September 3, 2008

Project Malaysia goes live!

Posted in Malaysia, The Cause, Tricia's Writings at 10:43 am by egalitaria

Project Malaysia goes live! This is a non-profit initiative by Malik Imtiaz and Michelle Gunaselan. Very nice design and spaces all round. Their first theme is on Race Relations this month, and I wrote a responsive piece on the effects of race based policies in Malaysia.

Race Based Policies and Its Effects In Malaysia

By Tricia Yeoh

“Those were the days”, many in their late fifties and sixties recall of their younger years when races intermingled freely and ethnic backgrounds were not divisive in nature. They reminisce of a time when race was not an element one thought of when meeting another. Today, studies have shown increasing racial polarisation, a worrying trend taking place especially amongst the younger generation. This begs the question of what it was that fundamentally changed the entire workings of society over a period of forty years. This change would have a permanent and deep-rooted effect on society.

In 1971, two years after the May 13th racial clash between Malays and Chinese, the New Economic Policy was formulated as part of the 2nd Malaysia Plan. It had a twofold objective, of eradicating poverty irrespective of race and restructuring society to eliminate the association of race with job function. Although these were necessary at the time to reduce heightened interracial tensions between the two races, actual policies in their very core definition – race as an indicator of socioeconomic distribution – should have been foreseen as clearly self-destructive for the nation. There are four broad effects that race-based policies have had on Malaysia, and these will be explored here.

First, it has created a potential source of and powerful tool for political patronage and cronyism – both of which lead to white-collar corruption. Under the NEP (1971-1991), and its later two cousins the National Development Policy (1991-2001) and the National Vision Policy (2001-2010) – the latter of which applies today – Malays and indigenous peoples both classified as Bumiputera were given priority and special assistance in a various number of economic means.

The targets for Bumiputera ownership of the economy would steadily shift from being specific initially to later being less numerically quantified, and leading to the perception that these were moving goalposts by the administration to perpetuate wealth of one community alone. For example, while the Outline Perspective Plan 1 (OPP1) lasting from 1981 to 1990 stipulated that the Bumiputera were to have at least 30% of total private sector equity capital, “no numerical target” was set in the OPP2 for the ownership of equity capital and focus instead was channelled to wealth creation.

One could therefore track the steady shift from ownership and management of commercial and industrial activities, towards emphasis given to generating new income and wealth. Without a fixed quantifiable target, license was given to perpetuate wealth at whatever means, as long as it would benefit the Malay and indigenous peoples.

This situation was rare vis-à-vis other countries in that race-based affirmative action was in favour of the majority ethnic group (as opposed to aiding the minority groups). This has been made worse by the fact that majority of the policymakers within public service comes from the same ethnic group as the policy’s beneficiaries themselves. Malays would then increasingly depend on the patronage of top-level political individuals able to influence decisions to award contracts and tenders and appoint top positions within Government-Linked Companies (GLCs), eventually creating distributional cartels amongst friends and loyal supporters of the system. Whilst there were definite non-Malays who benefited from economic policies, they have been only the select few and far between. Also, although indigenous people technically fit into the Bumiputera category, in reality they have received little in comparison – another example of system abuse.

Second, race-based policies have created a self-defeatist model for the Malays, the very ethnic group that it originally set out to assist in the first place. Despite attempts to elevate the status of the Malay community through economic policies, this may have in effect backfired instead. It has been said that a crutch should only be used for a limited period of time, or the user risks remaining crippled forever. Where government chose to promote university lecturers and appoint vice-chancellors on the basis of ethnicity rather than merit, erosion of quality began. Without needing to pursue excellence to qualify for selection and appointments, it was easy to allow quality to fall. Thus began the slippery slope down hill, for those belonging to the Malay community – an unfortunate and unexpected outcome of race-based policies.

Similarly, emphasis was greatly placed on the need for numerous Malay graduates, to ease their entrance into the job market. This would supposedly have boosted their employability. However, this feverish attempt at passing and qualifying Malays for university degrees also resulted in watering down grades and examination standards. Graduating students of less-than-desirable quality has eventually produced a generation that does possess a paper qualification, but without world-class standards required of a developed, international market. It has clearly been a self-defeatist policy.

