How to keep Asia's melting pots from boiling

This is a story about affirmative action, Southeast Asian style.

Throughout the region, it's generally a good thing to have Chinese forebears. Odds are you'll be better educated and more prosperous than your non-Chinese neighbors. But you may also be the object of envy and prejudice.

In times of turmoil - which is what the ongoing economic crisis has brought to many parts of the region - those sorts of feelings can engender violence. This year, mobs in Indonesia have attacked Chinese homes and businesses repeatedly. Many wealthy Indonesian Chinese have fled their country, or at least made preparations to do so. But they have only to look to the smaller nation to the north to realize that ethnic or cultural differences don't have to mean discord.

"It's always been better in Malaysia," says Alexander Irwan, an ethnic Chinese publishing executive who lives in the Indonesian capital of Jakarta. That is because Malaysia has aggressively worked to even out the differences between the groups in its society, while Indonesia has not.

Perhaps as a result, Indonesia's period of turmoil has included instances of violence along ethnic and religious lines. Malay-sia so far has not seen intergroup tension, although it has not suffered as much as a result of the economic crisis. To hear ethnic Chinese in both countries tell it, being on the losing end of affirmative action can be a lifesaver.

Sitting in an armchair in his plush, high-rise office in Kuala Lumpur, the Malaysian capital, David Chua considers the deadly anti-Chinese riots that occurred in Indonesia in May. "What happened in Jakarta convinced me that we have been very successful in providing an alternative.

"I am not saying I wholeheartedly supported the system," he adds, since it has meant discrimination against him and many other Malaysian Chinese. "But it's a system that has worked."

Despite similarities in language, culture, and political and economic philosophy, any comparison between Indonesia and Malaysia has its risks. Indonesia is a vast nation of more than 200 million people spread over more than 13,000 islands. The Chinese minority is tiny, about 4 percent of the population. But some of its members are the wealthiest people in the country.

Malaysia has a population one-tenth the size of Indonesia's. Its people are much more evenly divided according to origin: just over half are indigenous Malays, less than a third have ancestors in China, and the rest are descended from Indian immigrants. In recent decades, Malaysia has become much more middle-class than Indonesia, where half the population still farms for a living.

Mostly getting along

For the most part in Malaysia, people of different backgrounds can get along. "Today you can have a conversation with an educated Malay, much more than before," says Mr. Chua, group managing director at HLG Capital, the financial subsidiary of a Chinese-owned conglomerate. "That has allowed the society to integrate."

His comment may sound condescending, but his point is solid. Malaysia's "New Economic Policy," officially in effect from 1971 to 1990 but in some ways still in force, emphasized education of Malays so they'd get good jobs and start businesses. Spurred by race riots in 1969, the policy sought to correct legacies of British rule which ended in 1963.

Under the British, Malays were peasants or civil servants, Indians worked as plantation laborers or in the professions, and the Chinese ran businesses. The NEP set out to eradicate poverty and remove these distinctions, mainly by promoting Malay employment, education, and business ownership. The inevitable byproduct - as in the decision to make Malay the national language - was discrimination against Chinese and Indians.

The NEP "discriminated in favor of Malays and against non-Malays non-Malays believed they were treated as second-class citizens," writes Australian political scientist Harold Crouch, in his 1996 book, "Government and Society in Malaysia."

Several factors aided the NEP. One was that many businesses and plantations were foreign-owned at the end of the 1960s. Companies and land could be redistributed or sold to Malay owners without expropriating Malay-sian-Indian or Malaysian-Chinese property. Another was Malaysia's long period of high economic growth. Finally, the government was willing to use repression and other controls to maintain stability and keep the NEP on track.

That last point represents the crucial distinction from affirmative action programs attempted in the West. In Malaysia, a politically empowered but economically disadvantaged majority - the Malays - set out to wrest some of the wealth and opportunity from more advanced minority groups. "What it's created is a large Malay middle class," says an economist at the government-backed Institute of Strategic and International Studies in Kuala Lumpur. For Malaysian Chinese and Indians, the NEP meant sending children overseas for higher education, being forced to include Malay partners in business enterprises, and keeping one's head down. They have also had to put up with crony capitalism and a sense of entitlement among Malays.

A trade-off for stability

But if the reward is stability and security, the downsides look bearable to many Indonesian Chinese. "I'm an ethnic Chinese and I'm pressing for affirmative action," says Mr. Irwan. "It means peace and quiet for our children."

Indeed, the Indonesian government is now creating cooperatives that would mainly benefit indigenous Indonesians, allowing the new entities to take over some industries formerly dominated by the private sector.

The problem is that Indonesia today certainly isn't Malaysia 30 years ago - the proportion of foreign-owned capital is much smaller, the country's economy has collapsed, and the people are clamoring for more democracy.

Even so, says Cung Ie, an Indonesian Chinese businessman actively considering where he and his family should move, the government must pursue a policy of integration. "They have to force people to respect each other."