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Ghosts of Compromises Past – Malaysia and the Limits of Change

Trends in Southeast Asia Series: 9(2005), ISEAS, Singapore

AT A DINNER given in his honour held on 31 October 2004 by the Mentri Besar of Perak state exactly one year after Abdullah Badawi became Malaysia’s Prime Minister, the new leader optimistically stated that he expected to reap greater success during his second year in office. During his first year, he had only been sowing “high-yielding seeds”, and these were expected to mature in the second year.

This tells us that a longer perspective is necessary even when we reminisce about the past year. While this paper takes a quick look at Malaysia’s experiences over the last year, it tries to analyse the events
through the adoption of a long-term approach. Current events gain significance from two directions – firstly, through what is to come, since this will decide their causal status, and secondly, through what went before, since this allows them to be viewed as effects of past processes.

I shall view trends in Malaysia as compromises and alterations to compromises. This is all the more necessary if we are to give full significance to the position that Abdullah Badawi apparently finds himself in, i.e. succeeding the highly active and controversial long-term premier Tun Dr Mahathir Mohamed. Looking back over these past two years is therefore all the more exciting because of this “succeeding the Great Leader phenomenon” that Abdullah’s leadership to a great extent is about.

He is seen by many as a man who rode out the political storms of the Mahathir era, and much hope for effective change and rectification of policies is therefore placed in him. His perspective on Umno politics and on Malaysian politics involves a long history stretching from a time before Mahathir to a time after Mahathir. The Mahathir era itself stretches back over decades, and therefore Mahathir’s way of thinking, his style of politics and all the things he built and all the things he dismantled have had lasting effects on the political terrain.

Can Abdullah build on the successes of the Mahathir era while rectifying the excesses? That has been the question on people’s minds. Furthermore, he has to do this with the help of the Umno that Mahathir built, and with Mahathir visible at the sidelines concerned about his own legacy.

When Mahathir retired after 22 years at the helm, and Abdullah took over in October 2003, many  wondered how Malaysia would manage under this quiet Umno stalwart whose greatest asset was apparently his unobtrusiveness. Due to Mahathir’s centralisation of power and his dabbling in all facets of Malaysia’s political economy, a life after him was then hard to imagine. Much has happened since then, and what is surprising is that Mahathir has been more easily forgotten than anyone thought possible just two years ago. However, the heritage of a regime that lasted as long as his cannot but continue to exert strong influence over the succeeding administration, not only where policy continuity is concerned but also with regards to the issues that demand attention.

Budget deficits, a strong Islamic opposition, widespread corruption, cronyism, mega-projects and soured relations with many countries were as much Abdullah’s inheritance as were a diversified economy, a good
infrastructure, a growing middle class and stable inter-ethnic relations. The general impression in recent  months is that Abdullah is doing rather well. The main criticism against him had been that he was overly cautious, and changes had therefore been rather tentative. This perspective is probably encouraged by  the Mahathir era itself. Drama was common in Mahathiran politics, and nothing was holy enough to feel save from being assaulted and redefined. It would not be fair therefore to expect the new prime minister to maintain the same tempo and style, nor is that necessarily desirable.

Introducing Islam Hadhari to de-politicise Islam

One of the most important conceptual innovations to come out of Abdullah Badawi’s administration is  Islam Hadhari”. In order to understand its domestic significance, however, one has to locate it within the Islamisation process in Malaysian society that preceded its formulation.

During the time the New Economic Policy (NEP) was being worked out to help Malays gain a stronger share of the economy in 1970, Islamisation was just appearing on the political horizon. Since then however, Malayness had internationalised itself through religious globalism, as much as through secular capitalism. Domestically, Muslimness was been increasingly used to define, and recreate, Malayness itself. Every now and then, paradoxes appeared when calls for globalisation were made alongside demands for increasing censorship.

Islamisation in Malaysia took off recognizably in the 1970s, and it was during this period that leaders such as Anwar Ibrahim gained prominence as much for their public demonstrations as for their agenda of  Islamization. By 1982, Mahathir decided to defuse what he saw as a grassroots swell and recruited Anwar Ibrahim into the United Malays National Organisation (Umno), the dominant party within the country’s ruling coalition. The process of Islamisation drew much of its inspiration from major international incidents
such as the Oil Crisis of 1973 and the Iranian Revolution of 1979.

