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Southeast Asia

Malaysia in political stalemate

Prof. Murray Hunter

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Malaysia’s Prime Minister Najib is facing accusations of fraud with the 1MDB fiasco, and the murder of Mongolian model Altantuya Shaaribuu, while the economy is going into a ‘nosedive’.

After six and a half years in office, Premier Najib presides over a nation with contracting growth, rising inflation, growing unemployment, a Ringgit at a 20 year low against the US Dollar, significant capital flight, a massive debt problem, disappearing sources of income, and low consumer confidence.

Although some of these problems are the result of global factors such as declining oil and gas prices, low commodity prices, and sluggish growth of major trading partners, Malaysia’s problems also greatly exist today as the result of policy failures. Extremist policies have also led to social and ethnic tensions within the country. In addition, the depreciation of the Ringgit and introduction of the GST have put undue hardships on the people.

Malaysia is going through a very intense period of political infighting at the highest echelons of power within the dominant party within the Barisan Nasional (BN), UMNO. Premier Najib recently sacked his Deputy Muhyiddin Yassin, and other ministers and officials in desperation to maintain his grip on power, while the former PM Dr. Mahathir is leading a vanguard of senior UMNO stalwarts to remove Najib from office.

Within corporate Malaysia, there is now a deep realization about how fast Malaysia is falling behind the rest of the world. Many believe that the Prime Minister has not grappled with the real problems facing the nation. This thinking according to sources goes right to the board rooms of companies like Sime Darby and Petronas, some of the premier financial institutions of the land, as well as a number of Royal Households.

However there is a large split in thinking about how to solve the problem, as the Mahathir forces are still viewed with great suspicion by many sections of royalty. Thus any possibility of him being an immediate interim prime minister would never be considered. There is also a general distain for the weak and incompetent opposition in the country, which instead of showing leadership has allowed infighting to surface publicly and dissolve the Pakatan Rakyat.

Consequently, there is no planned takeover of power, coup, of method to remove Najib from office in existence. The prevailing view is one of being stunned and a feeling of impotence, as Premier Najib has managed to centralize most power in the country around the Prime Minister’s position.

The immediate task at hand for Premier Najib was to deliver a national budget. There has been massive revenue shrinkage due to falling oil revenue and a corresponding reduction of dividends paid by Petronas to government consolidated revenue. The unpopular GST will not make up the projected short falls over the coming years, which will increase the budget deficit, if government spending is not drastically reduced. This would be politically unpalatable, particularly at a time when Najib is so unpopular. Najib also has to contend with growing unemployment and will be pressured to maintain infrastructure spending, so lucrative contracts can continue to be given out to his supporters.

The flip side for Najib is that with the falling Ringgit, and rising debt, ratings agencies will be looking for fiscal responsibility in the budget. A fiscally irresponsible budget could increase capital flight which is already a major problem for Malaysia’s balance of payments.

Najib has tried to do all this. He has chosen the path to spur the economy through nine infrastructure projects, of which a high proportion are in rural areas, Sabah and Sarawak. In addition, a lot of ‘sweeteners’ have been added into the budget, which are no doubt aimed at shoring up his popular base. From this point of view, it could be construed as an election budget, giving Najib the option to call a snap election, if necessary. At the same time a number of reforms for the civil service have been announced as well as a projection of a lower budget deficit of 3.2% of GDP, down from 6.7% the year before, in an attempt to win support of ratings agencies.

It’s a budget that BN members of Parliament would find it difficult to vote against, due to the large numbers of specific programs benefitting their individual electorates.

The weak opposition has become Premier Najib’s great strength. PAS President Aman Hadi’s push for HUDUD laws eventually broke up the opposition alliance, Pakatan Rakyat. In addition Hadi’s indecisiveness on whether PAS would support any no confidence motion against Najib in parliament this week was seen by many in the opposition as treacherous.

The handling of the no confidence motion showed complete incompetence. The fact that DAP MP Hee Loy Sia filed a motion of no confidence before PKR leader Wan Azizah, has led to questions in the local media about whether the new alliance Pakatan Harapan actually wants to remove Najib from office. The opposition seemed to be more interested in who would make the motion of no confidence, rather than actually making this symbolic move in parliament, which would have failed anyway, due to lack of numbers of support the motion.

