Malaysia Still Held Back by Affirmative Action

Malaysia’s four decade old affirmative action social and economic experiment has failed. The country must reform its out-dated affirmative action policies in order to have a bright economic future argues a new report released by The Centre for Independent Studies today.

In Malaysian Dilemma: The Enduring Cancer of Affirmative Action, CIS Foreign Policy Research Fellow Dr John Lee argues that the New Economic Model (NEM) announced by Prime Minister Najib Razak is the first step to acknowledging the harmful effects of the affirmative action policies.

‘Affirmative action policies in Malaysia have wreaked havoc on the country’s economic performance,’ says John Lee.

 

The affirmative action policies have been in place since 1971 and favour 65% of Malay or Bumiputra Malaysians and discriminate against the 25% of Chinese-Malaysians and 10% of Indian Malaysians.

 

Affirmative action policies were introduced with good intentions after the May 1969 race riots to address socio-economic racial diversions within the country but now are linked to many of the country’s structural problems.

 

‘Although the affirmative action policies were intended to create a prosperous and happy multi-ethnic society they now do more harm than good.’

The NEM proposes to wind back many of the country’s race-based affirmative action policies. The NEM is pro-growth and aims to reduce the size of the state sector and its role in redistributive national wealth. It will tackle the strict rules that require non-Malay investors and business owners to have a Malay business partner and also seek to address the pro-Malay culture in the civil service that currently means that 95% of government contracts are given to Malay businesses.

 

‘The NEM will face significant hurdles as many of the Malay elites who have benefited affirmative action policies will resist these changes.’

‘It is worrying that already, there are early signs that PM Najib is stepping back from tackling the most important reforms.’

Defeating the entrenched culture of pro-Malay bias will be just as hard as winding back official affirmative action policies, but these hurdles must be overcome if Malaysia is to have a strong economic future.

 

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Dr John Lee is a Foreign Policy Research Fellow at The Centre for Independent Studies. He is available for comment.