Published February 5, 2009

Another Malaysian businessman calls for change in quota system

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(KUALA LUMPUR) Gamuda Bhd managing director Lin Yun Ling said that Malaysia's ethnic quota system is impairing competition, the second business leader to call for change in as many days as the country seeks to avoid a recession.

'There needs to be a lot of competitiveness and competition instilled in our economy, not just the corporate sector,' Mr Lin said at a seminar to discuss the financial crisis. 'If everything is based on quotas, and merit is discarded, then it will be a long and slippery road down.'

Gamuda is Malaysia's second-biggest builder by market value.

Malays, two-thirds of Malaysia's 27 million population, are given priority in housing, university places, commercial contracts, and company share issues.

On Tuesday, Nazir Razak, head of Bumiputra-Commerce Holdings Bhd, the country's second-biggest bank, said that the policy is impeding investment and growth amid a global recession.

The policy, introduced in 1971 to reduce poverty and address wealth imbalances among ethnic groups, removes competition from everyday life and its implications haven't been fully considered, said Mr Lin.

The main ethnic minorities are Chinese and Indian. An opposition alliance led by Anwar Ibrahim made record inroads into the government's majority at elections last March after pledging to scrap the race-based policy.

Foreign companies must allocate 30 per cent equity to Malays under the policy, known formally as the New Economic Policy. Local companies must allocate a portion of contracts to domestic operators. -- Bloomberg