Recent Political and economic developments in Malaysia

I attended a talk by Dato’ Dr Michael Yeoh this afternoon at Raffles Hotel on the topic, “Recent political and economic developments in Malaysia”. The event was organised by the Institute of Southeast Asian Studies (ISEAS).

Dato’ Yeoh is the co-founder and CEO of the Asian Strategy and Leadership Institute (ASLI), a prominent Malaysian think-tank, which captured headlines a few months ago when it released a report about the Malay equity stake in the economy.

He began by summarizing the key events that shaped the Malaysian political scene in 2006, then provided a assessment of what lies ahead in 2007.


Key events in 2006

2006 started well for Prime Minister Abdullah Badawi, as his Ninth Malaysia Plan was initially well received. However, several events led to a sharp rise in political tensions in the nation, including:

1. Former Prime Minister Mahathir Mohamed’s personal attacks on PM Abdullah’s policies.

2. Reductions in oil subsidies which led to a sharp rise in fuel prices.

3. Increased road toll prices.

4. Numerous anti-government public demonstrations, most of which which were “blacked out” by the mainstream media but carried freely on the Internet.

5. The “Bloody Sunday” incident. On 28 June 2006, a protest in frot of Kuala Lumpur City Centre (KLCC) descended into chaos and many protestors were beaten by riot police. The Malaysian human rights commission (SUHAKAM), on which Dato’ Yeoh sits as a board member, later found that there was a “disproportionate use of force” by the police on the protestors.

6. The Article 11 Coalition of several ethnic minority and liberal Muslim groups raised the very sensitive issue of religious freedom (or lack thereof) in Malaysia, arousing tensions among conservative Malay groups. One of their public meetings was forcibly shut down by the government.

7. There was a general perception that the Malaysian economy was not doing well, probably due to the shift in the “components of growth” to industries with “less multiplier effect”.

8. ASLI’s corporate equity distribution study, which came under attack by Malay groups. Using alternative methodologies, the study estimated that the bumiputera (ethnic Malay) corporate share in the country may be as high as 45 per cent — considerably higher than the official figure of 19 per cent and higher than the targeted 30 per cent share that was meant to be achieved under the New Economic Policy (NEP).

9. During the televised UMNO Youth general assembly, the UMNO Youth president Hishamuddin Hussein unsheathed a kris (a Malay warrior’s dagger), which is a symbol of Malay pride. He came under fire from Chinese groups for his provocative actions.

10. The Sarawak state elections saw many urban Chinese voters ditching the Barisan Nasional (BN) for the Opposition, causing no small concern among the BN’s Chinese parties, the Malaysian Chinese Association (MCA) and Gerakan.


Looking ahead in 2007

2007 brought a “fresh spring” for PM Abdullah, as Tun Dr Mahathir toned down his criticism of his successor. PM Abdullah’s deputy prime minister, Najib Tun Razak, continued to demonstrate his steadfast loyalty to and support for the prime minister.

The unveiling of the Iskandar Development Region (IDR) in Johor generated much excitement and a “feel good factor” for the country. Many Malaysians are hopeful that the relaxing of the bumiputera policy in the IDR could herald more good news in the near future. It is significant this move is being done in Johor, which is the power base of UMNO.

In addition, Malaysia’s foreign reserves have increased significantly under PM Abdullah, many times more than the kitty during Dr Mahathir’s reign as PM.


Timing of next GE?

There is speculation that the next General Elections could take place sometime in the later part of this year, in order to capitalize on the “feel good factor” and before former finance minister Anwar Ibrahim can legally contest elections. Dato’ Yeoh felt that there was “no reason” for Pak Lah (as PM Abdullah is affectionately known) to call for early elections. If elections are delayed until next year, it would give the PM more time to roll out another “feel good” budget, which could see the lowering of personal income tax. Also, the next few months will witness several more Ninth Malaysia Plan programmes being rolled out.

Dato’ Yeoh did an assessment of how he thought the BN will fare during the next elections. He was of the view that it would be impossible for the BN to repeat the sterling results of the March 2004 elections, but it will easily maintain its two-thirds majority in Parliament. He pointed out that support for UMNO is still very strong in the rural heartlands.