In time, Malaysia’s development began to gain a greater Islamic aura that has often alarmed other religious groups in Malaysia. The late 1980s was marked by the internal conflicts within the secular Umno that led to a split among the Malays that has as yet not totally healed. Inter-ethnic tension was dangerously high.

Mahathir’s strategy of survival on that occasion was to form a new party named Umno Baru (New Umno), but which nevertheless immediately hijacked for common use the highly popular old brand name of “Umno”. Five ministers lost their jobs in the process, including Abdullah Badawi, who was Defence Minister.

During the 1990s, Anwar Ibrahim’s rise led to further changes in the leadership of Umno and the government-linked institutions. Things came to a head after the 1997 financial crisis, however. With the 1998 sacking of Anwar, his bizarre trial and sentencing, and the founding of the reformasi movement, growing anti-Umno and anti-Mahathir sentiments among the Malays culminated in disquieting bad electoral results for the ruling coalition in November 1999. The Islamist party, Parti Islam SeMalaysia (PAS), took power in the states of Kelantan and Trengganu and strongly threatened Umno in the other  northern states. The conflict between Mahathir and Anwar thus led in effect to an Islamist advance in the elections against the more secular agenda of party that had controlled the party since 1957.

Mahathir had been under pressure to adopt some strategy to steal the thunder from the growing opposition. This strongly affected his choice of a successor as deputy prime minister. He bypassed Najib Abdul Razak, whom many thought was the given candidate, and in February 1999, chose Abdullah  Badawi instead. Abdullah’s reputation was supposedly needed to counteract the moral high ground that PAS had gained vis-à-vis Umno.

This move was too late and too little to turn back the tide, at least that time around. 9/11 – when terrorists attacked New York and Washington – was the beginning of the next setback for Islamists in Malaysia.  It provided an excuse for the government to crackdown on the Malay right and the Islamic party. This was so thoroughly done that Mahathir earned himself an invitation to Washington, an honour that to his credit nevertheless did not silence his criticism of the USA in any way. In an interview on 27 May 2005 in The
for example, he denounced the Bush administration as a “rogue regime”.

In June 2002, in an attempt to undermine PAS authority, Mahathir went so far as to declare Malaysia a de facto Muslim state. Eyebrows were raised and questions were asked about Mahathir’s concern with the  Islamists, and about the length to which he would go to counteract their appeal.

One of Abdullah Badawi’s first acts as Prime Minister after taking over on October 30, 2003, was to introduce the concept of Islam Hadhari. This vague term was finally provided with a list of ten principles
during the Umno general assembly in September 2004, all but one of which had no religious connotation. Nevertheless, this move appeared to be all that was needed for voters to return to the fold of the Barisan Nasional. The general elections of March 2004 took place in a new atmosphere. Mahathir had stepped
down after 22 years in power, and a new awareness among moderate Muslims about terrorist tendencies in their midst gave further significance to the religious background of the new prime minister. Abdullah Badawi won a landslide.

The release of Anwar Ibrahim soon afterwards raised Abdullah Badawi’s prestige further as a leader who could bring morality back into politics, and who could heal intra-Malay conflicts.

The introduction of Islam Hadhari is an attempt to shift Islam’s focus from its sanctioning function to its civilisational potential, “de-ideologizing” it to an extent. Islam is presented as a generator of civilization and culture, and not merely as a source for religious inspiration. This has helped to counter extremist tendencies domestically and to provide a conceptual platform for “moderate Islam”.

Very importantly, Islam Hadhari tries to project the idea that Umno’s materialism and nationalism do not contradict Islam. The idea has been proselytised domestically even as it is announced internationally
during Abdullah Badawi’s many visits to Islamic countries.

A raid in January 2005 by the “moral police” from the Federal Territory Islamic Department (Jawi) on a popular nightclub in Kuala Lumpur led to a public debate that showed how Muslim individuals and groups differed in their views on the matter. Not only are there deep divisions within the Malay community, but the issue of religion has also become so tightly connected to inter-ethnic questions that debates tend to stall very early in the process. The initiative taken in February 2005 by various groups to achieve an “inter-faith commission” based on the structure of Human Rights Commission of Malaysia, fell victim to warnings about “ethnic sensitivities”, despite support from the Minister of Culture, Arts and Heritage, Dr Rais Yatim. Abdullah Badawi, perhaps reacting to rumblings on the ground, cautioned against the proposal since it “can have an impact on the prevailing religious harmony among people of diverse religions”.

