Oleh/By : DATO' SERI DR. MAHATHIR BIN MOHAMAD
Tempat/Venue : PARLIMEN
Tarikh/Date : 17/06/91
Tajuk/Title : TABLING OF THE SECOND OUTLINE
PERSPECTIVE PLAN (OPP 2) (1991-2000)
Tuan Yang di-Pertua,
1. I beg to move the following motion standing in my name:
"That this House,
recognising the significant progress made in the socio-
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economic development of the nation during the last
twenty years under the First Outline Perspective Plan
1971-1990 and the New Economic Policy;
acknowledging and endorsing the continuous efforts of
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the Government in implementing policies, strategies and
programmes in order to achieve the objectives of the
First Outline Perspective Plan through the New Economic
Policy, that is to attain national unity as well as
maintain a stable and sustainable development in an en-
vironment of stability, peace and security;
approves and endorses the Second Outline Perspective
_____________________
Plan, 1991-2000 and the New Development Policy which
seek to provide respectively the development objectives
of the nation and the policies that will be followed in
the national effort to achieve the planned objectives
for the next decade, as set out in Command Paper No 8
of 1991;
That in approving the Second Outline Perspective Plan
and the New Development Policy, this House calls upon
Malaysians from all walks of life to strive harder and
prepare themselves to face the socio-economic and poli-
tical challenges ahead, in the spirit of the
Rukunegara, and stand united in our continuous efforts
to build a socially just, progressive and resilient na-
tion".
With your permission, I therefore, table the Second
Outline Perspective Plan (OPP 2) (1991-2000) for deliber-
ation by Honourable Members of this House.
Tuan Yang di-Pertua,
2. Today is a historic day for us. Malaysians have been
waiting anxiously to know the successor to the New Economic
Policy (NEP) which expired at the end of 1990. Indeed, the
keen interest shown by Malaysians about the shape of our new
policy indicates that we all have a keen sense of responsi-
bility for the nation and we are concerned about our future
and the future of the nation. This augurs well for the na-
tion since ultimately it is the commitment of the people to
our national goals that will ensure the success of the de-
velopment efforts for our own benefit.
3. It has often been said in international circles that
development plans in Malaysia are meant to be followed. In
other words we take our plans very seriously. Many observ-
ers have also remarked that the objectives, targets and
strategies that we set in our plans are well thought out,
realistic and achieveable and that, by and large, we have
been successful in achieving what we set out to do. This
was largely so with the OPP 1 and the NEP. God willing, we
will continue to maintain this track record by improving
further our capability to plan and to implement our plans by
mobilising all the resources of the nation to achieve our
objectives.
4. The racial riots of 1969 shocked us into realising the
political and social imperatives of addressing and resolving
the twin problems of poverty and racial socio-economic im-
balances facing the nation at that time. Since the new gen-
eration of Malaysians are generally not aware of the events
in 1969, it is necessary to remind them and also ourselves
that in a multi-racial society like ours the existence of
socio-economic imbalances along racial lines is not condu-
cive to stability or national unity. Accordingly, efforts
to perpetuate socio-economic imbalances along racial lines
will only lead to instability and disunity in the country.
The New Economic Policy (NEP)
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5. The launching of the NEP in 1970 marked the beginning
of our efforts at socio-economic engineering designed to
bring about a more equitable distribution of wealth between
the different races and groups in the various strata of so-
ciety. The main thrust of this socio-economic engineering
was embodied in a two-pronged approach aimed at:
(a) eradicating poverty irrespective of race; and
(b) restructuring society to reduce the identification
of race with economic function.
Within a span of two decades, we targeted that the incidence
of poverty in Peninsular Malaysia should be reduced from
49.3 per cent to 16.7 per cent and that the ownership of
share capital in the corporate sector should be restructured
such that the share of Malays and other Bumiputera would in-
crease from 2.4 per cent to at least 30 per cent while that
of other Malaysians, from 34.3 per cent to 40 per cent. The
foreigners were targeted to reduce their holdings from about
63.3 per cent to 30 per cent by 1990. Apart from these, we
also agreed on the target that the employment pattern at all
levels should reflect the racial composition of the popu-
lation. We also resolved to undertake this socio-economic
engineering exercise within the context of an expanding
economy so that in the process of distributing the benefits
of development, no ethnic group experiences a sense of abso-
lute deprivation. It is pertinent to mention here that
there have been many attempts in other parts of the world at
socio-economic engineering. Almost without exception they
have failed and they have caused untold misery and dragged
down the economy of the nations involved. The objectives
that we had set for ourselves in the OPP 1 and the NEP were
therefore fraught with all kinds of pitfalls and dangers.