The key electoral challenge facing the BN would be retaining urban support. A recent survey revealed that 65 per cent of urban voters want a change and will vote for the Opposition. This will pose a tremendous challenge to the MCA, the Malaysian Indian Congress (MIC) and Gerakan, whose seats are mainly in the cities.

The fight for the state of Penang will be the most important contest during the elect
ions. The opposition Democratic Action Party (DAP) and Parti Keadilan are expected to pick up many more seats in the coming election. Dato’ Yeoh assessed that they could more than double their number of seats in Parliament up to 30 — mostly at the expense of MCA, Gerakan and MIC.

However, Dato’ Yeoh was confident that UMNO’s position is still stable, as most rural voters still support the party. Parti Islam (PAS) can be expected to pick up 14 – 15 seats at best, compared to more than 80 for UMNO. Although the PAS stronghold is in the northern states, these states have only a few seats. In fact, Dato’ Yeoh pointed out, if UMNO could retain all their Johor seats, it would make no difference to their position even if they lost Kelantan and Trengganu.

With these high expectations of a BN victory, the result would therefore be considered a “poor performance” if BN lost its two-thirds majority in Parliament and they lost the states of Penang and Kedah — all unlikely scenarios.

Concluding, Dato’ Yeoh said that the key challenges facing Malaysia are the vital need to bridge the racial divide; maintaining political stability by the BN retaining its two-thirds majority; reducing or eliminating corruption; redressing inequalities; and making the economy more open and competitive.


Q & A discussion

During the Q & A discussion, some interesting insights were raised. Unfortunately due to the imposition of the Chatham House Rule by the chairman, Ambassador K. Kesavapany, the discussion cannot be freely reported. But here are some of the notable remarks made from the floor and the speakers:

It was pointed out that some of the most capable Malays in the country are in Johor. They are therefore poised to compete with the best that will come in to invest in the IDR. Therefore it is unlikely that there will be a repeat of the racial tensions of 1960s even if affirmative action policies in IDR were relaxed, simply because the vast inequalities have been largely levelled out. There is also now a new group of Malay business leaders with a modern outlook and no longer depend on patronage to succeed.

There appeared to be much optimism about what the Abdullah government would be achieving in the coming months. It was pointed out that PM Abdullah’s style is much more deliberate, bottom up, institutional-based (instead of personality-based) and consultative than his predecessor’s. Important issues now get debated over several Cabinet meetings, unlike in the past when few ministers spoke and most issues were basically fait accompli by the time they reached the Cabinet.

Author: Gerald Giam

Gerald Giam is the Member of Parliament for Aljunied GRC. He is a member of the Workers' Party of Singapore. The opinions expressed on this page are his alone.

2 thoughts on “Recent Political and economic developments in Malaysia”

  1. bgerald, in what context was this talk held? i mean – whats the reason for them to do it in singapore? was it open to the public or a closed-door session for invited guests?

    Strange he didnt mention Anwar and his push for a multi-racial party/politics. Will his party even challenge BN and MIC, MCA in the urban areas?

    No comments on the Economic Policy and where its heading too. strange. This seems to be the main cause of unhappiness among non-malays.

    And Najib – who could possibly face a lot of issues in the near future over the murder of the Mongolian girl, Defence contracts etc.

  2. This talk was part of a regular series of talks that ISEAS holds. I think it’s open to the public. Just visit the ISEAS website to sign up for updates.

    He covered a lot of stuff, not all of which I was able to include in my summary. Yes he did mention that Anwar’s Keadilan has joined hands with DAP and will pose a fierce challenge to MIC and MCA in the cities. But UMNO’s (and therefore BN’s) position overall remained strong.

    He noted that the removal of the affirmative action policies in the IDR may have been an indication of what might lie ahead, with respect to the NEP.

    He was of the view that nonwithstanding the alleged murderer of the Mongolian model’s close ties to Najib, it will not affect Najib much. He didn’t elaborate why.

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