Malaysian PM Najib entrenches race-based policies

KUALA LUMPUR - Malaysia's Prime Minister Najib Razak announced steps on Saturday to further boost the economic participation of the ethnic Malay majority, entrenching race-based policies seen as shoring up Malay support ahead of a key ruling party meeting.

The measures include privatising some government services and granting more government-related contracts to firms owned by ethnic Malays, known as Bumiputeras or "sons of the soil".

Najib faces a possible ruling party leadership challenge next month following a divisive election in May in which the ruling coalition won a majority in parliament but lost the popular vote. His coalition relied on support from the Malay majority to stay in power, compensating for an overwhelming rejection by minority ethnic Chinese voters.

"Najib is burnishing his Bumiputera credentials ahead of the party election so that no one can say that he hasn't thought about their loyalty in the recent election," Ibrahim Suffian, director at independent pollster Merdeka Centre, told Reuters.

Ethnic Malays have benefited from wide-ranging affirmative action privileges since the early 1970s, a policy that critics say has stunted the Southeast Asian country's competitiveness and led to a huge "brain drain" of ethnic Chinese emigrants.

After he took the country's top job in 2009, Najib cast himself as a moderniser who would roll back the privileges that have deterred investment and alienated minority Chinese and ethnic Indians. He has also pledged to base government assistance more strongly on needs than on race.

But those plans have largely failed to advance due to stiff resistance from within the ruling, ethnic Malay United Malays National Organisation (UMNO).

In a live broadcast on national television, Najib said a unit within his own department will start initiatives to identify "selected government services which are viable" to be privatised to Bumiputeras.

Najib gave no other details on the privatisation plan but said more procurement contracts will be handed out to Bumiputeras.

"I want chief executive officers in all government-linked companies to set targets for Bumiputera participation, including procurement by vendors," he said.

He also announced measures to boost entrepreneurship, home ownership and opportunities in education and employment for the Malay majority.

"We are doing what is right and we are doing what is equitable," Najib said after announcing the steps.

Malays, who make up around 60 per cent of the 28 million population, are historically poorer and traditionally live in rural areas. Minority ethnic Chinese, about a quarter of the population, are wealthier and still dominate business.