Former Prime Minister Dr Mahathir Mohamad today said that promoting social equity is a crucial for world economic growth, citing Malaysia's success as an example.

Speaking before the annual Philippine Business Conference in Manila, Mahathir said Malaysia's success in closing the gap between wealthy ethnic Chinese and poorer Malays had spurred economic growth while minimizing class and racial tensions.

"On a world scale, we are witnessing today how the greed of the rich is affecting the growth of the world and themselves because of disregard for equity in the distribution of opportunities and wealth between rich nations and poor nations," Mahathir said.

"That, in essence, is what the present interpretation of globalization is about."

He said that "achieving growth is relatively simple when the question of equity is ignored" but warned that this would soon result in class and even racial tensions as the gap between the rich and poor widened.

Mahathir, who retired in October after 22 years in power, cited the experience of Malaysia where race riots broke out in 1969 between the poorer, majority-Malays and the minority ethnic Chinese.

To alleviate this, a coalition government of all ethnic groups was set up and a policy of "affirmative action" was implemented to pull more of the Malays up to the level of the Chinese.

While there is still a difference between the economic status of the ethnic Chinese and the Malays, "the disparity is less than before and therefore, more tolerable."

Learn from us

Thus, during the 1997 Asian currency crisis, "the Malaysians did not blame the Chinese for the recession and did not burn Chinese shops," said Mahathir.

He also cited other measures to promote equity such as taxation of the rich, subsidies to the poor, control of prices of essential goods and promoting labor-intensive industries to create jobs.

At the same time, he warned that wages must stay competitive or workers would start to lose jobs as investment dries up.

Mahathir declined to say which countries could prosper from following Malaysia's example stating instead that if any country wanted to learn lessons from Malaysia, "they are welcome to do so."