The system-wide change to needs-based policies proposed by Anwar is lacking in details and rooted in nebulous rhetoric, making them likely to fail. Reforms should be pursued sector by sector, and thought through systematically in order to succeed.
Anwar Ibrahim recently reiterated his policy stance that Malaysia should move away from race-based policies and instead focus on needs-based policies that target the poor. He further called for this shift to be accelerated. However, these spectres of reform, while popular with segments of Malaysia and the international community, are flawed, misguided and unrealistic.
The notion that Malaysia can take away programmes that currently are in place and replace them with Anwar’s proposals is unrealistic, and inflates hopes of system-wide change that it assuredly will fail to deliver.
Targeting the poor, who need help the most, is a noble objective and a necessary policy. But needs-based or pro-poor assistance does not provide an across-the-board substitute for Malaysia’s extensive race-based system. Helping the poor can contribute to the desired shift away from Bumiputera quotas and preferences, but it is only one of many reforms that should be brought to the table.
Reforming the system requires a coherent perspective that recognizes the objectives and instruments of pro-Bumiputera programmes, and formulates solutions on a sector-by-sector basis.
It helps to step back and pose basic questions on policy objectives and instruments.
The notion that Malaysia can take away programmes that currently are in place and replace them with Anwar’s proposals is unrealistic.
Needs-based policies are meant to help the poor – but what is the purpose of the help? The key objective is to lift households out of poverty. What are the policy instruments? Throughout the decades-long experience of Malaysia, and countries around the world, the following feature prominently: primary and secondary schooling, rural infrastructure, basic health services, and low-skilled jobs. It is common knowledge that these programmes provide important support and service to low-income households, and by and large they operate without any application of ethnic preference in Malaysia.
The levels of education are also instructive. Unlike primary and secondary schooling which provide universal access, entry into higher education is not automatic but is conditional on meeting academic requirements. Many countries promote access to university for the poor, recognizing that their disadvantaged conditions amount to unfair opportunity for their educational advancement. Thus, it is predominantly in higher education – not primary or secondary levels– that countries have intervened, in Malaysia’s case by providing preferential admissions to Bumiputeras.
Higher education is also the pre-eminent sector where there is considerable scope to provide needs-based assistance.
Regarding race-based affirmative action, what are its objective and instruments? Its defining goal is to increase Bumiputera participation in upper socioeconomic strata, by providing quotas and preferential treatment.
It is imperative to specify the four principal sectors where affirmative action is embedded: (1) higher education, in pre-university programmes, university admissions, and scholarships; (2) government and GLC employment, especially in professional and management positions; (3) enterprise development, through public procurement, credit schemes, and various grants and incentives; (4) wealth ownership.
Considering the above, it should become apparent that these programmes are principally seeking to broadly develop Bumiputera capability and upward mobility, not to address poverty alleviation. Hence, these programmes cannot be reformed by introducing needs-based pro-poor targeting.
Reforms must also be pursued sector by sector. For instance, in enterprise development, Malaysia’s way forward can involve incentivizing Bumiputera contractors to upscale and upgrade technology as part of a long term plan of rolling back quotas and preferences. Granting contracts on a needs-based, pro-poor basis simply does not make sense: poor households are not in any position to undertake government contracts. It is also potentially hazardous. Giving preference to poorer contractors – what needs-based affirmative action would entail – may distinctly result in less competent, less safe delivery of public works projects.
The one exception, again, is higher education, where the scope is greatest for Anwar’s needs-based agenda. Broadening admissions to university to the disadvantaged regardless of ethnicity can, and should, be done – alongside a clarification that this reform is limited to higher education and not the other sectors.
Nebulous, sweeping rhetoric of “needs-based affirmative action” does a disservice to the reform agenda. Anwar, and all interested parties, need to think more systematically, and devise solutions on a sector-by-sector basis.
Lee Hwok-Aun is Senior Fellow of the Regional Economic Studies Programme, and Co-coordinator of the Malaysia Studies Programme, ISEAS – Yusof Ishak Institute.