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Saturday, 28 August 2010 admin-s

Common cause Malaysia's three major races are reflected in one train carriage

By Michael Schuman (TIME)

Malaysia is that rare country with an unequivocal national narrative. It goes something like this: Malaysia's 28 million people, comprising mainly Malays, Chinese and Indians, make up a moderate and modern emerging democracy. Unlike members of other multiethnic countries, they respect one another's beliefs and values and share a commitment to achieving prosperity. The official religion is Islam, but other faiths are freely allowed and celebrated. This is one harmonious place.

Much of that narrative is true — but not all of it.

Malaysia's economic miracle has stalled, and while the nation is, indeed, somewhat pluralistic, it is no melting pot. Indeed, it is a society where people define themselves first and foremost by race. (See pictures of Islam in Asia.)

The country's political leadership has in some respects reinforced those ethnic identities. For the past 40 years, policymakers have doled out special privileges — in education and business — to one community: the majority Malays. The program is one of modern history's greatest experiments in social engineering and possibly the world's most extensive attempt at affirmative action. But the policies have also bred resentment among minorities, distorted the economy and undermined the concept of a single Malaysian identity.

Now a movement is gaining strength to finally change the system — and it's coming from the very top. Prime Minister Najib Razak, 57, has surprised the country by advocating a fundamental reform of the pro-Malay program first introduced, ironically, by his father, who was Malaysia's Prime Minister in the 1970s. Though the specifics of the new policies remain hazy, Najib's intent is not. "I want Malaysia to be globally competitive," he told TIME in an exclusive interview. "For that, we need to get every single Malaysian to be together."

Najib's proposals have simultaneously raised hopes, ire and fear. The mere idea of changing the affirmative-action system has reopened old wounds in Malaysian society and reactivated the long-running debate on how best to fuse Malays, Chinese and Indians into one nation. The direction Malaysia takes, moreover, has repercussions beyond its shores. The issues raised by Najib's proposals are relevant to any upwardly mobile developing economy, especially a multicultural one: how to increase wealth and do so equitably. (Read "Why the Honeymoon is Over for Malaysia's New PM.")

In confronting these sensitive challenges, Najib is taking enormous political risks. The primary base of electoral support for Najib's political party, the United Malays National Organization (UMNO), is the Malay community, and altering decades-old perquisites could cause voters to defect to the opposition. But Najib believes he has little choice. If Malaysia's economy is to compete with China, India and other rapidly emerging neighbors, Najib sees no other route but reform. "The competition is much greater and some would describe it even as cutthroat," Najib says. "There is a realization that what has worked in the past may not necessarily work in the future."

The Malay Card
Najib is facing the same dilemma his predecessors have since the earliest days of Malaysian independence: balancing the perceived needs of the Malays, both political and economic, with those of the country as a whole. At the heart of the problem is the reverse-pyramid shape of the Malaysian economy. Though the Malays and other indigenous peoples, together known as bumiputra in Malay, make up about 60% of the population, they have traditionally been poorer than the Chinese and Indian immigrants, who have long dominated the nation's business and trade. After Kuala Lumpur was struck by race riots in 1969, a shaken leadership determined that communal peace was impossible without economic balance. The result was the New Economic Policy (NEP), introduced in 1971, which aimed to raise the Malays' share of the economic pie. Malays were given preferential access to public contracts and university scholarships. Any company listing on the stock market had to sell 30% of its shares to bumiputra investors. Though some measures have been softened or eliminated over the past two decades, many pro-Malay privileges remain. Certain government contracts are available only to bumiputra-controlled firms, for example. Malays even receive special discounts on home purchases. The affirmative-action program has become so ingrained in the Malaysian psyche that it is akin to a national ideology.

