Malaysia Begins All Over Again

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Last May 9, Malaysia’s voters initiated the most interesting experiment in democracy in Asia, ending the 62-year reign of the Barisan Nasional, the national ruling coalition, and delivering the government to an untried Pakatan Harapan opposition headed by a 93-year-old retreaded prime minister with a history of autocracy.

What that has meant is starting all over, with only the principle of Westminster parliamentary government to work with. All of the country’s institutions – the parliament itself, the judiciary, the law enforcement establishment, the press, its religious bodies, the civil service – were indelibly corrupted by the decades of Barisan rule.

The potential for institutional reform remains unfulfilled as the new year gets underway and Pakatan Harapan didn’t help itself with an overly broad election manifesto featuring dozens of pledges that have run into parliamentary roadblocks as the losing United Malays National Organization and its ally Parti Islam se-Malaysia fight a tenacious rearguard action. It is still seeking to strengthen the right of freedom of assembly and to revise the draconian Security Ordinances (Special Measures) Act or SOSMA that the Barisan passed in its struggle to stay in power.

Cue the peaceful revolution

“I think you have got to look at it as almost a revolution, although a peaceful one,” a major financial figure told Asia Sentinel, asking not to be named. “It is the first time that has happened in Malaysian history and it needed an overhaul in terms of people into government. It was never going to be smooth sailing. It was a coalition largely held together only by a common enemy and with a lot of opportunists. The prime minister has held it together surprisingly well. He is holding it together but whatever happens tomorrow is not clear. Politics have been so entwined with the system that the business community is scared to do very much right now.”

In addition, the country’s ethnic Malays, who with other native groupings make up 68.8 percent of the population, have enjoyed almost 50 years of race-based privilege from the New Economic Policy put in place after bloody 1969 riots. Those privileges have led to strangulation of the economy and fostered a rent-seeking elite who lived off inefficient and corrupt preferential government contracts.

Malaysia still faces the nearly-intractable problem of race, although some observers say the racial and religious tensions fanned by a previous government desperate to stay in power have abated somewhat. Nonetheless, the Chinese, who make up 23.2 percent of the population, continue to hold the economic heights despite 28 years of social engineering to try to achieve equality.

And despite the presence of Anwar Ibrahim’s urban moderate Parti Keadilan Rakyat, which is predominantly Malay, with 50 seats in parliament at the head of the coalition, and Mahathir’s reputation as a staunch defender of Malays rights, Malays remain unsure whether the coalition, which holds 12 seats in the 222-seat parliament, will defend their so-called “special rights.” The Chinese-dominated Democratic Action Party remains the second-biggest in the coalition with 42 seats.

Backing away from racial equality

The government was forced to backpedal from a promise made by Mahathir to ratify the United Nations-sponsored International Convention on the Elimination of All Forms of Racial Discrimination (ICERD) after thousands of UMNO and PAS members descended on Kuala Lumpur on December 8 to protest.

Thus today it is hardly surprising that today there is considerable disillusion with Pakatan Harapan, which is still trying to find its feet amid an admittedly mixed performance, led by Mahathir Mohamad in his second incarnation as premier. On January 26, the coalition got a serious shock when a Barisan Nasional candidate, Mohd Ramli Noor, handily beat a coalition candidate in a Cameron Highlands by-election, an indication that Pakatan Harapan has a tenuous hold on power, especially since former Prime Minister Najib Razak, under indictment, is rumored to have pulled out all the stops to win the seat.

But despite continuing headlines of disaster in a newly freed press, of bitter infighting among the forces of Anwar Ibrahim’s Parti Keadilan Rakyat, the linchpin holding the four disparate coalition components together, it doesn’t all look that bad.

“The situation is still very fluid, more than eight months after that historic victory,” said an ethnic Malay businessman who is an astute longtime observer of the country’s politics. “Unfortunately, despite their espoused ideals and plans, the Pakatan guys have found they are out of their depth in how to run the country.”

A longtime foe of Mahathir during the premier’s previous 22 years in power, he now says he fears what would ensue if anything happens to the nonagenarian leader, who has broken with precedent and appointed non-Malays to top governing positions including the 67-year-old Tommy Thomas, an ethnic Indian, as the first such ethnic outsider to serve as attorney general since 1963.

