Malaysia’s Missing Tiger

Ask anyone what he or she thinks about Malaysia and you will usually hear a story about one of Asia’s economic success stories. Miraculous economic growth fueled by foreign investment catapulted Malaysia to the forefront of ASEAN economies. Visitors sing praises of a peaceful multiethnic, multi-religious society brimming with tolerance and compassion. Sharing the stage with Singapore, South Korea and Taiwan, much of the developing world looks to Malaysia as a beacon of hope and a model for development.

On the other hand, the salacious trial of former Deputy Prime Minister Anwar Ibrahim in 1998 and the new one that began in 2010 have highlighted the repressive, anti-democratic forces at play. Repeated use of the Internal Security Act to detain political dissidents, rising crime and a bloated and increasingly corrupt public sector have kept investors at bay since the 1997 financial crisis. Stiff competition from its neighbors has forced Malaysia to play a game of catch up. Foreign investment is at a 20-year low, according to the U.N. Conference on Trade and Development’s World Investment Report.

To combat the negative publicity, Prime Minister Najib Abdul Razak has been busy promoting Malaysia’s virtues at home and abroad. In 2010 he announced a series of economic overhauls aimed at liberalizing the economy, strengthening the private sector and drawing multinationals back to the country. Capitalizing on Malaysia’s reputation as a peaceful, multiconfessional state at the U.N. General Assembly in September, he announced a global movement for moderates as the antidote to radicalism.

At home, however, reform and moderation have been elusive. On Transparency International’s Corruption Perceptions Index Malaysia slipped in 2010 and the country ranks near the bottom of Reporters Without Border’s Media Freedom Index. The Malaysian authorities have recently banned yoga, caned beer drinkers and adulterers, and outlawed non-Muslims from saying the word “Allah.” Not long after his moderation speech, Najib himself warned fellow party members at an annual meeting in Kuala Lumpur of “bodies being crushed and lives lost” if ruling party UMNO, United Malays National Organization, loses political power.

Brief flirtations with opposition rule amounted to little and the thought of political change is relatively unheard of. UMNO, which has been in power since 1957, has not lost its Parliamentary supermajority since 1969. This gives it a broad mandate and the ability to amend the Constitution freely, which it has done more than 650 times. UMNO has been effective in co-opting the media, the judiciary, the electoral commission and law enforcement agencies to ensure its grip on power. Opposition parties have had some room to maneuver, giving Malaysia the outward appearance of a democracy. But they have seldom come close to holding real political power.

The electoral landscape changed dramatically in the March 2008 elections. In what many described as a political tsunami, six of Malaysia’s 14 states and territories fell to the opposition along with 82 seats in its 222-member Parliament. Slightly more than 50 percent of Malaysians in Peninsular Malaysia voted against UMNO and Prime Minister Abdullah Badawi, whose approval ratings had once exceeded 90 percent.

Since then Malaysia has hardly been the same. Opposition-held states passed laws promoting transparency, enhancing social services and have largely done away with costly direct awards and no-bid tenders. Debates in Parliament are heated and the ruling party, without its once iron-clad supermajority, can no longer take for granted its rubber stamp on legislation. On one occasion, even the prime minister had to run from his office to the chambers to cast a vote to prevent the defeat of an important budget bill. The Malaysians are taking well to the newly minted political landscape. Demonstrations for fair elections and against warrantless detentions have become commonplace. People are more willing to engage in public dialogues and debates about the freedom of the press and the restrictions on academic freedom. New members are joining opposition parties in droves where before, many feared reprisals for broadcasting their political affiliations. Pro- and anti-government activists wage heated wars in the blogosphere and on social networking sites. Voter registration drives are hoping to sweep up the 4 million unregistered voters before the next election, the majority of whom are opposition-leaning and under the age of 30. Even the holy grail of Malaysian politics – the affirmative action policies that benefit the country’s ethnic Malay majority – is open to greater scrutiny.

One needs to know something about the role of religion and race in Malaysia to understand what drives its politics. The population is 60 percent Malay, which by definition means one is Muslim. The minority is split with 30 percent Chinese and the remainder Indian. Many of the non-Malays arrived in the 19th century during the British mandate.

