Singapore Premier Puts Malaysia To Shame


South China Morning Post

1MDB VS 38 OXLEY ROAD: WHY MALAYSIA ENVIES SINGAPORE

The family feud dominating public life in Singapore has crossed the Causeway, as Malaysians marvel at the Lion City premier’s open handling of the saga – and compare it to the closed-door approach of their own leader, Najib Razak, regarding his alleged links to a scandal at the state investment fund 1Malaysia Development Berhad (1MDB).

Singapore’s prime minister, Lee Hsien Loong, has won widespread praise for his handling of what many believe should have been kept a private family matter. His siblings have accused him of abusing his power as prime minister to overrule the wishes of their late father – the city state’s founding leader Lee Kuan Yew – regarding the fate of the family home at 38 Oxley Road. They say their father was adamant in wanting the home to be demolished after his death, but that the premier wants to go against this wish to preserve the home and derive political capital from their father’s legacy.

Singaporean Prime Minister Lee Hsien Loong speaks in parliament about his family’s dispute over the fate of his late father’s home at 38 Oxley Road. Photo: AFP

The Lion City premier has responded with openness. Not only did he make a statement on national television – saying he had done all he could to resolve the family conflict and apologising for any harm it may have done to Singapore’s reputation – he also gave MPs a free rein to grill him in parliament.

Najib, on the other hand, has remained largely silent regarding a scandal at the state investment fund 1Malaysia Development Berhad (1MDB) – where investigators claim to have traced some US$700 million wired into his accounts. Najib, who has denied any wrongdoing, is accused by critics of trying to shut down debate on the scandal. He has banned parliament from mentioning 1MDB and has removed key figures from his cabinet after they spoke out about the issue.

“The Singaporean PM has asked forgiveness from the people because of his siblings fighting. The Malaysian PM robbed billions, cricket noises,” said Twitter user @normgn. “Find it amusing to see the level of response of Singapore towards the Oxley Road house versus here for 1MDB. Just so weird,” said another, @yoongkhean. “One side got parliament seating just to explain it, one side … ignorance is bliss.”

The contrasting approach of the two leaders has been made more obvious as new details emerge about the US Department of Justice’s investigation into 1MDB.

As the public digest the details of the saga in the usually scandal-free Singapore – which has included Facebook posts from the premier’s family and private emails made public – they are also poring over the latest details of the Department of Justice’s investigation into 1MDB. The latest filing in the case seeks to recover US$540 million in assets including a yacht, a Picasso painting gifted to Leonardo DiCaprio, and a diamond necklace purchased with money stolen from the government fund.

Department of Justice documents allege that nearly US$30 million stolen from the fund were used to buy jewellery for the wife of “Malaysian Official 1” – jewellery that is said to have included a 22-carat pink diamond necklace. The documents do not identify Najib or his wife Rosmah Mansor by name, but say the jewellery was for the wife of “Malaysian Official 1”. Cabinet minister Abdul Rahman Dahlan has identified Malaysian Official 1 as Najib.

A cartoon by Zunar depicts an Inspector Clouseau-esque character. Handout photo

Controversial political cartoonist Zunar responded to this revelation by drawing a picture of a witch with a beehive hairdo riding a 1MDB broomstick and waving a large pink diamond pendant. Another cartoon depicts an Inspector Clouseau-esque character, a reference to the pink panther and a large pink diamond.

Last month, Rosmah’s solicitor released a statement saying that her lawyers were closely monitoring all postings on social media platforms and other publications, cautioning the public from making any false and malicious postings and statements.

In June, model Miranda Kerr turned over jewellery worth US$8.1 million that had been given to her by Malaysian financier Jho Low, who was instrumental in the development of 1MDB.

Australian model Miranda Kerr turned over jewellery given to her by Jho Low worth more than US$8.1 million. Photo: AFP

Even opposition politicians have taken to social media to vent their frustration at the lack of debate surrounding 1MDB. Member of Parliament M. Kulasegaran tweeted: “Openness by Singapore PM on a controversial issue speaks well of a government. In Malaysia?”

And Speaker of the Selangor State Assembly Hannah Yeoh said on Facebook: “When a controversy happens of this nature, being answerable to parliament is the right response. Lee Hsien Loong, you’re a good PM & I hope 1MDB can be dealt with like this in the Malaysian parliament too. Truly, not every son of a former prime minister is the same.”

WATCH: Singapore PM says siblings’ charges ‘baseless’

 

Najib is the son of Malaysia’s second prime minister, Abdul Razak Hussein.

Lawyer Ong Yu Jian also shared Lee’s public address on Facebook, saying: “No matter how embarrassing or personal the issue, he has the b**** to air it in parliament, invite questions from MPs and ask the party whip to be lifted for this issue.”

