Malaysia's deputy PM calls for merit-based policy

KUALA LUMPUR, Sep 4 (Reuters) Only deserving ethnic Malays should receive government help under Malaysia's affirmative action policy, the deputy prime minister said today.

Malaysian affirmative action, also known as the Bumiputera (''sons of the soil'') policy, is aimed at improving the economic well-being of the majority Malays by giving them preference in education, jobs and business.

But the policy, borne out of bloody riots between poor ethnic Malays and generally wealthier Chinese in 1969, has come under criticism from many who say it has only benefited the Malay political establishment and its cronies.

''I, for one, would like to see only deserving Bumiputera get help,'' Najib Razak told a business forum in the Malaysian capital.

''There is a tendency for us to dish out help to those whom we know, as opposed to those who are really competent. So the next 50 years, a more effective model would be to help those who really have the competence.'' In 1969, Malays made up half the population but owned barely 2 per cent of the nation's corporate equity. Malay ownership has since climbed to about a fifth -- and one unofficial estimate puts it as high as 45 per cent.

But the wealth gap between Malays, who now make up about 60 per cent of the population, and ethnic Chinese (a quarter), remains big. Chinese corporate equity is double Malay equity and Chinese household income outstrips Malay income by 64 per cent.

REUTERS PD BST1930