Malaysian New Economic Policy - Implementation

Implementation

The abstract policies and goals of the NEP were implemented by the Second, Third, Fourth and Fifth Malaysia Plans.

Some specific requirements were introduced to achieve the 30% Bumiputra equity target set by the NEP. Amongst these was a requirement that all initial public offerings (IPOs) set aside a 30% share for Bumiputra investors. These investors could be selected by the company being listed on the stock exchange, or the Ministry of International Trade and Industry, which would normally recommend such state-owned trust agencies as Permodalan Nasional or the Armed Forces pension fund. These shares were initially heavily discounted, as IPO prices were often significantly lower than prices after the listing had taken place. However, this advantage has disappeared in recent years. Nevertheless, this regulation has been criticised, especially as the 30% target continues to apply after the IPO has occurred; if the Bumiputra investors divest their shares, the company must issue new shares to maintain the proportion of Bumiputra shares above 30%.