Malaysia fury at EU envoy remarks

Thierry Rommel, head of the European Commission delegation in the country, was accused of meddling in Malaysia's internal affairs.

In a speech last week, Mr Rommel said that the policies amounted to discrimination and protectionism.

Malaysian politicians reacted furiously to his remarks.

Mr Rommel described his 45-minute meeting with a senior foreign ministry official as "a useful exchange of views", and he hoped that it had resolved any misunderstanding.

Privileges

The envoy accused Malaysia last week of denying foreign companies a level playing field - remarks which one government minister labelled "arrogant and extreme".

Mr Rommel called Malaysia's affirmative action policies a deterrent to both investment and free-trade deals - like the one Malaysia hopes to strike with the European Union.

He said that the policies - once intended as a means of reducing poverty amongst Malays by giving them privileges over Malaysians of Chinese and Indian descent - were now an excuse for "significant protectionism".

Correspondents say some foreign companies have complained that rules forcing them to take on ethnic Malays as business partners open the door to corruption.

Malaysian leaders were angry at Mr Rommel's remarks, with Deputy Prime Minister Najib Razak saying the comments could be "construed as trying to interfere in the internal administration of the country".

But Mr Rommel insisted over the weekend that this was not his intention.

The veteran leader of Malaysia's parliamentary opposition, Lim Kit Siang, said that the government should justify giving state aid according to race, rather than accusing Mr Rommel of not having the facts right.

Malaysia's continued use of race as a test for business and social welfare has proved an obstacle in trade talks with the US, and is likely to be no less controversial in Europe, the BBC's Jonathan Kent in Kuala Lumpur says.