Continuing Furore over Malaysia’s Racial Policies

Posted on this blog with the kind permission of Dr Lim Teck Ghee. Dr. Lim was critical of the New Economic Policy as  implemented. He resigned on a matter of principle from ASLI Center for Public Policy Studies when the Center refused to support his findings on the subject and back his conclusions. I admire Dr Lim for the courage of his convictions and we have become very good friends and colleagues as we both are committed to the cause of  justice for all Malaysians.  I believe that race-based politics must come to an end, and he shares my view —Din Merican

by Dr. Lim Teck Ghee

A recent speech by the European Union Ambassador to Malaysia criticising the country’s New Economic Policy (NEP) has raised a firestorm of protest from the Malaysian authorities. According to Thierry Rommel, Malaysia’s racial quota policy favoring the majority ethnic Malays was detrimental to the country. Malaysia’s attractiveness to foreign investors had weakened as a result of the affirmative action policies for the majority ethnic Malays or “bumiputras”. He also expressed concern that “protectionism in public procurement is rising. That protectionism is expanding and the scope for competition and efficiency is narrowing … Malaysia is marginalising itself”.

Rommel’s criticism of the country’s longstanding pro-Malay policies made in the context of the country’s free trade negotiations with the EU is not new. A contentious long running controversy had taken place in September last year arising from the findings of a study conducted by Malaysian researchers. The study concluded that the Malay corporate equity target of the NEP had been achieved and proposed that this component of the NEP should be terminated.

It triggered an angry denial from UMNO leaders and a nation-wide debate on what was the actual level of achievement of the 30% Malay equity target, who had benefited from this policy and a host of related issues including whether the official statistics on Malay achievement levels were under-stated and the reliability of the government’s methodology in calculating corporate equity.

In Rommel’s case, not only was he perceived as breaching diplomatic protocol, but his specific charge that the government was using the NEP to practice “significant protectionism of its own market,” including in the automotive sector, steel, consumer goods, agricultural products, services and government contracts was too close to the truth for comfort. Similarly, his analysis that it is the Malay-centered policy that largely drives the country’s protectionist policies although not original – US-Malaysian free trade agreement negotiations this year have largely broken down for the same reason – was regarded as unacceptable.

Immediately following the media report of the speech, the country’s Deputy Prime Minister and Foreign Minister jumped in defense of the NEP and lambasted the Ambassador for interfering in the Malaysia’s internal affairs. A few days later, the spin masters of UMNO, the dominant Malay party in the ruling coalition government, went to work in the local media. Unfortunately, what appears to be the party’s choice of defender of the NEP cause was not exactly the most appropriate, likewise the arguments used to rebut Rommel and other critics of the NEP.

Writing in the “Letters to the Editor” column of the New Straits Times, the writer, Rais Saniman, unsurprisingly omitted mention of how the policy has spawned a class of privileged Malays who have taken advantage of their racial identification to profit from the racial quota system imposed in the country’s economy after 1970.

In 1983, Rais Saniman was one of four Bumiputra Malaysia Finance Limited officials who, together with George Tan of the Carrian Group, were ultimately convicted for conspiracy to defraud BMF in what was then the biggest financial scandal to rock the country and which cost the Government an estimated M$2.5 billion in lost monies. A noted political scientist, Prof. R.S. Milne, writing of the scandal noted that “Bank Bumiputra was not just any bank, it was government-owned, the largest in the country…. and under the New Economic Policy, a spearhead for the economic advancement of the Malays, invested with immense symbolic value”. Owing to his role in what was described by then Prime Minister, Dr Mahathir, as “a heinous crime”, Rais Saniman was sentenced to 15 months imprisonment.

Since then, Rais Saniman has not only been politically rehabilitated but he has also made a comeback in the Malaysian political scene by playing up Malay fears over the possible dismantling of the NEP in favor of less ethnically-biased national policies. Teaming up with a prominent Norwegian consultant, Just Faaland of the Chr. Michelson Institute of Norway, the convicted ex-banker is one of the more visible UMNO backroom gurus spewing out propagandistic briefs over the past 15 years extolling the merits of the NEP and justifying its continuation ad infinitum.