Political analyst Oh Ei Sun of the Pacific Research Centre said Najib’s silence was because he was confident he had the support of voters ahead of an election that may be called as early as this year.

38 Oxley Road, the residence of Singapore’s first prime minister, the late Lee Kuan Yew. Photo: EPA

“At end of the day, the 1MDB scandal will not significantly affect the vote banks for the ruling coalition, the Barisan Nasional, or even his party Umno specifically.

“Najib relies primarily on the urban and rural poor and for these people 1MDB is almost a soap opera. They may follow it but don’t feel acute hatred towards Najib as do the first group of people. They are more interested in whether they get a share in the next handout as they depend on these handouts. They won’t stop voting for the Barisan Nasional because of 1MDB. ”

Oh also said that there was less need to clarify issues in Malaysia, as Singaporean voters were “more sophisticated and educated”.

Still, many Malaysian voters and lawmakers are frustrated at what they see as a clampdown on discussion of the 1MDB scandal.

Malaysian Prime Minister Najib Razak can avoid discussing the 1MDB scandal because he is confident of voter support in an upcoming election, analysts say. Photo: EPA

Opposition MP Steven Sim said parliament was not even allowed to mention it on the pretext that it was subjudice. “Despite investigators in at least six countries investigating and taking legal action against 1MDB-related parties, including the US Department of Justice, Najib’s government has not only removed key leaders in his cabinet and in civil service who spoke out against him on this issue – notably his deputy prime minister, second finance minister, the attorney general, and the head of the Malaysian Anti-Corruption Commission – parliament is not allowed to even mention 1MDB.

“By allowing serious and damaging allegations to be openly debated in parliament, Lee Hsien Loong demonstrated he has nothing to hide, is willing to come clean and answer to the people,” Sim said.

“The same cannot be said of Najib Razak.” 

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Malaysia – The second corporate raid


It was not the British government that seized Malaya, but a private company, run by an unstable sociopath

EIClogo

People still talk about the British conquering Malaya, but that phrase disguises a more sinister reality. It was not the British government that seized Malaya at the end of the 18th century, but a dangerously unregulated private company headquartered in one small office, five windows wide, in London, and managed in India by an unstable sociopath – Clive.

clive

Robert Clive, was an unstable sociopath who led the fearsome East India Company to its conquest of the subcontinent. Photograph: Hulton Archive/Hulton Archive/Getty Images

The first corporate raid.

In 1511, Melaka was conquered by Portugal, after which it was taken by the Dutch in 1641. In 1786, the British Empire established a presence in Malaya, when the Sultan of Kedah leased Penang Island to the British East India Company. The British obtained the town of Singapore in 1819, and in 1824 took control of Melaka following the Anglo-Dutch Treaty. By 1826, the British directly controlled Penang, Melaka, Singapore, and the island of Labuan, which they established as the crown colony of the Straits Settlements. By the 20th century, the states of Pahang, Selangor, Perak, and Negeri Sembilan, known together as the Federated Malay States, had British residents appointed to advise the Malay rulers, to whom the rulers were bound to defer to by treaty. The remaining five states in the peninsula, known as the Unfederated Malay States, while not directly under British rule, also accepted British advisers around the turn of the 20th century. Development on the peninsula and Borneo were generally separate until the 19th century. Under British rule the immigration of Chinese and Indians to serve as labourers was encouraged. The area that is now Sabah came under British control as North Borneo when both the Sultan of Brunei and the Sultan of Sulu transferred their respective territorial rights of ownership, between 1877 and 1878. In 1842, Sarawak was ceded by the Sultan of Brunei to James Brooke, whose successors ruled as the White Rajahs over an independent kingdom until 1946, when it became a crown colony.

On 31 August 1957, Malaya became an independent member of the Commonwealth of Nations.

After this a plan was put in place to federate Malaya with the crown colonies of North Borneo (which joined as Sabah), Sarawak, and Singapore. The date of federation was planned to be 31 August 1963 so as to coincide with the anniversary of Malayan independence; however, federation was delayed until 16 September 1963 in order for a United Nations survey of support for federation in Sabah and Sarawak, called for by parties opposed to federation including Indonesia‘s Sukarno and the Sarawak United Peoples’ Party, to be completed – Wiki

Just like any sovereign state, Malaysia trotted on to progress and prosperity independently, with all the ups and downs for six decades under six prime ministers.

Currently, this relatively young nation is going through rough seas. The captain of the ship has (literally) lost his bearings, and the vessel is heading towards a iceberg, a collision of an enormous proportion, which will make the Titanic look pale in comparison.

Malaysia is in turmoil, politically and economically. The local currency Ringgit has dropped to a twelve year low and is in a free fall position. The political situation is in a state of disrepair as the ruling party UMNO under the leadership of prime minister Najib is losing popularity by the minute even as we speak.

