Shaking up Malaysia's race-based economic and political system

Malaysia's Najib Outlines Affirmative Action Overhaul

Malaysian Prime Minister Najib Razak Tuesday outlined his plans to modernize the country's economy, including proposals to overhaul one of the world's most entrenched systems of race-based preferences and quotas, which many economists say has held back this Southeast Asian nation's growth potential.

Mr. Najib said the country's decades-old affirmative action policies will be recalibrated to help disadvantaged members of all ethnic groups and not just the country's majority ethnic Malay population, which comprises about 54% of Malaysia's 28 million people.

Malaysia introduced race-based preferences and quotas for ethnic Malays in the early 1970s to help them catch up with their generally better-off ethnic-Chinese and ethnic-Indian compatriots. Supporters of the program say it has helped provided stability in this racially and religiously diverse nation, which was rocked by race riots in the late 1960s.

Many critics say the affirmative action program, known as the New Economic Policy, has hindered Malaysia's competitiveness in recent years. The U.S. and European Union have singled out Malaysia's insistence on maintaining preferences for ethnic-Malay owned businesses in government procurement contracts for stalling the development of free-trade pacts.

Mr. Najib said, "But for the long-term strength of our nation, we cannot afford to duck these issues any longer. If we are to truly tackle inequality and become a beacon of progress in our region, we must bring a sense of urgency to reform."