Via Bloomberg:

Ethnic Malays have blown the opportunities given to them under the country’s 36-year-old affirmative action policy and still need preferential treatment.

"The Malays have not responded to the efforts made by the government and because of that, the disparity remains,” said Mahathir. […]

When you’re coming up from behind to catch up, you have to run faster, you have to make more effort.

Ethnic Malays Have Frittered Away Opportunities, Mahathir Says

By Stephanie Phang and Angus Whitley

July 19 (Bloomberg) — Ethnic Malays have blown the opportunities given to them under the country’s 36-year-old affirmative action policy and still need preferential treatment, former Malaysian Prime Minister Mahathir Mohamad said.

The race-based program gives the group privileges over ethnic Chinese and Indians for government contracts, homes and company shares in a bid to redistribute wealth. Without the policy, ethnic Malays, or Bumiputeras, will slip further behind, risking a return to racial violence in the Southeast Asian nation, Mahathir, 81, said in a July 17 interview.

"The Malays have not responded to the efforts made by the government and because of that, the disparity remains,” said Mahathir, who stepped down in 2003 after 22 years in power. “When you’re coming up from behind to catch up, you have to run faster, you have to make more effort.”

Mahathir and his successor, Abdullah Ahmad Badawi, scrapped some elements of the 1971 New Economic Policy program to lure investment. The program hindered Malaysia’s trade talks with the U.S. this year, while opposition parties and some analysts say the rules crimp competition and should be dropped completely.

"There’s more than enough headway given to the Bumiputeras now,” said Maznah Mohamad, a senior research fellow at the University of Singapore. “The NEP has been reduced to a kind of charity scheme. That is not good for any economy.”

Bumiputeras, which literally mean “sons of the soil,” are given more places in public universities and discounts on home purchases. Hypermarkets and department stores must allocate 30 percent of shelf space for goods made by Bumiputera suppliers, and foreign retailers have to set up local companies that are 30 percent-owned by Bumiputera shareholders.

The program was devised after bloody clashes between ethnic Malays and Chinese on the streets of Kuala Lumpur in 1969.

Selling Contracts

Some ethnic Malays failed to develop their own business expertise, choosing to sell to other races the government contracts set aside for them, or auction specially allocated permits to import cars, Mahathir said.

The poverty rate in 2004 among Bumiputeras was 8.3 percent, compared with 2.9 percent for ethnic Indians and 0.6 percent for Chinese, according to the government. Ethic Malays owned 19 percent of the nation’s corporate equity that year, while the Chinese had 39 percent and Indians 1.2 percent.

The greatest failure of Malaysia, which this year marks 50 years of independence from British rule, is not correcting the economic disparity, Mahathir said.

Still, pursuing the policy risks angering local Chinese and Indians, he said. Without it, Malays, who account for about 60 percent of the 27 million population, may struggle, he said.

`Bad Results’

"That is the dilemma," Mahathir said from his office on the 86th floor of the Petronas Twin Towers in Kuala Lumpur. "We can say let’s take it away, then I’m quite sure they will regress. One way or the other, we are going to get bad results.”

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