Tensions among the various groups have simmered since independence in 1957. Malays fear that they will be run out of their own country by the minorities, the Chinese in particular, who are viewed as more educated and resourceful. Political parties play off sensitive racial and religious sentiments to win votes using a divide-and-conquer strategy. Occasionally this game of race baiting turns violent. In 1969, a strong showing by the Chinese party Gerakan led to race riots that left hundreds dead and a declaration of a state of emergency.

After the race riots, a system of race-based privileges was implemented to give assurances to the bumiputeras, literally the sons of the soil, that their place in society was secure. Top positions in business and government were reserved for Malays, who also receive preferential treatment in school admission, the armed forces, the police, the private sector along with other perks such as discounts on land purchases and university scholarships. The civil service is dominated by Malays and most ministerial portfolios are held by Malay elites.

Malays have certainly benefitted from decades of affirmative action. Their share of national wealth has increased as have the number of Malay professionals, entrepreneurs and academicians. But over time, abuse of the system became egregious. In the name of protecting Malay rights and privileges, elites raked in millions of dollars from no-bid government procurements and land grabs. The government handed bailouts to poorly run Malay corporations without regard for transparency or accountability. Morgan Stanley estimated that close to $100 billion had been lost to leakages since the early 1980s.

Income inequality in Malaysia remains among the highest in Asia, suggesting that the trickle down economic policies that were the hallmark of Malaysia’s heyday have not worked. Malaysia’s super-rich businessmen and tycoons were growing richer while its middle and lower class struggles to keep pace with higher costs of living and fewer jobs. Fed a stable diet of fear and insecurity through the government controlled media, they have yet to rebel against a corrupt system that overlooked their basic needs.

Malaysia’s non-Malay minorities have become more vocal in their rejection of the status quo. In 2007, HINDRAF, a coalition of Hindu organizations, brought more than 20,000 people to the streets of Kuala Lumpur to protest against discriminatory policies. Hundreds of thousands of disaffected and mostly Chinese students and professionals have voted with their feet. Migrating to places such as Singapore, Hong Kong, Australia and the U.K., they are frustrated that their country has failed to give them a fair chance. This came to a head in 2008 when most of Malaysia’s minority voters sided with the multiethnic opposition coalition.

In the midst of this one finds Anwar Ibrahim, the popular former deputy prime minister and finance minister. Anwar joined UMNO in 1982. While his early speeches talked about pluralism and social justice, it is difficult to separate him from the racebased policies of the party he served loyally for nearly two decades. That is until 1998, when he crossed swords with Prime Minister Mahathir Mohamad, calling for an end to corruption, cronyism and nepotism, and giving birth to Malaysia’s Reformasi movement. For his efforts, he was removed from office, sacked from UMNO and delivered a 15-year jail sentence on charges of corruption and sodomy after a trial that was condemned internationally and viewed as politically motivated.

Emerging from prison in 2004 as a Mandela- esque figure, Anwar spent several years abroad before returning to Malaysian politics in 2007. Once branded a firebrand Malay nationalist, his views on race and religion appear to have shifted. In 2006, he published the Malaysian Economic Agenda, in which he called for replacing Malaysia’s race-based affirmative action system with one premised on merit. He believed that welfare and social services should be awarded irrespective of race and that restoring democracy and eliminating corruption was essential to reviving the country’s sagging economy. Of his legacy in UMNO, Anwar talked about the transformative experience of being in held solitary confinement, witnessing firsthand the plight of the downtrodden and marginalized. While campaigning in the 2008 elections, he said he could not absolve himself entirely of the excesses of the past but asked Malaysians for a second chance.

Few would have given one to his party, which held only one seat in Parliament at that time. Even fewer would have bet on the unlikely coalition that he brought together. On one end of the spectrum was PAS, the Malaybased Islamist party once dedicated to establishing an Islamic state. On the opposite end was the Democratic Action Party (DAP), a secular, socialist-leaning party with a predominantly Chinese base. Completing the coalition is Anwar’s newly minted multiracial, multiethnic Justice Party (PKR). Many considered it unrealistic that this coalition could win anything on a reform platform calling for the dismantling of the bumiputera privileges enjoyed by a majority of the electorate.

