By: John Berthelsen

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.”