Malaysia’s Bumiputera Transformation 2035 Needs Rigour, Fairness and Self-Awareness

INTRODUCTION

The Bumiputera Economic Transformation Plan 2035 – known by the acronym PuTERA35, for Pelan Transformasi Ekonomi Bumiputera – was unveiled on 19 August 2024. PuTERA35 is the latest edition of Malaysia’s decades-long Bumiputera preferential policy that has been nested within national development plans since 1971. However, as a Bumiputera-specific policy document, it follows the Bumiputera Transformation Programme launched in 2012 and Bumiputera Development Action 2030 (TPB2030) of 2021.

Bumiputera development plans have become a political staple. Master plans normally run their course before being reviewed and possibly extended. The New Industrial Master Plan 2030 launched in September 2023, a signature policy of the Anwar administration, followed on the Third Industrial Master Plan that had concluded in 2020. PuTERA35, however, has superseded TPB2030 merely two years after the latter’s inception, and seven years before its conclusion. It is politically expedient for the Unity Government, with its tepid reception among Malays, to build trust and rapport by taking ownership of these policies that are widely embraced by the community.     

The Anwar Ibrahim administration, with the United Malays National Organisation (UMNO) in the ruling coalition, has thus modified and rebranded its own Bumiputera programme, now with an eleven-year horizon. Prime Minister Anwar Ibrahim and Deputy Prime Minister Zahid Hamidi have also rallied popular support for this administration’s take on Bumiputera policies while asserting that the system does not marginalise other groups.

This article gives an overview of PuTERA35, locating it in the context of preceding Bumiputera development policies. We then discuss PuTERA35’s 132 initiatives from the perspective of guiding principles that would reinforce the policy’s dual fundamentals of cultivating Bumiputera success cases and empowering a broad swathe of Bumiputera society. Next, we evaluate the government’s misguided response to minority groups’ misgivings. In sum, Malaysia should ensure that PuTERA35 proceeds with rigour, fairness, and self-awareness.

EMBEDDED SYSTEM WITH CHANGING COMPONENTS

Malaysia’s Bumiputera policies are deeply embedded. Preferential treatment, as authorised by the Federal Constitution, was implemented already from the time of Malaya’s independence in 1957. The system was massively expanded in 1971 under the New Economic Policy (NEP). The Bumiputera category, which accounts for 70 per cent of Malaysians, includes ethnic Malays, who currently represent 58 per cent of citizens and predominantly reside in Peninsular Malaysia, and indigenous groups in Sabah and Sarawak (12 per cent of citizens). The NEP articulated its ultimate aspirations to be the eradication of poverty for all groups, and the elevating of the Bumiputera population to be “full partners in all aspects of the economic life of the nation”. The latter entailed accelerating Bumiputera participation in higher education, high-level occupations, business and entrepreneurship, and asset ownership and control, through quotas, exclusive access, and other forms of preferential treatment. The specific interventions encompass admissions and scholarships in public colleges and universities, employment in the public sector and government-linked companies, public procurement, business loans, SME support, unit trust funds, private equity, and property discounts.

Bumiputera representation in managerial positions rose from 24 per cent in 1970 to 37 per cent in 2000, and 49 per cent in 2023; among professionals, from 47 per cent (1970), to 59 per cent (2000), and 66 per cent (2023). However, the policy has fallen short in developing capability and competitiveness, saliently reflected in the persistent quality issues and under-employment of graduates, and shortfalls in entrepreneurial capacity and enterprise growth.

This special access to learning, working, and ownership opportunities is meant to foster upward mobility and socioeconomic empowerment. The outcomes of this comprehensive group-targeted programme are mixed, with data pointing to extensive achievements in Bumiputera higher education attainment and mobility into technical, professional and managerial positions, especially in the public sector and in government-linked companies. Bumiputera representation in managerial positions rose from 24 per cent in 1970 to 37 per cent in 2000, and 49 per cent in 2023; among professionals, from 47 per cent (1970), to 59 per cent (2000), and 66 per cent (2023). However, the policy has fallen short in developing capability and competitiveness, saliently reflected in the persistent quality issues and under-employment of graduates, and shortfalls in entrepreneurial capacity and enterprise growth. Bumiputera companies presently account for a mere 8.1 per cent of GDP. Shortfalls in Bumiputera empowerment inhibit the community’s capacity to grapple with modification or phase-out of overt preferential treatment, which has also been a perennial concern of minority groups aggrieved at the real and perceived systemic unfairness in socioeconomic opportunity, particularly in public higher education.

