In a rather stunning turn of events, Prime Minister Najib has called for the implementation of stronger race preferences for ethnic Malays in Malaysia. Prime Minister Najib, once well-known for his efforts to reduce racial tensions and to create a “1Malaysia,” has now reversed course ahead of an upcoming party leadership election.

Malaysia

Malaysia is one of the most racially complicated countries in the world. Currently, approximately 50 percent of the population is ethnic Malay, while 25 percent is Chinese and 7 percent is Indian. An additional 10 percent of Malaysia is non-Malay bumiputera, who are also granted preferential treatment based upon race. Traditionally speaking, most economic power has been concentrated in the hands of the Chinese, while the Malay community has maintained control of the government. The Indian community has largely been left on the sidelines.

Through government efforts, the ruling Barisan Nasional coalition has tried to increase the economic power of the Malay community by providing preferential treatment in rewarding government controls and various other efforts. At one point in time, for a company to be listed on the Kuala Lumpur stock exchange, 30 percent of the company had to be Malay owned, though this law has since been repealed. The government has also provided a huge number of scholarships to Malays and bumiputera, as well as other resources.

History behind race relations in Malaysia

The history behind race relations in Malaysia is complicated, to say the least. When the British colonized Malaysia, they decided to largely leave the Malay community to its own devices. Instead of working directly with Malays, the British often chose to bring in Indian workers to work on plantations, and Chinese workers to run businesses and tin mining operations.  British efforts were initially altruistic—they didn’t want to interfere with or subjugate local Malay communities—however, this policy resulted in the large scale concentration of power into the hands of the Chinese.

When Malaysia was granted independence in 1963, the government worked to reduce racial inequality by creating affirmative action programs to uplift the Malay community and to redistribute wealth on more equal terms. The policies arguably had a strong moral ground, as it was the actions of the British that had resulted in essentially the economic subjugation of the Malay community.

The government created a wide range of affirmative action programs

Unfortunately, many programs did not pan out as planned. The government created a wide range of affirmative action programs, but did not install the necessary competitive measures to ensure that Malays would be able to compete in a modern economy. Some have gone as far as to accuse Malaysia of creating a “welfare” state that has encouraged Malays to become dependent on hand-outs and affirmative action.

When Prime Minister Najib came into power, he worked actively to roll back race-based affirmative action. He repealed Malay stock ownership requirements for public listings and also began to roll back other affirmative action policies. Najib himself saw a large popularity boost for his efforts, but his political coalition, BN, remained highly unpopular.

In the 2013 elections, BN actually lost the popular vote, though through heavy gerrymandering meant to insure that political power rests with rural Malays, BN was able to retain the parliament. BN lost out heavily on the Chinese vote, with a vast majority of Chinese citizens voting for opposition parties. In the days following the election, BN members blasted the Chinese community for creating a “Chinese Tsunami”.

Now, it appears that Najib is ready to abandon his long-standing policy of trying to build a more inclusive Malaysia. In many ways, Najib’s hand may be forced: if he wants to survive the up-coming internal party leadership elections, he may have to pursue a more ethnic-centric policy to garner up internal party support. Either way, Najib’s call for increasing Malay centric policies represents a stark turn in policy formulation.

Race-based economic policies: will they improve or worsen Malaysia’s economy?

It’s fair to wonder if race-based economic policies will improve or worsen Malaysia’s economy. While Malaysia has enjoyed strong economic growth over the last few decades, the country has had trouble taking the next step towards developing a high-income economy. Malaysia has also had trouble developing truly competitive international companies able to compete on the world stage. Some believe that this is due to the “protected harbor” the Malaysian government has created within the country through race-based economic policies and protectionism.

Malaysia also suffers from massive brain drain, with as many as 20 percent of college educated Malaysians choosing to move to Singapore, Australia and elsewhere. Many people blame race-based policies for this brain drain. Indeed, many of those heading abroad are either of Chinese or Indian heritage. Individuals from such communities may feel that their economic prospects will be better abroad, where their race and heritage will not be a detriment.

Arguably, a better move for the Malaysian government would have been to shift focus away from racial status and to economic status. Malays, and to a lesser extent Indians, make up a disproportionately large portion of the poor. By focusing on socio-economic status, Najib would be able to still direct resources to the poorest Malays, and also Indians, who have demonstrated a higher amount of support than Chinese.

Focusing on poverty would also allow the government to directly address the biggest socio-economic issues in Malaysia. Malays are not poor because they are Malays, they are poor because they are poor. Efforts that directly target the underlying conditions causing their poverty would probably bear more fruit than race-based initiatives, which have largely failed. Even after decades of race-based affirmative action, Malays are still at a serious economic disadvantage in comparison to their Chinese counterparts.

Moves to ramp up race-based affirmative action could also increase the already substantial brain drain in Malaysia. Race plays an important role in securing higher-paying positions and promotions. This has created a situation in which someone might be promoted based on the color of their skin, not their actual abilities. As such, many Malaysians have sought work abroad in Singapore, Australia, the United States, and elsewhere.