Malaysia’s affirmative action programme caused harm – and South Africa can learn from it

Malaysia’s affirmative action programme has been a failure on many fronts and provides a glimpse into what is in store for South Africa.

Malaysia introduced ethnicity-based affirmative action as part of the New Economic Policy (NEP) in 1970.

The programme aimed to eradicate poverty and benefit those deemed “Bumiputera,” including the Malay population.

The argument is that the Malays have lower incomes than the Chinese and Indians in the country, who have traditionally been involved in businesses and industries.

Malaysia’s race-based affirmative action resembles the situation in South Africa because it benefits the politically dominant majority instead of a majority group.

The affirmative action policies in Malaysia and South Africa aim to raise the economic status of the majority against economically more advanced minorities.

Fast forward fifty years, and the impact of Malaysia’s affirmative action policies shows what we may face locally.

By 1990, the NEP programme helped to reduce poverty and significantly increase the corporate share ownership of the Malays.

The NEP was then replaced by the National Development Policy, with race-based policies growing in number and significance.

Apart from benefitting a very small minority who have enjoyed superlative gains, it is now widely accepted that Malaysia’s affirmative action program has not benefitted most Malays.

Asian Development Bank economist Jayant Menon said the “affirmative action program has failed its focus group while marginalising everyone else in the process”.

“Rather than increasing social cohesion, it has contributed to disunity,” he said.

“As a result, Malaysia’s skilled labour and capital have tended to migrate overseas, compounding the costs of affirmative action.”

Renowned economist Thomas Sowell, who studied the impact of affirmative action worldwide, shares Menon’s views.

Sowell said the result of affirmative action is that a large number of qualified and high-earning Chinese left Malaysia, taking their capital with them.

One of the reasons is that Chinese children struggled to get into universities even though they achieved better grades.

Sowell highlighted that only 5% of Malays benefitted from the affirmative action programs, and those who were most fortunate before the programs were introduced benefitted the most.

Although the blow from affirmative action was softened in Malaysia by strong economic growth due to oil and becoming an industrialised nation, it still has significant negative consequences.

The negative effects have moved into political discussions, with former Prime Minister Mahathir bin Mohamad criticising the system.

“The protection and privileges accorded by the NEP [affirmative action] may weaken the Malays further by lulling the next generation into complacency,” Mohamad said.

Former economic affairs minister Azmin Ali added that “economic policies should not be based on race, but on needs instead.”