Towards A Competitive Malaysia #84

Book Serialization Installment #84

Chapter 12: Fragmentation of Malaysian Society

Path To Unity: Economics, Not Politics

The more promising and enduring path to unity is not through politics, language, or culture but economics, more specifically the embrace of free enterprise.

I would have expected that socialism with its egalitarian ideals would be the best vehicle to bring Malaysians together. It failed, in Malaysia and elsewhere. Socialism failed to capture the imagination of Malays because of its association with atheistic communism. The MCP resorting to terrorism certainly did not help. Malays did not differentiate between socialism and communism, and equated both with Godlessness and Red China.

A legacy of colonial rule was the segregation of Malaysians at work and where they live. When economic crises occurred, they took on a racial hue very quickly. When there was a shortage of sugar, Malays would blame Chinese traders for hoarding and profiteering. Even a simple railway labor dispute could quickly degenerate along racial lines.

Today as a consequence of NEP, economic crises and labor disputes no longer have racial undertones. A remarkable but under appreciated achievement. The 1997 economic crisis had minimal racial repercussions despite the fact that many of the high-flying casualties were Malays. Likewise, the recent reduction in petroleum subsidy affected all: urban dwellers, taxi drivers, Malay fishermen, and those who use public transportation. The pain cut across race and class, economic imperatives successfully breaching racial boundaries.

The very visible Malay professional and middle class helped blur the perception of interracial inequities and discord. The emerging Malay business and trading class also introduced capitalism to the Malay masses. They began looking at others less as immigrants or non-Malays and more as potential customers, suppliers, and business partners. That contributes greatly to racial harmony.

Perversely, while a generation earlier NEP brought Malaysians together, today its successor policies further divide us. More consequentially, those policies, now severely corrupted and corroded, are no longer effective instruments for the betterment of Malays. They contribute to the polarization of Malays, between those who benefited from the largesse of the state and those left out.

Free enterprise and with it, free trade, is the best instrument to break down not only race barriers in Malaysia but also other artificial barriers globally. Capitalism does not differentiate between race, national origin, political persuasions, or religious beliefs. Profits are profits, whether they come from your own kind or foreigners.

The government is actively encouraging greater integration in the business sector, and if successful, that would enhance racial harmony. Unfortunately, the government’s usual highhanded ways are undermining this otherwise noble goal. For example, publicly listed companies must divest 30 percent of its equity to Bumiputras. This is fine if we let the market pick who those lucky Bumiputras would be. Instead that scheme has now degenerated into another corrupt-ridden political patronage system.

A more profitable approach, and thus likelier to succeed, would be for the government to explicitly use ownership and employee diversity as a criterion when awarding contracts and choosing vendors. American companies are realizing that workplace diversity has its own rewards, quite apart from being the right thing to do. American corporations are easily outbidding European and Japanese competitors in Africa because the executives they send there are mostly Blacks. The same in China, with American companies actively recruiting ethnic Chinese Americans.

The “mom and pop” retail sector in Malaysia is essentially in Chinese hands. They usually recruit their own kind. Such ethnic mom and pop operators, whether in Malaysia, Japan or America, are inefficient and their customers pay for the inefficiency. An effective way to discourage them and at the same time enjoy the benefits of having an efficient retail sector would be to open it to foreign competitors like Carrefour and Walmart. Carrefour has exemplary recruiting policies; it actively recruits capable Malays for its frontline as well as management positions. Unfortunately, instead of encouraging such multinational retailers with their enlightened personnel policies, the government is restricting them, no doubt through the influence of “money politics” (otherwise known as corruption) of UMNO politicians by these Chinese retailers.

Yes, Walmart has squeezed out many mom and pop stores in America, but American consumers enjoy “every day low prices!” Such mega chains have done much to contain inflation in America. Walmart and Carrefour are also very popular in China. Chinese consumers, like those elsewhere, want wide choices and lower prices. They could not care less who owns those outlets, “foreign devils” or their own kind.

Similarly with the small retail lending business; banks and finance companies ignore these customers with less-than-stellar credit history. They have no alternative but to go to pawnshops, Ah Longs, and chettiars with their usurious interest rates. They are also all exclusively non-Malay operations, right down to the goons they employ to collect their overdue payments. If Malaysia were to open up the market to foreign lenders like AIG that specializes in “sub-prime” loans, we would wipe out these chettiars and Ah Longs. Malaysia would definitely be a better society without them. AIG, like other American companies, have enlightened personnel policies. You can be assured that they would employ many Malays, certainly more than what the present ethnic moneylenders would. Those American lenders would be shrewd enough to employ many Malays as their customers would be mostly Malays.

If all else fails, UMNO and PAS could unite with a common purpose of boycotting those ethnic companies and establishments whose workers do not reflect the general Malaysian society. A few such high profile boycotts would change the employment and ownership patterns of Malaysian businesses far more effectively than any government mandate.

The free market is not only the most efficient economic system for producing goods and services but also the most effective tool to bring substantive social and cultural changes. Once Malaysians start looking at each other and the rest of the world not in terms of race or nationality but as potential customers, business partners, and sources of capital and expertise, peace and understanding would follow suit.

Next: Factors Contributing to Fragmentation