Malaysia Uncut

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Koh’s Headache

Penang Chief Minister Koh Tsu Koon (mymalaysia)

Malaysia’s only ethnic Chinese chief minister has a political headache — the state he governs is too much of an economic success.The northern state of Penang, Asia’s first Silicon Valley, is the country’s biggest magnet for foreign direct investment this year and has its lowest poverty rate, the envy of other states.

But for Chief Minister Koh Tsu Koon, there is a racial tinge to the envy surrounding Penang, a state where ethnic Chinese form a very slim majority in a country dominated by majority Malays.

“Such occasions reflect that we have not arrived in complete harmony about race,” Koh, a smartly dressed Princeton graduate, told Reuters in his usual understatement in a recent interview.

He was referring to attacks on his record as chief minister by members of the United Malays National Organisation (UMNO), the dominant party that represents the interests of Malays, who have a centuries-old history of racial tension with ethnic Chinese.

Malays, who see themselves as the native people of the Malaysian peninsula, dominate political power but are generally poorer than the Chinese, who have come to dominate business.

Koh’s UMNO critics say his 16-year-old administration favours ethnic Chinese firms and that economic benefits have not flowed strongly enough to Malay businesses, which rely heavily on state contracts.

Penang, manufacturing hub for high-tech giants such as Intel <INTC.O>, Motorola <MOT.N> and Dell <DELL.O>, drew 3.1 billion ringgit ($871 million) in foreign direct investment in the first nine months of 2006 — just over a fifth of Malaysia’s total.

Koh expects Penang to bring in 4 billion ringgit for all of this year, similar to the 3.9 billion ringgit for 2005.

These are dream numbers for any politician, but Koh is on the defensive. Under fire from Malay critics, he has sought to discuss the issue of more balanced development with UMNO leaders and set up panels to thrash out solutions.

“We should not react. We should look at this coolly. If the criticism is constructive, then it’s valid,” he said.

‘FAMILY QUARREL’

Koh looks and speaks much more like an up-and-coming chief executive than a Malaysian politician, wearing sharply tailored suits, looking younger than his 57 years and lapsing into corporate-style understatement when asked about racial tensions.

“We have maintained a safe, democratic space to talk about this,” he said of the racial debate at his office in Bayan Baru, an industrial area offering views of busy highways and factories.

“In the 1960s, 1970s and 1980s such political statements would have been more fiery and the reaction, worse.”

Koh was alluding to racial violence that erupted in 1969 when Chinese-backed opposition parties performed well in general elections. Officially, hundreds died in riots between Malays and Chinese, but unofficial estimates run into the thousands.

Koh’s own mainly Chinese-backed party, Parti Gerakan Malaysia, was one of the then opposition parties that performed well that year, winning control of Penang state and then opening it up to the West in the 1970s as a low-cost manufacturing base.

Now, Gerakan is part of the national ruling coalition, Barisan Nasional, which is led by UMNO.

Koh likened the present dispute to a family quarrel.

“In a family, brother and sister, husband and wife will quarrel,” Koh said. “There will be differences in opinion within this family but the family should not forget that they have come together for the good of this nation.”

But the quarrel highlights an area of policy that has become an increasing turn-off for foreign investors, who would prefer state contracts to be awarded by competitive tender rather than handed out to unknown Malay businesses by affirmative action.

“The decrease in investor interest is the danger and trade-off that officials might have to consider if Penang hands out contracts to Malay firms. But this is the perennial tension in the Malaysian economy,” said Singapore-based regional economist David Cohen of Action Economics. ($1 = 3.546 Malaysian ringgit)

Source: Reuters

Thursday, January 11, 2007 - Posted by | Commentary, Economy, Issues, News, Politics

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