http://www.asiawise.com/mainpage.asp? mainaction=50&articleid=1749

Malaysia's Quotas Proving Costly

By Lynette Ong, AsiaWise

1 Jun 2001 14:30 (GMT +08:00)

In early May, Malaysians kicked off a debate on a once taboo subject -- the country's university quota system which is a kind of affirmative action program for majority Malays.

The debate started when 600 of the country's youngest and brightest -- some scoring 10 straight As in high school exams -- were refused admission to state universities. The nation's young brains were assessed on their school grades, participation in extracurricular activities and -- ethnicity, where they apparently got a failing grade.

This provoked a public outcry because, as it was, more than 7,000 places reserved for Malays went unfilled due to a shortage of qualified candidates who met the minimum requirements. In an unprecedented move, Prime Minister Mahathir Mohamad announced the unfilled places would go to those deserving Chinese and Indian students. But the euphoria quickly evaporated when the education ministry suddenly announced the openings had all been filled by Malay students.

The race-based quota system, the cornerstone of the New Economic Policy (NEP) aimed at reapportioning national wealth in favor of indigenous Malays, was instituted three decades ago. It officially ended in 1990, but was succeeded by other plans aimed broadly at the same goal. Today, 55% of university openings are reserved for Malays, while the remaining 45% are set aside for Chinese and Indian students.

However much the policy may drain cash out of Malaysia, the quota has proven a boon to Australia, which like the UK, is a popular destination for Chinese and Indian Malays denied university at home. Indeed, Australia now calls education a key "export industry."

Discounting the business Australian educational institutions drum up through satellite operations in Malaysia, Malaysians spend a heap down under by our conservative calculations. On average, a Malaysian student spends A$12,000 on tuition fees and another A$12,000 on living expenses. Multiply that by the 16,000 students who go to Australia every year, and the net outflow is 768 million Malaysian ringgit. With about the same number of students going to other countries, including the U.S. (11,500) and U.K., the total outflow doubles to RM 1.5 billion annually.

There are other costs, of course, not least a tertiary education system that putters along instead of roaring at the speed of the country's top students. And the brain drain that starts in school ends up spilling over into the economy, as students who study abroad stay where they are in hopes of finding better-paying jobs. Many of them end up leaving Malaysia for good.

A year ago, a Kuala Lumpur online recruiter welcomed a government initiative to attract IT talent, adding "the brain drain phenomenon is serious." According to the Multimedia Development Corporation, which oversees the government's much-hyped Multimedia Super Corridor, that project alone will require 100,000 knowledge workers in 2005. That projection, admittedly, was published before dotcoms morphed into dotbombs. But filling even half that number without expensive talent and more drain on the national coffers looks difficult, if not impossible.

The government has recently tried to lure some of its talented sons and daughters home by offering tax relief and subsides -- but the calls seem to have fallen on deaf ears.

Though Malay ownership of corporate assets has risen from 2.4% to 19% in 30 years thanks to the NEP and its successors, there is even more of an income gap between those who benefit from the system -- many of whom are well-connected to begin with -- and the vast majority of Malays left behind.

And the educational preference system didn't work much better, at least in the first half of the affirmative action era. According to a 1985 study evaluating government scholarship policy (Mehmet & Yip), Malay students from families of lower income groups (65% of the total) received only 14% of the university scholarships, while the 17% I the top income group received over half of the government assistance available.

Even the Bumiputras, the indigenous Malays, are getting fed up. Thirty years of "molly-coddling" has bred a "back-door mentality", complained a recent editorial in the national Malay newspaper,Utusan Malaysia. The quota system has also led to low morale and compromised academic standards in the institutes of higher learning. "No matter what, there will always be 60% bumiputras. And yet, despite such quotas, local universities still have difficulty filling their science and engineering faculties", writes a Malay intellectual residing in the U.S., Dr. Bakri Musa in his book 'The Malay Dilemma Revisited.'

With traditional support beginning to splinter in the wake of the Anwar Ibrahim controversy and the general malaise overhanging the economy, Mahathir must walk a tightrope -- making gestures to the Chinese to garner votes he will need to win the next election, while pulling back for fear of displeasing conservative Malays who form the grassroots of his ruling UMNO party