Understanding Dr M’s grand diplomacy and trip to China( August 17-21, 2018)


August 16, 2018

Foreign Policy: Understanding Dr M’s grand diplomacy and trip to China( August 17-21, 2018)

by Rais Hussin

COMMENT | China, if the historical accounts of Lord George Macartney (George Macartney, 1737-1806) are to be believed, once reached a stage of opulence that never needed the world at all, including, and especially, England. To China, England was but a speck in the Far West.

Indeed, one of the most famous British attempts to expand trade with China demonstrates the miscommunication between the two nations.

As other historical recollections would have it, Lord Macartney led a mission in 1793 to the court of the Qianlong emperor (1711-1799) of China.

This emperor had reigned over perhaps the most luxurious court in all Chinese history*. He had inherited a full treasury, and his nation seemed strong and wealthy enough to reach its greatest size ever, and also to attain a splendour that out-dazzled even the best Europe could then offer.

Indeed, the research of Professor Frederick Wakeman once at Columbia University affirmed that “King George III (1738-1820) of England sent Macartney to convince the Chinese emperor to open northern port cities to British traders and to allow British ships to be repaired on Chinese territory.”

To which Wakeman added: “Macartney arrived in North China in a warship with a retinue of 95, an artillery of 50 redcoats, and 600 packages of magnificent presents that required 90 wagons, 40 barrows, 200 horses and 3,000 porters to carry them to Peking.”

Yet, as history had showed, the best gifts the king of England had to offer – elaborate clocks, globes, porcelain – “seemed insignificant beside the splendours of the Asian court.”

The Chinese emperor also insisted that Lord Macartney had to kow-tow to him. Since Lord Macartney refused, all deals and negotiations were off. Some thirty years would pass before China lost to the British in the First Opium War in 1832, leading to a succession of territorial seccessions that led to the fall of Hong Kong, and subsequently of Kow Loon and the new Territories to the British, in turn inviting other colonial powers like Portugal to insist on getting Macao, and the works.

From August 17 to 21, 2018, Prime Minister Dr Mahathir Mohamed would once again encounter a powerful China, possibly a thousand times stronger and scientifically more advanced than the imperial China described by Lord Macartney. Yet, China ought to remember three things.

First of all, Malaysia is not asking for any concessions. Of the eleven China projects that span Malaysia, which are worth a total of US$134 billion (RM550 billion), based on the research of South China Morning Post in Hong Kong, which is incidentally owned by Chinese tycoon Jack Ma, whom Dr Mahathir will also meet again in Hangzhou on August 17, some of these projects have been found to be of questionable value, indeed, origins.

Image result for Mahathir and Jack Ma

Although many are deemed to be done under the Belt and Road Initiative (BRI) of President Xi Jinping, some have a system of payment that does not reflect the very fairness and transparency urged by President Xi himself.

His anti-corruption drive in China, for example, has netted some 300,000 officials and unscrupulous businessmen to date.

Image result for Mahathir and Xi

Yet, within the context of the BRI in Malaysia, some projects carried the imprint of 88 percent of the payment being made while only 13 percent of the projects being completed.

Second, while Malaysia has discovered these financial oddities, Dr Mahathir has understood the complexities and protocols of China’s inner sanctum.

Minister of Finance Lim Guan Eng and the Malaysian Anti-Corruption Commission (MACC) are not tagging along.

For the lack of a better word, despite being an elder statesman of Asia, Dr Mahathir has abided by the Malay concept of diplomacy – to not exploit the weaknesses of the others but to tell the truth.

Indeed, Dr Mahathir has embodied the idea that “Melayu pantang dicabar,” (Malays do not like to be challenged or insulted) and “berani kerana benar” (to be bold is to be truthful). These two Malay adages have formed the twin templates of Dr Mahathir’s key motivation to China.

Thirdly, when Sino-Malaysian abnormalities have grown to huge proportions to be more than half of the combinsed national debt and liabilities of Malaysia of US$250 billion (RM1 trillion), it goes without saying that this is beyond government to government negotiations.