It is also controversial. Critics contend that the pro-Malay program too often benefits the connected few over its intended targets: the poor and struggling. All car-import permits, for example, are awarded to bumiputra-controlled firms, a policy intended to foster entrepreneurs in the community. But government audits have revealed that Malay businessmen with access to the permits sometimes sell them to minority traders who don't — at an instant profit. (The Ministry of Trade and Industry, recognizing the problem, says it will phase out the permit system by 2020.) "Unfortunately, as [the NEP] was implemented over time, some of the zealots, politicians and bureaucrats included, tended to become more racial and emphasized more on the people who have relationships with them," says Razaleigh Hamzah, an UMNO dignitary and former Finance Minister. "That's where it went wrong."

Despite four decades of special aid, 3 in 4 of the poorest people in Malaysia are still bumiputra. Adli Ahmad Ghazi, the Malay co-owner of Malaysian Defensive Driving & Riding, a 70-employee driving school in Kuala Lumpur, complains that the pro-Malay policies do little to help a small businessman like himself. In 2008, Adli tried to get financing from three agencies tasked with supporting Malay businessmen or small enterprises, but got rejected. When he has to deal with the bureaucracy, Adli says, he faces the same red tape as any other businessman. It took him two years to buy a parcel of land for his company from the local government. "The [NEP] rules don't really apply to people on the ground," Adli says. "They say the NEP would help the Malays, but it only helps a small percentage of the Malays."

Comfort Zone
Affirmative action may not be helping the overall Malaysian economy either. Though Malaysia has been among the best-performing economies in the world since World War II and boasts a spectacular record of improving human welfare — the percentage of the population living in absolute poverty has plummeted from 50% in 1970 to less than 4% today — the story is now stuck on the same chapter. Malaysia has fallen into what is called the "middle-income trap." Having elevated itself to a comfortable level of income, Malaysia has been unable to take that next leap into the realm of advanced economies. While growth has slowed, Malaysians have watched other fast-paced Asian rivals zip by. In 1970, the gross national income per capita of South Korea, at $260, was below Malaysia's $380, but by 2009, South Korea's was almost three times larger, at $19,830 vs. $7,230, according to the World Bank. (See pictures of Malaysia.)

Malaysia's struggles reflect those facing Southeast Asia as a whole. The region's economies once seemed among the world's most promising emerging markets, but in recent years, progress in almost all of them has been stymied by upheaval and poor governance. Thailand remains rudderless as its fragile democracy has degenerated into perpetual factional strife. The promise of the Philippines remains unrealized as its feeble government has continually failed to enact the tough reforms needed to turn around the underperforming economy. Indonesia is only now returning to its place as one of the world's premier emerging economies after a decade of political uncertainty scared off foreign investors.

If it is able to change its economic system, Malaysia could show its neighbors the way forward. Malaysia's essential problem is that its growth model — export-oriented manufacturing, often by foreign-invested factories — has become mismatched with its needs. Malaysia must become more innovative if its rapid development is to continue. But that's not happening. Private investment has fallen from a third of GDP in the mid-1990s to only about 10% today, labor-productivity growth has slowed, and R&D spending remains anemic. Instead of developing new products with highly skilled technicians, Malaysia's manufacturing sector still too often assembles goods designed by others, using imported technology and low-skilled foreign workers. "There is a growing realization that Malaysia's relative position compared to other countries that are catching up very quickly is not improving," says Philip Schellekens, a senior economist at the World Bank. "Relative to where they want to be, there is still a long road." (Read "Fortress Asia: Is a Powerful New Trade Bloc Forming?")

Though it would be incorrect to blame the pro-Malay policies for the economy's woes — Malaysia did, once, achieve remarkable rates of growth with the perquisites in place — they are nevertheless dampening business sentiment, scaring off talent, curtailing investment and stifling domestic competition. Chua Tiam Wee, president of the SMI Association of Malaysia, a small-enterprise organization, believes relaxing the NEP preferences would create a more level playing field on which the most capable firms could advance, making the economy more merit-based and upgrading Malaysian industry. The affirmative-action policy is "a source of a lot of distortions to the economic system," Chua says. By limiting the opportunities available to minorities, the NEP is likely contributing to a brain drain, in which some of the country's most talented people choose to work elsewhere. The government estimates that more than half of the 350,000 Malaysians working abroad have a college education. Stéphane Garelli, director of the World Competitiveness Center at IMD, a business school in Switzerland, believes that the affirmative-action regulations have made Malaysia less attractive to foreign investors. Malaysia's "bargaining power to put such restrictions on foreign investors is not as big as other nations'," he says.