The tension between Umno and its basically secular agenda on the one hand, and the religiousness of the Malay community that it professes to represent has therefore been managed through various compromises. Today, with the atmosphere strongly charged with concerns about emerging economic superpowers such as India and China, the religious aspect of Malaysian nation building has been overshadowed by worries about the national economy and the moral health of the government and its component parties.

The call for a revival of the NEP, or at least its “spirit”, made by Umno Youth at the July 2005 general assembly, which has drawn sharp responses from Chinese members of the ruling coalition, may therefore be seen to be an Umno reorientation towards ethnicity, not necessarily vis-à-vis other ethnicities, but vis-à-vis Malay Muslimness. This would basically be a return to Malay politics before the era of Islamisation.

From Malay Agenda to New National Agenda

Umno was formed to protect what was termed Malay rights within a Malaysia that was unavoidably multi-racial. This ambition has come to be called The Malay Agenda, and has been best expressed through the New Economic Policy. This policy was not only a balance between economic growth, ethnicity-class relations and the income gap, it was also a compromise made between the “ultras” and the moderates within UMNO in the early 1970s.

Some of its major architects, such as then Home Affairs Minister Tun Dr Ismail, considered it highly important that a best-before date was put on policy. They decided that 20 years was a good round figure at the time. Looking back, one is wont to think that that was overly optimistic, given the hurdles Malaysia had to clear along the way, including problems of governance, corruption, communism, and inter-ethnic tensions. A row of unexpected issues also turned up along the way in the form of intra-Malay political disunity, the 1997 financial crisis and the Islamisation of Malay society as part of a global trend.

While a compromise between “ultras” and moderates was made in the formulation of the NEP, the spirit of that compromise did not necessarily trickle down to the Malay community at large. Affirmative action was therefore often carried out, not as a national economic policy, but as a strategy for ethnic defence, and for putting non-Malays in their place. The implementation of the NEP was therefore compromised from the start, and the effects of this on the lack of efficacy need to be studied further. While the “spirit of the NEP” was rational, professional and business-like, the “spirit” in which it came to be implemented was less generous in character.

Under Mahathir, the implementation of the NEP focused on economic growth. This reduced the ethnicity-class objective to the creation of an urban Malay middle class, and sidestepped inter-ethnic questions through a discourse on East and West. Poverty goals were given little priority. Notwithstanding the positive effects of this strategy, the income gap nevertheless grew, budget deficits worsened, corruption became rampant, inter-ethnic integration suffered, Malay unity broke down, and Umno split and lost much of its grassroots support.

Fighting a culture of corruption

Where the struggle against “the culture of corruption” is concerned, hopes were raised by the release on  May 16 of the 500-page Report of the Royal Commission to Enhance the Operation and Management of the Royal Malaysia Police, with 125 recommendations for reforming the police force. Time will tell how well these recommendations will be implemented.

It was however money politics within Umno that had become the major issue where corruption was concerned, growing in importance the more it was realised within Umno itself that the party’s credibility was being seriously undermined. If the major party in the ruling coalition was riddled with corruption, the government could not possibly lead a campaign against graft throughout society in general. The credibility of Umno was at stake.

For months, the country wondered what would come out of all the debates about corruption and money politics. A few “middle-rank” party members were reprimanded and suspended. Finally in June, the Minister for the Federal Territories, Tan Sri Mohd Isa Samad, was punished after the party’s disciplinary board found him guilty of vote buying. Isa Samad was a rank outsider in the last party elections but sprung a surprise on everyone when he came first in the battle for the three posts of party vice-president.

While this dramatic move by the Umno leadership against a Minister and vice-president was hailed on all fronts, many were disappointed that that also appeared to be the end of the matter this time around. No other “big fish” was to be pulled in. The party is instead reviewing its voting system, and some radical changes are expected to be made soon.

In July, former Sabah chief minister Osu Sukam, a senior party member, was forced to resign as Papar Umno divison chairman after disclosures that he had accumulated debts of over RM7 million at a London
casino. The same week, the parliamentary Public Accounts Committee (PAC), having checked on the privatised PSC-Naval Dockyard, advised the government to attempt a reversal of the privatisation exercise and recommended that an investigation for breach of trust and fraud be initiated. At the same time, it was also revealed that fraud charges were being considered in the case of a cargo-handling project at Malaysian Airlines Systems. Both the latter cases involve tycoons created during the Mahathir era.