Others felt that the whole matter of a no confidence motion was just a waste of time, as there is no chance of and mass defection of Barisan MPs. UMNO backbenchers have shown no sign of wavering, as have Sabah and Sarawak MPs, along with Gerakan and MCA members.

There is also worry about the opposition’s policy proposals to solve the financial crisis. The opposition proposal to put 1MDB into administration in Wan Azizah’s budget speech would only lead to an asset fire sale. In addition, blocking TNB from taking over 1MDB assets is just sabotaging any initiatives to reduce debt.

There is no end game in sight.

It is rumoured that Najib’s mother and at least one brother has asked him to make a deal with Dr. Mahathir on safe passage out of Malaysia and immunity from prosecution. However, upon Najib’s wife, Rosnah’s insistence, he is taking up the fight to survive with a new and ruthless political secretary in charge. Such a deal anyhow would provide Najib with no guarantee, as Dr. Mahathir has no legal or political standing to make such a deal.

No doubt, Najib will pass through this session of parliament with the partisan speaker Pandikar Amin Mulia, and the UMNO AGM in December. In theory Najib can continue right up to 2018 as party president and prime minister. However, the pressure of a quickly deteriorating economy and a poor budget reception could change that timing, particularly is any other unforeseen event arises over the next few months.

The advantage to Najib is the extremely poorly coordinated opposition that has shown itself to be in disarray with the PAS/Parti Amanah Negara (PAN) split. Ironically, Dr. Mahathir looks and appears to be the only effective opposition leader in Malaysia today. Yet the Mahathir forces themselves are also impotent (something he admitted himself) against the Najib forces which control the powerful PM’s office, ministers, UMNO, and police.

Overall, Mahathir has been disappointing in his handling of Najib, which has only in reality showed up his impotence in standing up to his old protégé. He has failed to show the strength he once had as a leader and politician.

Muhyiddin and Tunku Razaleigh have primarily been on the side-lines, unwilling to take any lead.

Najib’s best action would be to go for an immediate snap election after the budget and catch the opposition ‘off guard’, and weaken them further. By placing his people in winnable seats, Najib could further his strength within UMNO and government, and even weaken the Mahathir forces mortally.

The recent poll stating the unpopularity of UMNO and its leader with the Malay electorate was urban biased, thus such a result would be expected. The general election is won or lost in the heartland, not the urban areas, so UMNO can still win.

However, there would be very little incentive to do this as parliament still has two years to run until an election is needed. Nevertheless, it could be tempting to wipe out PKR, PAS, and Harapan Baru all at once, as PAS is likely to stand candidates against PKR and DAP leading to three-cornered contests. The opposition also has a major credibility gap with the Malaysian public.

A new parliament after an election would most probably be dominated by UMNO and DAP, which is set to make massive gains.

Najib’s best and only option open to him at the moment is to stay in power to protect himself, and the interests of his family’s businesses, controlled by his brothers Nazir, Ahmad Johari, Mohamed Nizam, and Mohamed Nazin Razak. These business interests include a number of high profile corporate assets, entangled with a number of close associates including Tan Kay Hock, Shahril Shamsuddin, Mohamed Azman Yahya, Rohana Mahmood, Azman Mokhtar, Mohd. Nadzmi Mohd. Salleh, and others, who could stand to lose many of their assets should Najib no longer be prime minister.

Najib seems very hesitant to go the election track and may rely on police repression to maintain his grip on power for the time being. Najib’s new DPM Zaid is like a ‘pitball’ and his new political secretary Muhd Khairun Aseh Che Mat has shown himself to be a ruthless political operator. Attacks on dissenters and the arrests of those trying to expose Najib, like Khairuddin and Matthius Chang under the anti-terror SOSMA laws, shows what Malaysia may be install for in the near future.

This would leave the leadership crisis in stalemate, where Najib can choose his own time to step down, while the economy continues to deteriorate into the foreseeable future.

To this point in time, primarily due to the lack of incentive to unite, Najib’s detractors are powerless to make any decisive constitutional moves against him.

No one is able to convince to UMNO/BN politicians, except for the Najib forces, who are keeping a tight rein on them. So any move by former senior UMNO leaders to push for an interim government through the parliament and constitution is not a possibility.

Najib, who was once Dr. Mahathir’s protégé has proven himself to be more skilful and cunning than the master.

Yet the biggest tragedy for Malaysia is that the Najib regime has no vision for Malaysia, and thus the longer he stays, the more damage that will be done.

