Minority Chinese and Indian communities are disenchanted with economic policies that favour the Malays...
For a country that abhors public protests and suppresses them with strict rules against illegal assembly, Malaysia has had several big demonstrations in Kuala Lumpur in the recent past. Street rallies may also be a sign that the 50-year-old code defining the rules of engagement between the state and the three main ethnic groups—the “social contract” of Malaysia—is fraying.
The biggest source of discontent is race, a four-letter word in a country where three-fifths of the 27 million people are Malays, about a quarter of the population is Chinese and 10 per cent is Indian. Minority Chinese and Indian communities are disenchanted with economic policies that favour the Malays.
And while privileges granted to the Malay Bumiputeras (son of the soil) can’t be taken away abruptly, the case for separating entitlements from racial identity is building.
To make Malaysia attractive to foreign investors, Prime Minister Abdullah Ahmad Badawi has already shown a willingness. The government has said that companies setting up tourism or logistics businesses in the Iskandar Development region of Johor won’t need to comply with a rule requiring foreign companies to have at least 30 per cent ethnic Malay ownership.
Investments and trade
This is a welcome step because Malaysia received just $6 billion of foreign direct investment last year. Thailand got $10 billion and India received $17 billion. Ending preferential treatment for Malays in lucrative government contracts is going to be more problematic. Free-trade talks with the US and Australia have been delayed and the ones with New Zealand have had to be suspended primarily because Malaysia’s policy of discouraging non-Malays, including foreigners, from bidding on government tenders is unacceptable to these countries.
The Federation of Malaya’s 1957 constitution recognised that the indigenous Malay community needed special help to improve their abject economic standing. Following bloody race riots in 1969, the new economic policy of 1970 made it an avowed goal of state policy to lift the share of corporate ownership for the Bumiputeras to 30 per cent, from just two per cent.
There was an uproar last year when a Malaysian economist argued in a study that the goal may already have been more than met and it was time to dismantle economic policies based on race. The political rhetoric is still staunchly against any such dilution of affirmative action.
However, the economic reality is different. Malaysia’s annual per-capita income has jumped an impressive 26-fold in the past 50 years to 20,900 ringgit ($6,200). But the decades of sustained, rapid growth in prosperity are now history. The rise of China and India is forcing Malaysia to discover new sources of competitiveness; the policy of race-based discrimination is increasingly untenable.
Education issues
The area where Malaysia has paid the heaviest price is education. In the 1980s, government policy reduced national schools to “Malay enclaves,” in the words of University of Sydney political scientist Lily Zubaidah Rahim; as a result, the Chinese opted out in large numbers. While ethnic quotas in higher education were removed in 2002, university entrance norms for non-Malays are still significantly tougher. Talent that Malaysia badly needs to build a knowledge-driven economy is forced to migrate.
Recent protests called for an improvement in the electoral process so that the next polls are free and fair. But another rally, organised by The Hindu Rights Action Force, had an overt racial tone. It is suing the British government for not protecting the rights of the minority Indian community at the time of independence. The real purpose of the protesters is, of course, to draw attention to the unfairness of the 1957 constitutional arrangement and to show that the Malays aren’t the only underclass in Malaysia.
The Tamil-speaking Malaysians are rather poor as a community. A renegotiation of the Malaysian social contract so that entitlements are realigned with real economic needs will be a slow, challenging process, though nothing short of it can really heal the wounds festering for half a century.
