PETALING JAYA, June 28 ― Malaysia is hoping the cream of the tech crop can help power its chase for developed nation status come 2020 and drag the bottom 40 per cent of its population into high-income status, The Guardian reported yesterday.
But with the bulk of this low-income group being Bumiputeras and Malays, the cloud of the New Economic Policy (NEP) race-based affirmative action may stifle investment and reduce the attractiveness of the key information and communication technology (ICT) sector on which Malaysia is banking, according to analysts cited by the British newspaper.
“Not only does it undermine Prime Minister Najib [Razak]’s ‘1 Malaysia’ policy — which emphasises national unity and ethnic harmony — it also contributes to increased inequality in Malaysia, which is now more severe within ethnic groups (including among Bumis) than between them,” said a blog entry by Vikram Nehru, of the Carnegie Endowment for International Peace think-tank, quoted in the report.
“Najib has tried hard to reform the Bumiputera policy, but he has had to compromise in the face of intense pressure from within his own party as well as from powerful ethnic Malay interest groups. The Malay elite have reaped enormous benefits thanks to the policy, and they are unlikely to relinquish their privileges easily.”
Born from the communal dissatisfaction that climaxed during the May 13, 1969 race riots, the NEP was designed ostensibly to lift the poorer sections of the Bumiputera Malay group in a bid to help it catch up to the economic progress of other communities.
Although technically defunct since 1990, the application of the NEP remains very much alive albeit unofficially.
The NEP remains a bone of contention among those who argue that it stifles competition by producing a “crutch mentality”; even the Bumiputera entrepreneurs it purports to help have labelled it a failure.
But its proponents are fiercely protective of the policy that is so entrenched that it is often seen — incorrectly — as a “right” of the community, purportedly stemming from the Federal Constitution.
To meet ICT focus for the government’s 2020 target, however, the NEP could remain a major stumbling block.
According to the Multimedia Development Corporation (MDC), Malaysia can no longer leverage on traditionally labour-intensive industries to power its progress as it once did.
“We can’t compete with China and we don’t want to compete with India on call centres,” said MDC chief executive Datuk Mohd Badlisham Ghazali in The Guardian report.
“We are more interested in high-end engineering research and development. DHL, for example, has set up R&D facilities here and in Prague.”
The ICT industry now contributes a tenth of the Malaysian economy, and the goal is to increase this to 17 per cent in 2020.
This will hinge on the country’s ability to draw in the foreign capital to power the growth, but again, the NEP could prove a hindrance.
The policy mandates that Bumiputeras must hold the majority stake in any venture by a foreign firm, a stipulation that can be unpalatable for some multinationals.
Also needed are professionals and education in science, technology, engineering and mathematics — dubbed the STEM fields in the US — in order to provide the “software” for the plan.
With an estimated 5 per cent emigration rate annually, Malaysia has long suffered a brain drain that is often attributed to racially-biased affirmative action policies, with Singapore — also an aspiring technology hub — the main beneficiary. Now, Malaysia needs not just to retain the talent that it has, but also draw in new as well as that which previously departed.
Ghazali believes, however, that higher pay can answer part of the problem. He pointed out that salaries in technology sectors were almost double the national average, and may be enough to stem or slow the brain drain.
Malaysia aims to raise per capita income from US$9,500 (RM28,500) currently to US$15,000 by 2020 to achieve high-income nation status.
Analysts said the country’s ambitions were not wayward.
“Malaysia will definitely reach the target,” Lawrence Sáez of the School of Oriental and African Studies was quoted in The Guardian report.
“But it is not likely to move above and beyond its competitors for a long time once it has reached this stage. I wouldn’t sell the Malaysian dream but I would say the targets are credible. Education is the greatest problem facing Malaysia’s development.
“The interest from the government is there to make improvements but the capabilities are not.”
