Malaysia’s New Economic Policy (NEP) was first announced in 1970 as the principal policy response to the post-election race riots of May 1969, which also resulted in a significant regime change. The NEP had two prongs, namely “poverty eradication regardless of race” and “restructuring society to eliminate the identification of race with economic function”. The NEP was supposed to create the conditions for national unity by reducing interethnic resentment due to socioeconomic disparities. In practice, the NEP policies were seen as pro-bumiputera, or more specifically, pro-Malay, the largest indigenous ethnic community. Poverty reduction efforts have been seen as primarily rural and Malay, with policies principally oriented to rural Malay peasants.

The NEP has since ostensibly been replaced by the National Development Policy associated with the Second Outline Perspective Plan for 1991–2000, and then by the National Vision Policy linked to the Third Outline Perspective Plan for 2001–2010. Although the new policies have put far greater emphasis on achieving rapid growth, industrialization and structural change, there is the widespread perception that public policy is still dominated by the NEP’s interethnic economic policies, especially wealth redistribution or “restructuring” targets.

While there is little doubt that specific socioeconomic targets of the NEP have been largely achieved, later rather than sooner, it is not clear that such achievement has led to national unity, understood in terms of improved interethnic relations. Associating improved interethnic relations almost exclusively with reduced interethnic disparities among the respective business communities and middle classes has in fact generated greater ethnic resentment and suspicion on both sides. Ethnic affirmative action policies as implemented and enforced in Malaysia have associated the interests of entire ethnic groups with their respective elites, thus generalizing resentments associated with interethnic, intra-class competition. Thus, it is unlikely that the ethnic affirmative action policies will achieve the end of improved interethnic relations. An alternative approach needs to be found to create more lasting conditions for improved interethnic relations.