Malaysia agonizes over race (and language) policy

[Harold F. Schiffman]

Malaysia agonizes over race policy, 35 years on

By Jalil Hamid  |  August 23, 2005

LENGGENG, Malaysia (Reuters) - For decades, Yeow Kim Kin and his fellow
ethnic Chinese have been the engine of the Malaysian economy. Born in
China, 64-year-old Yeow has been running his grocery shop in a small town
in the rural southwest for 30 years. Most businesses here are run by
Chinese and their customers are mainly ethnic Malays, who make up a
majority of Malaysia's population. It is a portrait, in miniature, of the
entire $104 billion economy, Southeast Asia's third largest.

"Many just want to make quick profits," he says, putting away his
Chinese-language newspaper to sell a Malay man cigarettes. Despite a
35-year effort to bridge the wealth gap between ethnic Chinese and the
poorer Malay majority, business in the rural town where Yeow lives is
still dominated by the Chinese. Though not unique in the world, Malaysia's
affirmative-action program was born out of bloody racial riots in 1969 to
help address economic imbalances between the Malays and other races.

Malays, known as Bumiputras or sons of the soil, think of themselves as
the country's indigenous race, live mainly in the countryside and make up
just over half the population. Ethnic Chinese, whose ancestors came
centuries ago as traders or as mine workers shipped in by colonial rulers,
make up a quarter but hold about 40 percent of the nation's wealth. But
despite the racial peace of the last three decades, there are growing
doubts, within both Malay and Chinese communities, whether the
affirmative-action plan is still working.

SOCIAL ENGINEERING

The plan called for Malays to control 30 percent of the country's equity
holdings, up from 2.4 percent in 1970 when it was launched. But by 2004,
Malays held just 19 percent of the equity, more than a decade after the
initial deadline of 1990, despite billions of dollars in state contracts
and concessions awarded to Malay businesses. Prime Minister Abdullah Ahmad
Badawi's ruling party now wants to carry on the program until 2020, when
Malaysia hopes to graduate into a developed nation.

The program is closely watched elsewhere in the region where ethnic
Chinese generally dominate business. In Indonesia, economic disparities
fanned anti-Chinese race riots in 1998, at the height of Asia's financial
crisis. There has been some success, but the overall economic achievement
of the Malays has been disappointing, says Khairy Jamaluddin, deputy head
of the youth wing of the United Malays National Organization (UMNO), the
Malay party that dominates government.

"Generally, the Malays lack capital to run or expand their business," he
told the party's recent annual assembly. In 2004, only 19.6 percent of
registered firms and 21.5 percent of listed firms were Malay-owned,
government data showed. And of the 20 richest Malaysians, only four were
Malays. Some Chinese have misgivings about carrying on with the
affirmative action program indefinitely.

"If we keep on failing to achieve the (30 percent) quota and then ask for
more, it will go on and on," said Lim Keng Yaik, head of the Chinese-based
Parti Gerakan and a member of Abdullah's ruling Barisan Nasional
coalition. Lim said Malays should learn to create and retain wealth, a
point that even Abdullah acknowledged. "If not, they will spend all that
they are given," Lim said.

"RENT-SEEKERS"

Collectively, the Chinese have actually improved their share of the
economy since the drive began to redistribute the nation's wealth. In
1970, they controlled 27 percent of the economy and today their share is
about 40 percent, gaining at the expense of foreign investors such as
British tin miners and planters. One reason for failing to meet the target
was because Malays had sold out government concessions to non-Malays,
Prime Minister Abdullah said.

"This is the action of rent-seekers who seek quick gains," he told party
loyalists last month. "The leakages have hurt the image of Malays and
eroded the confidence of others toward us." Yeow, who set up the Lenggeng
shop with loans from his late father and a bank, says his recipe for
success is sheer hard work. "The Malays, too, can be successful in
business if they are resilient.  Many are already doing well, with little
help from the government of course."



 Copyright 2005 The New York Times Company


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