Infernal Ramblings
A Malaysian Perspective on Politics, Society and Economics

Incrementally Ridding Malaysia of Bumiputra Privileges

Written by johnleemk on 11:35:10 am Mar 23, 2007.
Categories: ,

Former Deputy Prime Minister Musa Hitam has been at the forefront of a recent movement to get the government to exempt foreign businesses in the Iskandar Development Region of certain requirements enshrined in the government's pro-Bumiputra (and thus pro-Malay) policies.

Musa's argument is that the IDR will not be able to compete with other investment destinations unless these restrictions are lifted. The economic logic behind this is pretty simple and clearcut, and I don't think anyone requires an explanation for why we should lift quotas on Bumiputra ownership of local enterprises, or why their blatant subsidies should be cut.

It remains to be seen how far the government will actually adopt Musa's proposals, but Johor Chief Minister Abdul Ghani Othman (who has been temporarily resurrected for the purposes of this article) is reportedly backing them.

Thus far, the government has been extremely resistant to any proposals whatsoever that would cut back on Bumiputra rights. Even a suggestion that the sacred 30% target of Bumiputra equity has already been reached can result in you losing your job — literally, as happened to Dr. Lim Teck Ghee when he published a paper making such claims. He was forced to resign from the institute which published the paper, and promptly retracted it for unspecified problems with the study's methodology.

It's a welcome sign, though, that Prime Minister Abdullah Ahmad Badawi has stated that the normal rules related to Bumiputra privileges when it comes to foreign investors will be waived for the IDR. This does not seem to have been met with much fanfare by the mainstream media, with the exception of the Sun (the only national English daily, I believe, which is not owned by the government or one of its parties).

The reasons for this are quite obvious, but for the blind, it's clear that Abdullah and the Barisan Nasional regime cannot be seen to be backing down from their incessant trumpeting of their status as defenders of Bumiputra/Malay privileges and the ridiculous ideology of "ketuanan Melayu" (lit. Malay lordship; normally translated as Malay supremacy).

As a result, they dare not highlight this, and indeed, they announced the move in tandem with other incentives for investment such as tax breaks, probably as a smokescreen. Ceding their high ground as champions of the Malay race would not look good at all, considering it was just about six months ago that they were waving daggers and threatening to spill the blood of non-Malays who impinged on their rights. (Apparently they've decided that non-Malaysians don't qualify as non-Malays, in a Nazi-esque move — the Nazis proclaimed their Japanese allies as "honorary Aryans".)

Whatever the case may be, the government is on the right track. After I proclaimed the impending death of Malaysia unless drastic steps were taken, I explained that incremental change is key. To take big steps, we must take small steps that, in the long run, will add up to something larger.

One nice thing about such incremental steps is that as long as you know what you want to accomplish in the long run, each short run step you take will tend to reinforce that goal. It's a slippery slope.

What do I mean? I'm talking about simple darwinism — the survival of the fittest ideas and policies. The government is presently exempting foreign businesses from the restrictive policies meant to uplift the Bumiputra. (Although many, myself included, think these policies merely mollycoddle them.)

The greater competition this engenders will benefit the country, and the government will then consider perhaps experimenting with lifting these requirements for local firms in certain areas. If this is successful (as I believe it will be, since I believe the Bumiputras can and will buck up if their livelihood depends on it), the government will naturally expand the scope of this policy.

Even if all they have in mind is the advancement of the Malay race (a pigheaded and shortsighted goal), they will naturally gravitate to a more level playing field once they realise the benefits competition brings by rewarding those Bumiputras who can innovate and work hard.

I remain skeptical as to whether this will actually happen, since the exemptions apply only to foreign companies. There will thus be little, if any, effect on Bumiputra competitiveness, although perhaps Malaysian industry (and thus indirectly Bumiputra businesses) will become more efficient as a result of the greater foreign competition.

What will be the true sign of snowballing change is if the government implements a pilot policy lifting the Bumiputra privileges for certain designated economic zones. Once this happens, and if the policy works, there will be no turning back. Incremental change will sweep through the whole country, and before we know it, we will have organically and naturally rid ourselves of these anachronistic handouts-based racial policies, and God willing, the even more antiquated ideology of racial supremacy.


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Infernal Ramblings is a Malaysian website focusing on current events and sociopolitical issues. Its articles run the gamut from economics to society to education.

Infernal Ramblings is run by John Lee. For more, see the About section. If you have any questions or comments, do drop him a line.


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