[lg policy] Malaysia: Gay Sex Takes Backseat to Economic Policy Making

[Harold Schiffman]

Gay Sex Takes Backseat to Economic Policy Making:
Commentary by William Pesek


July 20 (Bloomberg) -- Malaysia is in the global financial pages, and
for a change it has little to do with sodomy.

Normally, when Asia’s No. 10 economy makes the front page overseas,
it’s about Anwar Ibrahim’s legal woes. And the former deputy prime
minister and opposition leader will soon be back in court facing
charges he had illegal sex with a man. The steamy case has been
distracting policy makers since the late 1990s.

Now, Malaysia finds itself in the international press for the right
reasons: changes that may leave the nation more competitive and
prosperous in the years ahead.

In his first 100 days in office, Prime Minister Najib Razak eased
rules governing overseas investors, initial public offerings and
property purchases, peeling back decades of benefits to ethnic Malays
as the nation faces its first economic contraction in a decade.

If you are a foreign company in Malaysia or a locally listed business,
you no longer need to set aside 30 percent of equity to indigenous, or
Bumiputera, investors. Overseas ownership thresholds in the
fund-management industry and at local stockbrokers also were raised.

While much more needs to be done, these steps send an important
signal. It’s that the nation of 27 million is open for business again
after five years of drift and indecision under Prime Minister Abdullah
Ahmad Badawi.

Window of Opportunity

Had Abdullah had the courage and foresight to implement these changes
five years ago or even two years ago, Malaysia might be a very
different place today. He didn’t and one of Asia’s most resource-rich
nations lost a rare window of opportunity to compete with China, India
or even Indonesia. Last week’s deadly hotel bombings in Jakarta didn’t
send panic through Asian markets the way they did in the past -- a
reminder of how far Indonesia has come.

Better late than never, though. The good news is that Malaysia is
working to buttress its stature with investors, many of whom avoided
the place after the 1997 Asian crisis.

“We are at a critical juncture,” Najib, 55, said in Kuala Lumpur last
month as he began dismantling policies his prime- minister father
established 38 years ago. “Failure or hesitation to act now will have
long-term ramifications for the nation.”

Hesitation still reigns, of course. Najib, for example, is sticking
with a broader goal. It increases ethnic Malays’ share of Malaysian
corporate equity to 30 percent from a 2004 estimate of 19 percent.
Also, investments will still be overseen by regulators in certain
industries, such as water, to safeguard “the national interest,” Najib
said.

Awkward Capitalism

It’s an awkward brand of capitalism. Affirmative action is normally
aimed at minority groups. In Malaysia, it benefits the majority at the
expense of minorities. Those of Indian and Chinese descent pay more
for homes and compete for some jobs, university admissions and
contracts, only after Malay slots have been filled.

If Malaysia wants to know why it’s not a bigger blip on investors’
radar screens it need only look at these policies. They aren’t around
because of good economics, but in spite of it. Najib should be more
aggressive in creating fair conditions for non-Malays and foreign
investors.

The world won’t wait for Malaysia. Economies as diverse as China,
India, Indonesia, Thailand and Vietnam are evolving in ways that
enable them to leapfrog peers in a short span of a few years.
Developing economies need to watch their backs.

And then there’s Singapore, the beneficiary of many of Malaysia’s best
and brightest seeking a more merit-based economy. Najib’s decision to
order that math and sciences again be taught in Malay, rather than
English, is a step backward.

Step Backward

Like it or not, English is the global business language, and Malaysian
students should be honing their skills whenever possible. Politicians
such as former Prime Minister Mahathir Mohamad said the reversal will
be a disadvantage to Malaysia.

This is a time for smart policy making. Malaysia’s gross domestic
product may shrink more than previously thought as the global crisis
reduces exports and household spending, the Malaysian Institute of
Economic Research said last week.

The economy will probably contract 4.2 percent in 2009, almost double
the 2.2 percent decline that the institute predicted in April. It
lowered the 2010 growth forecast to 2.8 percent from 3.3 percent. It’s
a sign that the ripple effects of global turmoil are still flowing
this way.

Malaysia’s $187 billion economy shrank 6.2 percent in the first
quarter. Najib has unveiled 67 billion ringgit ($19 billion) of
stimulus measures. More will be needed with the research institute
predicting a 22 percent plunge in exports of goods and services this
year.

Anwar’s sodomy trial will soon resume and grab some of the global
spotlight. Sordid news tends to do that. It would be a mistake to let
it eclipse Najib’s plans to fight crime, cut corruption and improve
public transport. He also is pledging to raise education standards and
the quality of life for the poor.

The real concern is follow-through. Malaysian politicians are big on
glossy, headline-grabbing plans to revitalize the economy. They are
less successful at implementing those visions. It’s time for Malaysia
to stop talking and start doing.

(William Pesek is a Bloomberg News columnist. The opinions expressed
are his own.)

http://www.bloomberg.com/apps/news?pid=20601039&sid=ao5UOkpWQWUg

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