Malaysian Chinese May Abandon Prime Minister Najib as Fear of Riots Repeat Ebbs

Malaysian Chinese May Abandon Najib as Fear of Riots Repeat Ebbs

Malaysian businessman Stanley Thai says he’s joining thousands of fellow ethnic Chinese citizens in abandoning support for Prime Minister Najib Razak and voting for the opposition for the first time in elections next month.

“Why are the Chinese against the government — it’s simple,” Thai, 53, owner of medical glove-maker Supermax Corp. (SUCB), said in an interview last month. “We don’t want our children to suffer what we suffered, deprived from education, from career opportunities, from business opportunities.”

Chinese, who make up about a quarter of Malaysia’s population, are growing intolerant of affirmative-action programs for Malays propagated by Najib’s alliance of parties, the most recent national poll indicates. Any mass defection by Chinese voters raises the risk of the ruling coalition’s first election loss since it was formed after 1969 race riots.

The violence of 1969 helped persuade many Chinese to back Barisan Nasional, which Najib has led since 2009, as they accepted racial preferences for Malays as the cost of peace. Thai said thinking changed when the government’s electoral take sank in 2008 with little sign of renewed social unrest. “Everyone said, ‘Wow, the time has come,’” he said.Vision Contest

Now, the opposition, led by Anwar Ibrahim, sees the end of race-based policies that have hindered companies such as Supermax as key to long-term economic growth. Najib counters that his gradual reform of the affirmative-action programs will assure stability and avert a slide in stocks and the ringgit that would accompany any opposition victory.

“It’s a contest ultimately about visions — do you believe the country is Malay-centered or a state of all its citizens?” said Clive Kessler, emeritus professor at the University of New South Wales in Sydney, who has studied Malaysian politics for half a century. “Najib no longer has adequate non-Malay support,” said Kessler, who estimates the ruling coalition must win about two-thirds of Malay votes to stay in power.

About half of Malaysia’s 29 million people are Malays, while roughly a quarter have Chinese roots and the rest are mostly ethnic Indians or indigenous groups. One in five ethnic Chinese think the country is headed in the right direction, compared with 75 percent of Malays, according to a February survey by the Merdeka Center for Opinion Research, the most recent available.

Anwar’s Group

In 2008, the ruling 13-party Barisan Nasional coalition won by its slimmest margin since it was formed, with three Chinese parties losing half their parliamentary seats. Anwar’s own multi-racial coalition, which includes a Chinese-majority party and a mostly Malay party that advocates Shariah law in criminal matters, has pledged to eliminate race-based policies to fight corruption.

“What we’re seeing with the implementation of the policy is enormous rent-seeking and patronage and corruption,” said Edmund Terence Gomez, a professor at University of Malaya in Kuala Lumpur who edited a book on the affirmative-action program. “The electoral trends clearly indicate that Malaysians are saying they’ve had enough of race-based politics.”

In 1969, Malaysia suspended parliament for more than a year after race riots in the wake of a close election killed hundreds of people. Abdul Razak, Najib’s father, then initiated the racial preferences in 1971 as the country’s second prime minister.

Malay Preferences

The New Economic Policy sought to raise the share of national wealth to at least 30 percent for Malays and indigenous groups known as Bumiputera, or “sons of the soil,” that make up about 60 percent of the population. They got cheaper housing and quotas for college places, government contracts and shares of listed companies.

While Najib has tweaked the policy for publicly traded firms and extended benefits to poorer members of all races, many other elements remain intact. Malaysia favors Bumiputera companies in awarding contracts from the government and state- owned enterprises, the U.S. Trade Representative wrote in a March report.

“We don’t play the racial card — we play a moderate Malaysia, an inclusive Malaysia and we’re talking about power sharing,” Najib said in an April 17 interview. “That’s the kind of storyboard that we are trying to convince the Malaysian Chinese.”

College Rejection

Thai, whose father fled China in 1949 during the Communist takeover, is dubious. After growing up on a farm with 13 siblings in Johor, which borders Singapore, he failed to gain entry to a university where Malays received priority and moved to Canada to get a college degree. On his return, he built a business aimed at exporting rubber gloves to avoid restrictions on selling within Malaysia.

Supermax, the nation’s third-largest medical glove-maker, now exports 24 billion gloves a year, said Thai, whose holdings in the company are worth about $93 million. For years he and other Chinese entrepreneurs were wary of publicly speaking out about corruption in the 42-year-old affirmative action program due to concerns of reprisals.

“We have been brainwashed from Day 1,” Thai said. “We were born and bred with fear and threats by our own government.”

Fear Factor

Mahathir Mohamad, who ruled from 1981 to 2003 and was Malaysia’s longest-serving leader, alluded to those fears in a blog post this month urging Chinese voters in Johor to back the government. An opposition win would undermine the racial balance the Barisan Nasional aimed to achieve, he wrote.

“An unhealthy racial confrontation would replace Sino- Malay cooperation which has made Malaysia stable and prosperous,” Mahathir wrote.

Najib said in last week’s interview that his pursuit of gradual change would avoid the upheaval that engulfed the Middle East after longstanding governments collapsed. An opposition win could trigger “catastrophic ruin” that would cause stocks and the currency to plunge, he warned.

Chinese parties in Barisan Nasional are urging voters to stick with the government to promote social justice and warning that the Malay parties in the opposition will seek to impose Islamic laws. Malays and other indigenous groups owned 22 percent of share capital at limited companies in 2008, compared with 35 percent for Chinese, according to the most recent government statistics.

‘Still Complaining’

“The Chinese feel that the government has not done enough for them, but the same can be said of the Indians and the Malays,” said Wilfred Yap, an official with the Chinese- majority Sarawak United People’s Party, which is part of Najib’s coalition. “They are still complaining that the Chinese still control a big chunk of the economy,” he said, referring to the Malay and Indian populations.

Meantime, Anwar’s alliance is emulating Barisan Nasional’s original formula by promoting policies that seek to unite races and religions, according to Liew Chin Tong, a lawmaker with the Chinese-majority Democratic Action Party, one of three in the opposition coalition.

“They are suffering now because they are now only focusing on the Malay votes,” Liew said in an interview last month, referring to the government. “With Mahathir playing the racist card, they are speaking to only the Malay audience in the hope to push the Malay vote up to 65 percent.”

To contact the reporter on this story: Daniel Ten Kate in Bangkok at

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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