'Malaysia's example has been adopted in the Pacific Islands no more obviously than in Fiji, where the nationalist-minded government has implemented policies intended to put 50% of business in indigenous Fijian hands by 2020, in an environment now dominate


Malaysia is generally and rightly held to be one of Asia's success stories.

Setting aside the history of its political and certain other difficulties, Malaysia's efforts to develop its land, resources and people are viewed by numerous tropical developing countries as models they can beneficially emulate.

One policy that aroused considerable interest and later controversy is bumiputra-a programme of racial discrimination in favour of indigenous Malays so as to lift their economic status, particularly by turning them into owners and managers of businesses, to a level of equality with the country's Chinese and Indian business communities.

Part of the reasoning behind this policy was to dilute and eventually dissipate the causes of jealously that fomented race hatred and violence that at one stage pushed Malaysia to the end of an abyss.

This outlook was clearly wise and desirable. To an extent, it has been successful in ensuring Malaysia's evolution as the successful multi-racial society that is has become. One of the objects of affirmative action, as “positive” racial discrimination is labelled, was to put 30% of business into Malay hands by 1990.

Malaysia's example has been adopted in the Pacific Islands no more obviously than in Fiji, where the nationalist-minded government has implemented policies intended to put 50% of business in indigenous Fijian hands by 2020, in an environment now dominated by Indian, white and Chinese-owned businesses.

Most other Pacific Islands countries have affirmative action agendas, all aimed at pushing indigenous people up the scale, but not as vigorously as Fiji is doing. How is Malaysia's policy turning out? Much food for thought appears in an article in the Far Eastern Economic Review, The Perils of Pro-Malay Policies, by Edmund Terence Gomez, of the United Nations Research Institute for Social Development.

Some points made by him are:

• Malaysia had paid a heavy price in economic inefficiency and lost growth.
• By 2000, only 19.1% of business was Malay owned.
• Lucky Malays favoured by the government had concessions like licences, contracts and privatised projects, plus loans from government banks, dropped into their laps.
• Pals of the United Malays National Organisation (UMNO) party became especially favoured and became some of the country's richest people.
• In-house UMNO quarrels over influence and the spoils split the party. Even the UMNO leader, Dr Mahathir Mohamad, the high priest of positive discrimination, began talking about a “culture of greed.”
• Some recipients of business favours had no talent for building on the concessions
• Business connections became more clouded. Who was really running them?
• Prominent businessmen who fell out with the government were liable to see thriving businesses sink.
• By 2000, the government had majority ownership of seven of the 10 largest local stock exchange listed firms-a signal of the failure of privatisation. None of the ten were Malay-owned.
• A failure to develop real Malay entrepreneurs was due to the business favours given to unworthy recipients.
• The government's failure to check and discipline this style of growth caused the rapid collapse of firms when a currency crisis happened.
• Racial targeting by UMNO could cause the usurping by politicians of concessions meant for all Malays.
• Targeting has draped UMNO with allegations of corruption, loss of public confidence and serious intra-Malay class differences.
• Vast resources have been wasted.
• Another round of affirmative action could seriously damage the economy, social justice and national unity.

This litany from Malaysia should ring a few alarm bells, particularly in Fiji, and in other countries in the Pacific where the wealth gap between a lucky few and the larger number of not so fortunate inhabitants widens by the day.