Corruption is rampant in the government and UMNO, and it starts right from the highest echelon cascading down to the clerks in every ministry and department of the civil service.  Many arrests have been conducted by the Malaysian Anti-Corruption Commission (MACC)

Malaysia scored 49 points out of 100 on the 2016 Corruption Perceptions Index reported by Transparency International. Corruption Index in Malaysia averaged 49.73 Points from 1995 until 2016, reaching an all time high of 53.20 Points in 1996 and a record low of 43 Points in 2011.

The country’s reputation dived head down internationally as the infamous 1MDB scandals were blown out of the pandora’s box. Billions of dollars went ‘missing‘ into the pockets of rouges closely connected to the PM, while some RM2.6b were trailed into the PM’s personal account.

1mdb

The massive amount of debts by 1MDB triggered investigations and several law suits by authorities and creditors in United States, Switzerland, Dubai, Singapore and Hong Kong.

Najib will hope that a friendly figure in the White House will help his chances in the biggest kleptocracy case brought by the US justice department to date. It’s seeking $1 billion in assets that it says are tied to “public corruption and a global money laundering conspiracy.” – Quartz

The second corporate raid

communistmalaisie2

Many mega projects have been interrupted or halted as these projects are in financial rout and seeking bail-outs or sourced out to foreign financiers. The biggest and main taker is China.

The Finance Minis­try (MoF) has called off a deal to sell 60% of Bandar Malaysia – a mega property development project estimated to have a gross development value of RM160bil when completed in 20 years – has sent shockwaves through the country and the region – TheStarOnLine

Proton the first Malaysian car is up for sale and the Chinese automaker Geely is a promising buyer.

Even the Bilderberg Shell have sold their refinery in Port Dickson to a Chinese company Hengyuan International Ltd.

Chinese presence in the ailing Malaysian economy are seen as bailing out Najib’s misadventures and not as genuine investments.

Playing the domestic cards by opening its borders to China’s investment and development projects – many of which have shown traces of fatigue in the long run – Najib brought the Chinese government to understand that he needed them for his own political survival. – TheIndependent

Here are some national mega projects where the Chinese are literally and desperately begged to participate by Najib to restore his unpopularity, saving his neck and retain power all at the same time:

What comes with all these Chinese participations (interventions) and financing? One has to be too naive to think that its all purely business investments on the part of the Chinese and that Malaysia is just so good and fortunate to attract foreign investments, but silly enough to offer opportunities to foreigners, especially China as giveaways whilst herself missing the chance to reap fortunes from her own viable, profit making projects?

Desperate times call for desperate measures, even if it means selling one’s own mother to save one’s own neck. This is a more accurate observation by concerned Malaysians and that history is beginning to repeat itself is glaringly apparent.

The British East India Company came in a quite different time, scenario and circumstances as the corporate raid was done singularly and stealthily during a time and period the people were innocent simpletons, unsuspecting and unaware of what was going on until it was too late to do anything to stop the marauders… and the rest, as they say is history.

For a century, the East India Company conquered, subjugated and plundered vast tracts of south Asia. It was the original corporate raider. The lessons of its brutal reign have never been more relevant.

With that unforgettable episode of Malaya (then) in the back of the people’s heads, Malaysians are witnessing, with their eyes wide open this time history repeating itself.

Malaysians lowered the Union Jack on August 31, 1957 to regain their freedom, and sixty years later, will they be seeing the raising of another corporate flag – the Five Stars Red flag and be slaves all over again? One must remember, most of the big Chinese corporations are controlled and owned by the State. Only this time it will be a communist takeover instead of the capitalist fascists and oh, how paradoxical it has turned out, as the people of Malaya had fought so hard with their lives to rid off the communist terrorists (which were supported and backed by China), during the Emergency period.

What else will be sold to complete the corporate raid? Highways, water, power, utilities public transport and telecommunication services next? Will the people knowingly sit back and allow a second corporate raid this time around?

 

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Malaysia’s criminal state of mind


NewMandala

Manjit Bhatia

Malaysian PM Najib Razak is using the assassination of Kim Jong-nam to deflect heat from ongoing scandal and economic slowdown ahead of scheduled elections, writes Manjit Bhatia.

It’s comical when Malaysia’s deputy prime minister Zahid Hamidi demands that criminals backed by North Korea, China’s client rogue state, respect the “sovereignty” of his country’s laws. As home minister in 2013, Zahid had lavished praise on Tiga Line, the outlawed Malay gangsters. He also called on police to “shoot first” if non-Malay thugs threaten or kill his fellow Malays.

Meanwhile, police chief Khalid Abu Bakar requested the same abominable Pyongyang “authorities” to extradite suspects in Kim Jong-nam’s assassination at Kuala Lumpur’s budget carrier airport on 13 February. Khalid’s lightning-fast move here isn’t surprising, seeking fame and kudos. Yet, when it comes to netting official corruption’s big fish, including corporate leaders, and independently investigating prime minister Najib Razak, he disinclines at every turn.

