By Niluksi Koswanage
PENANG, Malaysia, March 11 (Reuters) – The newly elected opposition took power in Malaysia’s industrial heartland on Tuesday and immediately said it would kill one of the nation’s sacred cows — affirmative action for majority ethnic Malays.
“We will run the government administration free from the New Economic Policy that breeds cronyism, corruption and systemic inefficiency,” said Lim Guan Eng, whose Democratic Action Party (DAP) took control of Penang state after the weekend’s watershed elections and was sworn into office on Tuesday.
The four-decade New Economic Policy (NEP) policy is aimed at eradicating poverty through redistribution of wealth in favour of ethnic Malays and indigenous people. Malays, whose politicians dominate the ruling national coalition, receive preference in state contracts, jobs, university seats and financial assistance.
But many Malays say the plan has strayed from its original aim of fostering economic competition and is enriching a small elite, while rural Malays live hand-to-mouth in wooden huts.
In Kuala Lumpur, de facto opposition leader Anwar Ibrahim also took aim at the “Bumiputra” (sons of the soil) policy and said the five states where the opposition has come to power would review state contracts if they were not awarded transparently.
“We consider the NEP is obsolete,” Anwar told reporters.
“I always say the NEP benefits the few family members of the ruling establishment and their cronies. So we stop this practice of awarding tenders, projects and privatisation to family-related companies and cronies only at states where we are in charge.”
Affirmative action will be used to protect the interests of “the Malays, the poor and the marginalised” but has to be transparent, he added.
The government’s policy of favouring connected local firms has also been widely criticised abroad and has been a key stumbling block in five fruitless rounds of talks with the United States on a free trade deal.
Many in the country’s large Chinese and Indian minorities, meanwhile, have criticised the policy as unfair.
Acting Law Minister Nazri Aziz said Penang and the other opposition-ruled states did have the power to scrap the NEP.
“It’s the Penang government’s prerogative,” he told Reuters.
“Anything to do with federal government projects, which come under our jurisdiction, then the NEP applies. But if it is a state government jurisdiction, then it’s up to them.”
SOMBRE CIVIL SERVANTS
Malaysia’s politics of patronage, whereby state contracts are given to businesses aligned with ruling-party interests, has nurtured a powerful political-business establishment and contracts are often awarded without open, competitive tenders.
The Edge Financial Daily said in an editorial on Tuesday that cronyism was a major issue in Saturday’s election.
“Indeed, one can say that one reason why the people voted so strongly for the opposition in the elections is to send a message that they have had enough of political cronyism and awards of contracts and deals to politically connected companies,” it said.
Anwar’s People’s Justice party won 31 seats in the 222-member National Parliament, the most of any opposition party, and will share power in four of the five state governments now under opposition control.
The National Front coalition won the most seats, but lost the two-thirds majority it has enjoyed almost without interruption since independence in 1957, a stunning slap in the face to the prime minister, who had won 90 percent of the seats in 2004.
The strongly Islamist Parti Islam se-Malaysia (PAS) will lead or share power in four states, including three — Kedah, Perak and Kelantan — that share borders with Thailand, which has been battling an Islamic insurgency with historical links to Malaysia.
The election aftermath spooked the markets. Malaysian shares were up 2.7 percent at 0700 GMT Tuesday after plunging 9.5 percent on Monday, wiping out some $30 billion in market capitalisation, probably the biggest single-day loss in the market’s history.
Analysts called the Tuesday partial recovery a short-lived rally, given the uncertainties ahead.
Prime Minister Abdullah has a tricky task in fending off challenges, especially with his UMNO party, the dominant coalition partner, set to hold leadership elections in June.
He also needs to fill gaping holes in his cabinet, after four ministers lost seats in the weekend election.
The winning opposition parties also face a delicate task. The Chinese-dominated DAP has long harboured deep suspicions about the Islamist agenda of PAS, which advocates Islamic law for Muslims, including punishments such as stoning and amputations.
In their first test, the DAP, PAS and People’s Justice party were hammering out power-sharing arrangements on Tuesday in Kedah, Perak and central Selangor state. PAS kept power in Kelantan state and its government was to be sworn-in later on Tuesday.
