Page last updated at 23:13 GMT, Thursday, 23 July 2009 00:13 UK

Malaysia questions ethnic preferences

By Robin Brant
BBC News, Kuala Lumpur

Najib Razak, March 09
PM Najib Razak wants to win back the support of non-Malays

Malaysia's New Economic Policy is hardly "new". It has been around for almost 40 years.

But in his first 100 days in office, Malaysia's Prime Minister Najib Razak has been forced to tackle the government's most controversial policy - one that gives special treatment to the majority Malays.

It was meant to help people like Azban. He is 37, with a wife and two young children. He works in a ticket office at a train station.

I met him as we waited for the lift at the government-built tower block where he lives, on the outskirts of Kuala Lumpur.

The estate is rundown, with water pouring down from a spill higher up.

But it is better than the wooden house he used to live in before he left his village for the capital city.

For decades the NEP has ensured preferential treatment for people like Azban: special access to jobs, housing, education and loans - all because they are Malay.

Malaysia is made up of three main ethnic groups: Malays, Chinese and Indians.

The Malays make up the majority - just. The Chinese and Indians have been in this country for centuries but some Malays still regard them as foreigners.

Patronage politics

The NEP was born out of race riots in 1969.

The aim of the policy was to tackle an imbalance between rich businessmen, mostly Chinese, and the poor, who were mostly Malay.

At the time government figures claimed that Malays controlled less than 3% of the economy.

I think the people of this country realise and understand and agree that the Bumi [Malay] population of this country needs to be supported
Syed Amin
Malay Chamber of Commerce

Ramon Navaratnam was one of the team of government economists who helped draw up the NEP.

"The principle was, have an expanding cake, with more balance and equity provided for Malays or the underprivileged - of all races it was supposed to be."

But he said the noble aims were soon displaced by the politics of patronage.

"Some politicians got smart about it and wanted to allocate special reservations and shares and stocks and contracts to Malays, and very often it went to the wrong Malays, who had no clue about business."

Forty years on the Malays, who are also known as Bumiputra, which means "son of the soil", have grown in economic power.

According to government statistics they control 20% of the economy, but that is still some way off the target of 30%.

Malay students board the bus at Universiti Malaya in Selangor
Malay students are granted preferential access to universities

It may have been an effective political tool but many people, such as Syed Amin from the Malay Chamber of Commerce, see it as a failed project.

"There is no point in saying that we have achieved some measure of success just because we have trained a few Bumis in being professionals" he told me.

He thinks the Malays still need special help.

"I think the people of this country realise and understand and agree that the Bumi population of this country needs to be supported."

'Still in development'

Tucked away in an exhibition centre on the top floor of a shopping mall was an event for small and medium sized enterprises.

I got there just as it opened. Some stalls were still setting up.

After a 15-minute walk around I had been pitched security systems, help on setting up a toll free 1-800 number and numerous franchise opportunities.

The event should have been a haven for entrepreneurs, to come to promote their business and to share ideas.

For years in Malaysia entrepreneurship has always been associated with the Chinese.

Wan Azmalizam, NaviMap
Businesswoman Wan Azmalizam thinks Malays still need financial help

People will tell you, it is not what the Malays are good at.

At one stall Wan Azmalizam gave me a quick demo on what she referred to as "our little baby".

It was a bulky in-car GPS system. "Still in development," she told me.

The kit was made in Japan, but the software is Malaysian.

The firm she works for is NaviMap, a Malay-owned company, with almost 100 staff on the books.

She thinks Malay entrepreneurs like her need more than encouragement from the government.

"Do Bumis still need extra help with money, over Chinese and Indians?" I asked.

"Still need special help, yes," she replied.

Changes afoot

Malaysia's export dependent economy is suffering.

Exports dropped by almost 30% in May, compared to a year ago. A recession is looming.

At the same time the government is trying to rebuild support after a poor showing in last year's general election.

Just over 100 days into his tenure, Prime Minister Najib Razak has racked up a raft of changes.

Malaysian stock exchange, Kuala Lumpur
Malaysia's export-driven economy has suffered in the global downturn

Some rules guaranteeing Malay ownership have been dropped.

Nur Jazlan supports it. He is a young reformist MP from UMNO, the main government party.

"For the last 10 years the government has tried to grow the economy with the Bumiputra policy and obviously it hasn't worked," he said.

He thinks the past decade has exposed an inherent weakness in the NEP.

"Obviously those rules are not important anymore. Maybe, in a worst case scenario, they may be an impediment to foreign investors coming into the country."

Popularity surge

Malaysia's prime minister has no intention of completely ditching special treatment for the Malays.

Preferential access to places in universities, new housing developments, cheap money and civil service jobs remains.

But Najib Razak wants to win back the support of non-Malays.

He knows there must be change if Malaysia's economy is to compete with neighbours which are quickly passing it by.

The initial signs are mixed. His reforms have been met with a surge in public support.

A recent opinion poll suggested his popularity had jumped by 20%. Around 65% of people questioned were pleased with him.

The markets have not mirrored that though.

In spite of the liberalisation measures, Malaysia's financial markets have barely moved.

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