PM learns value of social institutions

Mahathir seems to have discovered that the institutions he scorned during his previous years in power – the judiciary, a free press, an independent civil service – are important after all. Either because of public outcry or his own instincts, after allowing a handful of members of the defeated United Malays National Organization to defect to his own Parti Pribumi Bersatu Melayu, which has only 14 of the 121 members of the Dewan Rakyat that he heads as premier, the defections have been stopped.

The leaders of Penang and Selangor – states that were held by the opposition in the wake of the 2013 general election – and were the country’s best-run governments, have acceded into top positions in the federal government. They are Penang’s Lim Guan Eng of the Democratic Action Party, who has become finance minister – another non-Malay – and Azmin Ali, the economics minister. They are regarded as competent, if inexperienced on a national level.

But they are given little help from the civil service, which is largely ethnic Malay and aligned with the United Malays National Organization, which had dominated the Barisan.

“There was a time when this country had great civil servants, but during Mahathir’s first reign (1981-2003), they were molded into becoming yes-men for the politicians,” the businessman said in a telephone interview. To some extent, according to another source, that has meant that information on Pakatan initiatives is being passed back to UMNO and in other cases it has meant outright sabotage.


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Aiming at the foot

Pakatan Harapan also hasn’t helped itself by a wholesale housecleaning of all the country’s institutions. The chief executive officers of Kazanah Nasional Berhad, the government sovereign wealth; Permodalan Nasional Malaysia, the government investment management company, and CIMB Group, the government-backed investment bank, among others, walked the plank despite a general feeling that they were competent and relatively honest.

“When you have that, in effect this discontinuity of leadership, that is having an impact on economic management,” said a top financial industry source. But, he said, given the political situation, there was no question that they would have to go.

The coalition has been thwarted by UMNO and PAS from passing many parliamentary reforms intended to check the unbridled power the previous government enjoyed. A move to establish select parliamentary committees to ensure accountability has been blocked. An attempt to do away with a pernicious “fake news” bill passed in the waning days of the previous administration in an effort to limit criticism is in limbo.

Nonetheless, if the government is stumbling, it is making some progress. Mahathir, perhaps having learned from being in the wilderness during the kleptocratic reign of former Prime Minister Najib Razak, today is an advocate of a free press and an unfettered judiciary, although there are hints that he wants to reproduce his 1980s style of government, starting with a national car in cooperation with China’s Geely Auto despite the massive failure of Proton, and other demands, including for an unwanted new bridge to Singapore, which neither Singapore nor many Malays want.

Justice for Najib, wife Lady McBeth

The new government’s signal accomplishment is to have arrested Najib, the architect of the biggest scandal in the country’s history, along with his grasping wife Rosmah Mansor, and their lawyer, Mohammad Shafie Abdullah. An astonishing pile of cash and valuable has been seized and efforts have begun to reclaim more of the billions that have been stolen. Several other leaders of the United Malays National Organization have been arrested as well

That in itself is a signal accomplishment in a region where impunity has been the rule throughout its entire democratic history. Ferdinand Marcos, his family and all of his cronies in the Philippines went free following his 1987 ouster and remain closely aligned with power. Suharto, who fell in 1998, his family and those who made Indonesia into a kleptocracy similarly remain influential. In Thailand, efforts to arrest democratically elected and deposed officials are political rather than legal. A thoroughly, deeply corrupt military is solidly entrenched in power.

“There is a big job in getting through to the judiciary that they are independent operators no longer beholden to their political masters,” said a prominent lawyer in an interview. “It is going to take time. You can’t overturn 62 years of rubbish that quickly.”

One of the most important factors in driving out the Barisan – arguably bigger than getting rid of Najib and corruption – was a promise to do away with a deeply unpopular 6 percent Goods and Services Tax. One of the new government’s quickest actions was to do exactly that. But it didn’t replace the tax with any other revenue generators, generating new fiscal problems at a time the economy is beginning to moderate, falling to 4.4 percent annual GDP growth in the final quarter of 2018.

With the global economy beginning to slow along with commodity and oil prices, and with the possibility that the country could become collateral damage in a trade war between the US and China, the loss of revenue from the GST could prove to be a mistake, even if politically popular.

In sum, as the financial industry source said, it is a revolution in the making. While some believe UMNO and PAS would return if a snap election were held today, he doesn’t.

“I am as optimistic as I can be that there are bright people in Pakatan that have the will and power to change things, but how far they can penetrate and influence the civil servants and some of the country’s other institutions is unclear,” he said. “When I look at Malaysia I think the sooner the next generation takes over the better. The 1990s generation fighting big fights and using out of date instruments.”