Malaysia's Bumiputera Empowerment regime and South Africa's BEE: foundations, experiences, and lessons

Abstract:Malaysia's experience in economically empowering the Bumiputeras, the country's ethnic majority, provides useful reference points for South Africa's BEE. Important systemic elements must be noted, particularly Malaysia's executive-driven, centralised, discretionary and quota-based administration, which contrasts with South Africa's more legislative, decentralised, codified and target-based interventions. Nonetheless, commonalities have surfaced between the two countries in the past decade, with Malaysia increasingly focused on active ownership and dynamic SME development, after decades of myriad interventions and under-performance in these policy spheres. This paper proposes four main applications for South Africa. First, in view of considerable incoherencies in contemporary policy discourses in Malaysia, it is imperative to clearly and systematically formulate an empowerment framework that subsumes education, employment and enterprise and that reinforces group-targeted empowerment by focusing on upward mobility and capability development. Second, higher education must be accorded priority to ensure availability of skill and talent. Third, SME development and entrepreneurship should emphasise broad-based ownership, effective control and productive outcomes. Fourth, the experiences of Malaysia's government-linked companies hold out lessons for South Africa's state-owned companies, given the significant parallels in structure and strategic importance.