Bumiputera development programmes have largely been nested within national policy, as components of five-year Malaysia Plans throughout the period of the UMNO-led Barisan Nasional government, rather than as a special policy document. The Bumiputera Transformation Programme (BETR) authored by Teraju, the government body established under the Prime Minister’s department in 2011, set a new precedent of promulgating a Bumiputera-specific master plan. BETR’s scope also grew, from an initial focus on Bumiputera enterprise development to an expansive scope reaching out to the “Bumiputera economic community”. The process showed a willingness to innovate and experiment, particularly with newer and nimbler government agencies directly under Teraju’s watch.

PuTERA35 has also emerged in a particular political milieu and administrative reshuffle. The Unity Government was formed in the wake of the November 2022 general election, with the Pakatan Harapan coalition of mainly multi-ethnic parties as the linchpin, led by Anwar Ibrahim’s Parti Keadilan Rakyat (PKR, People’s Justice Party). PH has called for “race-based affirmative action” to be dissolved and replaced with “need-based affirmative action.” The coalition maintained this stance, which substantially derives from PKR President Anwar Ibrahim’s personal conviction, vigorously proclaimed while he was in opposition but which has been replaced by a more dithering and noncommittal stance since 2018 when PH first won federal power (Lee 2024).

Election results of recent years markedly show that PH remains unpopular with the Malay electorate, securing only an estimated 11 per cent of the Malay votes at the November 2022 general election, behind Perikatan Nasional (53 per cent) and Barisan Nasional (33 per cent) (Ong 2023). This was for various reasons, arguably including its ambivalence toward Bumiputera policies. A Congress on the Future of the Bumiputera and Nation convened in September 2018, a mere four months after PH unprecedentedly defeated BN at the May 2018 general election, barely caused a ripple. The Malay-dominant Perikatan Nasional government also held a Bumiputera congress – in September 2020, six months after it had overthrown PH through parliamentary defection and realignment; this was more consequential as a precursor to the Bumiputera Development Action 2030 (TPB2030) launched in December 2021 by the Ismail Sabri administration. The ruling coalition’s complexion perhaps deepened the association of the policy with Malay political parties – and correspondingly reinforced expectations that multi-ethnic parties would dissociate themselves from the policy.

The PH-led Unity government, formed in November 2022 after sealing a strategic partnership with UMNO, has continually struggled to win Malay support and clearly sought to project its own plan for the community. Holding another Bumiputera Congress would renew policy consultation and deliberation and provide a platform for Malay leaders, especially Deputy Prime Minister and UMNO President Zahid Hamidi, to prominently champion the group’s developmental interests. The BEC was helmed by the Ministry of Rural and Regional Development and its agency MARA, which focuses on Bumiputera education and enterprise, both of which remain UMNO domains headed by the party’s president and secretary-general.

Bumiputera policies are undeniably politically driven and historically UMNO’s cause, but the underlying economic logic of such group-targeted interventions, which can benefit minority ethnic groups, was overshadowed by the appointment of UMNO to lead the charge. On 14 March 2024, a Steering Committee approved 74 resolutions and 150 programmes proposed by the BEC. The Ministry of Economy, the BEC secretariat and custodian of national development planning responsibilities transferred from the Economic Planning Unit in the Prime Minister’s Department, would author the Bumiputera road map incorporating the BEC resolutions. PKR Deputy President Rafizi Ramli is the Minister of Economy.

The policy journey of the past 15 years, as encapsulated in the core objectives of BETR, TPB2030, and PuTERA35, is instructive (Table 1). All three plans indicate the primacy of Bumiputera entrepreneurship and wealth creation, with due mention of human capital and talent development, and some prominence given to governance. BETR set up a peculiar organisational structure, with Teraju, the policy author and secretariat, primarily involved in initiating new programmes – most notably, the Yayasan Peneraju foundation, and a series of entrepreneurship and enterprise development interventions – while also tasked with policy formulation and coordination among myriad government bodies. The accountability of the Teraju-based institutions, and feedback loops for policy learning and cross-fertilising, are much clearer than the numerous institutions and programmes under other jurisdictions, notably in higher education, enterprise development, and public procurement.

PuTERA35 stands out for establishing “social justice” as one of the policy pillars that the government seeks to uphold, to be driven by poverty alleviation and social protection measures, with specific attention paid to the needs of Peninsula-residing Orang Asli and to regional balancing between Borneo and the Peninsula. While noble in principle, this policy pillar is a mixed bag. The upside of social justice as articulated in PuTERA35 is that the Bumiputera agenda, often admonished for being Malay-centric to the neglect of other Bumiputeras and indigenous peoples, allows other communities to claim similar group-based interventions that benefit them. The downside is that the inclusion of welfare-based policies such as poverty eradication, perhaps counterintuitively, conflates such universal, rights-based interventions with PuTERA35’s mainstay of special group-based promotion of participation and building of capability.

