A Disastrous Social and Economic Development Model

I think it is no exaggeration to say that the ideas in the Malay Dilemma has been the philosophical basis of Malaysia’s social re-engineering and economic model since even before TDM became Prime Minister of Malaysia and it continues to be. 

By batsman

Roughly, the idea is that if the government were to foster and develop a few Malay millionaires, the benefits of economic development would flow down from these dynamic leading-edge drivers to a listless Malay society at large. 

In theory the idea sounds good. The reasons for its acceptance and adoption were also valid. The Malay masses were mired in poverty and economic opportunities were slipping through their fingers owing to backwardness in modern competitive abilities. The Chinese towkays in the meantime were seen as unreliable and unwilling to help without proper incentives. 

In practice, the model never really worked, even though it continues to be trumpeted as Malaysia’s great contribution to developing countries such as South Africa to copy. 

What it did was to create a system of both Malay and non-Malay cronies who hungered for more and more wealth at the expense of the taxpayer and the country’s natural resources while the Malay masses continued to wait in vain to be competitive and become an integral part of a vibrant and energetic society and economy. 

In order to satisfy the demand of Malays to be an integral part of a dynamic economy, the crony system was expanded from a few multi-billionaires to very many millionaires to tens of thousands of small contractors with scant regard for integrity, quality and talent. Inevitably, by its own internal logic, the system created the concept of Ketuanan Melayu, which gives each and every Malay the birth right to be the masters of the other citizens of the country or some other more politically correct interpretation as the situation demands. 

This is not a sustainable system. It is a massive system of subsidies and corruption. Eventually someone has to pay for it and Malaysia’s early advantage in global economics and geopolitics as well as its abundant natural resources were wasted (some people claim to be as much as RM 100 billion but I think it was much much more wasted through lost opportunities and corrupted institutions) by gigantic egos in trying to feed a failing system which is even now pushing the country towards self-destruct mode. 

Rather than merely making the observation that it does not work, I would like to explain why. 

When the government fostered a few millionaires, their economic support remained precisely the government. Malay society was not sufficiently developed at that stage to offer a solid basis for the success of the artificial millionaires. These people could not break away and become independent of the government for their continued success and remained dependent on government grants, contracts, APs and monopolies. The proof of this is the many public laments of top UMNO politicians about the inability of the Malays to wean themselves away from government help, not least by the author of the Malay Dilemma himself. Meantime, Malay society remained badly trained, uncompetitive and backward while the millionaires continued to be supported by and enjoy favours from the government. 

Any attempt of these Malay millionaires to be independent of the government landed them in the laps of the Chinese towkays through joint ventures or alibaba arrangements. 

The Chinese towkays in the meantime were not helping out of the goodness of their hearts. They were as ruthless as the western capitalists but without a well developed system of training successors or handing down their entrepreneurial skills even to their own children. There is a saying among these people that their wealth lasts only 3 generations – the first generation builds up wealth, the second barely maintains it and the third squanders it. They were not any more capable of successfully training their Malay partners than their own children. 

The difference was Chinese society was already able to support and sustain Chinese millionaires. The similar case applies for the Indians. These people were originally immigrants, but they were already being trained by the British the moment they landed to offer services and goods which the very picky and quality conscious British colonials found too expensive to import from England. The open secret is that this training had been going on for at least a couple of hundred years or so and it involved a broad mass of people though the crucible of need. It was not something fast nor was it easy and without terrible sacrifices. The prime example of this phenomenon is the development of Singapore. 

It was still very much a system of everyman for himself, but in order to maintain political support, UMNO had to create the illusion that they were champions of Malays and the way they did it was to offer exclusive benefits and privileges to Malays not enjoyed by the others. 

Unfortunately, this created a second disastrous artificiality. Many Malays became much better off, but not based on own competitive talents and skills or even their own productive efforts, but through special privileges and benefits, even charity. This was a system of massive subsidies and paid for by the taxpayers, the rich natural resources of the country and the fact that at the time, western capital had not many places to go as more than half the world was communist or violently unstable. 

The result of western investment capital pouring into the country was the creation of an illusion of wealth and plenty. This happy circumstance no longer exists as many more countries (mainly the BRIC countries) are now able to absorb not just most of western investment capital but are themselves buying western debts and subsidizing western spending habits. Malaysia is being very quickly marginalized in a major way. 

In order to do its will unimpeded and to crush all opposition, UMNO placed a massive network of sycophants in the civil service, police, judiciary, GLCs and government controlled NGOs. This quickly turned Malaysian institutions into corrupt instruments of greed and oppression and threatens even to turn commercial law into a cat’s paw of UMNO. 

Commercial law functioning efficiently and with integrity is the Holy Grail of foreign investors. Now that Malaysian commercial law is also being compromised (constitutional and criminal law being cynically manipulated and compromised a long time ago), foreign investors and even foreign governments are starting to make complaints about the excesses of UMNO and what they see as unfair privileges and practices being applied to the business environment and sometimes even to their businesses and investments, where before, they enjoyed status and respect. 

UMNO’s hunger knows no bounds. It is turning into a monstrous hydra headed leech sucking all that is good and decent out of the country. In its desperation, UMNO is now not only offering special privileges and benefits to Malays to maintain itself in power, but threatening to take away what the non-Malays and foreign investors have to fund its excesses. I submit that the Allah controversy is a symptom of that tendency. What the Christians and Sikhs have been practicing for ages was banned at the whim and fancy of the Home Ministry with the most ridiculous of excuses. 

I repeat that this is not a sustainable model and we need to pull ourselves away from the brink before it is too late. 

We need to re-start from basics, not blindly try fast-track ways which are not sustainable but which appeal to base emotions. The social and economic basis of the country must be natural, homegrown and strong enough to support its elites. Nationalistic Malays must realize that the basis of their national economy must be built up from the foundations and not fast tracked at the bloated top with special benefits and privileges which only weaken, make dependent and make greedy, not strengthen nor make honorable. Serious nationalists cannot accept such a model of development that is not only artificial but weakens society and corrupts it – just barely sustained by violence and force, short sighted and short term. Only the sinful and the opportunists travel this road. 

General principles are turning into very specific episodes in a frightening way. The first generation of Malaysians built the country into a reasonably wealthy and prosperous nation. The second generation seems barely to maintain this advantage. From most observations and opinions, the current third generation is about to squander it all away in the next 25 years in a most violent, sinful and corrupt manner which will rival those of the worst banana republics.