In early 2008, the opposition cobbled together a non-binding pact and agreed to focus its collective energy against a common enemy. Parliamentary and state seats were allocated so opposition votes would not be split in an electoral contest. Underlying this effort was a challenge to the conventional wisdom that Malaysian politics has and will forever be defined by racial preferences. The People’s Alliance coalition, as it was later named, forged ahead since its 2008 victories, winning by-election after by-election, formulating a Common Policy Framework, and building confidence in the states and territories that it controls. Anwar himself regained his Parliamentary seat in an August 2008 by-election and was declared opposition leader.

PAS has softened its approach. Imposing Shari’a is no longer the party’s primary objective. PAS leaders talk more about economic development, reducing corruption and promoting greater cooperation among Malaysia’s different ethnic groups. The party recently announced it would grant membership status for the first time to non-Muslims, and may even run non-Muslims as candidates, recognizing the Chinese and Indian support that propelled its electoral gains. PAS was also on the front lines in 2010 condemning the government’s banning Malaysia’s non-Muslims from using the word “Allah.”

The same goes for the DAP, which is staunchly secular, predominantly Chinese and has been perpetually suspicious of PAS’s intentions. DAP Secretary-General Lim Guan Eng, who is also the chief minister of Penang, can be heard on the campaign trail in Malay precincts quoting from the Qur’an, ‘amaru bil ma’ruf wa nahi ‘anil munkar, (enjoin the good and forbid the evil) and making frequent references to the good governance practices highlighted in Caliph ‘Ali’s letter to Malik Ashtar in the seventh century. Such symbolism goes a long way toward building confidence among the hypersegregated racial groups in Malaysia. The fact that Penang has posted budget surpluses in 2008 and 2009 is an indication that there are sound policies behind the slogans.

UMNO has had no choice but to respond to the challenge of new ideas. With millions of Malaysians consuming independent news online and a sluggish economy undermining the government’s popularity, Prime Minister Najib realizes that power may slip away unless UMNO crafts a bold response. He unveiled a catchy slogan called “1Malaysia” intended to bring the races closer together. His economic team has put together an ambitious transformation plan to overhaul institutions, stimulate private investment, create jobs and attract foreign investment back to the country. The 2011 budget will pump millions of public dollars back into the economy and civil sector.

Although elections will not be held until 2013, many are predicting snap polls in the first half of 2011. One indication is Anwar’s six-month suspension from Parliament in December for accusing the government of lifting its “1Malaysia” national unity campaign from a defunct Israeli political alliance. Three opposition lawmakers were also given the boot for protesting Anwar’s sentence, arguing that he was never given an opportunity to defend himself before Parliament’s disciplinary committee. Many also anticipate that Anwar’s second sodomy trial will end badly. Like in 1998, the court proceedings have thus far been marred by political interference, fabrication of evidence and denial of due process. Imprisoning Anwar may solve one problem for UMNO by sidelining the opposition’s hardest working campaigner. But it will likely create new fronts on which it has to battle a skeptical and impatient electorate. The thousands of people who flock to opposition rallies around the country may not take his jailing lightly.

Anwar’s coalition too shows signs of distress. By-election defeats in November have highlighted its waning popularity. Concerns over PAS’s aspirations for transforming Malaysia into an Islamic state governed by Shari’a continue to resurface from time to time. The perceived failure of opposition state governments to deliver on campaign promises may convince a portion of undecided voters that in the end, it is only UMNO that can deliver on policies. Defections and infighting in PKR have left many wondering whether the glue that holds the coalition together will survive another electoral cycle.

History has not been kind to single party rule that survives the half-century mark. UMNO, which has yet to lose an election in 52 years, can therefore anticipate a change in government soon. This is not necessarily a bad thing. The democratic forces at play in Malaysia today have been good for people in general. A stint in the opposition will force UMNO to undertake more reforms. And the frequent alternation of governments has the potential of generating more accountability and better policies that can lead Malaysia back to tiger status.

Aasil Ahmad lived in Malaysia for several yeas as an entrepreneur and media and communications strategist.