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The aim of this essay is to critically assess the notion of multiculturalism in the context of Competition Law in Malaysia – whether the manner in which the [1]Competition Act 2010 [Act 712] (hereinafter referred to as "the Act") is sought to be enforced or adhered to in the Malaysian context, is in fact a state of paradox? Hence, this essay will not state the obvious in terms of the provisions of the [2]Competition Act 2010 itself but rather address the issue as to whether the underlying spirit of the [3]Competition Act 2010 which has been stated to be ‘to promote economic development by promoting and protecting the process of competition, thereby protecting the interest of consumers' is truly capable of achievement in a multicultural / multiracial society that is typically Malaysia.
From the underlying purpose / aim of the [4]Act itself, it is clearly apparent that fair competition is at the heart of its purpose / creation and hence, it is seen to have roots in equitable principles. This has been stated to be from a domestic as well as global perspective. Logically / rationally, it should naturally follow that there must be compliance from a domestic perspective prior to global compliance with [5]the Act, in view of [6]the Act's global application and significance. Hence, in view of the importance / significance of preceding compliance from a domestic perspective, it needs to be analyzed as to whether Malaysia has indeed current domestic policies in place to comply with [7]the Act domestically.
In view of the fact that the facet of multiculturalism of the multiracial nature of Malaysian society may be seen to have an impact on true compliance with the spirit of [8]the Act, having equitable roots in the concept of fairness, it is necessary to first look into the basic meaning of the concept of multiculturalism which has been basically defined on the Web as [9]‘the doctrine that several different cultures (rather than one national culture) can coexist peacefully and equitably in a single country.' Hence, one needs to ascertain if within this sphere of purportedly peaceful equitable existence, the policies formulated by the Government are in fact applied equitably in practice to all ethnic races of people within the society without any form of exercise of discrimination whether expressly or impliedly. This is specifically from the economic aspect as it is concerned with the livelihood of the various races co-existing in such a multicultural / multiracial society. A very pertinent question that needs to be asked is whether at the very core / base of Malaysian society, there is seen to be laws / practices in place that provide equal opportunity without any basis of discrimination to all ethnic races which directly impact upon economic opportunities and hence, consequently fair competition domestically. In this regard, it is relevant to note that by virtue of [10]Article 8 of the Federal Constitution of Malaysia, it enshrines the principle of ‘equality' wherein Clause 2 of Article 8 states: "Except as expressly authorized by this Constitution, there shall be no discrimination against citizens on the ground only of religion, race, descent, gender or place of birth in any law or in the appointment to any office or employment under a public authority or in the administration of any law relating to the acquisition, holding or disposition of property or the establishing or carrying on of any trade, business, profession, vocation or employment."
In reality, however, as the facts would reflect, it would seem that the domestic commercial opportunities in Malaysia are far from being unbiased. This has been clearly stated in a very recent report, the Bertelsmann Stiftung's Transformation Index (BTI ) 2012, a global assessment of transition processes in which the state of democracy and market economy as well as the quality of political management in 128 transformation and developing countries are evaluated. Amongst other issues, the report had stated the following:
[11]‘Market-based competition
With regards to the matter of market-based competition, the BTI report essentially stated that previously there were rules in place giving persons of Bumiputera origin a certain percentage of equity. This situation was seen to have altered to a certain extent wherein the government was seen to lift this rule with regards to 27 services subsectors wherein major ownership minus Bumiputera equity participation was consented to. Apart from this move towards greater fair market-based competition, foreign shareholding in existing stockbroker companies was also sanctioned increase from 49% to 70%. Naturally, this made foreign investors elated as they viewed this as an attempt towards improving the situation of economic competition in Malaysia.
Notwithstanding this positive move, towards the conclusion of 2010, foreign investors grew uncertain about the overall reform of the policies in favour of the Bumiputeras. Upon revelation by the government of the second and final part of the New Economic Model (NEM), it became glaringly evident that the race biased quotas would for the most part, be retained. Foreign investors became keenly aware of the fact that open procurement tenders for government and government-linked companies would not yet be implemented if ever there would even be any prospect of this. Hence, the position as it stands currently is that small government contracts are only available to Bumiputera companies.
The fact of the relative novelty of competition laws, the aim of which is to bar monopolistic set-ups and behavior makes it unpredictable to forecast on the aspects of consistent enforcement. Indeed, the political dynamics of Malaysia where the issue of economic racial bias is concerned may be seen to be highly unpredictable. The passing on 21 April 2010 of the Competition Act 2010 by the Malaysian parliament had the stated objective of deterring large companies from engaging in anti-competitive conduct such as monopolistic cartel-like activities. The Act had become enforceable as of 1 January 2012 when prior to it there was no law in existence to prevent the formation of monopolies and oligopolies alike. The Act has been stated to govern commercial activity within as well as outside Malaysia and this would include government-linked companies. The establishment set-up to enforce the Act is the Malaysian Competition Commission (MCC). The Act purports to impose severe penalties with regards to infringing activities wherein a corporate body may be subject to fines of up to RM5 million for a first offence. The objective of implementation of the Act can naturally be seen as an attempt to create an increasingly fair competition-based economic environment in the Asia Pacific region and is envisaged to streamline Malaysia's laws to be aligned with over 100 other economic jurisdictions internationally.