Strictly speaking, Malaysia has not a single independent institution. Instead, patron-client relations rule. Others call it patronage. Simple example: Khalid is subservient to Zahid who is subservient to Najib who holds Malaysia’s purse-strings as finance minister. This buys him allegiance and serious protection in a country racked by state-ordained corruption, cronyism and some of the worst forms of racism. What has this to do with the Jong-nam case? Everything. And just as well — Malaysia-North Korea diplomatic ties are flexing for bust-up.    

As baffling as the assassination was, it couldn’t have happened sooner. Malaysian elections are due mid-2018. Zahid and Khalid, like Najib, are hoping the matter of the half-brother of North Korea’s insane leader Kim Jong-un will grip Malaysians like a John Le Carre thriller. The state-controlled media is acting to orders of ensuring the case is lead news, 24/7. After all, Malaysians need distractions. Being a Muslim country — not an Islamic state — the visit of the king of Saudi Arabia this week has somewhat displaced the Jong-nam as the lead story, albeit temporarily.   

Interestingly, the North Korean ambassador has had unprecedented scope in seen to attempt to interfere in police investigations. Also curiously, Malaysian officials didn’t refute the ambassador’s claim that South Korea and Malaysia were in cahoots, ostensibly to bring down the Jong-un dynastic regime. But when news outlets ran stories of a North Korean spy network operating in Malaysia, the episode moved from the bizarre to the whacky. Still, that’s exactly what Najib needs.

Problem is, the Jong-nam murder hasn’t absorbed Malaysians. They’re far more worried about their jobs future. Some factories have closed down; some others are moving offshore, to Vietnam, Burma and Bangladesh. The old ways of enticing foreign firms, via tax and other incentives, no longer work. These days China demands 99-year leases among its preconditions of investing in Malaysia. Like Singapore, Malaysia is struggling to establish anew its global competitiveness. For over a decade the international division of labor has shifted away from Asia’s first and second-tier ‘miracle economies’. 

Nonetheless, Najib boasts a high economic growth rate for the country. At 4.2 per cent GDP for 2016, it is significantly lower than 5 per cent in 2015. Between 2000 to 2016, average GDP has been 4.73 per cent. The jobs outlook is even bleaker. Official statistics put unemployment averaging 3 per cent; last year it climbed to 3.6 per cent, with 3.5 per cent in 2015. Most credible economists, even the market type,  know Malaysia’s official numbers are as rubbery as North Korea’s or China’s.

There’s no data for job participation rate in Malaysia. Yet it makes a better unemployment indicator, regardless or perhaps especially given the Najib regime’s propensity to embellish everything, including statistics. There’s sufficient anecdotal evidence to suggest joblessness is far higher among Malays and Indians, the groups increasingly engaged in crime. There’s also extensive under-employment among Malays, Chinese and Indians. And Malaysians are struggling on a single income, where the ‘minimum’ monthly wage of MYR900 ($US200) is scarcely enforced.

Exacerbating Malaysians’ worries is inflation. At 3.2 per cent, it spiked after the introduction of a consumption tax. In Kuala Lumpur alone, credible estimates put inflation at least twice the “official” number. At 6 per cent GST, Malaysia was never ready for it, in the structural sense. Add the measly value of the Malaysian ringgit, inflation hits close to double-digits, in real terms, according to some investment banks’ research. Meanwhile, Najib will maintain taxpayer-funded personal income subsidies, mostly for the Malays, and he’ll boost ‘free money’ ahead of next year’s polls.

If Bank Negara, the central bank, isn’t manipulating the low currency, then it’s a ‘market godsend’ for this heavily export-dependent, natural resource-based economy. Yet after two years of the collapsing ringgit, Malaysia’s competitiveness hasn’t improved. Its budget deficit and national debt are ballooning. Najib is banking on a commodities boom as the manufacturing base is routed by global forces. Take the long-failed local auto industry: Proton is effectively sold off to cheap China money. Selling the farm is the last resort of a scoundrel. But don’t expect Najib to sell the family jewels.

Blockbusting official corruption remains front and centre in Malaysian minds. Najib’s sudden great wealth humiliates Malays and irks the others. Nobody believe a rich Saudi or the Saudi state had “donated” $US1.4 billion to Najib; almost everyone, including the Malays, believe it was siphoned from bankrupt state firm 1MDB – brainchild of its chairman, Najib. And those proceeds miraculously wound up in Najib’s personal bank accounts.

The 2018 polls should humiliate Najib but it won’t defeat him or the ruling UMNO party. Many Malays feel especially aggrieved at how easily the ruling class has enriched itself while Malay villagers eke out a meagre living from plots of land Najib has ‘given’ them. No similar generosity has been extended to non-Malays. Some Malays agree this is unfair; most, however, subscribe to Machiavellian politics. But it’s Malaysia’s banal inter-racial harmony that’ll suffer the more as a consequence.

