Malaysian Paralysis

To the apparent frustration of Malaysia's 25 million citizens, it appears that the country is slipping into at least a technical recession if not a real one while political tensions continue to grow between the ruling national coalition and the opposition Pakatan Rakyat.

Last week, the squabbling culminated in someone mailing two bullets to opposition leader Karpal Singh, the longtime national chairman of the Democratic Action Party, who on the floor of Parliament used the word celaka [damn] in referring to the unnamed figure, allegedly from the United Malays National Organisation, who he said had mailed the bullets. That kicked off a row outside the parliament building when two UMNO members either did or did not push him. Karpal Singh is confined to a wheelchair.

In the meantime, the 3.5 percent gross domestic product growth forecast earlier by the country's central bank will have to be revised downward dramatically, with the new figure to be announced on March 10. GDP grew only 0.1 percent in the fourth quarter, Deputy Prime Minister Najib Tun Razak said Friday. It is difficult to see how Malaysia can escape further economic damage, with Singapore, which takes a major share of Malaysia's exports for re-export to the west, expecting a loss of GDP of at least 8 percent in 2009. Malaysia's primary exports are electronics, and commodities.

Palm oil, of which Malaysia is the world's second largest exporter, has fallen to Rp7,010 -- 40.4 percent off its cyclical high. Crude oil is down 62.9 percent from its cyclical high, tin off 56 percent. Electronics exports are down by more than 30 percent year on year.

As the economy sinks, the country's politicians seem completely preoccupied with political infighting. The country's first stimulus package amounted to just US$2 billion, or about 2 percent of GDP. A second package may be on the way, but its details are not known yet. Analysts forecast that it will be considerably larger.

More ominous, according to the economist Andrew Sheng in a presentation to Malaysian leaders and quoted in the local press, Malaysia risks being a dinosaur economy, overtaken by Indonesia in palm oil production, Malaysian companies are moving capital abroad, the country's talent is going overseas in search of better wages, its crude reserves are nearly gone, electronics are leaving for other, cheaper assembly areas, and overall the outlook is bleak.

The political paralysis spurred Anas Zubedy, the managing director of a consultancy firm, to take out an ad in local newspapers, asking "Dear Malaysian Politicians, Please stop the power chase, call for a truce and focus on the economy."

"Whether Barisan Nasional or Pakatan Rakyat leads, it is meaningless if Malaysians have no job to go to, no money to pay rent and no means to put food on the table," he wrote.

That apparently plucked a sympathetic chord with his fellow citizens, who besieged the newspapers with letters to the editor and packed his blog with appreciative comments.

The political situation is torn not only by the scramble for power between the opposition Pakatan Rakyat and the Barisan Nasional, but also within the United Malays National Organisation, the leading ethnic party in the Barisan. UMNO internal elections are to be held from March 24 to March 28. And although Prime Minister Abdullah Ahmad Badawi has been banished from the party for the loss of the Barisan's historic two-thirds majority in parliament last May 9, his acolytes and lieutenants, particularly his son-in-law, Khairy Jamaluddin, are still vying for power with party stalwarts aligned with former Prime Minister Mahathir Mohamad and his son, Mukhriz. With the contest for UMNO president settled and Naib selected as heir apparent and prime minister-in-waiting, the major contests are for lower positions.

Mukhriz and Khairy are rival candidates for the important post of UMNO Youth leader. Political operatives for the two factions have been crisscrossing the country, trying to shore up their defenses in advance of the party elections.

Najib, who had put his personal clout on the line by leading the UMNO side in the by-elections – one of which delivered Opposition Leader Anwar Ibrahim back to electoral politics – was considered by political analysts to be in trouble. Not only was he dogged by a series of scandals stemming from the award of lucrative military contracts during his stint as Defence Minister, he had the albatross of his alleged connection to the execution murder of Mongolian translator Altantuya Shaariibu in October 2006. Two of his bodyguards and his best friend spent most of 2008 on trial for the murder.

Despite those problems, however, Najib suddenly became resurgent by enticing local lawmakers in the tin-rich and populous state of Perak to abandon the opposition and, with the help of Sultan Raja Azlan Shah, the state was delivered back into the hands of UMNO.

Karpal Singh offered to sue the Sultan, alleging he had illegally appointed a new UMNO chief minister. UMNO stalwarts leapt on Karpal Singh's statement, accusing him of insulting the sultan, which UMNO leaders, particularly Mahathir Mohamad, had been doing with impunity for years, in a strategy that could only be construed as trying to divide the electorate by race.

The situation became increasingly poisonous, with more than 100 UMNO members manufacturing a rising crisis by filing police complaints against Karpal Singh although there is no lese majeste law in Malaysia and although Mahathir, in 1993, pushed through legislation legalizing lawsuits against the sultans, who he accused of giving the country to the British, gambling away the people's money in London casinos, and various other transgressions.

Despite the fact that Karpal Singh is a member of the opposition, both factions of UMNO have sought to turn the incident to their favor. One blogger speculated that Khairy Jamaluddin apparently views himself as the beneficiary. But, he wrote ironically, "it's clear that Karpal has succeeded in touching the hearts and minds of the Malays in the kampung and not just at Dewan Rakyat."

Three by-elections are now looming across the country as opposition members have been uprooted from office – one of them a woman who has offered to resign after her estranged boyfriend made pictures available on the internet of her sleeping without underwear and a second who turned out to have two wives – something allowed to Muslim Malays but not to other ethnic groups.

Those potential by-elections will determine whether the opposition, led by Anwar, will continue to be viable. In the meantime, over the next three weeks, UMNO will continue to attempt to sort itself out, and it is questionable whether the flagging economy will get any additional attention.