As Malaysians cheer Kuala Lumpur’s shiny new 21-billion-ringgit (HK$38 billion) metro link, Prime Minister Najib Razak seems to be doing his best to extract political mileage.
But his championing of the project as a success of the government’s ‘Malay first’ policy could prove disquieting for the Chinese investors and firms whose infrastructure projects are seen as crucial to Malaysia’s fragile economy.
At the official launch of the Sungai Buloh-Kajang Mass Rapid Transit (MRT) line last month, the premier sought to paint the completion of the network under budget and on time as evidence that his ruling party’s decades-old bumiputra (sons of the soil) policy – which grants special privileges to ethnic Malays – was paying off.
That appeared to be an effort to win over voters ahead of a general election expected as early as this year – and no later than August 2018. But his words are likely to raise the eyebrows of mainland Chinese investors and construction firms, who are rapidly gaining influence in Southeast Asia’s third largest economy with huge infrastructure undertakings.
The Chinese-led projects are seen as particularly important as the Malaysian economy is still reeling from depressed pump prices and a multibillion-ringgit graft scandal at the state investment firm 1MDB that spooked international investors. The country’s planned railway and port projects will receive up to 400 billion ringgit in Chinese investments over the next two decades, Citi Research said on July 4.
In his speech at the launch event on July 17, Najib said the bumiputra policy was successfully implemented in the MRT project because “only those properly qualified were given the opportunity”.
“We did not give to our cronies,” the 64-year-old leader said, quipping that he was told the new network was superior to the metro systems in Hong Kong, London and New York and “at par with Singapore”.
‘NAJIB’S GIFT TO THE PEOPLE’
Rashaad Ali, a Malaysian politics expert, said “Najib’s statements are to be expected as he shores up support for his Malay core voter base”.
“He is essentially trying to indicate that he takes care of and prioritises Malay interests, using the megaproject of the MRT as an example. Rhetoric from other ministers also indicates the same line of thinking, whereby the people, especially Malays, should be grateful to their government,” said Rashaad, a research analyst at Singapore’s S. Rajaratnam School of International Studies.
Salleh Said Keruak, the information minister and a key Najib ally, had said soon after the MRT was launched that the project was “a gift from the prime minister to the country”.
The bumiputra policy – in place since the early 1970s – offers wide privileges in business and education to ethnic Malays and tribespeople in Borneo, who together make up some two thirds of Malaysia’s population of 31 million.
Najib’s United Malay National Organisation (UMNO) says the policy is necessary to bridge the wealth gap between Malays and ethnic Chinese, which was blamed for violent riots in 1969.
Critics say the UMNO-led ruling coalition uses affirmative action to stay in power through the economic clientelism of a small Malay elite, with little done to transfer wealth to other bumiputras in rural areas.
UMNO’s efforts to assuage the Malays that their interests will be taken care of comes amid rising signs that its keenest rival – an upstart party founded by the former premier Mahathir Mohamad – is fast gaining ground ahead of an election that must be called by August 2018.
Mahathir, 92, quit UMNO and started the Malaysian United Indigenous Party last year after declaring he had lost confidence in the premier, a former protégé, over his handling of the multibillion graft scandal at 1MDB.
Najib has denied any wrongdoing, but US prosecutors last year identified a person referred to as “Malaysian Official 1” – widely thought to be him – as the owner of a private bank account which received US$680 million of funds tied to 1MDB.
With the singular goal of toppling Najib at the polls, Mahathir has joined hands with arch rivals from his 23-year stint as a strongman leader, including the ethnic Chinese-backed Democratic Action Party (DAP). Zairil Khir Johari, an ethnic Malay DAP MP, said Najib was grasping at straws by claiming credit for the MRT and touting its bumiputra credentials.
“I think it’s a bit disingenuous to flaunt the bumiputra policy as ‘doing well’ just because there was 50 per cent bumiputra participation in a project that was completed on time,” the lawmaker told This Week in Asia.
“Firstly, as most conglomerates are either state-owned enterprises or significantly owned by government-linked investment corporations, there are hardly any that could be considered ‘non-bumiputra in that sense,” said Zairil.
“Secondly, shouldn’t completing a project in time be a given and the normal expectation?”
WILL THE CHINESE PLAY BALL?
Observers were split on whether bumiputra companies would be substantially involved in the country’s string of China-backed projects, such as the US$7.2 billion Melaka Gateway port project on its west coast and a US$13 billion high-speed railway on the east coast.
Ong Kian Ming, another opposition MP, said he was “sceptical that large portions” of the projects would be awarded to bumiputra companies.
He said: “Many of these big Chinese companies have enormous excess capacity which they want to utilise in projects overseas. As such, they would not want to release significant portions of these large scale infrastructure projects to local companies.”
Rashaad, the Singapore-based researcher, said he did not expect the Malay-first infrastructure policy to be a hindrance to the China-linked projects.
I do not expect them [the Malaysian government] to go out of their way to implement a pro-bumiputra policy, and if they do, bumiputra participation would take the form of companies that were expected to be part of the projects anyway,” he said.
Zairil said “the question is not whether there will be substantial bumiputra participation, but whether these projects will be tendered out competitively and whether Malaysians will get value for money”.
Proponents of Malaysia’s affirmative action policies say making exceptions for the Chinese firms could hurt the country’s relative ethnic peace. For now, major projects like the Melaka Gateway have local partners that are made to adhere to bumiputra quotas, instead of the Chinese firms.
“It’s hard to shake off the impression that the Chinese do not fully appreciate the delicate balance Malaysia needs to strike on economic opportunities for the various communities, especially the bumiputra,” said Shahriman Lockman, a researcher at Malaysia’s Institute of Strategic and International Studies.
“It remains a steep learning curve, but one hopes that the Chinese will gradually have a more sophisticated understanding of the local context, both in Malaysia and elsewhere in Southeast Asia.”
The next phase of the MRT – stretching 52 kilometres from the current line’s northern terminus in Sungai Buloh to the administrative capital of Putrajaya – has similar “carve out” provisions for bumiputra companies. In his speech, Najib said he hoped the bumiputra companies involved in local infrastructure projects would one day participate in overseas ventures.