The five-year Malaysia Plans have tended to get things right as far as the big picture is concerned.  A cursory glance at the recent five-year development plans show an acute sense of awareness on the part of the Government of the general direction in which the economy must move.  It was no different with the 10th  Malaysian Plan (10MP), Dato' Sri Najib Tun Razak’s first since becoming Prime Minister.

The broad thrusts and priorities of the 10MP are sound - spurring private sector economic activity towards a high-income economy, government transformation, inclusive development, fighting for talent and rewarding innovation, among other big ideas.  No one can argue with these priorities.  Even in Parliament, members from both sides of the divide agree that these are sensible strategic initiatives to extricate the country from the doldrums of the mediocre middle that we currently find ourselves in.

Of course, the disagreement will now be on the details and implementation. Is privatising vast parcels of prime land the best way to spur private investment?  Which subsidies do we rationalise first?  Do we need to change the poverty line to better understand increased cost of living and more effectively target those in need of assistance?  These are some questions to which there will be many different views.

But one of the most important aspects of the 10MP that needs to be explained fully is that which touches on affirmative action.  In very simple terms there are three schools of thought about programmes that are associated with the original manifestation of affirmative action in Malaysia – the New Economic Policy (NEP).

One view that I will refer to as the orthodox school will defend affirmative action as sacrosanct, something only a traitor would dare question, and generally promote proposals that call for the same affirmative action programmes to be multiplied and intensified.  There has, of late, been a surge of interest and popularity towards this school of thought as its proponents have been vocal in resurrecting some unfounded insecurities among the Malay community.

The second school of thought is made up of those who are still intellectually and philosophically committed to restructuring the economy so that it’s not divided along ethnic lines, but want to reform affirmative action programmes so they are more effective and reduce leakages and wastage.  I think the Prime Minister belongs to this group based on the adjustments to affirmative action laid out in the 10MP.

The final school of thought favours “creative destruction” or outright demolition.  Many in the opposition belong to this group.  They feel that anything associated with the NEP cannot be reformed and the entire house needs to be torn down and replaced with something that does not eliminate the identification of economic function based on ethnicity or explicitly target economic participation based on ethnicity.

Following the unveiling of the 10MP, the orthodox school and the demolitionists have been the loudest screamers.  The former have claimed success saying that they prevailed over the Prime Minister in ensuring the original form of affirmative action stays alive in the 10MP.  They point to the continued relevance of an explicit, quantitative target for Bumiputera corporate equity ownership as evidence of their victory.

Predictably, the latter also point to the same equity target, among other things, as evidence that the 10MP has departed far and wide from the spirit of the New Economic Model, which gave the impression that merit was the order of the day and assistance would be needs-based regardless of ethnicity.  The neo-liberal financial market and media have sympathised with the demolitionists, questioning the government’s commitment towards market-friendly liberalisation based on the continuation of quantitative targets for Bumiputeras.

Sadly, the reformist school – those who recognise the weaknesses and failures of existing affirmative action programs but are committed to its original objectives – have been quiet, once again leaving the Prime Minister alone in defending his philosophical turf.  I would count myself as part of this school of thought.  And I subscribe myself to this school not without any professional risk attached.

The UMNO Youth leader is traditionally supposed to be the standard bearer for the orthodox movement, rejecting any reforms to NEP-type programmes for fear that this may dilute the government’s commitment towards the Bumiputera community.  But this is a different day and age.  The grim writing is all over our wall of survival.  If we don’t fundamentally change the way we practice affirmative action, it will be the most destructive impediment to our nation’s competitiveness.

We need to accept and support the Prime Minister’s comprehensive revamp in the way assistance will be given to the Bumiputera community.  In a significant departure from the past, socio-economic assistance – including for the Bumiputera community – will be done based on the principles of market-friendliness, needs-based, market-based and transparency.

In addition, the bottom 40% of households based on income are being targeted regardless of ethnicity as a development priority of the government.  In other words, when it comes to the most vulnerable groups in society, assistance will be colour blind and based on genuine need.  When it comes to enhancing Bumiputera participation in the economy, those who are truly deserving will be identified and promoted.

And this is the point of departure between the reformists and the other two schools.  The demolitionists are silent on enhancing Bumiputera participation in the economy beyond basic welfare assistance which they want delivered based on need.  Basic, race-blind assistance is something that the 10MP fulfills, but beyond that it also incorporates measures to help Bumiputeras at the productive stages of the economy.

The orthodox demagogues don’t care for affirmative action being market friendly and transparent.  They have no interest in promoting merit and competition even within the Malay community.  They are more interested in blanket assistance and not in capacity building.  The 10MP clearly provides a direction that is alien to the orthodox DNA debunking their claim that they are responsible for preserving affirmative action as is, in the new development plan.

How policy instruments are ultimately overhauled to ensure the new approach to affirmative action is adhered to remains to be seen.  The rhetoric and sentiment are familiar: eliminate rent-seekers, brokers and commission agents; support only Bumiputeras who are competitive and deserving; reward those with know-how and not know-who; focus more on economic participation rather than dormant equity ownership; build genuine partnerships between Bumiputera and non-Bumiputera businesses as opposed to the Ali Baba-ism that has characterized much of such joint ventures since the 1980s.

The actual implementation requires innovation in policy-making in addition to robust assessment and due diligence to determine and, in some cases, unearth genuine, deserving Bumiputera enterprises that hitherto would not have appeared on the radar screen because they didn’t know the right people.  But more than that, it will require determination in fending off the orthodox choir every time an uncompetitive but well-connected company cries foul based on discrimination when in fact it’s just sheer incompetence that has caused its misfortune.

It also requires clarity and persuasion to convince global investors and the financial markets that the approach adopted towards affirmative action in the 10MP is fundamentally different from the past, without the market distortions, leakages and unproductive rents that have been the hallmark of an era gone by.

Most importantly, reformists must come to the fore to ensure it is we who are screaming the loudest.  Malaysia’s competitive future depends on our philosophical victory.