Malaysia must review its race-based economic policies if it hopes to rein in political discontent and regain competitiveness, according to a top banker who is the brother of the country’s incoming premier.
Nazir Razak, the brother of incoming prime minister Najib Razak, said the New Economic Policy (NEP) which favours the majority Malay population, had damaged national cohesion and hindered investment in this Asian country of 27 million people.
“It is timely to examine the NEP, look at how the NEP retards national unity, investments and economic efficiency and develop a new, more relevant framework for economic policy-making,” said Nazir, who is chief executive officer of Malaysia’s second largest bank CIMB.
The policy gives preferential treatment to Malays who account for around 60 percent of the population in business, education, and home ownership.
It was designed in 1971 after race riots to narrow the wealth gap between the majority Malays and the richer ethnic Chinese.
Critics say the NEP has enriched those businessmen who are politically connected and encouraged cronyism and corruption in the coalition that has ruled Malaysia for 51 years.
Political analysts said Nazir’s comments would carry weight with his brother, but questioned whether Najib, who is currently deputy prime minister and finance minister, would be able to act.
Najib is set to take the helm of the United Malays National Organization (UMNO), the leading party in the National Front coalition, after party polls in March.
The coalition is still reeling from losses in elections last year when it lost its two-thirds parliamentary majority for the first time in almost 40 years forcing incumbent premier Abdullah Ahmad Badawi to say he would stand down in March.
It recently lost two by-elections to the opposition alliance, led by former deputy prime minister Anwar Ibrahim.
“The question is how to convince the people who have a vested interest in keeping the status quo to review the NEP,” said Lee Hock Guan, a senior fellow at the Institute of Southeast Asian Studies in Singapore.
“The answer is not in dismantling the NEP, as it is very difficult because of the way it has been established, but to get away from the abuse, which is at present disproportionately benefiting a select few, whereas the majority of the Malays remain poor,” said Lee.
He said the policy could be reviewed so that it was based on income rather than race, a move that has been suggested by Anwar who held government office until he was jailed in the late 1990s.
Barisan Nasional’s NEP retards national unity, investment and economic efficiency