Managing Ethnic Relations in Post-Crisis Malaysia and Indonesia: Lessons from the New Economic Policy?

This paper addresses some of the problems of managing ethnic relations in Southeast Asia subsequent to the financial crisis of July 1997 by comparing the experiences of Indonesia and Malaysia.

In Indonesia, as is well known, the financial crisis led to economic collapse which, in turn, catalyzed the Popular “Reform” Movement, Reformasi, which ended President Raden Suharto’s three-decade “New Order” regime. Indonesia’s economic and political implosion brought in its wake several eruptions of ethnic violence—against the Chinese population, between Christian and Muslim communities in Maluku, and between Dayaks and Madurese in Kalimantan. Instances of ethnic animosity were not unknown during the New Order period, and a few of the more recent outbreaks had occurred just before the crisis in Suharto’s regime. Yet the major post-crisis outbreaks of ethnic violence surpassed previous ones in various ways. The scale of violence was much larger and covered many different geographical locations. They have been extremely complex in their causes, flashpoints and antagonists. And, in some cases, their security ramifications have been so severe that, together with the secessionist battles in Aceh and Irian Jaya, these outbreaks have sometimes been seen as signs that the Indonesian state may disintegrate.

In contrast, and barring low-level controversies over certain issues, political contention in post-crisis Malaysia has been generally free of ethnic tension, and particularly Malay-Chinese tension, which had so overshadowed past politics. Instead, a novel politics of dissent, also popularly called reformasi (after the Indonesian experience), has emerged around an opposition coalition of parties and groupings that are remarkable for their diverse ethnic partnership, religious affiliations and ideological commitments. It is not yet certain how successful this movement will be, but it has already tried some bold experiments in alternative forms of interethnic cooperation.

In short, it seems paradoxical that Indonesia, which was not usually thought to exemplify a state with deep interethnic problems, suffered major outbreaks of ethnic violence in several re-gions of the country, whereas Malaysia, which has been typically seen as an ethnically divided society, maintained stable interethnic relations.

Among other things, this stark contrast in outcome has led some politicians and analysts in Indonesia and Malaysia to argue that post-crisis Malaysia avoided interethnic recriminations because of the socially and politically beneficial effects of its massive affirmative action pro-gramme, known as the New Economic Policy (NEP). Extrapolating from that, some observers have suggested that post-crisis Indonesia requires some variation of a Malaysia-style NEP to avoid or minimize ethnic tensions.

Without dismissing some of NEP’s underlying, more generalized principles about an equitable interethnic distribution of wealth via affirmative action programmes, this paper suggests that Malaysia’s NEP was never exclusively restricted to ethnicity and ethnic relations. NEP encom-passed state policies that affected ethnic identities, interethnic power sharing, and an ethnically targeted distribution of developmental benefits, but was not confined to these issues alone.

In its heyday, NEP provided an overarching policy framework that presupposed high capacities for policy making, determined state economic intervention, bureaucratic regulation, and modes of governance generally associated with the East Asian developmental state. In addition, NEP coincided with certain developments in the global economy, such as the new international divi-sion of labour linked to the internationalization of manufacturing production. Consequently, while NEP was commonly seen as “ethnic” in conception, its implementation and subsequent adjustments radically recomposed the class structure of Malaysian society, altered the balance of power between different economic and social groupings, and entrenched the role of the state in the economy.

Can this massive programme of social engineering be replicated in post-crisis Indonesia under global and domestic economic and social conditions that are different from those that Malaysia faced when it pursued NEP in earnest between 1970 and 1990? To what extent did NEP’s effects reduce—or periodically intensify—interethnic tension? If some variant of NEP can be useful for managing interethnic tensions, which might that be? And finally, what differences in levels of state capacities for managing the immediately destabilizing consequences of the July 1997 crisis accounted for the starkly contrasting outcomes for ethnic relations in Indonesia and Malaysia? This paper provides some answers to these questions with the goal of contributing to a deeper understanding of ethnic conflicts in the two countries.