Third, race-based policies have been damaging for ethnic relations in the country. Ironically, this policy was instated in 1971 precisely to address ethnic relations that were so fragile just after May 13th. It is paradoxical that a policy designed to promote national unity should be aligned according to race. Surely the two are simply mismatched with the other, yet this obvious contradiction in terms seems to have been unaddressed. In a national unity study conducted by the Centre for Public Policy Studies amongst young Peninsular Malaysians, it was found that whilst 75% of young Malays had never been treated unfairly on account of their race, only 45% of their Chinese peers and 49% of Indians said the same.

These statistics are very telling of a fragile situation, where economic policies to restructure society have resulted in the perception of unfair treatment – the basis of fractured ethnic relations. Further, the study also showed that the more people placed unity as important in their lives, the more critical they were of policies having had a detrimental effect on national unity at large.

In the past, there was a quota system that was used for university admissions, where Bumiputera were given greater allocations to courses – and hence disqualifying non-Bumiputera. Although the system has been abolished already, the effects have been long-lasting, where numerous non-Bumiputera have been unable to enter their courses of choice even where they scored better grades. Further, Bumiputera students sign up for pre-university matriculation courses (easier to pass) whereas non-Bumiputera students are obliged to take the STPM (Sijil Tinggi Penilaian Malaysia) at Form 6 (more difficult); entrance to universities is hence dual-tracked. Students unable to enter university based not on their inability but on their ethnicity would have harboured feelings of resentment towards those who did.

Finally, race-based policies have affected the economic potential of the country. The government has been single-minded in ensuring that the Bumiputera accumulate a greater amount of wealth. This was done by reducing foreign ownership of corporate equity in the country. Even from the 3rd Malaysia Plan onwards, it was held that foreign ownership of equity should not exceed 30%. This goal has been steadily achieved, with the reduction of foreign equity in the country through the years.

There have, however, been policies that have in effect driven away foreign direct investment into the country, which otherwise would have boosted economic growth and development. First is the requirement for publicly listed companies to set aside at least 30% of their share capital for the Bumiputera. Shares are similarly reserved for them under the merger and take-over guidelines implemented by the Foreign Investment Committee (FIC). Foreign investors find these regulations to be extremely restrictive. Since there are other more lucrative markets to invest in, which offer freer conditions, it has made little sense for them to be attracted to Malaysia.

Coupled with all other factors listed above, corruption and cronyism, the deterioration of the workforce and poor building up of quality human capital, the increasing polarisation between ethnicities, and finally the restrictive economic policies to foreigners, it comes as no surprise that foreign corporations would likely choose to invest elsewhere.

This piece has attempted to show that many present problems faced by Malaysia have their roots in race-based policies. As long as ethnicity is the definition by which affirmative action policies operate, these issues will continue to arise. Whilst many Malaysians have openly proclaimed that the NEP has been subject to corruption, I would also contend that it is the very policy that needs to be altered as it is fundamentally flawed.

The argument that Malays should be reserved their special rights in the country and hence given economic privileges – is per se not one that holds water. First, economic privileges would continue to be given to Malays if policies are based on need and socioeconomic class. Second, Article 153 of the Federal Constitution guarantees the special position and not “rights” nor “privileges” of the Malay, in reference to socioeconomic position. Article 153 also encapsulates the special position of natives of Sabah and Sarawak and other marginalised groups. More importantly, there is a need to show the Malay electorate that no part of their pie is being snatched away and that Malay interest will always be well cared for in Malay-majority land.

It is essential to emphasise the depth of emotional wounds experienced by the nation’s psyche as a result of race-based policies. The impacts have been real, experienced by the peoples themselves. This is an urgent time, more than ever, for government to come to terms with realities on the ground. An immediate review on all national policies that are race-based – education, economics, corporate, others – should be conducted, as these lie contradictory to national unity, the actual main thrust of all overarching policies. Race should be cleansed out of politics and policies; and left to the realm of social and cultural activities.

Come Merdeka Day, numerous black-and-white television advertisements transport us to a time during which our nation’s neighbours interacted freely with each other regardless of race or religion. It is the hope of all that Malaysia can return to these days without labels attached to people. Race-based policies are old roots, which when dead will kill off all nation-building efforts. Let the new roots of non-racial politics and non-racial policies spread wide and flourish for the sake of future generations.

1 Comment

  1. greg said,

    Wow.. you have said all there needs to be said.


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