The Jong-nam case is serious — on legal paper. His killing hasn’t caused Beijing’s eunuchs a twitch. But Najib is using the assassination to his own political ends. It’s what dastardly regimes or political leaders in trouble or on the people’s noses would do — exploit an awful criminal matter to cement their illegitimate and immoral positions.    

 

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Leonardo DiCaprio and the #1MDB scandal


FT

DiCaprio breaks silence over Malaysian fund

Star contacted DoJ on claims stolen money used to fund ‘The Wolf of Wall Street’


Hollywood actor Leonardo DiCaprio reached out to the US Department of Justice after allegations surfaced in July that money stolen from a Malaysian development fund was used to finance his blockbuster film The Wolf of Wall Street.

Mr DiCaprio’s representatives sought to determine whether he or his foundation “ever received any gifts or charitable donations directly or indirectly related to these parties, and if so, to return those gifts or donations as soon as possible”, a spokesman for the actor said.

In July, US authorities filed a civil forfeiture complaint alleging that more than $3bn had been diverted from 1 Malaysian Development Berhad, the state development fund, with $94m used to finance the Hollywood blockbuster.

Mr DiCaprio on Tuesday broke his silence since the lawsuit was filed. His statement follows a press conference held in London on Friday last week by Bruno Manser Funds, a rainforest charity, which called for the actor to step down from his title as UN Messenger of Peace or renounce his associates at the centre of the scandal.

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Protest against DiCaprio over 1MDB scandal in London

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The law of rule in Malaysia


NewMandala

James Giggacher

1MDB shows that an already fragile rule of law is being stretched to the limits, writes James Giggacher.

Malaysia’s rule of law may have reigned supreme in this week’s case of the Budgie Nine – saving the Southeast Asian state from gross national insult at the hands of some silly young Australians.

Too bad the same thing can’t be said about another national disgrace, the 1MDB financial scandal.

In the face of investigations into the country’s failing sovereign wealth fund, and Prime Minister Najib Razak’s alleged links to millions of missing dollars, the rule of law has in fact gone missing in action.

This was certainly the case when Najib sacked attorney general, Abdul Gani Patail, who planned to bring charges relating to 1MDB against the PM in July 2015.

The plan was leaked, and Abdul Ghani stepped down, officially for ‘health reasons’. Perhaps he’d heard about what happened to former Mongolian model and Najib’s inner circle mainstay, Altantuya Shaarribuu.

At the same time, Najib removed his deputy and one of his most vocal critics — Muhyiddin Yassin.

The former AG’s replacement, Mohamed Apandi Ali, almost immediately cleared his embattled PM of any wrongdoing.

Apandi said that the royal family of Saudi Arabia had gifted Najib $US 681 million, of which $US 600 million had been returned. He also said no criminal offence had been committed. However, several countries, including the US, Switzerland, Singapore and the Seychelles, are still investigating the case.

Reports on the scandal by Malaysia’s central bank and anti-corruption commission have also been dismissed by Apandi; according to him the PM has no case to answer.

And in June, Najib filed court documents that denied graf, misuse of power, and interference in 1MDB investigations in response to a lawsuit brought by former PM and mentor, and now key adversary, Dr Mahathir Mohamad.

Meanwhile, the almost 700 million dollar question of how 2.6 billion ringgit managed to find its way into Najib’s personal bank accounts has yet to be satisfactorily answered.

So much for due process, democratic safeguards, transparency, and holding those in power to account. But can we expect anything better from a Malaysia still under the sway of long-ruling coalition Barisan Nasional (BN) and its leading party, Najib’s UMNO?

As Jayson Browder notes, BN has long had a poor record of abiding by the rule of law.

It has consistently leveraged several national laws – including The Peaceful Assembly Act of 2012, the Sedition Act of 1948, and the Printing Presses and Publications Act of 1948 – to curtail freedoms, assembly, political expression as well as intimate activists and the media, and ensure its power.

These tactics guarantee the ruling coalition’s stranglehold over Malaysia’s political system “through a combination of economic rewards, intimidation of political opponents, and several national laws, which are in direct violation of Article 10 of the Federal Constitution in Malaysia.” Article 10 is meant to guarantee Malaysian citizens the right to freedom of speech, freedom of assembly and freedom of association.

An embattled Najib has only sharpened the teeth of a legal system already heavily stacked in his party’s favour. In August he brought in an unprecedented law that allows him to designate ‘security areas’ and deploy forces to search people, places and vehicles without a warrant.

Draconian would be an understatement.

