Bloomberg Business Week 10 Sep Edition : Malaysia Tries to Curb Its Pro-Malay Policies

Posted on September 11, 2010

1


Bloomberg Business Week 10 Sep Edition : Malaysia Tries to Curb Its Pro-Malay Policies.

The writer failed to mentioned that Najib 1Malaysia’s concept is meant to be the backbone of his affirmative changes policy. To date it is obvious Najib’s vision of 1Malaysia is just a public relations disaster  . Najib’s flip-flop style and his weak commitment to his ” ideals” is destroying his 1Malaysia campaign.

Prime Minister Najib wants to undo affirmative action for the ethnic Malays and lure back the Malaysian Chinese and Indians who have emigrated

Source : http://www.businessweek.com/magazine/content/10_38/b4195011535958.htm

By Shamim Adam ( reporter for Bloomberg News in Singapore )

Malaysian Prime Minister Najib Razak wants to engineer a return to
Malaysia’s glory days between 1987 and 1996 when its economy boomed,
investment poured in, and local share prices almost quintupled.

Although Malaysia’s economy has expanded since those heady times, its
average annual growth has declined from 7.2 percent in the 1990s to
4.7 percent in the last decade. A fast-rising China has attracted
investment that might otherwise have gone to Malaysia, while neighbor
Singapore has built new industries, wooed multinationals aggressively,
and outstripped Malaysia in growth. “Beyond commodities, it’s
difficult to see Malaysia’s competitive advantage vis-à-vis other
Asian countries,” says Joseph Tan, Singapore-based Asian chief
economist at Credit Suisse Private Bank (CS).

In response, Najib, in office since April 2009, has moved to
streamline the government, made it easier for foreigners to invest,
backed cutting-edge industries, and promoted a productive, educated
workforce. His most controversial initiative is to start dismantling
the policies that favor the ethnic Malay majority that put him in
office—policies adopted by his father 40 years ago, when Abdul Razak
was Prime Minister and the country was still recovering from riots
between the Malay majority and the Chinese minority that left hundreds
dead.

Those 1969 riots started in part because the Malays felt the Chinese
controlled the economy. To raise the share of national wealth held by
Malays and indigenous groups to at least 30 percent, Najib’s father
crafted a policy that gave them cheaper housing as well as priority
for college enrollment, government contracts, and shares of publicly
traded companies.

For the most part, the pro-Malay policy has kept the peace. “Malaysia
has done very well, and affirmative action was a strong contributor to
the stability that allowed for such development,” says Masahide Hoshi,
a director at Phalanx Capital Management HK in Hong Kong. “However,
these same policies could impede Malaysia in the long term. The
government must make changes soon.”

Najib and his advisers say changing the pro-Malay rules will level the
economic playing field, encourage investment from both inside Malaysia
and abroad, and promote ethnic harmony. Najib, 57, has already eased
affirmative-action rules governing overseas investors, initial public
offerings, and property purchases. Mark Mobius, the emerging-markets
authority at Templeton Asset Management, is impressed: “Malaysia is
going through a transformation with the political changes that we’ve
seen,” he says.

Najib’s reforms are opposed by some politicians who helped him gain
power, including ex-Premier Mahathir Mohamad. At a March rally, former
Deputy Law Minister Ibrahim Ali brandished a traditional kris dagger
as the crowd chanted “Long live the Malays.” A spokesman for Ali’s
group says the dagger display was not meant to incite violence.
Najib’s Malay opponents say they are protecting the constitution and
that his father’s goals have not yet been reached. “Malays have not
gained for themselves the 30 percent target in corporate ownership
even,” Mahathir blogged on Aug. 9.

Analysts wonder if Najib has the political capital to carry through.
“Najib appears to be saying all the right things, but the actions of
many within UMNO [the main Malay political group] are not necessarily
in the spirit of what [he] is saying,” says Stephen Hagger, head of
Malaysian equities for Credit Suisse Group (CS). It will be up to the
politicians and civil service to implement Najib’s plan, Hagger adds.
“This is where our confidence falters.”

Some locals are voting with their feet. Leslie C., an ethnic Chinese,
moved to Singapore in June. “I don’t think any politician will be
different,” says Leslie, 36, who doesn’t want his full name reported.
“I want a better future for the kids, an opportunity for them to start
on even ground.”

The bottom line: As part of a drive to boost economic growth,
Malaysia’s Prime Minister is trying to dismantle policies that favor
ethnic Malays.

Tagged: , ,