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Malaysia cautiously challenges longtime affirmative action policies

In his widely anticipated new economic strategy Tuesday, Malaysia Prime Minister Najib Razak criticized longstanding affirmative action policies – which benefit his political base of ethnic Malays – but gave few specifics on how he would undo them.

Malaysia's prime minister, Najib Razak, unveiled Tuesday proposals to boost economic growth but also dilute affirmative action privileges for ethnic Malays.

Reuters

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In a delicate balancing act, Malaysian Prime Minister Najib Razak unveiled in a widely anticipated economic strategy Tuesday proposals to boost growth but also dilute affirmative action privileges for ethnic Malays, his political base.

The new plan is designed to lift an export-led economy that suffers capital outflow and has lost its shine compared with rising Asian manufacturers like Vietnam. But it faces stiff resistance from within the ranks of Mr. Najib’s own party and is unlikely to immediately win back the ethnic Chinese and Indian minorities who abandoned the government at the last election.

Speaking at an investment conference in Kuala Lumpur, Najib said Malaysia’s affirmative action program, called the New Economic Policy (NEP) and introduced after race riots in 1969 to redress social imbalances, had become a brake on economic growth. He said public spending on poverty should be needs-based, rather than ethnically oriented, and took aim at income gaps between ethnic groups.

“We can no longer tolerate practices that support the behavior of rent-seeking and patronage, which have long tarnished the altruistic aims” of the NEP, he said, in a surprisingly direct dig at his own ruling party, the United Malays National Organization (UMNO).

Treading lightly

The announcement had been publicized in advance and follows months of politicking by Malay groups seeking to retain their privileges, which apply to public education, housing, and government contracts. Former Prime Minister Mahathir Mohamad, who helped force out Najib’s predecessor last year, warned Saturday of racial tensions if the NEP is junked.

This pressure appears to have tied Najib’s hands. He offered few details Tuesday of how his new strategy would affect the web of privileges for Malays, except to stress inclusiveness and the need to make the economy more competitive.

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