New energy policy aims to wean Malaysia from subsidies

Malaysia’s Prime Minister Najib Razak laid out an ambitious plan to modernize and expand the country’s economy and wean it off decades of subsidies and racial-preference laws, but the proposed makeover faces resistance from some of the country’s ethnic Malays, who dominate Malaysian politics. In an interview with The Wall Street Journal, Najib said Malaysia has to make itself a more competitive destination for foreign investment while doing more to encourage talented Malaysians to stay instead of looking for opportunities in Singapore, Hong Kong, the Middle East and elsewhere. To break Malaysia out of what he calls “the middle income” trap, Najib is trying to encourage investment away from low-cost manufacturing into more sophisticated industries by rooting out inefficiencies in the economy. Najib’s two key goals are saving Malaysia US$22 billion a year by eliminating subsidies for goods ranging from gasoline to sugar, and amending longstanding affirmative-action policies designed to help the majority ethnic-Malay population catch up economically with their ethnic-Chinese compatriots. (June 12, 2010)