Last week, Thierry Rommel, the European Union (EU)’s ambassador to Malaysia, openly criticised Malaysia’s New Economic Policy (NEP). The NEP (commonly termed the “bumiputera policy”) is a 37-year old affirmative action programme in Malaysia that favours ethnic Malays and other indigenous groups in government contracts and education.
While the criticism and the perfunctory backlash from Malaysian leaders is rather unremarkable, what caught my eye was when Rommel warned the NEP could “lead to problems” in free trade negotiations between the EU and the 10-member Association of Southeast Asian Nations (ASEAN), of which Malaysia is a key member. The EU and ASEAN agreed last month to launch free trade talks, which could raise ASEAN’s exports to the EU by up to 20 percent. Senior officials are expected to hold their first meeting in Vietnam next month.
While I believe that the NEP is something for Malaysians to argue about amongst themselves, I am concerned that this policy may affect a very important free trade agreement (FTA) with the EU, which is the world’s most important trading bloc. I do not think Rommel would have risked the wrath of Malaysia if he didn’t think this was a serious enough issue. As if ASEAN didn’t already have enough roadblocks to the FTA like Myanmar’s military junta and EU agricultural protectionism, now it appears Malaysia’s NEP threatens to be another roadblock to sealing this important FTA.
Links: Malaysiakini report