Laurent Meillan, from the UN Human Rights Office for Southeast Asia, said that they were “gravely concerned” about human rights violations as a consequence of the act. The act could further restrict already highly limited rights of free speech and free assembly.

And in March this year, the independent news site The Malaysian Insider, went offline. Owners cited poor financial returns and high costs. The then editor, Jahabar Sadiq, said it was because the threat of being charged with sedition that could lead to jail time had become all too real.

The decision to pull the plug came almost three weeks after Malaysia’s Internet regulator — the Malaysian Communications and Multimedia Commission – issued a gag order on the site because of a report alleging the country’s anti-corruption commission had sufficient evidence to bring criminal charges against Najib in the 1MDB case – even though he had already been cleared by Apandi.

The lesson? Smuggling budgies and smearing the flag is a clear no-no. Smuggling billions and smearing the nation’s sovereign wealth fund is a-ok.

It all goes to show that in Malaysia there is the rule of law – but most of the time there’s the law that lets BN rule.

James Giggacher is an associate lecturer in the ANU Coral Bell School of Asia Pacific Affairs and editor of New Mandala

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The Cracks in Malaysia’s Political Order Begin to Show


Stratfor

Prime Minister Najib Razak will remain in his position until the ruling coalition decides he has become too much of a political liability to do so. But his opponents are nonetheless preparing for the next election, whenever it may be. (NICKY LOH/Getty Images)


Forecast

  • Neither Malaysia’s opposition nor its upcoming mass anti-government protests will supplant Prime Minister Najib Razak before the next general election.
  • Longtime Malaysian leader Mahathir Mohamad’s new party will struggle to gain traction, but it may still tip the electoral balance.
  • Growing restlessness in Malaysia’s outlying states could expose new fault lines in the country’s long-established political order. 

Analysis

As rumors circulate that Malaysia’s next general election may be moved up to early next year, the country’s next political showdown is beginning to take shape. Over the past two years, Malaysian Prime Minister Najib Razak has been implicated in a scandal in which he allegedly looted nearly a billion dollars from state investment fund 1MDB. Najib is widely considered guilty at this point, and the scandal has sparked mass protests, purges in his ruling United Malays National Organization (UMNO) party and international scrutiny. But it has yet to seriously threaten him. Until the UMNO-led Barisan Nasional coalition sees the crisis as souring its electoral prospects, whether by alienating voters or by undermining the power of its patronage, the teflon prime minister will remain relatively secure in his position.

Still, for UMNO, which has ruled Malaysia every year since the country gained its independence, several challenges loom on the horizon. Combined with the country’s lingering economic woes and the continued 1MDB fallout, those challenges could expose new cracks in the political order and stability that have underpinned Malaysia’s rise to global prominence.

Staying Power

Despite his involvement in the 1MDB affair, Malaysia’s prime minister has managed to maintain his power over the country and the ruling party. As the scandal has unfolded, most UMNO members have closed ranks around Najib, and the party’s coalition partners have stayed put. Party members who have questioned the prime minister (including former Deputy Prime Minister Muhyiddin Yassin) or tried to investigate him (as Najib’s former attorney general did) have been purged and replaced with loyalists who absolve him of any wrongdoing. The fractured opposition, meanwhile, is simply too weak to oust him through a no-confidence vote — as it tried and failed to do a year ago. The corruption scandal has also had little effect on voters; Barisan Nasional coalition partners won each of the state and parliament by-elections held over the past year. The reason for its longevity is simple: Patronage remains the dominant tool of political power in Malaysia, and Najib’s administration controls the purse strings. A half-century of UMNO rule, moreover, has allowed the party to redraw political districts to its favor, something it is trying to do again in the electorally critical Selangor state.

Even so, if the scandal starts to hurt the ruling coalition’s electoral prospects, UMNO may be compelled to devise an exit for Najib before the next election to save him from prosecution and the party from an unprecedented defeat. The vote does not have to take place until late 2018, but over the past month, UMNO has reportedly intensified discussions on whether to call snap elections as soon as early 2017. Regardless, the possibility is accelerating realignments ahead of the next vote — among both the opposition and Barisan Nasional’s nervous coalition partners.

Enter Bersatu

The biggest complication for UMNO heading into the next election will be the newly formed Parti Pribumi Bersatu Malaysia, or Bersatu for short. Launched in August, Bersatu was established by longtime Malaysian leader and former Prime Minister Mahathir Mohamad, who also serves as the party’s chair. Muhyiddin is its president. The 91-year-old Mahathir has been trying to oust Najib, his former protege, for much of the past year, but his efforts have not gained much traction. His latest attempt to unseat UMNO is also unlikely to succeed on its own. Bersatu lacks the grassroots support and party machinery necessary to drive turnout, and Najib has been chipping away at Mahathir’s business interests, giving him less weight to throw around.

