Beyonce’s Bellybutton Is Least of Your Worries
By William Pesek

Oct. 23 (Bloomberg) — As investment barometers go, Beyonce isn’t normally mentioned, except in Malaysia.

The nation has an unfortunate knack of making global news for the wrong reasons: Sodomy trials involving former finance ministers, anti-capitalism tirades by prime ministers, murder investigations involving high-ranking officials. Malaysia really could have its own CSI crime drama.

Singer Beyonce Knowles entered the fray this week by canceling a concert a second time after Malaysia’s conservative Muslims criticized her raunchy stage clothes and dance moves. If that doesn’t bug you, what’s with this related movement to ban everything from yoga to Facebook?

The plight of this particular pop star won’t be affected. She will make millions performing somewhere else. You won’t find many Beyonce CDs in my collection. And folks are free to object to her bellybutton shaking before their eyes on moral grounds. Too bad there isn’t similar, if not more, outrage over the real problems facing Malaysia. Here are five.

One, shaking the global crisis. Malaysia is ruing the day it decided to put off badly needed changes to its economy. They include relying less on exports and dismantling four-decade-old affirmative-action policies leaving the nation less competitive and spooking investors.

Working Harder

Prime Minister Najib Razak has stepped up efforts to do that since taking the reins in April. He has to make up for much lost time after five years of drift and complacency under Abdullah Ahmad Badawi. The world won’t wait for Malaysia. It is competing in a region where China, India, Indonesia, Thailand and Vietnam are evolving rapidly.

Malaysia’s economy was also hit by the U.S. recession. Najib, who has unveiled 67 billion ringgit ($20 billion) in stimulus initiatives, said last month the government will be more prudent in spending and make subsidies more targeted as growth returns. That’s all well and good, yet the slow pace of action appears more disturbing than anything Beyonce may do.

Two, corruption. Transparency International ranks Malaysia behind Jordan, Cape Verde and Macau in its Corruption Perceptions Index. It’s a reminder that 12 years after the Asian crisis, Southeast Asia’s third-biggest economy needs to be far more aggressive in cleaning up politics and business.

‘Crony Capitalism’

Granted, the days of Washington officials singling out Malaysia for “crony capitalism” are over — events at Enron Corp. and American International Group Inc. saw to that. For Malaysia, though, the phenomenon makes the economy less efficient and keeps growth from being more widely shared.

Three, creeping Islamic fundamentalism. It’s always a sensitive point to raise, yet one that foreign investors view with trepidation both in Malaysia and neighboring Indonesia. A case in point: A 32-year-old mother may soon be caned in Malaysia as punishment for drinking a beer. Lawmakers in Indonesia’s Aceh province last month approved the stoning to death of adulterers and the flogging of gays.

Malaysia has long been a shining example of how Islam and modernity can co-exist. Kuala Lumpur is a place where micro- miniskirts comfortably exist next to women in headscarves. It’s where one of the most respected women in global finance, Zeti Akhtar Aziz, runs the central bank.

It’s a difficult balancing act to appeal to a Muslim- majority population while protecting the rights of Buddhist, Christian and Hindu minorities. The risk is that investors stop considering Malaysia a model of moderate Muslim democracies. Headlines generated by the Beyonce flap won’t help that.

Misplaced Priorities

Four, becoming Japanese. The United Malays National Organization is clinging to its five-decade hold on power at all costs. It has led to a Japan-like dynamic of leaders being more focused on shoring up the party than the nation. Japan recently elected a new government for only the second time in half a century, and the people want change.

Misplaced priorities are a key reason why Malaysia has been slow to streamline the economy and encourage the kind of entrepreneurship that will create well-paid jobs. It’s also why leaders have been timid about scrapping productivity-killing quotas that benefit only ethnic Malays.

Five, spin over substance. Hey, I’m a huge Malaysia fan. Aside from being an incredibly beautiful country, it’s a uniquely multiethnic place with a vibrancy that’s hard to resist. My concern is that Malaysia is often too much about grand plans and marketing campaigns, too little about tangible economic change.

Pop Diva

Spin won’t attract more long-term investment. That will take the kind of assertive and forward-looking policies the nation hasn’t enjoyed for years. Yes, the FTSE Bursa Malaysia KLCI Index has risen 46 percent this year. That gain pales in comparison with 113 percent in Indonesia, 94 percent in Vietnam, 63 percent in Thailand and 56 percent in Singapore.

Taste and decorum are in the eye of the beholder. Look no further than protests in recent years in Indonesia over the sale of Playboy magazine, or in the Philippines over the “The Da Vinci Code.” Nor are Beyonce’s moves for everyone.

I just wish there were similar outrage over the failure of governments to get economies closer to their potential. That’s the real outrage here, not a pop diva’s skimpy attire.

(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)