Feb. 3 (Bloomberg) — Malaysia should review its preferential treatment of majority ethnic Malays as the policy is impeding investment and growth amid a global recession, the head of the country’s third-biggest bank said today.
Interest-rate cuts and stimulus packages will only provide a temporary boost to Malaysia’s economy, said Nazir Razak, chief executive officer of Bumiputra-Commerce Holdings Bhd. and brother of incoming Prime Minister Najib Razak.
“The government should be looking at more than signing big cheques and reducing interest rates,” Nazir told reporters in Kuala Lumpur. “There’s a scarcity of investment. The bargaining hand has shifted decisively to the hand of the investor.”
Foreign companies in Malaysia must allocate equity and jobs to Malays under the 1971 New Economic Policy, designed to alleviate poverty and rebalance wealth among ethnic groups. As the Southeast Asian nation fights to avoid joining neighboring Singapore in a recession, Nazir said the policy is now a “serious” impediment to the country’s competitiveness.
The program includes making Malaysia’s Chinese and Indian minorities pay more for homes, and giving Malays priority for university places.
“It doesn’t take much genius to look at some of the present policies arising from the NEP that are undermining national unity and also investment,” Nazir said.
Bumiputra-Commerce expects bad loans to increase this year, asset quality to deteriorate and loan growth to slow, Nazir said.
Loan growth will weaken to about 7 percent in 2009 from a figure in the “mid teens” last year, he said.
Nazir said he’s prepared to take a pay cut as part of the bank’s cost-reduction program.
Source : Bloomberg