Trump, Zafrul & Anwar: The Perfect Storm That Ended Malaysia’s NEP Era – Quietly!
A populist American, a pragmatic minister, and a reformist prime minister — three forces that converged to quietly rewrite Malaysia’s economic destiny. — and why ALL Malaysians should be celebrating, not melting down.
Part 2 of 3 Parts
By: Damian Fernandez
Editor’s Note:
This analysis draws on the official public statements and summaries released by the White House and Malaysia’s Ministry of Investment, Trade and Industry (MITI) regarding the U.S.–Malaysia Reciprocal Trade Agreement (Oct 2025). All factual claims cite those releases and major reporting where relevant. Exact treaty article and paragraph numbers will be appended once the full treaty text (publisher’s PDF) is accessible.
(White House announcement: https://www.whitehouse.gov/briefings-statements/2025/10/agreement-between-the-united-states-of-america-and-malaysia-on-recipricol-trade/;
USTR fact sheet: https://ustr.gov/about/policy-offices/press-office/fact-sheets/2025/october/fact-sheet-united-states-and-malaysia-reach-agreement-reciprocal-trade;
MITI press releases: https://www.miti.gov.my/.)
You’ve been told for decades that any attempt to change the racial architecture of Malaysia’s economy would cause carnage — political, social, economic.
You were told wrong.
This Agreement — quietly signed, loudly announced — does something no number of parliamentary speeches could have done without civil unrest: it removes the economic levers that sustained race-based protectionism for half a century. It accomplishes that through trade law, market access and regulatory commitments. Donald Trump didn’t need to rewrite the Constitution. He simply made the NEP’s economic mechanics unworkable in practice.
Read this closely – why this is the best thing that’s happened for Malaysia’s future.
1) What the Agreement actually does (in plain terms).
The public summaries and fact sheets are clear. Malaysia has committed to a set of binding commercial and regulatory changes tied to market access, non-discrimination, digital trade, critical minerals cooperation, and customs/trade facilitation. See the USTR fact sheet and the White House announcement.
Key, practical commitments you must understand now:
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National treatment & non-discrimination for foreign investors and exporters in covered sectors — i.e., Malaysia agreed not to impose discriminatory ownership or performance requirements on qualifying U.S. investors and products. ([White House / USTR summary]).
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Tariff architecture: The U.S. publicly committed to a 19% reciprocal tariff baseline for Malaysian goods, while identifying a large set of product lines (over 1,700 reportedly) that receive 0% or exemptions (semiconductors, pharmaceuticals, aerospace components, etc.). ([USTR/White House; MITI press release]).
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Digital trade & services: Malaysia agreed to refrain from discriminatory digital services taxes, to not require revenue-sharing funds for global platforms, and to allow cross-border data transfers for trusted business — major concessions for Silicon Valley and global cloud providers. ([USTR Fact Sheet, Digital Trade section]
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Acceptance of foreign standards & streamlining: Malaysia will accept U.S. motor vehicle safety and emissions standards, streamline halal and food certification processes, accept certain U.S. regulatory certificates, and simplify import licences for industrial goods. This removes many non-tariff barriers that protected local incumbents. ([USTR Fact Sheet — Non-Tariff Measures].
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Critical minerals & rare earths cooperation: Malaysia agreed to no export bans or quotas on critical minerals to the U.S., and to grant extended licences to increase production — a literal invitation for U.S. capital and technology into previously protected sectors. ([USTR Fact Sheet]: Annex on Critical Minerals).
These are not minor admin reforms. They attack the regulatory instruments that allowed quota rules, race-based ownership requirements and discriminatory taxes to function. You don’t need a constitutional amendment to negate a protectionist policy — you simply remove the regulatory toolbox it depends on.
2) How this unravels the NEP in practice.
The NEP didn’t live in the Constitution; it was imposed on the nation through government policies, rules: listing equity caps, local-ownership mandates, licensing hurdles, preferential procurement, localized certification, and targeted taxes. Make those tools impossible to enforce for a broad swathe of trade and investment, and the NEP’s protectionist scaffolding collapses.
Example: stock market listings. If you cannot lawfully require a 30% Bumiputra equity stake as a precondition for listing — because the Agreement’s market-access and non-discrimination commitments prohibit such requirements in covered sectors — then companies like Grab or Carsome no longer need to incorporate or move abroad to access fair listings. That’s not hypothetical — it’s practical. ([MITI press release; USTR fact sheet].
Example: digital platforms. If you can’t force foreign social media and cloud providers to pay into a local fund or localize DNS traffic, local protectionist tax schemes and surveillance proxies lose their teeth. That opens the market to competition, investment, and technology transfer.
In short: the Agreement strips the NEP of its enforcement mechanisms across investment, trade, digital, and industrial policy — the NEP becomes, practically speaking, an anachronism – a historical footnote.
Let’s be clear — this trade agreement hasn’t yet stripped away the visible trappings of the NEP. (See part 4 below).
3) You’ve mistaken constitutional concession for economic privilege.
Let’s get something straight: Article 153 of Malaysia’s Constitution was never about guaranteeing anyone lifelong economic privileges. It was meant to ensure that Malay and Bumiputra (including Sabah & Sarawak) communities were not left behind in public service, education, and scholarships during the early years of independence — when social and economic gaps were wide.