Table 1. Bumiputera development plans since 2012

Bumiputera Economic Transformation Programme (BETR) 2012-20	Key Objectives 1. Strengthen human capital 2. Promote higher-value employment and income 3. Increase Bumiputera share and value of corporate equity 4. Strengthen entrepreneurship 5. Increase ownership of non-financial assets
Bumiputera Development Action 2030 (TPB2030) 2021-30	Priority Areas 1. Accelerate Bumiputera socioeconomic development 2. Improve governance and strengthen service delivery 3. Strengthen education and empower human capital 4. Enhance the resilience and sustainability of Bumiputera businesses 5. Increase Bumiputera wealth creation 6. Make full use of Malay reserve land and waqf instruments 7. Ensure sustainable corporate equity ownership
Bumiputera Economic Transformation Plan 2035 (PuTERA35) 2024-35	Pillars and Drivers 1) Strengthen the economy i. Economic control ii. Raise competitiveness and scale up iii. Talent development and empowerment of the education ecosystem iv. Wealth creation v. Increase equity ownership 2) Consolidate governance and institutions vi. Service delivery and governance vii. Participation of private sector, GLCs, GLICs viii. Realisation of the Bumiputera philosophy 3) Uphold social justice ix. Eradicate hardcore poverty x. Strengthen social protection system xi. Orang Asli socioeconomic development xii. Sabah and Sarawak development toward achieving regional balance

In line with the three pillars and twelve drivers, PuTERA35 projects nine key targets, affirming six existing targets and introducing three new ones, which translate into 132 initiatives (Table 2). Each initiative is assigned lead and ancillary government ministries. While only an annotated list without policy details, the 132 initiatives comprise the largest chapter of the PuTERA35 document (30 out of 90 pages).

Table 2. PuTERA35: Key 2035 targets and 2022 levels

	2022	2035
Existing targets
1. Bumiputera participation in skilled occupations	61%	70%
2. Equity ownership by Bumiputera individuals and Bumiputera-mandated agencies	18.4%	30%
3. Bumiputera hardcore poverty incidence	0.3%	0.0%
4. Bumiputera to Chinese median wage ratio	0.78	0.90
5. Bumiputera to Chinese median household income ratio	0.71	0.90
6. Share of Bumiputera households owning one residential unit	73%	75%
New targets
7. Bumiputera participation and control through GLC and GLIC equity	18.7%	20%
8. Share of Bumiputera graduates in the labour force	85%	97%
9. Contribution of Bumiputera enterprise to GDP	8.1%	15%

RIGOUR AND FAIRNESS

How will the aspirations for Bumiputera transformation be realised over the next decade? PuTERA35 has not detailed its 132 initiatives, but it is clear from the list that a range of deciding factors and enabling ingredients will come into play. A few examples illustrate the varying scope and demands on the coordinating ministry:

• “improve the Bumiputera entrepreneur database to raise the targeting and monitoring efficacy of Bumiputera entrepreneurship programmes” (coordinated by Ministry of Economy, with Ministry of Entrepreneur and Cooperatives Development)
• “raise product and service quality, and fulfil standards, in order to penetrate global markets” (Ministry of Investment Trade and Industry, with six affiliate ministries/agencies and state governments)
• “improve and empower the role of UiTM and MARA learning institutions in Bumiputera education” (Ministry of Higher Education, with five affiliate ministries/agencies and state governments).

Within the scope of this article, it suffices to set out guiding principles crucial for steering the process effectively and equitably. Upholding a high level of rigour helps elevate precision and thoroughness of policy design, and sustain policy monitoring and delivery. A firm commitment to fairness fosters a more even distribution of benefits within the Bumiputera populace and a greater emphasis on empowering the disadvantaged and facilitating upward mobility between generations. These principles, put into practice, would serve PuTERA35 and Malaysia well.

The Anwar administration has judiciously prioritised expanding participation and building capacity, particularly in entrepreneurship, while avoiding reinforcement of inequalities. These principles tap into the zeitgeist of mass discontent toward a system perceived to unfairly benefit the privileged and connected. PuTERA35 reiterates the goal of 30 per cent Bumiputera equity ownership but avoids making that a consuming goal, distinguishing itself from past policies that had placed this target on a pedestal, and deviated into elite enrichment. Nonetheless, the emphasis on entrepreneurship comes with its challenges – indeed, Malaysia’s achievements have been elusive because of the difficulty in making commercial breakthroughs and sustaining progress, and managing inevitable business failures along the way.