Tuan Yang di-Pertua,
Macro Economic Progress
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6. Let me now briefly deal with the progress we have made
during the last two decades in implementing the NEP.
7. Since 1970, Malaysia achieved a rapid and sustained
growth. The real GDP growth averaged 6.7 per cent per annum
during 1971 - 1990 period despite the effects of a very se-
vere recession in the mid-1980's.
8. The impetus for the rapid rate of growth achieved dur-
ing the decade of the 70's came as a result of a high level
of public sector involvement in the economy. Such a high
public sector profile arose from the need to continue with
the social and physical infrastructure development begun
since independence. It also arose because of the overriding
need to achieve the objectives of the NEP in the face of a
comparatively underdeveloped private sector. As a result,
public sector investment as a proportion of total investment
increased steadily from 32 per cent in 1970 to a peak of 50
per cent by 1982. Despite improvements in the domestic
savings rate, the increasingly high level of such invest-
ments had to be financed by external debt.
9. While we have been successful in achieving the growth
targets and in meeting many of the country's socio-economic
goals, dependence on the public sector was found to be
unsustainable. In addition, high public sector involvement
in direct productive activities, especially by the Non-
Financial Public Enterprises (NFPE) had not yielded the re-
sults that were expected of them. Indeed their performance
in most instances was dismal, very much the way state-run
enterprises in other countries disappointed their
protagonists.
10. Our response to the serious problems of unsustainable
deficits in the public sector budget and in the balance of
payments took the form of sharp and painful adjustment meas-
ures undertaken from 1984 onwards. These included re-
straints on public sector expenditure, reduced public sector
involvement in the economy as well as a reversal of the past
practices of using public sector expenditure to boost demand
and growth. In order to offset the declining role of public
sector expenditure, steps were taken to stimulate private
sector expenditure and investment and to make the private
sector the engine of growth for the economy. A series of
measures were undertaken to liberalise and deregulate the
economy and to embark on privatisation of certain Government
agencies and functions so as to reduce public expenditure
and transfer it to the private sector while making the in-
vestment climate more attractive to them.
11. The new strategy to make the private sector the engine
of growth was initially affected by world-wide recession.
But with the improvement in the world economy, the strategy
enabled the Malaysian economy to recover strongly from 1987
onwards. In the last three years between 1988 - 1990, ro-
bust growth of higher than 9 per cent was recorded. Most
recent estimates put the growth rate in 1990 at 10 per cent
which, we believe, is among the highest rate recorded in the
world for 1990. This was achieved despite the threats and
instability posed by the Gulf crisis which occurred in the
last quarter of 1990. Our greatest achievement is that we
have restored fiscal and financial stability in the economy,
strengthened the balance of payments and reduced the ex-
ternal debt burden considerably through prepayment. The
economy has returned to a high growth path. With economic
expansion, the unemployment rate has been reduced from 7.4
per cent in 1970 to 6 per cent in 1990, resulting in a
tightening of the labour market and improvements in wage
levels for the workers. The per capita income, in nominal
terms has increased more than five fold from $1,106 ringgit
in 1970 to $6,180 ringgit in 1990.
12. The recent progress of the economy exceeded all our ex-
pectations. In the manufacturing sector alone, total ap-
proved projects increased from $9.1 billion ringgit in 1988
to $28.2 billion ringgit in 1990, a three fold increase in
three years. This shows the confidence investors, partic-
ularly foreign investors, have in the attractiveness of our
economy as well as in our pragmatic policies. Manufactured
exports and tourism earnings have shown a remarkable per-
formance never achieved in the past. The inflows of export
earnings and foreign capital were larger than ever experi-
enced before, providing strength to the economy as well as
enabling the country to maintain a satisfactory level of re-
serves, which is important for sustaining growth and keeping
the inflation rate low.