Chinese and Indian entrepreneurs in Malaysia certainly believe the pro-Malay policies cap their business opportunities. Pardip Kumar Kukreja, the Malaysian-Indian chairman of Grand Paradise Holdings, a Kuala Lumpur — based firm that manages and owns hotels and operates travel agencies, laments that he can't get access to lucrative contracts providing travel services to the government due to regulations that favor Malay-owned enterprises. Removing such restrictions, he says, can act as an incentive to invest. Kukreja recently decided to launch an Internet-based business to sell travel services worldwide because Najib's administration liberalized affirmative-action rules for the tourism sector last year. "There are many things we'd like to do, which we hope we'll be able to do in the near future," he says. "To a small and medium entrepreneur, he wants to make his own decisions."

New and Untested
Najib is convinced the old ways must go. The centerpiece of his economic reform program, introduced in March, is called the New Economic Model (NEM). The plan envisions reducing red tape to encourage more private investment and internal competition, decreasing the state role in the economy and improving the education system to produce more skilled workers. "For us to move up a few notches, we have to address the structural problems," Najib says. "We cannot be in denial." Most of all, the NEM also proposes a major reform of affirmative-action policies to phase out remaining racial quotas and focus efforts on uplifting the poorest 40% of the population — irrespective of race. Says Najib: "I don't want anyone to feel that they've been left out or marginalized."

There are urgent political reasons he feels that way. UMNO, which has ruled Malaysia in coalition since its independence from Britain in 1957, lost ground to opposition parties in a hotly contested 2008 general election, and Najib is faced with the daunting prospect of expanding UMNO's political base outside its core Malay constituency. The NEM is an effort by Najib to turn stodgy UMNO into the party of change and outmaneuver its rivals. Some powerful voices within UMNO are egging on Najib to push his reforms. "We have to be bold and brave to ensure [our] long-term competitiveness," says Khairy Jamaluddin, an UMNO member of Parliament. (Read "Will Sodomy Charges End Malaysia's Opposition?")

Yet Najib has also come under pressure from conservative elements in the Malay community to hold back. "The bumiputra are still lagging behind," complains Ibrahim Ali, president of Malay nationalist organization Perkasa. "If the economy is not balanced, then everything will lead to trouble." As a result, Najib doesn't have full support from an UMNO worried about scaring off Malay voters. Najib's reform program "is a tough sell within the party," admits Khairy. "There will be people who resist the changes."

The split in UMNO reflects the greater divide within the Malay community over the future of affirmative action. Some Malays believe that they still don't possess the skills and resources to contend against Chinese businessmen, making continued affirmative-action policies indispensable. The program "should stay in place and improve," says Rizal Faris, president of the Penang Malay Chamber of Commerce. "What [officials] want to achieve is a level playing field where all parties are able to compete on their merits, but we need to ensure that the Malay community has been sufficiently skilled and pulled up." But others believe the time has come for Malays to step up and compete on their own, without special government aid. Akmal Syahirah, a 21-year-old law student at the University of Malaya, says that affirmative action should be eliminated, even though her family has greatly benefited from it in the past. Her father acquired land to produce palm oil through a pro-Malay development scheme, and her three younger sisters received tuition for extra after-school studies. But now, "I think we need to change," she says. "We can't just let Malays stay in their comfort zone."

