Will Umno buy Najib’s vision?

In reality, it was a source of patronage and bred cronyism. Many politically connected businessmen became rich on the quota, evoking resentment among the Malay masses and minority races.

By Carolyn Hong, The Straits Times/ANN

Malaysian Prime Minister Najib Razak took office on April 3 saddled with the image of a tired United Malays National Organisation (Umno) politician. But that look may well be changing.

On June 30, just days before his 100th day in office, he dropped a bombshell of an announcement on the Malaysian economic landscape. Given how politicised the economy is, it proved to be a major whammy on the political front as well.

A key part of the Malaysian psyche was shattered when Najib announced the removal of a decades-old quota on Malay ownership of public-listed companies.

Companies will no longer need to sell 30 per cent of their shares to Malays. Instead, they will reserve at least 25 per cent of shares for sale to the public, of which half must be sold to Malays. That works out to 12.5 per cent, and if there are not enough Malay takers, the requirement will be waived.

Close watchers of Malaysian politics will recognise that it is a seismic shift.

The pro-Malay economic policy was never meant to be that narrow but Malaysia’s politicised economy meant that the 30 per cent quota had become a sacrosanct right a Malay leader ought never to question, much less quash.

In reality, it was a source of patronage and bred cronyism. Many politically connected businessmen became rich on the quota, evoking resentment among the Malay masses and minority races.

Najib disclosed that of the 54 billion Ringgit (US$15.2 billion) worth of shares sold to Malays from 1985 to 2004, only 2 billion Ringgit ($566 million) remain in Malay hands. The rest had been sold. So much for the original intent of building Malay equity.

The move breaks one major link of the patronage chain. It comes on top of other measures like the scrapping of the Foreign Investment Committee which oversees bumiputera participation in businesses. Earlier this year, he liberalised 27 sub-sectors of the services sector, and the financial sector.

What prompted these moves? Has Malaysia made a clean break from affirmative action?

Rita Sim of Insap, the think-tank of the Malaysian Chinese Association (MCA), says he was forced to act by circumstances.

“He has no choice. Malaysia needs to be more competitive and of course, he needs to win back support for the Barisan Nasional (BN, the ruling coalition which Umno is the backbone),” said the Insap deputy chairman.

The ruling BN was hit badly in last year’s general election when voters deserted it in droves.

An aide to the Prime Minister said Najib was concerned over Malaysia’s declining competitiveness.

“He’s made it clear that he wants to tackle the structural problems. His overarching theme is 1Malaysia, and this can be seen from the measures,” he said.

Malaysia is Najib’s slogan of sorts. It appears to mean a policy that takes into account the interests of all races. Put another way, he is attempting to shift the balance towards injecting more meritocracy without completely abandoning pro-Malay policies.

Hence, along with the liberalisation, a 500 million Ringgit ($141 million) private equity fund was set up to develop bumiputera (Ethnic Malay) businesses.

Even the scholarship scheme is merely a new category. There will still be a racial quota in some categories.
Critics like Universiti Malaya law professor Azmi Shahrom see such changes as merely papering over the cracks, rather than any serious dismantling of policy.

He pointed out that the system is still a lopsided one. To him, Najib’s aims are purely political – to weaken the opposition rather than to deliver real reforms.

“He needed to cut the legs off the opposition, and what better way than to hijack their platform,” he said.

But Najib supporters see it as keeping a delicate balance. There is already some dissatisfaction within Umno about these changes, though a fairly silent one so far as the government had taken pains to prepare the ground.

Over the last month, it met Malay editors and opinion-leaders to explain its policies, and the top Umno leadership was also briefed.

There is bound to be unhappiness. Years of prickly race relations have heightened sensitivities, and to some, the moves appear to be a capitulation to the minorities’ persistent demands.

Opposition Parti Islam SeMalaysia (PAS) president Hadi Awang has also raised objections.

“We want equality for all races but at the same time, the bumiputeras must be given the strength,” he said.

Umno chieftains fear that Najib’s new approach would be used in a fear-mongering campaign among the rural Malays, especially in a by-election in Kelantan in a PAS stronghold on July 14.

Umno has decided on its message: the Malay agenda is still there but new ways are being designed to uplift the community and distribute wealth to the masses.

Some Malays agree. A Malay political analyst, for instance, says Malay self-confidence can grow organically only through genuine competition in an arena like the National Scholarship.

But it is harder to convince the masses. While surveys by the independent Merdeka Centre do show a more nuanced Malay sentiment, the overall sense of insecurity remains. “He’ll find it very hard to keep a balance,” said Sim of Insap.

Najib, a strong party leader with widespread grassroots support, will thus have his work cut out for him to persuade his party to follow his new path.