Article 153 gives the Yang di-Pertuan Agong responsibility to “safeguard the special position of the Malays and natives of Sabah and Sarawak” and “the legitimate interests of other communities.”
That dual phrase is crucial — it was never about superiority, but about balancing advantage between communities during a period of adjustment after British rule.
It was a safeguard for fairness, not a blank cheque for permanent entitlement. It never said that one race should control contracts, licences, or business opportunities forever.
The U.S.–Malaysia Reciprocal Trade Agreement doesn’t override the Constitution — it simply forces Malaysia to stop using race-based quotas as a shield in business and investment.
Even MITI’s own press release acknowledged this when it said the Agreement would “ensure a level playing field and non-discriminatory treatment for investors from both countries.” That line alone tells you that the government has already accepted that the old race-based filters can no longer stand.
If you think that weakens Bumiputra Malays, you’ve misunderstood the whole point. This deal will make Bumiputra entrepreneurs stronger — not by protecting them, but by finally freeing them to compete as equals on the global stage.
4) What the trade agreement has not touched – yet.
The U.S.–Malaysia Reciprocal Trade Agreement (RMTA) does not directly dismantle most domestic-facing privileges under Malaysia’s New Economic Policy (NEP).
So far, these remain intact:
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Property discounts (typically 5–15%) for Bumiputra buyers in residential or commercial developments;
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University entrance quotas and MARA scholarships reserved for Bumiputra students;
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Exclusive or preferential access to civil service positions and public-sector promotions;
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Certain government contracts and tenders, especially under the Bumiputra Vendor Development Programme and Procurement Guidelines;
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Special financing schemes through MARA, PUNB, and SME Bank with lower interest rates and looser collateral requirements;
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Priority for industrial land allocation in state-backed development zones.
These are domestic redistributive instruments, not trade or investment restrictions — which is why they’ve not (yet) been targeted under the trade deal.
Why these privileges will eventually be watered down.
While the RMTA doesn’t outlaw those benefits overnight, it creates economic conditions that make them unsustainable over time, for three main reasons:
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Reciprocal investment and non-discrimination clauses (the “national treatment” and “most-favoured-nation” obligations) will force Malaysia to align its corporate and regulatory practices with international norms — not just for U.S. firms, but for any foreign or Malaysian investor seeking parity.
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Once foreign investors enjoy legal protection from discrimination, local investors (including non-Bumiputra Malaysians) will demand the same.
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Over time, Malaysia’s own courts and administrative tribunals will have to reconcile these treaty commitments with domestic policies.
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Market exposure will outpace protectionism.
As global capital flows into non-discriminatory sectors, protected industries will start to lose out on foreign partnerships, innovation, and scale.
This will force policymakers to liberalize or risk irrelevance — especially as ASEAN peers compete for the same FDI under fairer terms. -
Public expectations will shift.
Once ordinary Malaysians — including many Bumiputra entrepreneurs — begin benefiting from open markets, cheaper imports, and new export access, the NEP’s paternalistic narrative will crumble. Economic reality will outgrow the political mythology.
So, yes: those social privileges will persist for now, but they are structurally doomed to erode because the trade deal anchors Malaysia into a global regime where discrimination is commercially untenable. This is not a betrayal of Malay interests. It’s a pathway to sustainable prosperity for the Bumiputra community, if leaders choose to seize it.
5) What happens next — parliament, implementation and the choice.
Yes — domestic implementation matters. Malaysia must still give effect to many of the commitments in the RMTA through legislation or regulatory change. That process will be televised, politicised, and messy. If Parliament refuses to implement, Malaysia risks losing the 19% tariff treatment, exemptions on critical exports and the whole investment package. That means worse outcomes: higher tariffs, stalled investment, lost jobs.
So the real political test is not whether the Agreement exists on paper, but whether the political class has the courage to implement it in law.
“You’ve mistaken protectionism for patriotism. Trump just handed Malaysia the key to global legitimacy.”
— From the U.S.–Malaysia Reciprocal Trade Agreement Analysis, Oct 2025
This new reality will take some getting used to — especially for those who’ve spent decades mistaking political protection for economic power. But as Malaysia stands on the threshold of real global legitimacy, you must start asking the hard questions about who benefits from keeping you dependent.
We’ll unpack this deeper in Part 3 of this series — where we’ll show what happens if Parliament hesitates, and why Malaysia’s future depends on embracing this deal rather than resisting it.
👉 Look out for Part 3 soon, or subscribe to our mailing list to get it the moment it’s released.
6) Wake up, Malaysia — this is your moment.
You have been conditioned, for decades, that any reform is a betrayal. This politically motivated dogma created stagnation. The Agreement has just created a different path — awkward, abrupt, and unavoidable. You can howl in grievance and watch the world pass you by, or you can build.
If you want better jobs, better schools and transfer of real wealth to Malay communities, this is how it happens: open markets, global standards, and competition that rewards skill and innovation — not connections.
This is not foreign imposition. This is a chance, compliments of Donald Trump, to have an economy that rewards you for real performance. Seize it.