Balancing Act
Faced with such contending forces, Najib is trying to please everybody. Affirmative action won't be eliminated entirely under the NEM, but altered to weed out abusive practices, target money where it is most needed and support the most worthy Malay businessmen, all the while trying to open up opportunities for minorities. Najib sees no contradiction in such a strategy. "Affirmative action remains in place, but the way it is carried out would be different," he says. "When it comes to helping the poor and the vulnerable groups, it should be irrespective of race. But there are certain affirmative actions which are still necessary, because the bumiputra are still very much behind and they must be helped. We want to help those bumiputra who are potential winners."

Even as he faces the daunting task of reforming Malaysia, Najib must deal with the domestic and international fallout from the divisive trial of Anwar Ibrahim, the opposition's most prominent leader. In 2008, only months after the opposition's electoral success, Anwar was charged with sodomy, a serious crime in Malaysia. The trial has a déjà vu flavor. Anwar was convicted of sodomy in 2000 (and abuse of power a year earlier), but the ruling was overturned in 2004 and he was freed after six years in prison. Anwar has pleaded not guilty to the latest charge and attacked his trial as a politically motivated attempt to discredit the opposition. The government denies that, saying the courts have a duty to conduct a fair trial. Yet the case has tainted Najib's administration. In a joint essay in the Wall Street Journal, former U.S. Vice President Al Gore and former Deputy Secretary of Defense Paul Wolfowitz wrote that Anwar's trial threatens "all those in Malaysia who have struggled for a freer and more democratic nation."

The biggest test for Najib still awaits. All eyes are watching for the detailed policy prescriptions of Najib's NEM, which could be released in October. Some Malaysia experts expect the final package to be underwhelming. Najib "doesn't have the strength to follow through, whether politically or personally," says John Malott, a former U.S. ambassador to Malaysia. "He's not a transformational figure." Najib insists his critics underestimate him. "I want to transform Malaysia," Najib says. "I want Malaysia to be a 21st century nation and I am determined to do that." Malaysia's future — and new narrative — depends on it.

— with reporting by Liz Gooch And M. Krishnamoorthy / Kuala Lumpur

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Comments (14) Add Comment

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written by strifus, August 29, 2010 23:39:41

"Malaysia's economic miracle has stalled, and while the nation is, indeed, somewhat pluralistic, it is no melting pot. Indeed, it is a society where people define themselves first and foremost by race."

I specifically underlined that last sentence there purely to prove a point. I have said this many times before and I will say it again. Malaysians are racist, at least to a certain extent. They can sugarcoat it anyway they want but like it or not Malaysians are very racially divided. I am a Malaysian and I know this to be true. A Malaysian would never admit to it, its shameful of course. Outwardly, we all live together because we have to. Inwardly, we talk about how this race is doing this and this race is acting like that, all the while not noticing that we are very racially divivded.

Sure you can blame this on UMNO, Perkasa, on whatever you like but I can tell you now that the majority of the people who want change in Malaysia will not lift a finger to do so. Sure they will complain about it behind closed doors and will discuss it with their own close circle of friends but when time comes, do they vote on it? Statistics say no. A large proportion of Malaysian citizens still dont vote. Why? Because they dont trust the opposition either. Sure they have gained inroads in parliament but not quite there yet.

So, the people want change yet they dont vote for the side that will bring change. Because they dont trust them. So, who do we blame for that? The MPs? I think not. Its the people.

Its the people, and not any singular race, that is stopping real change in Malaysia. 1Malaysia. The concept behind it is sound and has worked in other countries extholling multiculturalism and could be the genesis of a strong and reconnected Malaysia, yet Malaysians call it a pot of crock. I could go on citing more and more examples of Malaysians ambushing their own futures by being stupid and selfish.

I want to end with this in mind. Malaysians have tunnel vision, be they chinese, indian or malay. They only see what they can gain from and not look at the bigger picture. I have lived in this country for all my life, 4 decades, and I have seen the potential that Malaysians have when they work together. Have a greater vision, look at the bigger picture. If your not going to vote for BN/UMNO, at least make your vote count by voting for their opposition. Something, anything to get the ball rolling. Anything is better than having UMNO in for another term.

