Failing to spread the wealth

SHOULD Malays, Malaysia's largest ethnic group, receive more special privileges, or fewer? That, in a nutshell, was the focus of debate during the country's recently concluded round of political party conferences. The youth wing of the United Malays National Organisation (UMNO), the ruling, Malay-based party, called for a revival of the spirit of the New Economic Policy (NEP), which first ushered in affirmative action for Malays in 1970. The prime minister and leader of the party, Abdullah Badawi, agreed that the NEP needed fixing, as it had imbued Malays not with the intended spirit of entrepreneurialism, but with an unfortunate proclivity for rent-seeking. But many Malaysians, both Malay and non-Malay, wonder whether the NEP is needed at all.

In Malaysia, as in many South-East Asian countries, the Chinese minority traditionally controlled the lion's share of the economy, while Malays worked as farmers or fishermen. In 1969, resentment at this situation helped to fuel a convulsive bout of race riots. The government of the day (also led by UMNO) settled on affirmative action as a means to defuse racial tensions. Most jobs in the bureaucracy were reserved for Malays, as were the majority of government contracts. Quotas were set for university admissions, allowing Malays to win places ahead of better qualified Chinese and Indians. Companies were supposed to place at least 30% of their shares in Malay hands. Developers were required to sell a certain proportion of housing and commercial property to Malays, often at a discount—and so on and on.