Having grown up in the USA, we have a very firm grip on the term "racism". It is part of our checkered past and our present. The situation here in Penang with regards to race can only be described as enigmatic.
The island of Penang is quite different from the rest of Malaysia. On this island the ethnic make-up is equal parts Malay, Indian and Chinese with a growing number of expats from all over the world thrown in for good measure. On the surface these different cultures with their different religions live together peacefully. But once you've been here a while and gotten to know some of them, the reality of the situation becomes clear.
1. There is a set of laws here called "bumiputra" which basically give native Malays a whole slew of special privileges. Think affirmative action run amok. Native Malays get all the government jobs, discounts on real estate, first pick at colleges and more. It is actually illegal to even discuss repealing these laws!
2. In spite of the bumiputra laws it seems the ethnic group here with the most money are the Chinese. They are the doctors, business owners, etc., and if you drive by a beautiful mansion chances are it is owned by a Chinese family.
3. At least on the island, the ethnic group that seems to have it the hardest are the Indians. They comprise the majority of the poorest people here.
Now the situation with expats is even stranger. In some ways we are highly favored...so much so it is kind of embarassing. They use a lot of terms with us that show respect and subservience. And we get special treatment that is so obvious it makes me cringe. For instance, if you were to come to our home you would have to go through the guest entrance gate. If you are white the guards will just wave you in without even checking. But if you are not, you will get grilled with questions and not be allowed to enter without ID and special permission (and a blood sample and your first born...ok, just kidding...sort of).
Another example, the police set up blockades and do checks for your "road tax" sticker which is the same as a license tab in the U.S. Without fail they will wave the white people through without even checking. It has happened to us several times. In real estate ads for houses and apartments for rent it will actually say "expats only" because we are considered(as I have been told) more dependable about paying rent on time.
But on the flip side of that, the locals will try to rip you off if you are white all the time! It is called the skin tax. You will get overcharged for everything from parking, to taxis, to buying food at the market, to paying for services...you name it. You have to fight to get a decent price! Sometimes telling them you live here and are not a tourist helps but not always.
It is an interesting situation to say the least and keeping track of it all can be confusing. But it has been a learning experience and just goes to show that America is not the only country that deals with racism.