There is also little hope in any post-Najib era as well. The opposition is only coming out with ad hoc policy measures, which may even make worse some of the problems, and the Mahathir forces are totally silent about what they would do.

Innovator and entrepreneur. Notable author, thinker and prof. Hat Yai University, Thailand Contact: murrayhunter58(at)gmail.com

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Southeast Asia

France returns to Laos

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The geographical location of Laos, a small landlocked state surrounded by China, Thailand, Myanmar, Vietnam and Cambodia, has made it imperative for this country to pursue a well-balanced multi-faceted foreign policy that hinges on the development of a mobile system of economic and political counterbalances.

Regional integration is key to the economic development of Laos. A major integration mechanism is ASEAN, of which Laos has been a member since 1997. 99% of Laos’ residents believe that their country’s membership in this organization yields tangible economic benefits; 92.5% say it has improved their personal financial standing.

As a member of ASEAN, Laos is committed to developing relations with China, Thailand and Vietnam but pursues a preferential policy as regards each of them.

China remains number one investor in the Laotian economy ($ 8.5 billion) with the bulk of the finances channeled into the mining, transport infrastructure and energy sectors. In 2016, trade turnover between the two countries reached $ 2 billion , a significant amount for Laos with its less than 7 million population. The largest Chinese-Lao project is the railway from Kunming Province (PRC) to Laotian capital, Vientiane. China is ready to inject more than $ 6 billion in the project

Meanwhile, Laos has been stepping up cooperation with Vietnam, which maintains a wait and see position in relation to China. Laos views Vietnam as a political and ideological counterweight to China. Cultural ties with Vietnam serve as an additional means of preventing the transformation of Beijing’s economic influence into the ideological one. Members of the ruling People’s Revolutionary Party of Laos receive training in Vietnam.

With a view to diversify foreign economic and foreign policy relations, Laos is developing contacts with France, whose colony it used to be in the past. Paris is seen as a remote neighbor of Laos, a partner in the economic and cultural spheres. Since 1991 Laos has been a member of the international organization for the cooperation of the francophone states “Francophone”. According to the French Embassy in Vientiane, the number of Laotians who speak French amounts to 3% and has been increasing over the past 12 years.

Laos is home to two branches of the Institut Francais du Laos (IFL) – an organization that promotes the French language and culture abroad; the French language is on the curriculum of three of the country’s five universities. In March 2018, Laos was visited by leaders of “Francophone”, and in May 2018 – by representatives of the Francophone University Agency. The official mission of the latter is to create a new French-language communication and educational space. The visits resulted in the signing of agreements on further cooperation with both organizations.

The period that saw a catastrophic fall in the demand for the French language in Laos since the mid-1970s is coming to an end. Nevertheless, the Lao Ministry of Education has designated English as a compulsory subject in schools for the 2019 academic year. The decision was prompted by the currently prevailing position of English worldwide and Vientiane’s intention to develop economic ties not only with the Francophone, but also with the Anglosphere.

Along with the cultural influence, France is trying to build up its economic presence in Laos. In May 2018, a French delegation led by French Ambassador Claudine Ledo visited a special economic zone in the province of Savannakhet to examine the prospects for French investment. For Laos, France is the ninth largest trading partner accounting for only 0.2% of the Lao market but it holds top position among non-Asian countries in the volume of investment.

Trade turnover between Laos and France has been fluctuating in recent years between $ 34 and $73 billion. France is prepared to invest in the Lao economy but the volume of investment is determined by the extent of Vientiane’s openness to foreign investment flows and the ability of the Lao economy to ‘digest’ them.

The year 2019 will mark greater cooperation within ASEAN for Laos. Last year, economic issues within ASEAN prevailed over political ones in connection with trade conflicts between the United States, the European Union and the People’s Republic of China. ASEAN countries are planning to launch the Regional Comprehensive Economic Partnership program (RCEP).

If the program is fulfilled, it will become the largest trade agreement in the world. The cumulative GDP of the countries participating in it makes up 25% of the global GDP, the population accounts for 45%, and the trade turnover amounts to 30% (5). Australia, New Zealand, Japan, South Korea may all be attracted to the program. This will provide Vientiane with more opportunities to diversify foreign economic relations amid China’s growing financial presence in Southeast Asia.