Anti-monopoly policy
It is clearly obvious that although to some extent foreign trade is seen to have been more liberalized as compared to the situation previously nevertheless much is still to be desired as there still remains many other Bumiputera equity quotas (apart from the liberalized 27 service subsectors) and protectionist policies surrounding main enterprises that drive Malaysia's economy and these desired sectors which necessarily must be open to fair competition are still not within the participating reach of foreign investors.
Strategic Outlook
From a political standpoint as a declared democracy, transformation from a democratic perspective has been seen to be very slow. Even post the global financial crisis of the late 90's era, the inherent setbacks in Malaysia's economic management have yet to be effectively tackled by the political leadership. The BTI report has proposed renewed transformation wherein focus should rightfully be upon three identified integral areas:
First amongst these is the acknowledgment of the need to oppose corruption wherein although some reforms have been implemented by the government such as the Whistleblower Protection Act, these are seen to be inadequate means to fight corruption, a significant problem plaguing the Malaysian economic strive towards achieving fair competition in the economic arena. The dependence of the Malaysian Anti-Corruption Commission (MACC) upon the Prime Minister's office has meant that it continues to exert merely restrictive influence upon anti-corruption investigations. The integral role of the judiciary in its adjudicative functions in the battle against corruption cannot be ignored. This is made difficult by the fact that Malaysia's political leadership is seen to entirely interfere and influence trials and it is further known to have a firm grip over the judiciary. The government, to date, has been reticent about intentions to put in place effective monitoring mechanisms as a guarantee of its commitment to fighting against corruption. Reluctance of foreign investors to invest in Malaysia due to the prevalence of corruption is seen and this restraint is not helped by the fact that the Malaysian government perceives international efforts to create a system of checks and balances to be undesired political interference.
In the very recent period between 2009 and 2011, Malaysia has seen increasingly escalating political tensions between the three major races – Malays, Indians and Chinese. The marginalized Chinese and Indian races are now sensing their disadvantaged positions in Malaysian society and are seen to be increasingly open about opposing this discriminatory treatment. On the other extreme, the Malay Muslim majority population are concerned that ending the Bumiputera affirmative action policy would signal a threat to their privileged economic position under the said policy. Extremist Malays are seen to fervently oppose any change to their standing thus far in terms of the preferential special rights of the Bumiputera. Notwithstanding all these challenges, the BTI report firmly stresses that Malaysia must be rid of this racially-biased Bumiputera affirmative action policy which does nothing but encourage rent-seeking attitudes amongst the Malay race (an acknowledgment of the cripple mentality wherein they are perceived to require crutches in order to compete at any level with the other ethnic races), stifle competition and promotes corruption. Hence, the BTI report advocates that change of the pro-Bumiputera policies should be Malaysia's highest priority as necessary to dissipate ethnic tensions and consequently achieve a competitive economy.
The third element for reform identified by the BTI report pertains to the Malaysian education system which the report finds as lacking as improvement in the standard of education is in order to achieve a commendable workforce. The report stipulated that although public expenditure in education at 4.5% of GDP in 2007 was noted to be comparatively high, nevertheless the quality of public universities is low along with the achievement rates at the secondary and tertiary levels. Singapore, Malaysia's neighbor is seen to far supersede Malaysia from statistics that evidence Malaysia's 372 researchers per million residents as compared to Singapore's 5,736 researchers in 2006. Hence, in order to compete more effectively, the BTI report suggested that Malaysia would need to invest more in education and research sectors as only a highly skilled and soundly educated workforce would aid Malaysia in attracting foreign investment which is crucial in view of Malaysia's low level of private sector investment.'
The fact remains that in spite of [12]Article 8 of the Federal Constitution of Malaysia which enshrines the principle of ‘equality' (wherein if actually adhered to all ethnic races in Malaysia would be able to compete fairly on the basis of meritocracy), there exists a state of paradox in the form of [13]Article 153 of the Federal Constitution which confers a special position for Bumiputeras wherein [14]the Article postulates that there will be established quotas for Bumiputeras where federal trade and the issuance of business licences are concerned. As a direct result of these special economic privileges conferred upon Bumiputeras, other ethnic races of non-Bumiputera origin are increasingly seen to be marginalized due to unfair economic practices wherein Bumiputeras are currently seen to monopolize several key industries in Malaysia such as oil and gas, banking, insurance, plantations, motor vehicles, taxis, rice etc.. The manner in which these monopolistic practices are perpetrated by the Bumiputeras is to almost entirely exclude any kind of competition / participation from ethnic non-Bumiputera races. How can there be any form of fair competition on an unequal economic participating stage? Indeed, these overt discriminatory practices purportedly sanctioned by the Federal Constitution of Malaysia wherein these are seen to promote the exclusive economic interests of the Bumiputeras on a domestic front are seen as a cause of concern in relation to foreign investment locally. This is clearly and evidently reflected in an article by Chong Pooi Khoon dated 20 October 2011 which had been posted on Bloomberg wherein under the topic of ‘Growth Impediment', the following statements had been made:
[15]‘The U.S. Department of State said that Malaysia's "complex network of preferences" to promote the acquisition of economic assets by ethnic Malays and other indigenous groups is a "significant impediment" to economic growth. The country's affirmative-action policy is unique among Southeast Asian neighbours including Thailand, Singapore, Indonesia and the Phillipines.'