Meanwhile, another case was gaining attention that was to add fuel to the ongoing discussions about Malaysia’s purported culture of corruption, and its decades-long affirmative action policy.

Tengku Mahaleel Ariff, a Mahathir ally and CEO for the national car company, Proton, had commented in a Chinese language newspaper that the firm had been receiving “poor treatment” from the government. The board of directors asked him to explain himself, and by the end of July had allowed him to resign after he refused to the conditions of his new contract.

This train of events had in the meantime led to a battle of words between Mahathir, who is adviser to Proton, and the Minister of International Trade and Industry, Rafidah Aziz. It was Mahathir who had
appointed the latter as trade minister in 1987 after a major Cabinet reshuffle saw five Ministers, including then Defence Minister Abdullah Badawi, lose or resign from their jobs.

Mahathir publicly stated that it was the uncontrolled issuance of APs – permits granted to Bumiputera-controlled companies for the import of cars – that was to blame for the dramatic fall in sales by Proton, and called for the list of AP recipients to be released. The government at first refused. Three days before the Umno general assembly, however, the list was suddenly made public. The fact that 40% of the APs went to four individuals not only raised questions about corruption and unethical behaviour, the focus now shifted to the more basic issues of efficiency and transparency, especially where affirmative action programmes were concerned. Speeches then made by the trade minister in defence of the ministry’s practices – which included insinuations of memory loss in Mahathir – riled the ex-premier further.

On 4 August, officials from the Anti-Corruption Agency raided Trade Ministry offices and carted away certain documents. Abdullah’s solution to the mess has been to start a review of AP issuance, and to disengage Rafidah Aziz’s Ministry of International Trade and Industry from the drafting of the National Automotive Policy (NAP), putting a Cabinet committee in charge instead. The NAP is due to be announced in September. This string of revelations has given some needed credibility to Abdullah’s mission to eradicate corruption.

In 1987,after the serious split in Umno led to a radical change in the personnel of the old Umno, Rafidah Aziz took over the important trade ministry from Tengku Razaleigh Hamzah, and the recent fallout between her and her old protector, Mahathir, over the question of Approved Permits (APs) for the import of foreign cars symbolises the breakdown of a Mahathir legacy, paradoxically ignited by the retired premier himself. To an extent, the AP controversy has come to symbolize the lack of systemic implementation of affirmative action programmes, and the matter-of-fact manner in which irregularities were committed.

Where Rafidah Aziz is concerned, her tiff with the ex-premier and subsequent loss of support from that quarter, her haughty behaviour vis-à-vis the press and the Cabinet, the public’s sense of fatigue stemming from the revelation of all these and many more cases not mentioned here, the encouraging fact that a major personality in the government, Isa Samad, could be brought down, the fact that many remained unsatisfied because Isa went down alone, and the fact that the public expects more to happen, have all contributed to her becoming a lightning rod in the debate about the relationship between corruption and the implementation of affirmative action programmes.

 A series of party elections

While Umno’s party elections in 2004 were sullied by a string of accusations about money politics, PAS elections in June were noteworthy as further proof that  intra-Malay politics is more dynamic than inter-ethnic politics has become. PAS  was almost kicked out of parliament in the 2004 elections, losing a disastrous  21 seats as well as the state of Trengganu to the BN. This was a shocking  reality check for a party that actually threatened the ruling coalition on various  fronts in 1999.

PAS elections on 5 June 2005 placed reform-minded non-ulama professionals in  key positions, signalling a broad understanding within the party that radical change was needed if the party is to have any chance of regaining lost territory. How this change in leadership will be translated into concrete measures has yet to be seen, and with the general elections still a long way off, there is still room for surprises. PAS has suggested to ex-Deputy Prime Minister Anwar Ibrahim that he should lead the opposition, but so far Anwar has merely thanked the party without accepting the position. Anwar’s future role in Malaysian politics thus remains unclear.