France was the first European country to sign a partnership agreement with ASEAN. Paris regards this organization as key to its policy in the Indo-Pacific region and a major economic partner. The volume of French investments in the ASEAN economy in 2017 reached € 16 billion. France’s share in the ASEAN market is 1.6%. This figure has not changed for ten years.

Paris aims to give cooperation with ASEAN a new impetus, which will impart more momentum to French-Lao relations.

First published in our partner International Affairs

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Southeast Asia

On Refugees… And Myanmar: It’s Not Just The Rohingya

Dr. Arshad M. Khan

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… And my life’s cold winter that knew no spring; Of my mind so weary and sick and wild,  Of my heart too sad to sing.  — Paul Laurence Dunbar

The world now has more refugees than at any time since after WW2, more than the population of Britain.  They are often the consequence of wars usually instigated by great powers directly or through proxies.  Civil strife accompanied by the demonization of minorities, killing and expulsion is another reason.  Such is the story of the Rohingya in Burma, or Myanmar as it now likes to be known.

It is a country with the river Irrawaddy as a central artery.  Bordering it is the heartland, peopled by the Bamar who make up 68 percent of the population and are Buddhist.  The Rohingya are Muslim, look different and have lived in Rakhine state for at least five centuries.  During WW2 they supported the British while the Buddhist Burmese supported the Japanese, their coreligionists.  It brought lasting enmity.  After years of propaganda and vilification, the Rohingya were stripped of citizenship.  Not unlike Nazi Germany targeting Jewish people, new restrictive laws curtailed liberties, marriage rights, even children — limited to two.  The vilification turned most neighboring Buddhist villages against the Rohingya, and those attacking and burning their villages were often these neighbors when not the military.

In this latest violence, 90 percent of the Rohingyas were driven out and about three-quarters of a million sought refuge across the border in Bangladesh.  The story does not end with the Rohingya for there are other threatened minorities in Burma occupying the periphery in the north and south:

In northern Shan state, a simmering conflict with the Taang National Liberation Army dating back to 1963 has displaced 300,000.  The army emboldened by the relatively meek response to the assault on the Rohingyas have intensified their efforts also against the ethnic Kokang’s  Myanmar National Democratic Alliance Army.  The consequence is an addition to the tens of thousands that had streamed from earlier conflicts over the border into China.  Also in the north the largely Christian Kachin minority formed the Kachin Independence Army to defend their villages.   The ongoing conflict has displaced more than 135,000 internally.  And in the south the conflict with the Karen (Buddhist, Animist and 15 percent Christian) resulted in over 100,000 refugees … this time in Thailand, plus a 100,000 diaspora to the rest of the world including some 65,000 in the US.  Myanmar’s perverse antipathy towards all its minorities makes a mockery of the Nobel Peace Prize awarded to Aung San Suu Kyi, its leader.  Is meaningful censure an answer, or is innate tribalism an unconquerable primitive amygdala response?

The top five refugee hosting countries might also come as a surprise.  Amid all the news of Angela Merkel’s generous offer to accept everyone entering her country, Germany is not one of them.  Shortly thereafter her party lost by-elections and she is departing.  The actual figures are Turkey (3.5 million), Pakistan (1.4 million), Uganda (1.4 million), Lebanon (1 million) and Iran (0.98 million).  The chaos in countries adjoining them (think of Afghanistan, Iraq, Syria and Somalia) explains why, and the great power with a finger in each pie, when not actually baking it, is also not difficult to discern.

Imagine being forced to flee with just the clothes on your back or just a bag.  A word here also for the people who had to do just that to escape wildfires.  They all have our heartfelt sympathy, often taking a concrete form through donations to help.  A happy new year to everyone and a better one for the unfortunate among us.  We can try to make it so.

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Southeast Asia

In Thailand, Mahathir offers a hypocritical take on ASEAN unity

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“The stability and prosperity of our region,” Malaysian premier Mahathir Mohamad claimed earlier this week, “rely heavily on a united and integrated ASEAN.” The call for regional unity came as Malaysia’s prime minister was conferred an honorary doctorate in Thailand in the field of social leadership, entrepreneurship and politics, an occasion that marked Mahathir’s second visit to the country since winning a landmark election in May this year. His earlier visit saw him pledge to facilitate peace in the southern border provinces of Thailand amid a persistent separatist insurgency.

