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Malaysian PM stands by the redistribution of ethnic wealth

AP, KUALA LUMPUR
Sunday, Apr 02, 2006, Page 12

Malaysian Prime Minister Abdullah Ahmad Badawi has pledged to beef up a controversial affirmative action program for the majority Malays to ensure that by 2020 they control 30 percent of the country's corporate wealth, now largely in the hands of ethnic Chinese.

The goal is part of a 220 billion ringgit (US$59 billion) five-year plan that Abdullah unveiled on Friday to fast-track the country's economic and social development. But he assured the minority Chinese and Indians they would not be left behind either.

"We want our country to be a developed country, imbued with its own unique characteristics. We want progress that is enjoyed by all, regardless of religion or ethnicity," he said in a speech to parliament.

The five-year "Malaysia Plan," a blueprint toward the country's grand vision to become a developed nation by 2020, foresees the economy growing by 6 percent every year until 2010, up from an average 4.5 percent during the last five years.

Malays make up about 60 percent of the country's 26 million people but control only 19 percent of its corporate wealth, while ethnic Chinese who are a quarter of the population control 40 percent. Indians control only 1.2 percent of the equity, and foreigners hold the rest.

The disparity was much wider in 1970 when the affirmative action program, known as the New Economic Policy (NEP), was started for the Malays. The aim of the NEP was to raise Malays corporate ownership to 30 percent by 2010.

Abdullah acknowledged the target can now only be achieved by 2020, with only 20 percent to 25 percent of the wealth likely to settle with Malays by 2010.

"We have not achieved the targets that were set. We cannot pretend to be blind to the realities today," Abdullah said, adding that corrective measures were a must. "If unaddressed, these disparities can threaten the harmony and stability we enjoy."

The government already requires publicly listed companies to allocate 30 percent of their shares to Malays. Companies without Malay directors or employees are excluded from lucrative government contracts. Employers have quotas for hiring Malays.

Malays form the bedrock of political support for Abdullah's United Malays National Organization, so it can ill afford to cut back the affirmative action policy despite criticism that it has benefited only a few well connected Malays and created a class of mega-rich.

Under the new plan, the government will set up a state agency with an initial capital of 2 billion ringgit to buy prime commercial real estate in urban centers on behalf of the Malay community.
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