Malaysia appears to be steadily approaching the goal of taking its place among the world's developed economies by 2020.
However, the nation needs to open up and embrace its ethnic minorities together with international residents and workers to really advance itself.
The country is increasingly covered with high-rises and luxurious shopping malls including the spectacular Petronas Twin Towers, the world’s tallest buildings between 1998 and 2004. However, officials of foreign businesses operating in the country seem to disagree with the view that Malaysia as an emerging economic force. One thing that they all agree on, is that the country has a major invisible hurdle to clear before achieving the long-cherished goal.
An official at a Japanese firm, which has been operating in Malaysia for nearly four decades, said that the country might look advanced, however, they explained that the country, in truth, was tightly closed when it comes to business on account of its Bumiputra policy.
Bumiputra is a Malay term, meaning “son of the land.” The government implemented economic policies under this thinking during the 1970s, policies that were designed to favor bumiputras — native Malay people and the businesses that they operate. For example, the Malaysian-made Proton Persona compact sedan is currently sold for around $14,566, almost half the cost of Honda Motor’s Civic. The overwhelming competitiveness of the Persona is attributable to the nation’s preferential tax system.
The Persona is alleged to be exempt from almost all excise tax. Usually, an excise tax of 65-105% is imposed upon passenger cars, although the details of the scheme are not publicly available. Some even said that the excise tax on automobiles was originally introduced to promote the sales of the domestic Proton.
Malays represent roughly 60% of the country’s population of 30 million, followed by 30% of Chinese and 10% of Indians.
The current government, led by Prime Minister Najib Razak, strengthened the Bumiputra policy once again in 2013, the year of the last general election. It offers low-interest loans to Malay businesses and nurtures Malay entrepreneurs. The unfair playing field has cooled any motivation for overseas businesses to inject money into the country.
Brain drain is also becoming a more serious issue for the Southeast Asian nation. Competent Chinese and Indian workers, cold-shouldered by the Bumiputra policy, are increasingly giving up hopes for a career in the country and moving to places such as Singapore. According to a World Bank estimate, roughly 300,000 workers left the country in 2010.
It is important to protect a nation’s identity, however, it is also true that Singapore, which has developed ahead of neighboring Malaysia, owes its current success in part to the fact that it made extra efforts to include multiple ethnic groups within their society.