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Identities, Conflict and Cohesion Programme Paper 6: Managing Ethnic Relations in Post-Crisis Malaysia and Indonesia: Lessons from the New Economic Policy?

6 Sep 2004

  • Author(s): Khoo Boo Teik


In Indonesia the financial crisis led to economic collapse which, in turn, catalyzed the popular movement, Reformasi, which ended Suharto’s hold on power. The crisis brought in its wake eruptions of ethnic violence. These outbreaks have been extremely complex in their causes, flashpoints and antagonists. Some have been so severe that, together with the secessionist battles in Aceh and Irian Jaya, they have been interpreted as signs that the state may disintegrate.

In post-crisis Malaysia, in contrast, political contention has been generally free of ethnic tension, and particularly the Malay-Chinese one of the past. Instead, a novel politics of dissent, also called reformasi, emerged around an opposition coalition of parties and groupings that are remarkable for their diverse ethnic partnership, religious affiliations and ideological commitments.

Some argue that post-crisis Malaysia avoided interethnic recriminations because of the socially and politically beneficial effects of its massive affirmative action programme, known as the New Economic Policy (NEP). Extrapolating from that, it has been argued that post-crisis Indonesia requires some variation of an 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 shows that it was never exclusively restricted to ethnicity and ethnic relations. NEP encompassed 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. While it was seen as “ethnic” in conception, its implementation and subsequent adjustments radically recomposed the class structure of society, altered the balance of power between various 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 interethnic tension? This paper provides answers to such questions with the goal of contributing to a deeper understanding of ethnic conflicts in the two countries.

Khoo Boo Teik is Associate Professor at the School of Social Sciences, Universiti Sains Malaysia.

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