel stopped short of saying the NEP should be scrapped but told reporters separately: “We (in Europe) have bitten the bullet on a number of sensitive issues, why can’t you?”

He warned the NEP could “lead to problems” in free trade negotiations between the EU and the 10-member Association of Southeast Asian Nations, of which Malaysia is a key member.

The two groups agreed last month to launch free trade talks, which could raise ASEAN’s exports to the EU by up to 20 percent, Rommel said. Senior officials are expected to hold their first meeting in Vietnam next month, he added.

Apparently Rommel did an “Al Gore” and “John Mallot” here. He defied protocol and insulted the host. On top of that, his information is grossly incorrect and easily regarded as something with malice.

The truth is far from what Rommel claimed to be. Too many foreign owned and managed firms flourished the past 37 years doing business here in Malaysia and were not subjected to the NEP. Foreign owned firms like Shell, Standard Chartered, OCBC, Unilever, Fraser and Neave, Nestle, IBM, Motorola, Texas Instruments, Intel and all the likes operated without having the mandatory Bumiputra partner and flourished significantly. Private European owned firms like Boh Plantations Sdn. Bhd, was established since the Russell brothers in 1908 and Tan Sri Borge Bek Nielsen’s United Plantations Bhd. were never subjected to NEP.

More than 80% firms in listed in the Bursa Malaysia do not even meet the so called 30% mandatory Bumiputra ownership and still do business as usual.

The fact is that the NEP is an affirmative action, adopted by the Malaysian Government in 1971, derived as a consensus after months of national level consultation with all political parties representing all ethnic and multiracial interests (with exception of the DAP!), to alleviate poverty and restructure socio economic level of the various ethnic group and the gap that exist between them. Education, infrastructure and economic development programs have been identified, carried out and still continue since it was launched by the second Prime Minister, Tun Razak Hussein.

Infrastructure and economic development programs successfully carried out under the NEP actually have laid the economic fundamentals and foundations for the various and multi-layered economic transformations seen. This was also the basis for the country to go for bigger and more sophisticated industrialization programs.

Even with the NEP in place, Malaysia’s economic growth was recording excellent figure, that it create a new hope and potential of where it will take the nation. In 1991, then Prime Minister Dato’ Seri Dr. Mahathir Mohamad launched an ambitious “Vision 2020” policy to propel Malaysia into a newly industrialized country status by 30 years. Economy was targeted to have a steady 8% annual growth during that period. Of course, a lot of fresh investments poured from all over the globe, especially in the manufacturing sector.

HE Rommel’s incorrect outburst was really unnecessary and regarded as undiplomatic etiquette. In fact its outright “Kurang Ajar”! The whole country should rise and defy this attempt to insult our nation with a notion of inaccurate concept and whole context articulated poorly. If this EU team of ten diplomats really regard Malaysia as an important ‘ally’ for ASEAN-EU bilateral relations, then at least there should be an immediate statement of revocation and followed by an unconditional apology.

Otherwise, one of these days, maybe one of our statesmen make a damaging voracious attacks against EU’s own protectionism policies, discriminating under-developed countries products with non trade barriers such as environment or labour issues. Of course, he reciprocate this outburst at a significant event somewhere in Western Europe.


* An update as of 2300hrs, Saturday 23 June 2007.

Deputy Prime Minister Dato’ Seri Mohamed Najib Tun Razak, the son of the NEP founder 2nd Prime Minister Tun Abdul Razak Hussein, came out strong against Rommel’s calling to dismantle the NEP. has the story:

June 23, 2007 20:03 PM  

Don’t Meddle In Malaysia’s Domestic Affairs, Warns Najib

KUANTAN, June 23 (Bernama) — Datuk Seri Najib Tun Razak expressed regret over the statement by the Ambassador and Head of the European Commission Delegation to Malaysia with regard to the New Economic Policy (NEP), saying that the envoy should not interfere in Malaysia’s domestic affairs and policies.

Refuting the facts presented by the envoy, the Deputy Prime Minister said that as an ambassador accredited to this country, Thierry Rommel should play a role to forge closer relations between the two countries.

“Normally, an ambassador or envoy does not comment on the affairs of the country they are accredited to. This has been the practice because when we comment on the policies adopted by the country concerned, it means that we are interfering in the affairs of the host country,” he told reporters after launching the national level Campaign On Early Intervention To Prevent Children’s Disability, here.

Najib said this when asked to comment on Rommel’s remarks on Thursday which were carried by foreign wire agencies.

A foreign wire report quoted Rommel as saying that the government was using the NEP as an excuse to practise “significant protectionism of its own market” and urged the Malaysian government to roll back its affirmative action policy for the Malays.

The foreign news reports had stated that the NEP gave a host of privileges in jobs, education, business and other areas to ethnic Malays.

As part of the NEP, all public-listed companies are required to allocate 30 per cent of their shares to the Malays. Companies without Malay directors or employees are excluded from lucrative government contracts, the report said.

On Malaysia’s action or official protest against the statement, Najib said: “Wait first, I will seek the opinion of the Foreign Ministry.”

“The role of an ambassador is to forge close relations between the country he represents and the host nation. In terms of diplomatic principles and practices, Rommel’s remarks contradict the practice that we adopt.

“What was raised can certainly be disputed factually,” the Deputy Prime Minister added.


Published in: on June 22, 2007 at 05:21  Comments (34)