Something is seriously wrong either with BRI in Malaysia or BRI in some parts of the world, where research at Harvard University, as conducted by Sam Barker, has shown a serious case of “debt” that are practically unpayable by sixteen countries and counting. Malaysia, luckily, is not one of these sixteen countries. But Malaysia does not want to be number 17.

Indeed, BRI ought to be applauded for its scale and ambition to connect some 68 countries to China, of which Malaysia is but a vital vector since it controls the Straits of Malacca and part of the South China Sea, hence, is one of the three littoral states including Singapore and Indonesia.

To be sure, there are no cabinet ministers in Malaysia who, to date, oppose BRI in any way or form. They just want it to be more accountable and transparent to prevent any insidious corruption, the likes of which was practiced by the previous administration of Najib Razak.

Interviews with South China Morning Post three weeks after the strategic electoral upset of May 9, 2018, also revealed Dr Mahathir’s affirmation that he had once written a letter to President Xi to encourage him to build a train “1.5 times bigger (than the size of any current trains)” to pulsate the land locked economies of Central Asia. President Xi seemed to like the idea of reviving the Silk Road and added the “maritime portion” too, Dr Mahathir added.

For the lack of a better word, China and Malaysia do not have to allow the errors of the past administration, and the unscrupulous elements in that relationship, to affect the strategic partnership of the two countries. When Japan did not want to discuss the issues of Asia in G7, it was Dr Mahathir who raised the concept of the East Asia Economic Group (EAEG), or the East Asia Economic Caucus, to former Prime Minister Li Peng in 1990, a delicate time when China was ostracised by the rest of the world due to the Tiananmen incident of 1989. Instead of ganging up on China, Malaysia encouraged China to lead Asia.

All open and classified records would show between 1990 and 2018, Dr Mahathir had never made a single anti-China statement except when questioning some questionable deals. Dr Mahathir even dismissed the China threat peddled by some in the West and Japan.

It is with this context and backdrop in mind, that the world that makes contemporary China – whether in the physical or virtual realm – should appreciate Dr Mahathir’s upcoming trip. Malaysia does not want China to be torn asunder, like other colonial powers before had wanted.

Nor does Malaysia want China to express any sympathies for its unfortunate national debt that could potentially become gangrenous.

Dr Mahathir, on behalf of many Malaysians, merely want China to listen deeply and attentively: let’s aim for “shuang ying”, or win-win solutions, to enrich the two countries and regions which they represent for posterity to come. If there are businesses and investments to be made, let the two countries and regions of Northeast and Southeast Asia merge as one grand diplomatic concert, where all can prosper in peace.

After all prosper thy neighbor is many times better than the reverse.

* Source: The Fall of Imperial China (Frederick Wakeman, Jr, Free Press, 1977), pg 101.


RAIS HUSSIN is Bersatu supreme council member and policy and strategy bureau head.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

Proton 2.0 is a Mahathirian Egotistical Dream


August 9, 2018

Proton 2.0  is a Mahathirian Egotistical Dream

by P Gunasegaram
Image result for Proton 2.0
Malaysia’s Nightmare and Dr. Mahathir’s Egotistical Aspiration. That’s why it will fail.

 

QUESTION TIME | It does not matter if it is manufacturing electric cars or energy efficient vehicles (EEVs), or intelligent cars which drive themselves or a combination of them; any other national car project will fail with further massive losses to the public which eventually underwrites the profits or the losses.

It benefits only the egotistical aspirations of one man – Prime Minister Dr Mahathir Mohamad and the pockets of one of his cronies, Syed Mokhtar Al-Bukhary, who owns a majority 50.1% in Proton Holdings through DRB-Hicom, the other 49.9% owned by Geely of China.

Interestingly, DRB-Hicom recently sold its entire stake in rubbish disposal firm Alam Flora to a related company, Syed Mokhtar-controlled Malakoff for RM945 million cash, which it said will be used to retire Proton debt and to invest in the development of new models. Could one of the new models be an EEV? Time will tell.

The car industry simply does not have the scale and the technological base to compete in the international markets and is a burden to Malaysia and its people. Therefore, it should be slowly wound down as Australia did. It was not competitive in 1983 when it was first mooted and it is not competitive now. What keeps it alive is tariff protection.