Both the MCA and the Gerakan – the ruling coalition’s two de facto Chinese-supported parties – had their elections in August this year. In the MCA, all positions from the president downwards were
challenged. The discussions at the general assembly during which party elections were held concerned the usual communal issues, economics and the debate started by Umno Youth recently for a revival of the NEP. Because of intense intra-party conflicts, the MCA cancelled polling three years ago. This meant
that these latest elections were the first in six years. The MCA presently holds 28 parliamentary seats, much more than any other Chinese-dominated party. Electoral winners are therefore also expected to be rewarded with governmental positions in Abdullah Badawi’s impending Cabinet reshuffle.

As things turned out, the compromise leadership formed in 2003 to end party infighting, which comprises party president Ong Ka Ting and deputy president Chan Kong Choy, were elected with clear margins. This
bodes well for party unity and for the necessary project of regaining confidence and legitimacy from the Chinese community that it claims to represent.

The Gerakan – apparently lacking in concrete subjects for discussion – suffered an electoral campaign that involved much name-calling. Kerk Choo Ting, long-time deputy president, decided to challenge
long-term president Lim Keng Yaik, forfeiting his old position to the chief minister for Penang state, Koh Tsu Koon, who thus won without by default. Kerk and his followers lost in an election that saw broad support for long-time president Lim and his men. Both sides immediately apologized after results were announced for the rough language used during the electoral campaign.

Strangely enough, two days after the elections, Dr Lim Keng Yaik, elected party president for a record fifth term, presented five key challenges to Vision 2020. These were the need to rethink the education system
for long-term advantage, to develop a National Economic Strategy for global competence, to achieve Bangsa Malaysia (Malaysian race), to enhance partnerships between the private and public sector, and finally to address urban poverty. Such a presentation would have been better placed during an
electoral campaign than after it. The fact that it was not shows a paradoxical need among Barisan Nasional component parties to depoliticise internal electoral campaigning.

Party elections for the next important member of the ruling front, the Indian-supported Malaysian Indian Congress (MIC), are scheduled for May-June 2006. Even there, much excitement is predicted.

Neighbours Close and Distant

Malaysia is taking over the chairmanship of Asean for the coming year, and its job is being made less stressful by the fact that it no longer has the dilemma of handing over the position to Myanmar next year, since Yangon has decided to skip its turn at the head of the table. Malaysia’s agenda as chairman is expected to be greatly influenced by the fact that it will also be hosting the East Asian Summit in December, when all Asean members will discuss future Asian regionalism together with China, Japan, Korea, India, Australia and New Zealand. The fact that the Australians and New Zealanders decided to fulfil the condition of signing the Treaty of Amity (TAC) before being invited to the summit is generally seen as a diplomatic success for the Malaysians. The summit as such is seen by some as a major part of Mahathir’s legacy.

Whatever transpires at this summit is bound to affect the economic policies of all countries in the region over the next few years. While Asean countries, each on its own, reacted well enough to the tsunami disaster of 26 December, Asean as such did not rise to the occasion as a major coordinator of aid. Nevertheless, Aceh was – and is – grateful recipients of large inflows of aid from her immediate and more distant neighbours. The signing of the Aceh Peace Agreement in August is an encouraging sign for the region where a number of conflicts have the potential to lead to open warfare.

Relations between Malaysia and Indonesia were dented by the expulsion of Indonesian workers from
Malaysia in March after the end of a four-month amnesty that allowed them to leave voluntarily. The ensuring tension led to a severe labour shortage in Malaysia over the following months in the manufacturing industries and in construction, plantation work and the services sector. Malaysia has since tried to solve the problem by recruiting labourers from a list of fifteen states in the region including Pakistan, Sri Lanka, Myanmar, Vietnam and Nepal. At the same time, Malaysia has not succeeded in luring Malaysian experts working overseas from resettling and working in Malaysia, and to stem what Abdullah Badawi had started calling the “poaching” of Malaysian talents by other countries.

Relations with Indonesia worsened in mid-February 2005 when Malaysia’s oil company Petronas decided to give production-sharing rights to the Royal Dutch/shell Group in disputed territories in the Sulawesi Sea off
northern Borneo. This quickly led to sabre-rattling demonstrations on the streets of Jakarta. Things have since quietened down.

The latest issue between the two countries is the haze that has been blowing across to Malaysia in early August from forest fires in Sumatra. While Jakarta apologized and countered with the argument that many of
the culprits – at least eight of them – were Malaysian companies, the Malaysian side demanded more effective action, and offered to help fight the fires. This offer was finally accepted. As things look, a long-term solution to the recurrent haze problem needs to be sought at the Asean organisational level. In fact, an Asean agreement on trans-boundary haze pollution came into effect in November 2003. The fact that the haze affects at least four member countries speaks for a regional solution.