In his letter to the NST on 28 June 2007, Rais Saniman described Rommel’s speech as “loose coffee shop talk about the NEP”. Listing various achievements of the NEP, he defended the legal and moral foundations of the policy and stated that it was “consistent with the Federal Constitution… the UN Charter, Human Rights, Democracy, Free Trade and Enterprise, Rule [of] Law and Civil Society.” The letter ended by claiming that similar policies (to the NEP) were now “a standard policy prescription by the United Nations…. and in the EU itself.”

These unsubstantiated claims not only strike the average well-informed reader as bizarre and self-deceiving, but they also draw attention to various unsavory facts, including that Malaysia has consistently refused to sign the UN Convention on Elimination of Ethnic Discrimination (CERD) and various other key human rights conventions.

In contrast to this and other sycophantic responses permitted in the printed mass media, the websites and blogs have elicited more thoughtful and politically nuanced responses. Jeff Ooi, one of the more widely followed social commentators, in his blog, “Screenshots”, noted that there is a fundamental difference between adjusting an archaic economic policy and safeguarding sovereignty in an ever changing global economy and warned that “It is a perilous game to play….by over-protecting the UMNO-putra sub-stratum and….turning [our] back on two of [our] biggest trading partners…. which have called for the removal of such intra-and-ultra discriminatory policies”. He concluded that the loss of competitive edge will likely lead to a situation in which other ASEAN countries “may one day eat [our] lunch.”

Another writer in the online newspaper, Malaysiakini, noted that Malaysia was experiencing a second generation of NEP legislation and warned that “grave danger lies, for it will, if not already, be deeply entrenched in the psyche of the Malay. Far from being more even-handed in its application, the young educated Malays will hijack the NEP.” The writer’s solution: “ethnic suspicions make all Malaysians under perform as a collective ….Perhaps the NEP should be phased out to blur the lines of ethnicity….albeit gradually to lessen the shock impact.”

What is heartening about what has appeared in the web-based media is that the more discerning contributors are providing a variety of well-informed and cogently argued arguments as to why a continuation of NEP or NEP-type policies and programs is detrimental to the country’s future. They are also proposing practical alternatives that can help enhance national cohesion and competitiveness. To reap the benefits of this unprecedented discussion and public scrutiny of the country’s NEP and other controversial and sensitive policies, the country’s leaders need to overcome their indifferent attitude and refrain from the infamous “waving the keris” reflex action whenever there is someone who disagrees with them on how the country’s future policies should be reshaped.

Unfortunately, there are few signs that this political maturity may come about soon. Speaking recently (28 June 2007) to over 500 Malaysian and foreign media owners and practitioners at an annual Mass Media Conference meeting organised by the Internal Security Ministry (which is also in charge of enforcement of the country’s notorious Internal Security Act permitting detention without trial for individuals deemed dangerous to the state), the Prime Minister, Abdullah Badawi, warned that some newspapers and periodicals had been testing the limits of his tolerance. He also intimated that “tough media laws that are in place are unlikely ever going to be repealed or withdrawn” (The Sun, 29 June 2007) and was quoted as saying, “When naughty children are no longer unruly, the cane should not be thrown away. Just hang it on a nail on the wall”.

Such threats are unlikely to deter the growing public concern over the impact of NEP type policies on the country, be it in trade, licensing, education, housing, and in the other areas of social and economic life where the policy has been woven into. Similarly it will not stifle the growing chorus of suggestions – from responsible Malay and non-Malay stakeholders – on how to provide an even playing field for all Malaysians, irrespective of race whilst ensuring that poor and deserving Malays and others in need are provided their fair share of public resources.

The country’s political bosses may wish to continue censoring the debate and harp on what appears to be self serving warnings of racial unrest that may arise from doing away with the NEP. But the genie is well and truly out of the bottle. The sooner the government deals with this reality and listens to these “dissident” voices, the more likely the country can push ahead to meet its 2020 goal of one united Malaysian people.

Lim Teck Ghee is a leading Malaysian policy analyst.  He was formerly Director of the Center for Public Policy Studies, ASLI, a regional think-tank based in Kuala Lumpur. Prior to this, he was Regional Advisor on Poverty and Social Development with UNESCAP and Senior Social Scientist at the World Bank.