While his speech may have been stirring, Mahathir’s grandiose vision of a more unified ASEAN community does not extend to his own government’s policies, at least judging by the escalating border dispute Putrajaya has ignited in recent weeks with neighbouring Singapore. The same Mahathir that called for regional unity in Thailand is refusing to remove ships from disputed waters, while a senior member of his party threatened Singapore with “pain by a thousand cuts”. The provocative language harkens back to the long and tense relationship between the two countries since their 1965 split, with boundary issues typically flaring up in parallel with domestic politics.

This latest dispute straddles two sets of issues. On the maritime side, Malaysia’s October claim to extended limits of the Johor Bahru port has been rejected by Singapore on the grounds that the new boundaries exceed previous claims. In terms of airspace, Malaysia has voiced opposition to the Instrument Landing System (ILS), an assisted navigational aviation facility for Seletar Airport. Malaysia protests the system’s implementation on the grounds that it infringes on national sovereignty and creates adverse impacts on flight paths and shipping in Pasir Gudang.

Mahathir’s renewed aggression toward Singapore marks a notable about-face from predecessor NajibRazak’s efforts to build stronger ties between Malaysia and the city-state. Najib sought to increase mutual trust through cross-border infrastructure and education projects. “We certainly do not want to return to the era of confrontational diplomacy and barbed rhetoric between our two countries,” he declared earlier this year in a barely-veiled barb at Mahathir’s preceding stint in office. “It was an era that we want to forget.”

That attitude was echoed by international observers, who held high hopes for bilateral relations upon Mahathir’s election as PM in May despite his widely-known frosty attitude towards Singapore. A few months in, those hopes have given way to somber disillusionment. The tensions of the past several weeks have revived uncomfortable memories of cross-causeway relations during Mahathir’s first stint in power, when he ruled Malaysia with an iron fist from 1981 to 2003.

One focal point of tensions is Mahathir’s so-called 2001 “crooked bridge” plan, designed to replace the causeway linking the two countries with a bridge to allow ships to cross the Johor Strait. Singapore refused to back the project, declaring the bridge unnecessary as long as the causeway was in good condition. Mahathir’s insistence on building Malaysia’s end of the bridge, and more recent attempts to revive project discussions, have confirmed fears that his return to power would revive old issues previously laid to rest.

It’s difficult to determine exactly why Mahathir is so blatantly after confrontation with Singapore. Two main theories have emerged to explain the PM’s enmity towards Malaysia’s tiny neighbour. According to the first theory, the idiosyncratic Mahathir holds a grudge from his university days in Singapore, where he faced anti-Malay prejudice and condescension from Singaporeans.

Mahathir does indeed have a history of holding grudges. Long before the Seletar airport issue and the revival of the Johor Strait bridge project, Mahathir had one-time protégé Anwar Ibrahim thrown in jail on trumped up sodomy charges after they disagreed over financial policy in the wake of the 1997 Asian Financial Crisis. Anwar, who has since re-emerged as a critical political ally for Mahathir, was just one of a long list of political opponents to suffer similar fates during Mahathir’s first tenure.

That trend has carried over into the premier’s second term. Having already spoken at length of his soured impression of successor Abdullah Badawi, the newly reinstated leader is now going after predecessor Najib. Arrested in July in connection with the billion-dollar corruption scandal surrounding state investment fund 1MDB, Malaysia has also filed criminal charges against Goldman Sachs for its involvement in the embezzlement of large sums of money. The unfolding case against Najib is being held up as a litmus test of Mahathir’s commitment to justice. The supposedly “bitter” Mahathir is unlikely to disappoint.

The second theory, however, may offer a more straightforward explanation. It suggests Mahathir is using this latest spat with Singapore as a means of drawing attention away from domestic problems. A Nikkei Asian Review report released earlier this year held Mahathir’s government responsible for a rapidly declining ringgit, with the new administration lacking in substantial new economic policies and failing to curb capital outflow.

Mahathir’s economic woes are compounded by rising concerns over Malaysia’s ballooning debt. In the wake of the 1MDB scandal, realizations that government debt exceeds RM1 trillion – more than $238 billion – are ringing national alarm bells. The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index has fallen nearly ten percent since Mahathir took office.

Amid rising debt, dubious economic policies, and broken election promises, Mahathir’s comments in Thailand earlier this week belied what could very well be a conscious strategy of exploiting regional tensions to maintain domestic control. While ASEAN unity almost certainly is the only path to shared regional prosperity, Mahathir does not seem to be to be listening to his own advice.

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