As part of an opposition alliance, however, the new party could play a decisive role in the next election. A similar opposition coalition nearly unseated Barisan Nasional in the 2013 general election and cost it the popular vote; Barisan Nasional retained a majority in parliament in that election mostly because of gerrymandering. During the week of Sept. 5, Mahathir was seen shaking hands with Anwar Ibrahim, a charismatic, reform-minded opposition leader. The incident was a boon for Bersatu, which found in Anwar an unlikely source of legitimacy — Mahathir ousted him in 1998 and then had him jailed on politically motivated charges.

By admitting only ethnic Malays into its membership, Bersatu has positioned itself as a natural landing place for Malay nationalist voters disenchanted with UMNO’s scandals but unsure of other opposition parties’ commitment to protecting their interests. UMNO’s stranglehold on the “Bumiputera” (the umbrella term for ethnic Malays and indigenous groups) vote is a perennial obstacle for the opposition. The party has long styled itself as safeguarding the interests of the Bumiputera against other ethnicities in Malaysia, stoking fears that the country’s economically powerful Chinese and Indian populations will try to do away with pro-Malay affirmative action policies. (Mahathir himself quietly sought to roll back some of the affirmative actions near the end of his term, to no avail.)

In the 2008 and 2013 general elections, opposition factions overcame their deep-seated differences and united behind ethnic Malay figures such as Anwar to appeal to Malay voters. But Anwar has since been jailed again, and the alliance has largely collapsed amid infighting and ethnic rivalries. For instance, the Pan-Malaysian Islamic Party (PAS) — the opposition Islamist party dominant in northern peninsular Malaysia — severed ties with a former ally, the Democratic Action Party (DAP) in 2015 and has yet to commit to the new coalition, possibly positioning itself as kingmaker in the next general election. But considering that the opposition won the popular vote in 2013, Bersatu theoretically would not need to peel off much support from the ruling coalition to swing the next election. Bersatu’s best bet may be to focus on splitting the ethnic Malay vote in key races rather than on winning seats for itself, allowing other opposition parties to prevail.

First, however, the opposition parties will need to find a workable marriage of convenience. Though Anwar has tentatively endorsed Bersatu, the main opposition parties do not trust Mahathir. After all, he was the main architect of the system that has made it so difficult to dislodge Najib, and his own rise was fueled by exploiting Malay and indigenous fears of, for example, “the Chinese tsunami.” And several opposition leaders — from Anwar to members of the DAP — were jailed on politically motivated charges during his tenure. Even if Barisan Nasional does not call snap elections, the opposition has less than two years to find a way to cooperate and come to terms on sticking points such as seat allocations and conflicting policies. So far, they have not made much progress. The DAP has been reluctant to follow Anwar’s lead by accepting Mahathir’s olive branch, and the PAS (which itself is facing internal splits between Islamist hard-liners and a breakaway faction that supports the opposition alliance) remains a wildcard.

A Spotlight on the Scandal

Disorganized though it may be, the opposition will still benefit from the activities of Bersih, or the Coalition for Clean Elections, an activist group that is agitating for Najib’s ouster. Next month, the group plans to launch a nationwide roadshow to spread awareness of the 1MDB scandal in Barisan Nasional-controlled areas of Malaysia — an important endeavor given the government’s censorship of news related to the case. The roadshow will culminate in mass protests in Kuala Lumpur and other cities on Nov. 19. Although Bersih is not formally aligned with any of the opposition parties and is wary of Mahathir’s legacy, its efforts will serve the needs of the opposition, especially if elections are on the horizon.

Though protest turnout promises to be high — the last Bersih protest in 2015 drew some 300,000 participants over the course of 30 hours — the demonstration itself will not be designed to overthrow Najib. Mass protests in Malaysia are not typically the go-for-broke affairs seen, for example, in Thailand, where protesters occupy urban areas for prolonged periods of time to force a confrontation and delegitimize the government. Furthermore, any attempt to lock down Kuala Lumpur would spark ethnically tinged counter-protests that would raise the risk of violence. (Last year’s UMNO-funded counter-rallies, for instance, took on a noticeable anti-Chinese bent, and police narrowly prevented party supporters from storming a prominent ethnic Chinese business district in the capital.) The opposition does not want to validate fears among ethnic Malays that UMNO’s defeat would throw off the tenuous ethnic balance that the party’s rule has helped preserve. Instead, with the upcoming elections in mind, the protest organizers will aim primarily to put the focus of the next race squarely on the 1MDB affair and turn the vote into a referendum on Najib himself. The more it succeeds, the less the opposition’s internal fractures will matter.

Cracks at the Fringes

Along with its other political concerns, Najib’s government has to contend with growing restlessness in the country’s outlying, semi-autonomous states. Lacking geographical or ethnic coherence, Malaysia’s solidarity has long relied on shrewd, inclusive policymaking and plentiful resource wealth to grease any friction. The farther from the capital one gets, the more important the flows of revenue and patronage from the government become — whether in the form of large-scale infrastructure projects, extraction licenses or cash transfers.

