From a summary of Thomas Sowell's Affirmative Action Around the World in Commentary Magazine:
[In Malaysia] Chinese laborers were first brought to the peninsula to work the rubber plantations, Indian laborers to work the tin mines. Both have become substantial ethnic minorities, with Malays remaining the great majority. The three groups are quite distinct.
The Chinese, adopting a frugal style and investing heavily in the education of their children, pulled themselves from the plantations and built businesses across the country; they have come to dominate retail establishments in Malaysia, of which they owned 85 percent by 1980. Corporate ownership by Chinese has also soared. Chinese incomes are double those of Malays.
In 1965, Malaysians willingly divested themselves of a great mass of powerful Chinese by expelling Singapore, which became a separate country and remains very largely a Chinese city—and greatly prosperous. But, although the expulsion of Singapore made the Malay majority politically secure, and somewhat reduced its economic domination by the Chinese minority, it did not stop the intellectual advance of the Chinese who remained. In 1969, more than half the officers in the Malaysian army were ethnic Chinese; as long as university admissions were determined by examination results, only 20 percent of the places went to Malays, and most of the rest to ethnic Chinese.
The majority, competing unsuccessfully, had to be protected. The Malay government set out to achieve racial balance in employment, giving formal preferences to Malays in hiring. But there seemed no alternative to continuing reliance on the better-educated Chinese and Indian minorities in fields where their technical skills were needed. And so admission to universities was altered as well. Group membership was emphasized over individual performance, and, to increase the number of Malays yet further, the Malay language became the only medium of instruction in schools as well as in universities.
The ethnic preferences that have pervaded Malaysia in recent decades were not designed to pull an oppressed minority from the depths; their purpose was to protect the relatively less competent majority from the intellectual and economic advances of more competent ethnic minorities. What, then, do we learn from Malaysia? We learn that the inferior performance of some ethnic groups is not always a consequence of discrimination against them. On the contrary, even the imposition of discriminatory advantages favoring a majority cannot obscure the fact that some groups prove less competent than others.