The administration’s emphasis on increasing meaningful participation sends out a positive signal. Minister of Economy Rafizi Ramli, in his PuTERA35 launch speech, surmised that one of the main factors confining Bumiputera participation to lower value-added activities is the “lack of capacity for Bumiputeras to contribute meaningfully to the national economy.” This assessment corresponds with the plans to realign the agencies under his watch – Teraju, higher education foundation Yayasan Peneraju, and private equity firm Ekuinas – toward amalgamating resources and integrating efforts to support entrepreneurship. Simultaneously, the Ministry of Economy will venture to disburse RM1 billion in funding as loans, shifting away from former practices of providing grants – on the belief that loan servicing requirements will more effectively engender productivity, resourcefulness, and accountability. The initiative shows the potential for focused and coordinated action, but the test for PuTERA35 lies in whether its extensive programmes can proceed in a similar manner.

The interventions directly under Teraju’s watch have shown greater willingness and flexibility to learn, enhance and modify practices, but the Bumiputera preferential system on the whole has proven difficult to change. Bumiputera programmes in higher education, microfinance, and procurement have especially wide reach into the community. PuTERA35’s efficacy rides on whether missions are undertaken with greater rigour in selecting beneficiaries, setting standards, providing support, and monitoring progress.

Fairness constitutes another precept for PuTERA35, tempering the policy’s potential exclusionary effects and safeguarding the interests of society. Anwar Ibrahim fondly cites philosopher John Rawls’ adage, “justice as fairness”, as a guiding principle. The notion of fairness also resonates with the zeitgeist, as broad swathes of society feel marginalised by the economic system. Undeniably, various PuTERA35 initiatives groom a select group to be successes and exemplars, and hence by design are not intended for the masses. A definitive commitment to fairness, however, would incline PuTERA35 to continually seek to equitably distribute opportunities for knowledge and skills acquisition, earnings capacity, and upward mobility across generations.

The governance structure, with the Prime Minister-chaired Bumiputera Economic Council at the apex and tasks delegated to working committees, follows the template of the preceding plans – with a significant appointment of Chinese and Indian cabinet ministers as Council members (Anthony Loke and Gobind Singh, both of DAP). However, it is difficult to see these symbolic appointments assuaging minority unease toward the policy.

SELF-AWARENESS AND SOCIAL JUSTICE 

The social justice imperative of spreading the benefits equitably within the Bumiputera population finds a corollary at the national level, stemming from the disparate effects on policy beneficiaries and non-beneficiaries. Attitudes toward Bumiputera policies are, unsurprisingly, polarised, given that the policy affords preferential treatment to some over others in the allocation of scarce opportunities. Some degree of exclusion cannot be avoided, unlike basic welfare provisions, universal primary schooling, or the right to vote, which are available to all regardless of identity.

The Anwar administration evidently feels the pressure of electoral unease with PuTERA35; it hears the objections that have echoed throughout the decades of Bumiputera policy. The critiques can be overly provocative, dogmatic, and cavalier, particularly the blusters for Bumiputera policies to be abolished. Pakatan Harapan, the linchpin of the Unity Government, has consistently adopted a different posture, advocating for “race-based” affirmative action to be replaced by “need-based” affirmative action. This translates into an ambivalence toward Bumiputera policy and fuels expectations, within PH’s urban and mostly non-Malay base, that a PH-led government will not countenance a “race-based” programme such as PuTERA35.

In reality, Malaysia has conducted both universal welfare-oriented policies that provide basic needs and alleviate poverty, and group-targeted interventions that promote participation, capability, ownership and upward mobility. Of these two fundamental and enduring policy domains, the latter is undoubtedly more contentious, since it designates certain beneficiary groups and involves preferential treatment. In recent years, Malaysia has expanded group-targeted programmes for the benefit of other groups besides Bumiputeras – notably, the Indian and Orang Asli communities. The magnitude is dwarfed by the Bumiputera-favouring programmes, but the more coherent and constructive policy disposition would be to recognise these minority-favouring policies as logically being in the same domain as the Bumiputera policies and to engage substantively on all forms of group-targeted policies and break away from the entrenched mindsets that have polarised Malaysians into pro-Bumiputera policy vs anti-Bumiputera policy camps.