But over the past eight years, several outlying states have increasingly tried to take advantage of Barisan Nasional’s weaknesses to push for a greater devolution of powers from the capital. Sarawak, for example, has been pressing Kuala Lumpur for more authority and oil revenues. In addition, protests erupted in that state and neighboring Sabah — both of which were critical to Barisan Nasional’s victory in the 2013 election — in September, demanding greater autonomy and a referendum on their status in Malaysia. Meanwhile, the crown prince of wealthy Johor state has suggested that the state may consider leaving the federation — as its southern neighbor, Singapore, did in 1963 — if the central government does not honor agreements on issues such as water and land rights. And the PAS, based in the northern Kelantan state, has been flirting with supporting Barisan Nasional in exchange for considering a bill to increase the power of regional Sharia courts, a move that threatens to spark ethnic backlash on both sides of the aisle.

At this point, none of these nascent movements presages upheaval that would threaten the integrity of the Malay Federation, or even major defections away from Barisan Nasional. Johor’s secession threats are particularly hollow, and Barisan Nasional’s dominance in an April state election in Sarawak demonstrated that local issues will play as great a role in the next election as will turbulence in the capital. Still, the trend reveals the lines along which the UMNO-led political order could begin to crack in the face of prolonged political uncertainty — particularly if persistent economic problems and low oil prices pinch patronage flows — with or without Najib.

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#1MDB and Malay Nationalism


WSJ

Najib fans fear of foreign plots and traitors to shore up support.

Can Najib Razak survive the 1MDB corruption scandal? The Malaysian Prime Minister came under increased political pressure in July when the U.S. Justice Department filed a lawsuit alleging that a family friend embezzled $3.5 billion from the state-run investment fund. But he has fought back and could even turn the case to his advantage if he calls a snap election early next year.

Mr. Najib is using the same strategy predecessors used when faced with domestic opposition: Play the Malay nationalism card. The country’s racial divide makes this a powerful and dangerous weapon.

On Aug. 5 Mr. Najib said he wasn’t involved in the 1MDB case and blamed “certain enemies” for politicizing it. On Aug. 14 he warned that foreign enemies could impose neocolonialism if Malaysians share confidential documents with outsiders: “History is a testimony of how we could lose our sovereignty if we were in cahoots with foreigners.”

During an Aug. 30 speech on the eve of Independence Day, Mr. Najib reiterated the danger of foreign neocolonialists using “dirty hands” within the country. People in “certain quarters who want to topple the government in an undemocratic manner” were “poisoning the minds of the people,” he said. Other politicians from the ruling United Malays National Organization (UMNO) are making similar statements.

One target of this rhetoric is the anticorruption organization Bersih. On Wednesday the group announced plans for a mass rally in November calling for Mr. Najib’s resignation. Since Islamists dropped out of the group, Chinese and Indian activists have played a leading role.

UMNO politicians portrayed the last such rally in August 2015 as an attempt by minority leaders to seize power and take race-based privileges away from Malays. In the aftermath of that rally, a Malay nationalist group known as the red shirts, led by UMNO official Jamal Yunos, tried to protest in Kuala Lumpur’s Chinatown, the scene of race riots that killed hundreds of Chinese in 1969. The police kept the red shirts out of Chinatown, but Mr. Najib defended the protest as a response to posters insulting Malay leaders at the Bersih event.

A new opposition party set up by former Prime Minister Mahathir Mohamad and former Deputy Prime Minister Muhyiddin Yassin poses the real challenge to Mr. Najib. The Parti Pribumi Bersatu Malaysia—which translates to Party of Malaysia’s United Indigenous People—restricts membership to Malays. Mr. Mahathir attacked the government for selling national power-production assets to Chinese companies to bail out 1MDB.

The battle between UMNO and PPBM will depend on the loyalty of rural, less-educated Malays. Both portray themselves as defenders of Malay interests against outside forces.

The risk of communal violence is real, and there are striking parallels to past eruptions. The 1969 riots began after the UMNO-led coalition almost lost a general election as Chinese voters turned to the opposition. Then-Prime Minister Tunku Abdul Rahman supported a protest against insults to Malay leaders, much as Mr. Najib did last year.

Since 1969, racial tensions have risen whenever disunity within the Malay community threatened UMNO’s political dominance. The ruling coalition barely held on to its parliamentary majority in the 2013 election despite losing the popular vote.

The government’s motive to fan Malay nationalism will grow as details of the U.S. lawsuit and international investigations into 1MDB reach the Malay heartland. If Mr. Najib chooses to stoke resentments against ethnic minorities, he may succeed in holding on to power, but at immense cost to Malaysia.

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