RIGHTS-MALAYSIA
Affirmative Action Debated as Elites Cream Off Benefits


By Anil Netto

PENANG, Malaysia, Aug 18 (IPS) - The debate over Malaysia's affirmative action policies has been swirling in recent weeks after revelations that a coterie of well-connected, ethnic Malays have reaped huge profits from import permits awarded to them.

The revelations have fuelled a persistent debate over whether ethnic-based affirmative action policies are still helpful as Malaysia's open economy grapples with the challenges posed by globalisation.

Last month, the debate spilt out in the open when delegates at the general assembly of the ruling United Malays National Organisation slammed the award of lucrative permits to import foreign cars into Malaysia to a chosen few. Critics outside

UMNO said the scandal showed how ethnic-based affirmative action policies could be abused to enrich a select group of well-connected individuals.

Affirmative action policies in favour of the indigenous bumiputera (sons of the soil) groups were part of Malaysia's New Economic Policy (NEP), a 20-year blueprint to

reduce poverty and to restructure society to end the identification of occupations with ethnicity.

The policy espouses ethnic-based quotas for university admissions, licences, scholarships and civil service recruitment to promote bumiputera participation in the economy.

Upon the NEP's expiry in 1990, these policies continued under a National Development Policy. But the share of bumiputera corporate equity appears to have stagnated at around 20 per cent since then - though some dispute the figures - well short of the NEP's 30 percent target.

Leaders of UMNO's youth wing called for a revival of the NEP, hoping that it would jumpstart the quest to reach the equity target. ''The NEP definition itself should be reapplied as part of the national development policy, so that the Malays would be empowered and not sidelined from now till the year 2020,'' said UMNO Youth chief Hishammuddin Hussein.

He said the NEP's ''growth by distribution'' strategy should be pursued to ensure the bumiputeras finally achieve the 30 percent target.

But such calls sparked concern among UMNO's ruling coalition partners and opposition parties, who feared it could mark a return to the abuses of implementation.

Some Malaysians believe the time has come for meritocracy to create entrepreneurs and professionals who can face up to the demands of the global economy. They feel that that ethnic-based affirmative action policies have spawned cronyism and corruption and created a dependency syndrome. Handing out of licences and contracts to well-connected individuals and firms has promoted a culture of patronage and rent-seeking, they argue.

''We are dealing with a party, UMNO, which tells the Malays that if you don't support UMNO your future will be jeopardised,'' said former deputy premier Anwar Ibrahim.

Anwar, who has now allied himself with opposition parties, argued that the time has come to end the ''corrupt bumiputra policy''. Instead he called for a 'New Compact' among the various ethnic groups which would include forgoing the bumiputra policy while at the same time approaching ethnic Chinese firms to increase their bumiputera staffing.

He was quick to add that he was not calling for the abolition of the 'special position' of the bumiputeras in the Federal Constitution. The Sedition Act makes it an offence to question this provision.

Some Malaysians favour affirmative action policies based on need rather than ethnicity in a social democracy that would provide assistance to those who most need it.

Still others argue that neither affirmative action nor meritocracy as currently understood is sufficient. Meritocracy, they argue, would merely provide more opportunities for another class of individuals - who happened to be born into well-placed middle class families - to prosper, leaving the vast majority trailing behind.

''I am worried that we will be trapped into a more sophisticated version of the quota system and fail to look at the issue of how our children are learning to become labourers in this globalised system of production,'' observed Azly Rahman, a columnist for independent news portal Malaysiakini, in a recent commentary.

''We are using the wrong assessment strategies to create another colonial-styled pluralistic education system that favours the children of the economically-privileged in this nation that is increasingly cybernated and bio-technologised''.

Malays are the largest of the various indigenous bumiputera groups in Malaysia. The bumiputeras make up over 60 per cent of the country's 26 million population, the Chinese account for a quarter and the Indians about 7 percent, the remainder being foreigners.

After independence in 1957, Malaysia practised a laissez-faire approach to its post-colonial economy that did little to tackle inter-ethnic income disparities and corporate dominance. Ethnic Chinese and foreign interests controlled commerce, many Malays worked as fishermen and farmers while large numbers of Indians toiled in plantations.

These imbalances persisted until 1969, when bloody politically inspired ethnic riots between indigenous Malays and the immigrant Chinese community broke out, marking a watershed in Malaysian history.

Few dispute that the NEP, introduced after the bloodshed, has been a qualified success. Poverty levels have clearly fallen even though critics point out that the official poverty line is unrealistic and the drop may not have been as spectacular. The participation of bumiputeras in the professions and other occupations has soared as well.

Before the NEP, almost every sizeable Malaysian company was under ethnic Chinese control. Now many of the country's top corporate personalities include bumiputras, and bumiputras as a whole own about 20 per cent of corporate equity (compared with 2.3 percent in 1970).

But relative poverty and intra-ethnic poverty have widened as benefits fell disproportionately in favour of the elite of all ethnic groups. The corporate class meanwhile has prospered on the back of cheap and imported labour. Malaysia still does not have a minimum wage and production operators, many of them Malay, earn about 500 ringgit (131 US dollars) - about the same level as the official poverty line.

Critics also question the obsession with corporate equity as a measurement of income, arguing that it only measures the way income is distributed among the middle and upper middle class groups. The vast majority of Malaysians on the other hand are not in a position to afford shares; at most, they may only be able to take up small stakes in state-run unit trust funds.

Not all bumiputera groups feel they have benefited equally. Many bumiputeras, in eastern Sarawak for instance, are still struggling to have their native customary rights and land recognised by the state. Ethnic Malays in the northern state of Kedah and in the east coast states of Kelantan and Terengganu on the peninsula are generally much poorer than their urban counterparts in the Kuala Lumpur.

Within urban settings, too, a sizeable underclass of all ethnic groups live in squatter settlements or cramped low-cost flats - a world away from the glitz and city lights.

Thus, the intra-ethnic divides have grown and many analysts are concerned that a return to ethnic-based affirmative action policies could perpetuate or even widen these gaps.

Some observers feel that past policies have undermined the ability of many bumiputeras to compete in the global market place.

''Do we know, for instance, the percentage of Malay entrepreneurs who were knocked out by the 1997 financial crisis and were unable to rise again because their weak foundation was built through the original NEP approach?'' asked political commentator Rustam Sani, author of a new book 'Whither Malay Nationalism?'.

''I am not convinced that reverting to the NEP (what more if it's merely a case of using the old labels) will resolve the deeper structural challenges confronting the economy and society.'' (END/IPS/AP/IP/HD/IN/AN/RDR/05)