Progress of NEP
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13. There is general concensus in the country that very
substantial progress has been made in eradicating poverty
and that the achievements have been better than expected.
The national incidence of poverty has declined from 52.4 per
cent in 1970 to 17.1 per cent in 1990. In Peninsular
Malaysia, the incidence of poverty declined to 15 per cent
while in Sabah and Sarawak, it declined to 34.3 per cent and
21 per cent respectively. This reduction is a significant
achievement by international standards although the poverty
line of $370 ringgit for 1990 is far above those used in
many developing countries to define poverty. According to
international institutions, such as the World Bank, we have
been very generous with our definition. Obviously, if the
poverty line income was lower, we will get a much lower
level of poverty, as found by the estimates made by other
institutions.
14. During the period of the last two decades, about
480,000 households in Peninsular Malaysia have been lifted
out of poverty. Poverty is not a serious problem anymore in
Peninsular Malaysia as it used to be in the 1970's, but in
Sabah and Sarawak, although the incidence of poverty has de-
clined sharply, it is still high compared to Peninsular
Malaysia.
15. With the progress in eradicating poverty, the mean
monthly household income for the bottom 40 per cent of
households in Peninsular Malaysia has increased from $76
ringgit in 1970 to $421 ringgit in 1990. The mean household
income for the bottom 40 per cent of households in Sabah and
Sarawak also showed an increase from $68 ringgit to $390
ringgit and $74 ringgit to $436 ringgit, respectively. In
fact, the mean income of the bottom 40 per cent of house-
holds has been increasing at a faster rate than that of the
middle and higher income groups, resulting in an improvement
in income distribution.
16. The most important factor influencing the improvement
in rural incomes and the reduction of income inequalities is
the changing pattern of employment. With economic growth
and the rapid expansion of the industrial sector, there are
now more employment opportunities in the non-agricultural
sectors. As a result, there has been a steady trend in the
country for the rural poor to leave their traditional low
income agricultural activities and move into higher paying
employment in the manufacturing, construction and services
sectors. Among most rural households today, traditional ag-
riculture is no longer the only source of income because
their children can now get other kinds of employment in the
nearby cities and towns to supplement the family income.
Clearly the structure of employment and the income sources
of the people, especially those in the rural areas, have
changed with economic growth.
17. The Government's rural development programmes have
played a major role in enabling the poor to diversify their
employment and sources of income. The most important of
these programmes is, of course, education as it provides the
capacity for the rural poor to take advantage of the growth
opportunities in the country. By investing heavily in edu-
cation, health, transport and communication in the rural
areas, we have increased the mobility of the rural labour
force and raised the capacity of youths to participate in
the urban employment market and escape from the clutches of
rural poverty.
18. We have also made much progress in restructuring the
employment pattern so as to reflect more closely the racial
composition of the country as envisaged in the targets set
for the 1971 - 1990 period. In the last twenty years, the
progress made by the Bumiputera in education and employment
has been encouraging although there are still some major
gaps and shortfalls. For example, the share of Bumiputera
employment in manufacturing has increased substantially to
50.3 per cent by 1990 but this increase is concentrated in
the lower and unskilled categories of employment. In terms
of occupations, while their share in the professional and
technical jobs is high, this is mostly due to their high
share of employment in the nursing and teaching professions.
In professional occupations such as engineers, doctors and
accountants, Bumiputera are still under-represented relative
to their share of the population despite the efforts made to
increase the output of Bumiputera graduates from the univer-
sities and colleges.
19. In the case of the non-Bumiputera, while all have bene-
fited from the growth of employment, their share in certain
sectors such as agriculture, land settlement and the govern-
ment services has remained small in relation to their per-
centage of the population. As regards the Indians, their
former disproportionately high share of employment in cer-
tain professional groups has been declining although in ab-
solute terms they have increased. The Bumiputera in Sabah
and Sarawak have also not benefited as much as the
Bumiputera in Peninsular Malaysia from the growth of educa-
tion, employment and income opportunities in the country.
The Government is aware that the minority groups are lagging
behind in certain areas and therefore their needs for more
access to education and employment opportunities will be
given greater attention.
