August 27, 2014
Ethnic Inequalities in Malaysia remain after 57 Years of Independence
by Jenni Dixon (received via e-mail)
Ethnicity has played a major role in Malaysian political and economic policy since the inception of the federation in 1963. The launching of the New Economic Policy (NEP) in 1971, with the primary aim of promoting economic growth, with particular emphasis on exports, had another important objective: to promote unity and harmony in one of the most ethnically diverse of nations.
The laudable idealism of the project, which attempted to raise incomes and reduce unemployment in all ethnic groups, to reduce poverty and create a restructured society in which race played no part may have kept ethnic differences, prejudices and jealousies at bay while the country prospered, but the simmering tensions below the surface of society were bound to boil over as the country’s economy began to decline.
However, while many observers do accept that the NEP reduced overall poverty, it has to be said that it was only partially successful in achieving its goals. The policy of Bumiputera, which gives preferential treatment to the Malay ethnic majority, has gone some way towards reducing disparities in income and wealth, but has sharpened the rift between Malays and the other main ethnic groups, the Chinese and Indians. New policies following on from the NEP after 1990 have adhered to its philosophy of affirmative action. These have targeted education, employment and the development of new enterprises.
Programmes aimed at halting the decline of standards in primary and secondary education, increasing the manufacturing base and stimulating regional development have benefited some sectors of the urban population while neglecting the problems of the Malay rural and urban poor. While the reality of Malaysia’s social problems may be seen more clearly from a perspective of class, as a division between rich and poor, the country’s more visible ethnic differences colour much political analysis so that the division between the Malay/Muslim sector and the rest of the population has perhaps been allowed to dominate more than it should.
Playing the percentages
In 1971, over 66% of the Malaysian corporate sector was foreign-owned, while the indigenous Bumiputera, who made up 60% of the population, owned only around 2%. The NEP target was to increase Bumiputera holdings to 30%, that of other Malaysians to 40%, and reduce foreign holdings to 40% by 1990. The outcome was disadvantageous to the Bumiputera, who increased their holdings to only 20.4%, while the other Malaysians, mainly Chinese, benefited most with a rise to 46.8% that exceeded expectations, against a decline of foreign holdings to 25.1%. However, a booming economy during the 1990s and the early years of the 21st century ensured that all sectors increased the value of their holdings, which went some way to disguising ethnic resentments.
The current slowdown in the economy has only deepened the distrust between Chinese and Malays. Prime Minister Najib Razak has appeared to ignore these rising ethnic tensions in favour of strengthening his Malay support base. For several years he had been pressing for a review of Bumiputera policy. His recent close election victory, with his ruling National Front coalition winning a majority in the lower house with only 47% of the popular vote, compared to the 51% who voted for the opposition Pakatan Rakyat coalition, has put into sharp relief his lack of support among the ethnic Chinese, causing him to consider the benefits of pursuing policies favourable to the ethnic Malays. Indeed, in the autumn of 2013, he announced a new low-price housing policy aimed only at Malays.
Prejudices and disadvantages
Over the decades since 1970, when Dr. Mahathir bin Mohamed delineated the controversial ‘Malay Dilemma’, which helped to create the political climate for the instigation of the NEP, political rhetoric has only accentuated the fallacious negative image of Malays as struggling to overcome their ethnic inferiority. For those who want to believe these prejudices, Bumiputera policies that introduced quotas for education, scholarships and business contracts only seemed to confirm their validity. The false logic of this argument says that because Malays needed help in these areas, they were clearly lazy, uneducated and lacking in the business acumen for which the Chinese and Indians were renowned. Malays happen to make up the majority of the rural population, where there is a lower per capita income and more people live in poverty.
Social problems associated with poverty are necessarily more common among Malays; for example, the percentage of people needing help for drug abuse is far higher for Malays, which in 2008 was 74.97% against 12.61% for Chinese and 9.75% for Indians, and drug rehabilitation programmes show a recidivism rate of over 50%. On Anti-Drug day 2014 Prime Minister Najib Razak urged Malaysian families to do everything in their power to prevent their children becoming prey to drug addiction. These sorts of problems associated with poverty are better remedied in this way, in giving general encouragement and advice and relieving poverty than targeting a particular ethnic group.
New Bumiputera policies
In March 2014, Prime Minister Najib Razak launched the new Bumiputera Business Expansion Fund worth RM200 million, which is designed to help Bumiputera technology companies to expand internationally. These will be flexible loans offered without the need for collateral with a generous payment period of six years, beginning two years after the beginning of the loan. Another RM25 million has been given to the Bumiputera Agenda Steering Unit, to be managed by the Malaysian Technology Development Corporation, and a further RM1.4 billion in Facilitation Fund Grants had already been approved for Bumiputera companies to develop 132 projects, creating about 23,000 new local jobs. The Prime Minister said that the loans were aimed at businesses in the cutting edge of a wide range of technological industries, and stressed that each proposed project must have a clear prospect of profitability and expansion.
The downside of Bumiputera is that while it is an attempt to stimulate the economy by preferential loans, it also by definition ignores other important sectors of the population. It has caused many Chinese Malaysians to emigrate as well as put off Chinese nationals from coming to study in Malaysia. The signs of a new ‘Malay Dilemma’ are already there to see, which may not be easy to remedy. In Kuala Lumpur, for example, preferential treatment is given to Malays for jobs and University places, and Malay shop owners and restaurateurs enjoy lower rents and ease of access to premises. Chinese resentment over these inequalities has created increased ethnic tension.