Affirmative action to test Malaysian PM
However, the proposed bumiputra reforms are trapped in a heated debate between liberal Malays such as Nazir Razak, a business leader, and defenders of Malay interests such as the campaigning group Perkasa, the Malay word for a warrior.
By Kevin Brown in Singapore, Financial Times
Najib Razak, the Malaysian prime minister, will on Tuesday make the most important announcement of his year-long tenure when he reveals how much of the discrimination favouring the country’s majority population group he is willing to eradicate.
Ministers have been discussing radical plans for a “new economic model” that would greatly dilute affirmative action in favour of Muslim Malays, who make up 53 per cent of the population. They are also considering rolling back benefits accorded to indigenous people from the two Malaysian states on the island of Borneo, who account for about 12 per cent.
However, there are widespread doubts that Mr Najib will take the political risk of dismantling the privileges of the Malay majority, which forms the core of political support for his United Malays National Organisation, the main party in the governing National Front coalition.
“Looking back over the year that Najib has been prime minister his administration has been blowing hot and cold where reforms are concerned, especially where they concern race-based affirmative action,” says Ooi Kee Beng, a Malaysia expert at the Institute of South East Asian Studies in Singapore.
The Malay and indigenous groups, collectively known as bumiputra, or sons of the soil, are regarded as economically disadvantaged and have benefited from a range of policies intended to increase their prosperity relative to the ethnic Chinese and Indian minorities, who account for about 34 per cent of the population.
The policies were introduced in part by Malaysia’s 1957 independence constitution and in part by the “new economic policy” of 1971, brought in after race riots in a drive to spread wealth more evenly.
Affirmative action programmes include cheaper housing loans, quotas for university places and civil service jobs, and preferential treatment in competitions for government contracts and for permits required to operate businesses. Many companies must set aside 30 per cent of their shares for bumiputra owners.
Mr Najib is expected to press ahead with some economic reforms, including attempts to get Khazanah, the state investment agency, to sell some of its holdings in a wide range of Malaysian companies as part of a drive to increase liquidity on the Kuala Lumpur stock exchange.
There is also likely to be some liberalisation of rules governing foreign direct investment, which has fallen off since the 1997/98 Asian financial crisis, when Malaysia imposed capital controls against advice from the IMF.
However, the proposed bumiputra reforms are trapped in a heated debate between liberal Malays such as Nazir Razak, a business leader, and defenders of Malay interests such as the campaigning group Perkasa, the Malay word for a warrior.
Mr Nazir and others argue that bumiputra preferences are hampering business. But Perkasa says Malays need to make more economic progress before affirmative action can be scrapped.
Many Malays support some degree of reform, not least because the system is regarded as benefiting mainly better-off Malays who know how to exploit it. Anwar Ibrahim, the opposition leader who is on trial for sodomy, has won significant support for demands that assistance should be redirected towards poorer Malaysians of all races.
