The 30 percent ownership requirement was dropped for manufacturing in 1998 to encourage foreign investment in export-oriented factories, which have powered Malaysia's growth. Now, Najib is cautiously relaxing the requirement for the service sector.

So far, the reforms have not aroused any open anger among Malays. Najib describes them as a "tricky balancing act."

He says he remains committed to raising Malay corporate ownership to 30 percent from the current 19 percent. It stood at 2.4 percent in 1970, before the New Economic Policy was launched.

The government will set up a 500 million ringgit ($143 million) equity fund to buy private companies and hand them over to Malay managers, with an eventual goal of enlarging the fund to 10 billion ringgit.

As well, the 30 percent Malay ownership requirement remains for "strategic industries," which includes telecommunications, water, ports and energy, home to some of Malaysia's largest companies.

Nevertheless, there are worries among some Malays.

"It is fair and will make Malaysia more competitive but at the same time, there is concern that Malays will be completely shut out of mainstream commerce," said Azim Zabidi, a businessman and leader in Najib's party, the United Malays National Organization.

"You still need the NEP to ensure that Malays are given the kick-start and not lag too far behind," he said, referring to the New Economic Policy by its acronym.

The moves so far primarily affect wealthier Malays, who would be able to buy stocks. They don't strip away other privileges such as buying homes at lower prices

"To a large extent, nothing much has really changed," said Philip McNicholas, an economist with research firm IDEAglobal in Singapore. "In repealing the NEP policy, Najib has been careful and selective ... It's a case where he is going to walk a fine line to pick up non-Malay votes while not making enemy among the Malays."

A service of YellowBrix, Inc.