Image result for jomo kwame sundaram

 

I wrote a feature article on Proton way back in 1983 for The Star (it was different newspaper then) when the idea was first mooted before production started in 1985. There was substantial opposition to the project and in the article, I quoted two individuals. First was the late and respected associate professor Chee Peng Lim and second, Jomo Kwame Sundaram, currently a member of the council of elders. Both were from Universiti Malaya and were known to be forthright in their views.

Mahathir, who was Prime Minister then too, had then maintained that the government considered the capacity to produce vehicles a necessary component of the industrial structure. However Chee, then associate professor at Universiti Malaya, directly contradicted Mahathir saying that undue emphasis should not be placed on heavy industries as there were insufficient supporting industries.

“Unless you have a wide industrial base, too rapid development of certain heavy industries will result in a lopsided structure,” he said presciently 35 years ago, adding that Switzerland, an industrialised country, did not have a car industry. It still doesn’t. Mahathir’s industrialisation policy was a great flop.

 

Jomo called for an open debate then. “Let’s bring out the facts and figures. Then we can have an open forum and the subject can be debated.” That never happened, of course, and probably will not happen now because a new Malaysia is somewhat stymied in some respects. And those who opposed the project got short shrift.

Subsidy of up to RM360 bil

Image result for Proton 2.0

To understand why it won’t work, we need to understand what Mahathir’s concept of a Malaysian car is. He is not talking about a technology partnership, he is talking about a Malaysian car – developed eventually by Malaysians to be competitive worldwide.

For 35 years, Proton tried and could not do it because it produced lousy, substandard cars when it tried to go on its own without technology partners. These cars could not compete internationally even when prices were subsidised by domestic sales because of poor quality. They sold locally only because of massive tariff protection.

They never got scale because the technology needed to make good cars was non-existent. It’s not about race or bumiputera privileges – nowhere within Malaysia did we have anything near cutting-edge technology when it came to cars. We still don’t and in 35 years, the market is a helluva lot more competitive.

Perodua, the second major national car project, succeeded financially because they produced quality cars with a good technology partner throughout, Daihatsu of Japan. But this is basically a manufacturing operation for Daihatsu, which enjoys tariff protection and access to the Malaysian market.

It is of rather dubious benefit to Malaysia as a whole because Malaysia could have imported similar cars much more cheaply from anywhere in the world and offered its populace lower prices and better quality, and safer products.

Instead Mahathir basically stuffed inefficient, unreliable and even unsafe cars down the throats of Malaysians, who with a terribly inefficient public transport system, then spent more than they could afford on cars; their most conspicuous consumption after houses. Mahathir caused needless hardship to millions of Malaysians, who could have subsidised the national car industry to the tune of at least RM360 billion over the years – and that’s no exaggeration.

This is based on estimated sales of some 12 million vehicles between 1985 and 2016 of which some four million vehicles sold were Protons. I have estimated, conservatively, that the average price per vehicle was RM30,000 higher because of protective barriers. Multiply this by 12 million vehicles for RM360 billion. You may disagree with the exact figure but there can be little doubt that the order of magnitude is in the hundreds of billions of ringgit.

For instance, take the 2018 prices of two vehicles in the US (where taxes on cars are low or zero) and compare those to Malaysia. The first is a Honda Civic, priced at RM75,760 in the US but RM116,733 here for a similar model. This is RM40,973 or 54% higher. For a BMW 530e, the respective prices are RM210,600 and RM343,000 – RM132,400 or 63% higher! And this in a country which has a per capita income one-fifth of that of the US.

If we use the RM360 billion burden Malaysians have borne, Proton and the national car projects have already cost the country and the rakyat 7.2 times the likely maximum loss at 1MDB estimated at RM50 billion. Is that not enough reason to nix this crazy idea?

Ministers, why no guts?

But for that we need ministers who have guts, who must rise up and voice the dissatisfaction they have over the revival of yet another national car project. But instead, there is defence of Mahathir’s plan. How sad! How dangerous!