In February 2005, Abdullah met Singapore’s Goh Chok Tong for a second round of talks about issues
that had infected relations between the two countries over the last few years. At the first dialogue in December 2004, the two parties made the mistake of allowing information to be publicly discussed. This had quickly led to heated debates in various quarters. Consequently, no information was leaked after the second dialogue, and for the time being, it seems no news is good news. The improved relations that Malaysia now has with Singapore are one of the major successes of the Abdullah regime, and this has encouraged a significant rise in economic activities and investments across the border.

Relations with Thailand have largely been affected by the troubles in Muslim provinces in southern Thailand. Despite some comments by Prime Minister Thaksin Shinawatra that the Malaysians took objection to, Kuala Lumpur has exercised restraint in public dealings with its northern neighbour on that question.

Where the relations with the Philippines are concerned, Putrajaya’s involvement in the peace process in the southern Philippines continues.

Malaysia’s relations with powers further afield have also improved under Abdullah. His visit to Australia in early April, for example, was welcome on all sides, and relations between the two countries have improved considerably since then. Both sides are presently negotiating a bilateral free trade agreement. It was incidentally the first time in 21 years that a Malaysian head of state had visited Australia. Australia finally bowed to pressure in July and agreed to sign the TAC as a condition for its participation at the East Asian Summit starting on December 12 in Kuala Lumpur.

In June, Abdullah surprised many by publicly giving advice to China and Japan about how they should handle problems stemming from the souring relationship. This was highly uncharacteristic of the man, of Malaysian diplomacy and of East Asian diplomacy. What this act signifies is the fear Asian countries have about relations between the two giants in the northeast deteriorating too quickly, and that economic growth in the region will be adversely affected by it.

Where security in the Straits of Malacca is concerned, Malaysia continues to disallow private and armed escorts on ships. It is putting a 24-hour radar system into place to monitor shipping activities in the Straits. Sovereignty continues to be used as an argument against foreign involvement along the Straits. However, cooperation among the littoral states appears to be increasing. On 2 August, Malaysia, Singapore and Indonesia decided to coordinate air patrols over the Straits during a meeting among their heads of defence forces, at which Thailand was also present.

The Ninth Malaysia Plan (9MP) and the Economy

The Ninth Malaysia Plan – due to run from 2006 to 2010 – provides the Abdullah administration with a further opportunity to profile itself. At least three points are worth noting here – remedying rural poverty, improving the educational sector, and speeding up agricultural modernisation.

While poverty rates have dropped greatly over the last decades, recent figures show that there is entrenched poverty in predominantly Bumiputera states such as Kelantan, Trengganu and Kedah, and in East Malaysia. Low-skilled Indians are also among those suffering badly from poverty. Both the World Bank and the Asian Development Bank rate inequality of income in Malaysia as being relatively high.

A stronger focus on the knowledge industry is expected, and given the fact that huge numbers of graduates remain unemployed, one can expect that better coordination between courses offered and opportunities of employment will be a top priority.

In April 2005, the Prime Minister also announced the formation of Malaysia Biotechnology Corporation for furthering something he titles the new National Biotechnology Policy. Unlike the BioValley project proclaimed in May 2003 by Mahathir, which has failed to attract investments, his plan will focus less on hard infrastructure and more on the identification of potential projects that it finds to be worth financing. This initiative is tied to Abdullah’s pet idea of developing the agricultural sector. In August, he announced that a food production increase of 7.2% was targeted under the 9MP.

In fact, the 2005 state budget announced in September 2004 professed to develop the agriculture sector into the third engine of growth behind manufacturing and services.

Mahathir’s fast-track modernisation had aimed at creating a class of wealthy Malays through investments in manufacturing and other ‘urban’ industries, fuelled by mega-projects, may have succeeded to an enviable extent, but the ill effects included worsening conditions for the agricultural economy, an increasing poverty rate, and an unsettling budget deficit. However, any sustained policy must leave certain matters unattended.

