A Working Racial Bias
	For years, the rules favored Malays. Should they continue?
	By Jay Branegan | Kuala Lumpur

Originally published August 20, 1990
Azmi Wan Hamzah recalls his excitement when he returned home from Britain as a young accountant in the mid-1970s, just as the Malaysian government's program for promoting ethnic Malay businesses was shifting into high gear. "The opportunities for an ambitious young Malay were tremendous, and I had the skills everyone wanted," he says. Within a few years, through both preferential government treatment and his own talent, he had become chief financial officer of a publishing company, then head of the country's largest bank. Today, at 40, he is the chairman of a fast-diversifying lumber, real estate and manufacturing group and a rising star among the first generation of Malays to make it big in a business world once dominated by the country's wealthy ethnic Chinese. Says he: "Clearly, all of us owe a lot to the government's policies."

Azmi is one of the prominent success stories of Malaysia's 20-year-old New Economic Policy, an experiment in social engineering that, according to Fong Chang Onn, an economics lecturer at the University of Malaya, "has covered every facet of social and political life." The N.E.P. provides a panoply of privileges, quotas and subsidies—from cut-rate stock shares to coveted overseas scholarships—for Muslim Malays and other indigenous groups.

Together those communities—known as bumiputras (sons of the soil)—form 57% of the Malaysian population of 17.5 million. But during the first 14 years after the country's independence from Britain in 1957, the Chinese minority (32% of the population) and part of the Indian community (11%) controlled the economy and dominated the professions. So the goal of the discrimination policy has been nothing less than the restructuring of the society. With the N.E.P. expiring at year's end, the 142-member New Economic Consultative Council, convened 20 months ago by the government, is formulating a recommendation due later this month on whether the program should be continued. The issue is emotionally charged, but on at least one point there is wide agreement: the N.E.P. has been a political success, ensuring stability following the 1969 riots in which hundreds of Malays and Chinese were killed.

Economically, however, the results are mixed. Under the N.E.P., the percentage of families living in poverty, the majority of them rural non- Chinese, is down from 49% to 16%. In such professions as medicine, law and engineering, the number of bumiputras has risen from 6% to 25%. Together they own, either directly or through government-sponsored funds, 19.4% of all corporate stock—a striking increase from the less than 2% they held in 1970 but still short of the original goal of 30%.

Some Malaysians argue that the country has paid too high a price for racial peace. To administer and enforce the pro-bumiputra policies, the N.E.P. has spawned a huge government bureaucracy that, according to critics, practices old-fashioned political cronyism and patronage in the name of social justice. Moreover, they say, prominent success stories like that of Azmi Wan Hamzah obscure the many failures of ill-prepared Malay entrepreneurs.

At the same time, the N.E.P. has stirred deep resentment among the Chinese, particularly those of the middle class, who have struggled against the discriminatory policy and whose children find it hard to get into college because quotas allocate up to 70% of the places to other races. Many Chinese have emigrated—more than 30,000 to Australia alone since 1982—and all the Chinese-dominated political parties have called for a quick end to the program's racial bias.

Despite its shortcomings, the N.E.P. has not led to the kind of economic collapse that its critics predicted. "It has not really done too much damage to growth," says Kamal Salih, executive director of the Malaysian Institute of Economic Research. Nor has it prevented new Chinese tycoons from reaching the top. Malaysia is Southeast Asia's most prosperous country after Singapore, with a per capita GNP of more than $2,000. In the past two years its economic growth rate has exceeded 9%.

Most experts expect the consultative committee to recommend continuation of the N.E.P.'s basic goals and call for a stepped-up fight against poverty, particularly among destitute Indian plantation workers. Though not binding on the government, the group's proposals will play a significant role in the elections expected in September or October. For the first time, Prime Minister Mahathir Mohamad's United Malay National Organization is losing support among Malays and needs Chinese help to keep its coalition's strong majority in parliament. Mahathir's problem is that stronger pro-bumiputra policies would please his followers but would cost him some crucial support from the Chinese.

In a real sense, his political dilemma is a by-product of the discriminatory economic program's success. The reason for the breakdown in the Malay population's once unwavering loyalty to U.M.N.O. is that, thanks to the N.E.P., the country for the first time has a Malay middle class with a political mind of its own.

	Mahathir's Exit Strategy [July 05, 2002] If Malaysia's Prime Minister does step down as planned, the era of the Asian strongman will end It's My Party... [June 26, 2002] Malaysian PM resigns, breaks down, and is re-installed in a bizarre televised address Malaysia's Chosen One [June 21, 2002] Syed Mokhtar al-Bukhary has become a leading tycoon. Is it because of his friendship with Malaysia's Prime Minister? Just What Dr. M Ordered [October 22, 2001] The war against terror yields unexpected benefits for the Malaysian Prime Minister—at home and abroad Malaysia Under Mahathir [July 17, 2001] TIME's Simon Elegant on the 20-year rule of Prime Minister Mahathir Mohamad More Related Items | Search all issues of TIME Magazine