The discourses surrounding PuTERA35 would benefit from greater self-awareness and candour about these realities – and a systematic perspective that sets clear objectives and aligns policy evaluation with the relevant goals. Achievements in alleviating poverty and helping the poor are worthy but far removed from the exclusion experienced by minorities most acutely in their pathways to public university.

However, the Anwar administration has invoked political sentiment rather than systematic logic in making the case for PuTERA35, and also conflated poverty alleviation with group-targeted empowerment. Anwar’s March 2^nd closing address to the Bumiputera Economic Congress admonished non-Bumiputeras for complaining that they were excluded – by pointing to the proportionate distribution of cash transfers: 71 per cent of Sumbangan Tunai Rahmah (STR) was disbursed to Bumiputeras, who comprise 70 per cent of the population, with similar correlation for Chinese (20 per cent STR, 23 per cent population) and Indians (9 per cent STR, 7 per cent population). Zahid Hamidi declared in his February 29^th opening speech at the BEC:

“We need not be apologetic in deliberating big agendas for the Bumiputeras because we have never marginalised or oppressed the rights of other races. Moreover, the Bumiputeras have always honoured the social contract which is the basis of national harmony.”

Anwar echoed the sentiment in his August 19^th PuTERA35 launch speech:

“We should not be apologetic about this approach. Among non-Malays, this should not be made into an issue.”

These assertions miss the mark. While they seek to broaden popular acceptance of the Bumiputera policy, and PuTERA35 in particular, the reality remains that non-Bumiputeras will face continual exclusion, most acutely in public higher education admissions. Delivery of welfare benefits to all Malaysians is a fulfilment of basic and equal rights that has scant relevance to minorities’ sense of unease or grievance.

The government should be more clear-eyed, sober-minded and candid in acknowledging the policy objective of promoting Bumiputera participation and building capacity in specific areas – and reach out to non-Bumiputeras by expanding the group-targeted interventions for them. PuTERA35, indeed, incorporates specific programmes for the Orang Asli indigenous peoples of Peninsular Malaysia, and for specific Bumiputera causes in Sabah and Sarawak. Malaysia’s federal government Budget 2025 has spurred some debate over the adequacy of allocations for Indian-dedicated development programmes. Curiously, no party seems to have noticed a steep allocation increase in Bank Simpanan Nasional loans for Chinese micro and small enterprise, from RM5 million in 2024 to RM90 million in 2025. More of such discourses would be a more systematic and salutary way to balance the interests of different groups.

The government should be more clear-eyed, sober-minded and candid in acknowledging the policy objective of promoting Bumiputera participation and building capacity in specific areas – and reach out to non-Bumiputeras by expanding the group-targeted interventions for them.

CONCLUSION

The Anwar administration’s Bumiputera transformation plan for the next decade underscores the prevailing socioeconomic gaps in the majority group’s participation, capability, and ownership. PuTERA35 has inherited the challenge of fostering system-wide change but it remains unclear whether the Ministry of Economy can secure buy-in and compliance from peer ministries. The coordinating role, together with government data repositories and the planning machinery, have migrated out of the Prime Minister’s Department to the Ministry of Economy. The Ministry may be operationally poised to steward the agenda, but without the prestige of the Prime Minister’s office, it may struggle to muster the authority to execute PuTERA35 across multiple ministries, agencies and state governments.

The PuTERA35 document has merely provided a broad-brushed outline. Its impact on the Bumiputera community will hinge on the rigour of policy substance and implementation, and fairness in the distribution of benefits. PuTERA35’s 132 initiatives need to pursue efficacy at all stages – when designing programmes, selecting beneficiaries, providing support and monitoring implementation – and to maximise the benefits received by the disadvantaged and underprivileged within the Bumiputera population. In eagerness to justify PuTERA35 and not be apologetic about it, the Anwar administration has asserted that the policy does not marginalise anyone and pointed to the welfare benefits received by Malaysians of both majority and minority groups. However, these are misplaced assurances. Instead of invoking a rhetoric of minority inclusion, the Anwar administration should acknowledge Bumiputera preferential policies’ exclusivity and productive potential, while prioritising empowerment for disadvantaged Bumiputeras and extending group-targeted programmes to other communities. The situation calls for a self-aware, coherent and cohesive perspective recognising the preferential treatment at the heart of group-targeted policies such as PuTERA35, which unavoidably excludes non-beneficiaries while also expanding and enhancing group-targeted policies that favour minority groups. Malaysia needs a mindset transformation.

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This is an adapted version of ISEAS Perspective 2025/3 published on 15 January 2025. The paper and its references can be accessed at this link.