Among these is the problem of the budget deficit, which the Abdullah administration intends to reduce successively, despite that leading to discomfort among the many construction companies that are totally
dependent on government contracts. This has also raised the question of self-sustainability where NEP goals are concerned. Without a definite time span, affirmative action projects tend to be constructed without sufficient consideration for self-sustenance beyond the initial stages.

Although the economy continues to grow, it is now doing so at a slower rate, dragged down by cutbacks in government spending on construction and by the rising price of oil. The latter has necessitated reductions in subsidies, which in turn has raised the rate of inflation. Information about the gigantic size of government subsidies is being publicised to soften mounting complaints about their successive removal. The successive
reduction of government subsidies and of government spending to balance the budget, along with the removal of subsidies for highway tolls, is expected to cause public unease in the near future, and affect the inflation rate.

Inefficient monitoring of governmental projects has also been identified as a serious problem, and the Works Ministry, for example, has promised to improve matters under the 9MP.

The unpegging of the yuan by Beijing came at an opportune time for Abdullah. The first day of the 2005 Umno GA had ended when news of the unpegging came. Abdullah held a quick press conference, and the unpegging of the ringgit was also quickly announced. This gave the impression that the regime was on top of things, and was in no way being taken by surprise. The slow rise of the ringgit since then is also considered a good sign by many, and supposedly calms anxieties about a quick outflow of capital following the unpegging.

The regime is also aware of the potential that the Arabic world holds, especially in the post-9/11 era, when more and more Arabic oil money are seeking new piggy banks. In October last year, two Middle Eastern banks – Saudi Arabia’s gigantic Al Rajhi Banking and Investment, a consortium led by the Qatar Islamic Bank – were granted licenses to operate in Malaysia together with Kuwait Finance House, which had received its nod in May. Three local banks were also been allowed to engage in Islamic banking, taking the number of Islamic banks in Malaysia to eight.

At the 2005 Umno general assembly, Abdullah Badawi drew attention to the harsh pressure exerted by the global economy. The expressing of this concern, together with initiatives taken immediately thereafter by his
regime to stimulate Asean and to further Asian regionalism suggests that the future formulation of domestic politics will be strongly configured by international changes.

The recent public naming of a panel of international experts to advice Kuala Lumpur on developmental matters also suggests that nationalistic considerations in Malaysian development have weakened.

Something also worth noting at this point in time is the fact that when the Eight Malaysia Plan was initiated in 2001, something called the National Vision Policy (NVP) was introduced to replace the National Development Programme (NDP) that had run from 1991 to 2000. The NDP differed from the NEP that it replaced mainly in its focus on Malay entrepreneurship. This time around, the Ninth Malaysia Plan seems fated to be accompanied by the New National Agenda.

Altering national discourses

At the 2004 Umno general assembly, Abdullah Badawi introduced the term “Towering Malay” to denote the future Malay Malaysian. At the 2005 meeting, his deputy Datuk Seri Najib Abdul Razak used “Glocal Malay” to mean what appears to be the same thing. This apparent need to define the new Malay that the government wishes to create continues a political tradition that has included the coining of “Melayu Baru” (new Malay) and “Bangsa Malaysia” (which would constitute all the major races in some undefined fashion) during the Mahathir era.

This is but one aspect of the tension that Malaysian nation building contends with – modernising the traditional without jeopardizing popular support for the regime.

While the choice of words – and actions such as the wielding of traditional daggers – among Umno Youth leaders tend to be more nationalistic and radical, they need to be understood as part of a “good cop,
bad cop” scenario played in tandem with the party’s top leaders. At the 2004 meeting, the youth wing chose to focus on “The Malay Agenda” while Abdullah spoke about the towering Malay. This year, the “Glocal Malay” is accompanied by calls from Youth leaders – including Education Minister Hishammuddin, son of
former premier Hussein Onn, and his deputies, Mukhriz, the son of former premier Mahathir, and Khairy Jamaluddin, the son-in-law of the current premier – for a revival of the NEP. Officially, the NEP ended in 1990, and was replaced in name, if nothing else, by the National Development Programme, and then the National Vision Policy.

What has been suggested by Umno Youth is that a New National Agenda (NNA) be worked out, within which “the spirit of the NEP” would be revived. This is an apparent compromise between the ideals of the Malay Agenda and the reality of global pressures that Malaysia must deal with. Umno Youth has since accepted suggestions made by Gerakan and MCA that the Barisan Nasional’s component parties be allowed to play a major part in the construction of this agenda. Judging from what was said at the 2005 Umno general assembly, the time span for the NNA will be 15 years, which is the time the country has left before 2020 arrives. Malaysia is thus at the half-way point on the path to Vision 2020 as espoused by Mahathir in 1991.