+1

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written by BAYANGKARA, August 29, 2010 22:20:02

It is ironic. These pro-NEP Malays want to catch up with the Non-Malays holding onto their clutches which is the very antithesis of improvement and standing on one's own feet.These same Malays just lap up the racial rhetoric of the UMNO elite so that the latter can continue to hijack what should rightfully be distributed to all Malays fairly and transparently. When that happens, Malays will still be hobbling along behind the non-Malays in another 50 years!

Malays, take your choice. Only you can save yourself.

+0

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written by SoundMan, August 29, 2010 13:26:10

Interesting article, non-Malays should seriously consider moving out of Malaysia. smilies/cool.gif

+2

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written by PakPandir, August 29, 2010 12:53:55

According to Spanish ranking system, Webometric Ranking of World
Universities, the Top 10 universities in South-East of Asia are :

1. NATIONAL UNIVERSITY OF SINGAPORE
2. NANYANG TECHNOLOGICAL UNIVERSITY
3. KASETSART UNIVERSITY
4. CHULALONGKORN UNIVERSITY
5. PRINCE OF SONGKLA UNIVERSITY
6. ASIAN INSTITUTE OF TECHNOLOGY THAILAND
7. CHIANG MAI UNIVERSITY
8. THAMMASAT UNIVERSITY
9. ASSUMPTION UNIVERSITY OF THAILAND
10. KHON KAEN UNIVERSITY

Out of the top 10 ranking South East Asia universities, 2 are from
Singapore , and the balance 8 universities are from Thailand . Also, on the
Top 100 list, Thailand has 41 universities, Myanmar 18, Indonesia 14, the
Philippines 13, and Singapore 7.

In Asia , the Top 10 universities are :

1. UNIVERSITY OF TOKYO
2. NATIONAL TAIWAN UNIVERSITY
3. KYOTO UNIVERSITY
4. BEIJING UNIVERSITY
5. KEIO UNIVERSITY
6. NATIONAL UNIVERSITY OF SINGAPORE
7. UNIVERSITY OF HONG KONG
8. CHINESE UNIVERSITY OF HONG KONG
9. NATIONAL CHIAO TUNG UNIVERSITY
10. NAGOYA UNIVERSITY

Out of the Top 10 ranking universities in ASIA, 4 are from Japan , 4 are from
China , and the remaining 1 each is from Taiwan and Singapore . We are also nowhere near the
Top 100 universities in Asia . In terms of Global Ranking, None of Malaysia 's universities are anywhere near the TOP 100 universities.

Well, the fact speaks for itself ! Thailand , Myanmar , Indonesia ,
Phillipines, and Singapore are way ahead of Malaysia . Despite all our
constant shouting of Malaysia boleh this and that, and all the emotional rhetorics of shiok sendiri and self denials, we are already an academic backwaters nation in South East Asia , I shake my head..

Gone are the days before 1976 when University of Malaya is the pride in SE Asia and during those days University of Singapore is University of Malaya ! Ever since the Bumiputras took over with their NEP and special privileges, the standard of education in Malaysia has gone down the drains ! Now with the reemergence of Malay as the medium of instruction, we should expect the worse to come when English will become the universal academic, technical and business language. Lots of plegiarism amongst the Bumiputra academics.

+7

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written by red1, August 29, 2010 09:59:07

Thanks for this good article. I am migrating to Indonesia.

+4

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written by truthbespoken, August 29, 2010 03:20:19

"Najib doesn't have the strength to follow through, whether politically or personally," says John Malott. Does anyone from TIME envisage Najib or the PM-of-the-day will actually have a good chance of convincing more Malays to accept local and global changes and progress as any united nation should when Malaysia's greatest fermenter of disunity and former PM is gone? That old man Mahathir is still guarding the racist goal post as though there is no tomorrow! He had rendered one and is still rendering another of his successors ineffective through his racist agenda. Did TIME ask Najib to confirm whether this is true and what actions he would adopt to counter "Malaysia's menace" if true?