[16]"It clearly slows things as many competent people leave Malaysia because of it," said Jim Rogers, the chairman of Rogers Holdings who moved to neighbouring Singapore from New York in 2007. Malaysia should "abolish the policy and open the economy and society to all" to boost its competitiveness among international investors, he said in an e-mail."
Hence, it is seen that these statements, originating from a world economic giant like the United States, should be viewed upon seriously as the racially-biased practices that impede fair competition on a Malaysian domestic front is also seen to affect the prospects of foreign investment locally and hence fail to realize the purpose or aim of competition law itself. One may confidently postulate, as is clearly evident from the information collated in this essay that multiculturalism from an economic standpoint in a multiracial society that is uniquely Malaysia has negative repercussions in the sense that due to the disparity in competencies between the majority ethnic Bumiputera race and the minority non-Bumiputera ethnic races, it has necessitated the formulation of racially-biased policies to ensure that the Bumiputera race does not lag behind in the country's domestic economic sphere, hence, resulting in an unequal economic participating field. It is further rather pathetic to note that in spite of all the ‘special privileges' accorded to the Bumiputera race, they have consistently recorded many failed large business ventures due to inefficient management that required Government aid for bailout and hence a great drain of existing funds/ wealth of the country. This is a clear indication of the manner in which monopolistic practices can cripple a country's economic welfare.
In view of the fact that it has thus far been established that there cannot be fair competition in Malaysia from a domestic perspective in view of the existence of [17]Article 153 of the Federal Constitution that in essence creates the stage for unfair competitive practices to thrive based upon racially biased practices that in effect exclude almost entirely the participation of the minority races in key economic sectors, it is therefore postulated that this could in turn severely impact upon international trade as well as there would necessarily be a connection between the two spheres of trade. It is further propounded that it would be premature to simply seek to apply the tenets of competition law based upon the literal wording of the provisions of the [18]Competition Act 2010 without giving effect to the spirit of [19]the Act itself which propounds fair competition in every aspect and essence of the principle of fairness. Hence, the author of this essay concludes by posing the question, can fair competition exist in a heterogeneous society where two sets of rules / practices apply to two separate classes of society where economic advantages are concerned and further where there is bound to be a monopolistic grip of the economy as a consequence of this disparity? At this stage, it is quite obvious that Malaysia is not ready to embrace a culture of fair competitive economic practices that apply fairly to all its citizens regardless of race / ethnicity, in line with the vision of competition law. This may ultimately cause Malaysia to lag behind in the world economic sector as compared to its contemporaries which are applying competition law in accordance to its spirit and aim. It is hoped that globally enforced laws that promote fair play such as competition law will ultimately compel Malaysia to rid itself of a culture that violates the notion of fairness in competition to the detriment of its own future economic welfare from an international perspective.
[1] Competition Act 2010 [Act 712]
[2] Competition Act 2010 [Act 712]
[3] Competition Act 2010 [Act 712]
[4] Competition Act 2010 [Act 712]
[5] Competition Act 2010 [Act 712]
[6] Competition Act 2010 [Act 712]
[7] Competition Act 2010 [Act 712]
[8] Competition Act 2010 [Act 712]
[9] http://wordnetweb.princeton.edu/perl/webwn?s=multiculturalism
[10] Clause 2 of Article 8 of the Federal Constitution of Malaysia
[11] Bertelsmann Stiftung's Transformation Index (BTI) 2012
[12] Article 8 of the Federal Constitution of Malaysia
[13] Article 153 of the Federal Constitution of Malaysia
[14] Article 153 of the Federal Constitution of Malaysia
[15] Bloomberg.com: Malaysia Losses From Racial Law Exposed dated 20.10.2011: By Chong Pooi Khoon: http://www.bloomberg.com/news/2011-10-19/malaysia-losses-from-racial-law-exposed-by-foreigners-in-penang.html
[16] Bloomberg.com: Malaysia Losses From Racial Law Exposed dated 20.10.2011: By Chong Pooi Khoon: http://www.bloomberg.com/news/2011-10-19/malaysia-losses-from-racial-law-exposed-by-foreigners-in-penang.html
[17] Article 153 of the Federal Constitution of Malaysia
[18] Competition Act 2010 [Act 712]
[19] Competition Act 2010 [Act 712]
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