At the same time, the Chinese parties in the ruling coalition have not been lagging behind. MCA president Ong Ka Ting, has been trying to popularise the term “Rakyat Malaysia” (Malaysian Society) since 2004. In response to the NNA initiative, the MCA’s 52nd general assembly held in August agreed in the formation of the Malaysian Chinese Economic Consultative Council (MCECC).

Gerakan has stuck to Mahathir’s concept of “Bangsa Malaysia” (Malaysian people) as well as the general slogan of “unity in diversity” around which to orientate Malaysia’s inter-ethnic policies. The party also pushes for something it calls the “National Economic Strategy” through which First World status for the
country by the year 2020 is to be achieved.

Of course, the most influential discursive innovation over the last two years must be Abdullah Badawi’s “Islam Hadhari”. This has been proselytised over the last year in to as many countries as would listen, and while it has been criticised for its vague definition, the regime obviously finds it useful to continue spreading the notion of Islam as a civilizational force, both domestically and internationally. Under the Abdullah regime, a row of policy titles have been introduced, all of which aim to project an atmosphere of reform and optimism.
Terms such as the New Automotive Policy, the National Biotechnology Policy (NBP), and the New National Agenda now aim to fill the national consciousness alongside the many terms inherited from the Mahathir era. Something called the Third Industrial Master Plan (3IMP) that is to run between 2006 and 2015 is also on the drawing board. While all this continues a definite style of nation building, Abdullah’s policies tries to hint at renewal and innovation. How much substance it can put into these projects is the question that is of major interest in the next year.

Possible Cabinet Reshuffle

Rumours that a major Cabinet reshuffle is at hand have been rife since Isa Samad, the Minister of the Federal Territories, was suspended for playing money politics in June. When controversies arose around the issuance of APs, speculation that the time was now right for Abdullah to make changes in the Cabinet that he inherited from Mahathir grew even stronger. Presently, the Trade Minister Rafidah Aziz appears to be targeted for retirement, and having lost the support of Mahathir, her position does seem precarious.

A reshuffle is also imminent since Abdullah has to take the results of the MCA and Gerakan party
elections into consideration. As yet, Abdullah is keeping his cards close to his chest, and the prime minister is not expected to allow the opportunity for a regrouping of his supporters to pass.

The results of the party elections of the MCA and Gerakan, major components of the ruling front, also demand changes in the line-up of Ministers and Deputy Ministers, giving Abdullah ever more reason to go for a thorough shake-up in order to create a Cabinet more in line with his own political needs.


To conclude, one could say that Abdullah Badawi’s second year in office has indeed seen some longer-term results coming from the seeds he said he planted in the first year. Despite his successes, however, Abdullah is still considered rather weak, especially in relation to his big ambitions to fight draft and other disturbing trends in Malaysian society, such as poverty, criminality and falling educational standards.

Future strategies of his regime will all be subsumed under the Ninth Malaysian Plan, most probably accompanied by the emerging New National Agenda. Initial objections to the NNA that are voiced by certain factions, even within the Barisan Nasional, will most probably be discussed behind closed doors, and agreement reached on how sensitive matters are to be handled.

Vision 2020 never contradicted affirmative action for the Malays, and the construction of an NNA for the coming 15 years need not be as controversial an exercise as it may seem.


About Ooi Kee Beng

Dr OOI KEE BENG is the Executive Director of Penang Institute (George Town, Penang, Malaysia). He was born and raised in Penang, and was the Deputy Director of ISEAS - Yusof Ishak Institute (formerly the Institute of Southeast Asian Studies, ISEAS). He is the founder-editor of the Penang Monthly (published by Penang Institute), ISEAS Perspective (published by ISEAS) and ISSUES (published by Penang Institute). He is also editor of Trends in Southeast Asia, and a columnist for The Edge, Malaysia.


One thought on “Ghosts of Compromises Past – Malaysia and the Limits of Change

  1. There’s certainly a lot to learn about this topic. I love all the points you have made.

    Posted by forex signals service | March 4, 2013, 2:05 pm

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