In response to growing discontent between ethnic communities and the resultant rising social polarization, in 1970 the Malaysian government introduced a 20-year program called the New Economic Policy (NEP). The program was intended to encourage rapid economic growth in all sectors of the national economy, promote private entrepreneurship—especially among representatives of poor communities—and support small and medium-sized businesses. It was also intended to attract foreign investments, especially in modern technologies, by offering cheap and well-trained labor. At the same time, however, the government made major efforts to redistribute wealth. The NEP recognized the need for radical social changes and aimed to improve living conditions, economic power, and access to education and social benefits for Malays and indigenous people. These groups, who were called Bumiputera (sons of the soil), received privileged access to public services, were granted land rights and preferences in education and training, and benefited from job quotas in the public sector . This program was successful, and Malaysia achieved impressive economic growth, especially during the late 1970s, and throughout the 1980s. Between 1979 and 1989, the average annual GDP growth rate was around 5.2 percent, with manufacturing growing at an annual average of 8.2 percent and exports of goods and services at an annual average of 9.3 percent. In 1990, the NEP was replaced by the National Development Policy (NDP), which continued to promote economic growth, but relaxed some of the social requirements and privileges institutionalized under the NEP. Between 1989 and 1999, the average annual growth of GDP was around 7.6 percent, with manufacturing growing at an even more impressive 10.2 percent.
In response to growing discontent between ethnic communities and the resultant rising social polarization, in 1970 the Malaysian government introduced a 20-year program called the New Economic Policy (NEP). The program was intended to encourage rapid economic growth in all sectors of the national economy, promote private entrepreneurship—especially among representatives of poor communities—and support small and medium-sized businesses. It was also intended to attract foreign investments, especially in modern technologies, by offering cheap and well-trained labor. At the same time, however, the government made major efforts to redistribute wealth. The NEP recognized the need for radical social changes and aimed to improve living conditions, economic power, and access to education and social benefits for Malays and indigenous people. These groups, who were called Bumiputera (sons of the soil), received privileged access to public services, were granted land rights and preferences in education and training, and benefited from job quotas in the public sector . This program was successful, and Malaysia achieved impressive economic growth, especially during the late 1970s, and throughout the 1980s. Between 1979 and 1989, the average annual GDP growth rate was around 5.2 percent, with manufacturing growing at an annual average of 8.2 percent and exports of goods and services at an annual average of 9.3 percent. In 1990, the NEP was replaced by the National Development Policy (NDP), which continued to promote economic growth, but relaxed some of the social requirements and privileges institutionalized under the NEP. Between 1989 and 1999, the average annual growth of GDP was around 7.6 percent, with manufacturing growing at an even more impressive 10.2 percent.
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