To Modernize, Can Malaysia Move Beyond Race?

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Photograph by Rahman Roslan for TIME

Common cause Malaysia's three major races are reflected in one train carriage

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New and Untested
Najib is convinced the old ways must go. The centerpiece of his economic reform program, introduced in March, is called the New Economic Model (NEM). The plan envisions reducing red tape to encourage more private investment and internal competition, decreasing the state role in the economy and improving the education system to produce more skilled workers. "For us to move up a few notches, we have to address the structural problems," Najib says. "We cannot be in denial." Most of all, the NEM also proposes a major reform of affirmative-action policies to phase out remaining racial quotas and focus efforts on uplifting the poorest 40% of the population — irrespective of race. Says Najib: "I don't want anyone to feel that they've been left out or marginalized."

There are urgent political reasons he feels that way. UMNO, which has ruled Malaysia in coalition since its independence from Britain in 1957, lost ground to opposition parties in a hotly contested 2008 general election, and Najib is faced with the daunting prospect of expanding UMNO's political base outside its core Malay constituency. The NEM is an effort by Najib to turn stodgy UMNO into the party of change and outmaneuver its rivals. Some powerful voices within UMNO are egging on Najib to push his reforms. "We have to be bold and brave to ensure [our] long-term competitiveness," says Khairy Jamaluddin, an UMNO member of Parliament.

Yet Najib has also come under pressure from conservative elements in the Malay community to hold back. "The bumiputra are still lagging behind," complains Ibrahim Ali, president of Malay nationalist organization Perkasa. "If the economy is not balanced, then everything will lead to trouble." As a result, Najib doesn't have full support from an UMNO worried about scaring off Malay voters. Najib's reform program "is a tough sell within the party," admits Khairy. "There will be people who resist the changes."

The split in UMNO reflects the greater divide within the Malay community over the future of affirmative action. Some Malays believe that they still don't possess the skills and resources to contend against Chinese businessmen, making continued affirmative-action policies indispensable. The program "should stay in place and improve," says Rizal Faris, president of the Penang Malay Chamber of Commerce. "What [officials] want to achieve is a level playing field where all parties are able to compete on their merits, but we need to ensure that the Malay community has been sufficiently skilled and pulled up." But others believe the time has come for Malays to step up and compete on their own, without special government aid. Akmal Syahirah, a 21-year-old law student at the University of Malaya, says that affirmative action should be eliminated, even though her family has greatly benefited from it in the past. Her father acquired land to produce palm oil through a pro-Malay development scheme, and her three younger sisters received tuition for extra after-school studies. But now, "I think we need to change," she says. "We can't just let Malays stay in their comfort zone."

Balancing Act
Faced with such contending forces, Najib is trying to please everybody. Affirmative action won't be eliminated entirely under the NEM, but altered to weed out abusive practices, target money where it is most needed and support the most worthy Malay businessmen, all the while trying to open up opportunities for minorities. Najib sees no contradiction in such a strategy. "Affirmative action remains in place, but the way it is carried out would be different," he says. "When it comes to helping the poor and the vulnerable groups, it should be irrespective of race. But there are certain affirmative actions which are still necessary, because the bumiputra are still very much behind and they must be helped. We want to help those bumiputra who are potential winners."

Even as he faces the daunting task of reforming Malaysia, Najib must deal with the domestic and international fallout from the divisive trial of Anwar Ibrahim, the opposition's most prominent leader. In 2008, only months after the opposition's electoral success, Anwar was charged with sodomy, a serious crime in Malaysia. The trial has a déjà vu flavor. Anwar was convicted of sodomy in 2000 (and abuse of power a year earlier), but the ruling was overturned in 2004 and he was freed after six years in prison. Anwar has pleaded not guilty to the latest charge and attacked his trial as a politically motivated attempt to discredit the opposition. The government denies that, saying the courts have a duty to conduct a fair trial. Yet the case has tainted Najib's administration. In a joint essay in the Wall Street Journal, former U.S. Vice President Al Gore and former Deputy Secretary of Defense Paul Wolfowitz wrote that Anwar's trial threatens "all those in Malaysia who have struggled for a freer and more democratic nation."

The biggest test for Najib still awaits. All eyes are watching for the detailed policy prescriptions of Najib's NEM, which could be released in October. Some Malaysia experts expect the final package to be underwhelming. Najib "doesn't have the strength to follow through, whether politically or personally," says John Malott, a former U.S. ambassador to Malaysia. "He's not a transformational figure." Najib insists his critics underestimate him. "I want to transform Malaysia," Najib says. "I want Malaysia to be a 21st century nation and I am determined to do that." Malaysia's future — and new narrative — depends on it.

The article originally appears in the September 6, 2010 issue of TIME Asia magazine.

— with reporting by Liz Gooch And M. Krishnamoorthy / Kuala Lumpur

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