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Malaysian Leader Expected to Fortify Race-Based Advantages

Posted: 13 Sep 2013 11:47 AM PDT 

UMNO isn't forgiving to poor performance 

(Wall Street Journal) - Malaysian Prime Minister Najib Razak is expected on Saturday to announce measures to fortify advantages for the Southeast Asian country's ethnic Malay Muslim majority, a move that analysts say is a reward to voters who returned the ruling coalition to power and an attempt to secure support ahead of his party's election.

Earlier this week, Mr. Razak tweeted: "I will soon announce a comprehensive basis to promote Bumiputera involvement in the economic sector."  Bumiputera refers to ethnic Malays and other indigenous tribes in the multi-ethnic, Muslim-majority democracy.

It isn't clear what the measures might be. But analysts expect the initiatives may aim to boost Malay ownership of commercial properties and create more opportunities for them in the private sector. The government already has a stated goal of raising Bumiputera's share in equity wealth to 30% from the current 23%.

Race has long dominated Malaysia's politics. Malaysia introduced race-based preferences and quotas for ethnic Malays in the early 1970s to try to help them catch up with their generally better-off ethnic-Chinese and ethnic-Indian compatriots. The favorable policies followed the 1969 race riots.

Supporters of the program say it has helped provide stability in this racially and religiously diverse nation. However, critics argue the practices also have spawned a widespread  perception of government cronyism that boosts only a section of the business and hurts competitiveness in the broader economy.

Since taking office in 2009, British-educated Mr. Najib has called for dismantling such race-based preferences with calls to direct government assistance based on need than on race.

But his push met stiff resistance within his party, especially from the far-right members, who champion the Malay cause. Such voices have gained strength especially after the weak showing of the ruling National Front coalition at May's general elections. The Front retained power with the slimmest ever margin in its history of un-interrupted rule since 1957, when Malaysia gained independence from Britain. The coalition, led by Mr. Najib, cornered only 47% of the popular vote, carrying the day by winning smaller rural constituencies dominated by ethnic Malay Muslims. The opposition's campaign to curb corruption found widespread support among urban voters — mostly Chinese — and helped it secure 50% of the vote.

Mr. Najib had called the heavy loss in popular support a "Chinese tsunami."

The ethnic Chinese, who make up about a quarter of Malaysia's population, have been upset with the UMNO's policy that favors ethnic Malays. Thousands leave the country to seek better prospects abroad in a chronic brain drain that the World Bank says could hurt Malaysia's ambition of reducing the wealth gap between richer Asian economies such as Singapore and South Korea by 2020.

"The ethnic minorities have already distanced themselves from UMNO as there is very little faith in UMNO's transformation," said Andrew Aeria, a political scientist at University Malaysia Sarawak.

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