Malaysia said today it would maintain a policy of preferential treatment for its majority ethnic Malays in a new development plan, but vowed to ensure it would not undermine business dealings.

Deputy Prime Minister Najib Razak said the policy, which includes a targeted 30 percent of corporate equity be held by Malays or "bumiputeras", would underpin the five-year plan to be announced soon.

"There is no shift in terms of what we want to achieve, which is a more balanced and equitable growth in this country," Najib told an audience of business leaders at a conference on Malaysia's 2006 outlook.

But Najib said government "will not take the old approach" in the Ninth Malaysia Plan, a blueprint for development from 2006 to 2010.

"We will take a much more positive look in terms of how we can increase the bumiputera share, but not at the expense of undermining business confidence, or creating more obstacles, or being unfair to the other communities," Najib said, responding to an audience question on whether the policy would be dropped.

Malaysia's population of 25 million people is dominated by some 60 percent ethnic Malays or bumiputeras, with Chinese and Indians the minority races.

Under an affirmative action plan introduced from 1970, Malays and other indigenous groups receive economic, education and other benefits to narrow the wealth gap with the Chinese.

But non-Malay businesses are urging an end to the policy, while Prime Minister Abdullah Ahmad Badawi last year said it had lead to a culture of dependency, with Malay businesses relying on government handouts.

Integrated domestic economy

The former president of the American Chamber of Commerce Nicholas Zefferys said Malaysia's growth had to be driven by an integrated domestic economy, rather than the current "two-track environment".

"One track seems to be more for one race, the other track for another race, the bumi policies versus the non-bumi policies," he told the business forum, outlining prescriptions for Malaysia's economy.

The two "have been necessary and have served Malaysia very well. But in the future there needs to be an integrated, one Malaysian economy," he said.

Najib later told reporters the policy was one of the Ninth Malaysia Plan's "pillars" but indicated businesses would be favoured on merit, rather than connections.

The plan's new approach will "continue our business-friendly approach to ensure that the people given the opportunities are people with proven track records," he said.

Abdullah is expected to announced the Ninth Malaysia Plan by the end of March or early April.