"Rent-seekers" or real capitalists? : the riddle of Malaysian capitalism

Abstract

This study argues that the nexus of business, politics and the state which has been central to the capitalist upsurge in Southeast Asia (McVey, 1992:9) has also been central to the rise of Malay capitalism and the transformation of Chinese business in Malaysia. That nexus is intimate in Malaysia where the government through the New Economic Policy (NEP) has sought to create a Malay commercial and industrial community, in short Malay capitalists. In the process of creating Malay entrepreneurs the study shows how just as the boundaries between business, politics and the state became blurred in the Malaysian context there, as indeed elswhere in Southeast Asia, it is no longer easy in many cases to distinguish between “rent-seeking” and true “productive” capitalism, between pariahs and entrepreneurs or between patrons and clients. But from this amalgam what sort of capitalism and capitalists have emerged in Malaysia? To throw light on the character and strength of Malaysian capitalism answers are sought to two questions. First: Has government manipulation created new sources of entrepreneurship or only fostered rentiers? The study identifies the complex interaction between the state, party [UMNO] and business as the source of dynamism or defeat in the development of Malay capitalists. It argues that significant changes are taking place in those relationships, while at the same time more Malay groups are developing a greater independence of patronage - changes that suggest it is imperative we keep our view of the nature of Malay capitalism open to revision. But, just as the growth of Malay capitalism is more variegated than generally supposed, so this survey of Malaysian capitalism also seeks to illuminate the change and transformation occurring among Chinese business groups. So the second question addressed is: Have Malaysia's political circumstances trapped Chinese businessmen in dependency relationships similar in kind if not degree to Riggs' pariah entrepreneurs? After a survey of Chinese business groups the study finds that analyses in the 1980s which have described the relationship between the state and Chinese [as well as foreign] capital as discrete entities and in antipathetical terms, no longer seem appropriate to the more complex and complementary character of those categories in the 1990s. At a general level this survey also challenges a common view that Chinese capital is completely different to Malay capital. There are differences, but increasingly there are important points of similarity in the manner of their growth, their relations with the state and the UMNO leadership, and their credentials as capitalists. Overall the study argues against drawing sharp contrasts between dependency and self-reliance, between state and capital, and between rent-seekers and true productive capitalists. For it is from that amalgam of categories and groups that this study shows a form of capitalism emerging in Malaysia which is nonetheless remarkably dynamic, vibrant and resilient despite its ‘unorthodox’ origins, and already well integrated into the increasingly complex product cycles and investment patterns of the rapidly growing Asian region.