20. It is clear that poverty can be greatly reduced and
that absolute poverty can be eradicated. The notion that
the poor is fated to be poor is due to ignorance, for
clearly when the poor is given adequate help they can im-
prove themselves. And when they become rich, this too is
fate or takdir. It is the duty of a responsible Government
to help the poor and eradicate poverty and Islam does not
say that such help is unIslamic.
21. In the effort to eradicate poverty it is important that
the poor are motivated to overcome their own poverty. Those
who try to convince poor people that they should not strive
against their fate are in fact undermining the spirit of the
poor to work towards their own salvation. Such people are
in fact trying to suppress the poor and keep them poor for-
ever. Islam has never decreed that Governments should de-
liberately kill the spirit of the poor to strive to better
themselves. Only those who do not understand Islam or who
have other motives would actively deprive the poor of the
help and opportunities to better themselves.
22. The restructuring strategy under the NEP designed to
increase Bumiputera ownership and control especially in the
commercial and industrial sectors of the economy has also
met with much success in quantitative terms. The Bumiputera
share of equity in the corporate sector has increased rap-
idly from 2.4 per cent in 1970 to 20.3 per cent in 1990.
Although this is still below the target of at least 30 per
cent envisaged under the NEP, the rate of increase has been
very high as the Bumiputera started from a much smaller base
compared to other races. However, most of this progress was
due to the efforts of institutions such as the Permodalan
Nasional Berhad, PERNAS, and Tabung Haji while the equity
acquired by Bumiputera as direct investors is relatively
small. Further, there has been slow progress made by
Bumiputera to develop as a commercial and industrial commu-
nity and become owners and operators of their own business.
Although the Government provided substantial support and
subsidies to assist them, the incidence of business failures
was rather high among them. Experience during the NEP pe-
riod indicates that although equity ownership has increased,
this alone has not been sufficient to create a strong
Bumiputera commercial and industrial community capable of
retaining their share. There must be more effective efforts
to develop their management and entrepreneurial skills as
well as their value system so that the quality of their par-
ticipation in the economy can be significantly improved and
made more permanent.
23. Looking at the total picture, however, there is no de-
nying that despite the shortfalls and weaknesses, great
strides have been made to achieve both growth and equity in
our development and achievements, making Malaysia a unique
model among developing countries. There is hardly any
multi-racial country in the developing world which has been
able to carry out this experiment in socio-economic engi-
neering successfully, without disrupting and reducing or
even negating economic growth.
24. Usually if wealth is redistributed, economic growth is
retarded. If on the other hand, economic growth is given
priority, then the inequities in society will be accen-
tuated. We can be justly proud that through the NEP, we
have been able to make the employment and ownership struc-
ture in this country more multi-ethnic and to reduce poverty
without sacrificing economic growth. Indeed, our economic
growth actually outstripped those of other countries not
undergoing restructuring. And all these are achieved in the
context of a democratic system with peace and stability pre-
vailing. When all is said and done, the NEP must be ac-
knowledged as one of the greatest policies of independent
Malaysia, enabling it to prosper without the blatant injus-
tices of a totally materialistic society.
The New Development Policy
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25. We have made remarkable progress but we still have more
to do. The objectives of the NEP have not been fully
realised. Poverty still remains, although the magnitude of
the problem has been substantially reduced. There are still
wide gaps among the communities and the Bumiputera still lag
behind in a number of important fields, especially in the
field of ownership and management of commercial and business
enterprises and in the professions. Within the different
non-Bumiputera and the Bumiputera communities too, there is
inequitable distribution of wealth which needs to be re-
dressed.
26. We must not allow the success we have reaped to slip
out of our hands because of our complacency. We must push
on with policies designed to reduce further the current dis-
parities among the races in order for national unity to be
firmly established.
Tuan Yang di-Pertua,
27. The Second Outline Perspective Plan covering the period
1991-2000 has been formulated based on a new policy called
the New Development Policy (NDP). This new policy will
maintain the basic strategies of the NEP of eradicating pov-
erty and restructuring society so as to correct social and
economic imbalances and thereby contribute towards national
unity.
28. National Unity remains the ultimate goal of the NDP be-
cause a united society is essential to the promotion of so-
cial and political stability and sustained development. The
NDP will set the pace to enable Malaysia to become a fully
developed nation by the year 2020 not only economically but
also in terms of social justice, moral and ethical values,
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