+6

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written by Davy McChester, August 29, 2010 03:18:48

Malaysia has choices . One is to change ,allow meritocracy to replace the rest of the bullshit in place,which after all ,after four decades benefited a few and brought about rampant corruption and racial polarization never seen before. Four decades after the NEP ,UMNOputras still say goals not on target. The first choice would have the impetus to take on and compete with the surrounding nations and bring about prosperity to all Malaysians.
The second choice ,continue to make Malaysia as a hub for Jihad export against the Western nations and infidels. After all ,part of the 911 plot against the USA was hatched in Malaysia and also the not- long ago dead ,most feared Jihad terrorist in Indonesia was also the export of Malaysia .

Pick your choice ?

+4

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written by Semuaok, August 29, 2010 02:58:35

Chinese do not mind giving and the UMNO Malay take full advantage of it at the expense of their Malay brother. Now that the economy is bad, UMNO Malay is suffering and think they deserve more even thought the Chinese is hurting as well.

It's ok to give when time is good but when time is bad we Chinese expect you to chip in. If you are not helping never mind, just be mindful that other is suffering just like you.

+2

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written by cheekhiaw, August 29, 2010 01:43:35

That's because you don't know the real desires of thieves...

+1

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written by zachary, August 28, 2010 20:40:10

What the PM wants is far from what he desires. In then end, it either becomes watered down or turns out half cooked. Can't even discipline a school headmistress for her racist remarks, how then promote zero tolerance of racist remarks. Can't even check the umno mouthpieces and rein in some group like perkasa, how then to lead a nation?
All that is said resonates well from a public relations perspective but we all know 'cakap tak serupa bikin' and this is the honest to goodness truth.

+23

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written by Navigator, August 28, 2010 18:59:20

OK. How much did Najib pay this guy to write this article which makes him out as a visionary? Remember he initiated the sodomy case. There is also no mention of the Mongolian murder case.

+25

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written by cpchen, August 28, 2010 15:00:16

We, Malaysian irrespective of race fully support him to transform the country economically and socially to a higher level of modernization. However, recently we observed that there were under-currents from the PERKASA which is heavily supported by the former PM who was famous for his RACIST overtone has a grave effect of the present NEM transformation. We Malaysian should march forward as one "Bangsa Malaysia" to achieved a better quality of life for ALL. We should not be so narrow minded as to only take care of one single race and hamper our progress. Racial policy only hurt our Nation and the people living within, it do harm more than good. Let's wicked up all selfish and narrow minded Politicians from the land which we are prepare to nurture and live peacefully for generations to come. Let's all Malaysian put in effort to educate our young one to be a true "Bangsa Malaysia" without biased or favor. Long live to Malaysia and to those wise and far vision transformational leaders from both side of Political camp. We need a solution urgently at this juncture to save Malaysia from drifting further to a failed state and become a bankrupt nation.

+16

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written by hellosunshine, August 28, 2010 13:11:26

Malaysia is also drifting aimlessly now as the BeEnd gomen is too busy trying all devious ways to create racial and religious hatred amongst the people while the economy is sliding deeper into the red. Najis should hire Michael Schuman to be his economic advisor since all those idiots in BeEnd don't know what to do to jump start the economy. All they are good at is to wave their little keris in the air. Najis can't find any good, brilliant professionals nowadays as the cream of the crop had all left the building for greener pastures overseas with >500,000 braindrain between 07-09.

+52

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written by capricorn, August 28, 2010 12:34:22

Najib says he wants to transform Malaysia. He meant transform us back to the stone age. What with him being a lame duck PM, based on his current actions or rather non actions in dealing with racist bigots like Mamak, the school principals, Perkasa and Ibrahim..... fat hope our Malaysia has of moving forward.