Thursday, March 19, 2009

Father’s Racial Policy May Be Najib’s Undoing at Malaysian Helm

Father’s Racial Policy May Be Najib’s Undoing at Malaysian Helm
20 Mar, 2009

Najib is also burdened by allegations from a private investigator, a blogger and an opposition lawmaker that he is linked to the murder of a woman near Kuala Lumpur in 2006.

By Shamim Adam, Bloomberg

Najib Razak was a teenager when his father, Malaysia’s second prime minister, started a program that gives preferential treatment to the ethnic Malay majority. Days away from becoming leader himself, Najib may find that policy shackles his efforts to revive a faltering economy.

Najib, 55, is running unopposed in elections next week to head the biggest party in the ruling coalition, a sure-fire ticket to the highest office. Business leaders -- including his brother, who runs Malaysia’s second-largest bank -- say the racial program impedes growth just when Najib needs it most.

“He’s got an uphill task ahead of him,” said Azrul Azwar Ahmad Tajudin, an economist at Bank Islam Malaysia Bhd. in Kuala Lumpur. “How he handles the economic crisis and political developments will show us if he has the mettle and staying power to be leader.”

Najib, currently deputy premier, will replace Abdullah Ahmad Badawi, who failed to serve out his term after presiding over the coalition’s smallest election victory since Malaysia’s independence in 1957. Opposition leader Anwar Ibrahim won support from Indian and Chinese minorities in the March 2008 elections after pledging to scrap the race policy, open up the awards of government contracts and cut corruption.

Malaysia may be set for its first recession in a decade. Najib, who is also finance minister, predicts the economy will shrink 1 percent this year at worst. As exports and commodity prices tumble, economists at CLSA Asia Pacific Markets in Kuala Lumpur expect a 5 percent contraction. January’s overseas sales fell 28 percent, while oil is down 52 percent in the past year.

Murder Case

Najib is also burdened by allegations from a private investigator, a blogger and an opposition lawmaker that he is linked to the murder of a woman near Kuala Lumpur in 2006.

Last June, blogger Raja Petra Kamarudin said in a declaration at the Kuala Lumpur High Court that Najib’s wife witnessed the placing of explosives on the victim’s body. Najib called the allegation “garbage” and said he and his wife gave a statement to the police. Najib has denied any connection to the death and declined to comment for this article.

Raja Petra was arrested on Sept. 12 under the country’s Internal Security Act. His wife, Marina Lee Abdullah, said the arrests were for articles that criticized the country’s leadership. He was released from jail on Nov. 7 after a Kuala Lumpur court ruled that his detention was unlawful.

In July, investigator P. Balasubramaniam said at a press conference that Najib had had an affair with the 28-year-old victim. He retracted the allegation a day later and subsequently disappeared, said his lawyer, Americk Sidhu.

Banned From Parliament

This week, lawmaker Gobind Singh Deo was banned from parliament for a year for saying in the chamber that Najib was “involved in a murder case.” Najib’s adviser, Abdul Razak Baginda, was cleared in 2008 of abetting the killing of the woman, with whom the adviser said he had had an affair.

Abdul Razak, Najib’s father, initiated the New Economic Policy in 1971. He was seeking more national wealth for indigenous Bumiputera, the mostly Malay “sons of the soil.” That group, about two-thirds of the population of 28 million, gets cheaper housing as well as priority for college places, government contracts and shares of publicly traded companies.

The 38-year-old policy is a “serious” impediment to competitiveness, and undermines unity and investment, Nazir Razak, Najib’s brother and chief executive officer of Bumiputra- Commerce Holdings Bhd., told reporters last month. The Razaks are ethnic Malays.

Corruption Concerns

Opposition members argue that the affirmative-action program has done more to enrich politicians and their cronies than foster national unity. Sixty-one percent of voters say corruption is the biggest problem for Najib’s United Malays National Organization party, or UMNO, according to a poll last month by the independent Merdeka Center, near Kuala Lumpur.

Najib said in an interview last October that he will gradually remove the program, which aimed to raise Malays’ share of total wealth to 30 percent, and replace it with a needs-based system at an unspecified time. Bumiputeras held 19 percent of corporate equity in 2006, up from 2 percent in the 1970s, according to a government report.

“He might try to buy time claiming that he will scrap the policy once the Bumiputera equity share has been achieved,” said Khoo Kay Peng, an independent political consultant based near Kuala Lumpur. “The main point is the equity share will never be achieved. It is now a political tool and used extensively to grease the gravy train.”

Unemployment Rise

Racial tensions that dogged Abdullah, 69, may escalate on Najib’s watch as unemployment rises in the slowdown, said Azrul at Bank Islam. The government expects the jobless rate in 2009 to increase to 4.5 percent from 3.7 percent last year. The ethnic program forces Chinese and Indians to compete for some jobs after Malay slots are filled.

“People are clamoring for a more level playing field,” Azrul said. “As things get tougher and people lose jobs, that’s a trigger for more social unrest.”

Even as the government spends 67 billion ringgit ($18 billion) on economic stimulus, Lin Yun Ling, managing director of Malaysian builder Gamuda Bhd., told a seminar last month that ethnic quotas may lead Malaysia down a “long and slippery road.” Foreign direct investment may fall 50 percent in 2009, the government forecasts.

About 1 million people emigrated from Malaysia between 1972 and 2007, according to the Democratic Action Party, a member of the opposition coalition.

Come Back Later

“The outflow of the more educated non-Malays has adversely affected Malaysia’s transition to become a more knowledge-based economy,” said Lee Hock Guan, senior fellow at the Singapore- based Institute of Southeast Asian Studies. Lee, a Malaysian who has studied and lived overseas for more than 30 years, plans to return only when he retires.

Anwar, 61, a former UMNO deputy leader, is bidding for power with his multiethnic coalition and courting disaffected Malays. Najib’s National Front coalition lost its two-thirds parliamentary majority and control of five of 12 contested states in 2008 elections.

“Dismantling the New Economic Policy could mean losing the last bastion of support,” said Ibrahim Suffian, director of the Merdeka Center.

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