Deputy Trade and Industry Minister Ong Kian Ming ( from DAP) said the new project won’t be reboot of Proton but will instead go in the direction of energy efficient vehicles. Pray tell us does that mean we are going into the manufacture of EEVs? Does that mean EEVs will become more expensive?

Of course they will, using first the infancy stage argument and assuring us they will be competitive later, for the imposition of punitive tariffs on EEVs from overseas. When after 35 years we could not manufacture conventional cars more efficiently, how can we possibly manufacture EEVs more efficiently now or ever? What do we have now that we did not have earlier?

Instead of adding fuel to Mahathir’s fire of going back to some version of Proton, our ministers, so brave and full of gumption before GE-14, are now telling the new emperor he has clothes on when he is absolutely naked when it comes to Proton and a new car project.

Why no guts, ministers? Especially when many of you had so strongly criticised Proton before? Do you honestly think that Mahathir will miraculously restore a rotten car industry to profitability or do you not care that billions more are going to be poured into a wasteful project, which has already wasted over seven times the wastage at 1MDB? Don’t you have an obligation to the country to stop this project?

Remember it’s not the project cost that counts, it’s the money that Malaysians pay extra every day when they purchase a car, money that goes to subsidise the profit and bear the losses of our national car industry.


P GUNASEGARAM says that engaging in political subterfuge makes many politicians stupid… and dumb. E-mail: t.p.guna@gmail.com.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

 

 

Mahathir and the new National Car Project


August 9, 2018

Mahathir and the new National Car Project–Doomed to Failure Again

by John Berthelsen@www.asiasentinel.com

In 1984, a young researcher at a prestigious Malaysian thinktank wrote an exhaustive review of then-Prime Minister Mahathir Mohamad’s plan to partner with Mitsubishi Motors of Japan to produce a so-called national car. The sum and substance of the researcher’s report was: Don’t do it. It would be an economic disaster that would also limit consumer choice.

The report was leaked to a reporter for the Asian Wall Street Journal, then the New York-based WSJ’s Asian edition, which ran the story. The think tank’s chief quickly shot it down, saying it was only a draft, and never mind.  Fast forward a couple of decades, and learn just how prophetic the researcher’s warning was.

Mahathir went ahead and midwifed his proposal, of course, which became Perusahaan Otomobil Nasional (Proton). In the ensuing three-plus decades of its existence, the car, part of Mahathir’s move to move the country away from its resource-based economy to heavy industrialization, can only be described as a disaster.

Eventually in June 2017 – allegedly, partly to find funds to bail out the flailing 1Malaysia Development Bhd., which was enveloped in scandal – Prime Minister Najib Razak’s government would sell 49.9 percent of Proton to China’s Zejiang Geely Holding Group and effectively cede control over it to the automaker Geely.

But for everybody breathing a sigh of relief at having managed to get rid of the albatross hanging around Malaysia’s neck, the idea of a national car is back, along with Mahathir, who led the take-no-prisoners campaign to get rid of the corruption-plagued Najib in the country’s May 9 general election.

The 93-year-old Mahathir appears to want to bring back the country to where it was when he left office in 2003 after the first 23 year stint as premier, also reviving a proposal to build Malaysia’s half of a bridge over the Singapore causeway that nobody wants. It has won the name “crooked bridge” because it would have to be built to connect to Singapore’s half of the causeway since the island republic has no plans to replace its half of the bridge.

Ominously, Mahathir, has been appointed chairman of the board of Khazanah Nasional Bhd., the government’s premier investment vehicle, or more likely has appointed himself. Appointed along with him are allies Mohamed Azmin Ali, Mohd Hassan Marican, Sukhdave Singh and Goh Ching Yin. It was Kazanah that would ultimately take control over Proton, raising fears that Mahathir’s second incarnation as premier will result in amassing the same kind of power that he amassed in the 1980s and 1990s.

Against the advice of virtually everybody, Mahathir has gone to Japan, possibly to seek a joint venture partner to build another car despite the failure of Proton, which in characteristic Mahathir fashion was blamed on everybody else.

Entrepreneur Development Minister Mohd Redzuan Yusof announced last week that the government expects to launch what has been called “national car project 3.0” by 2020 in a move described as strategy to revitalize the national automotive industry.

But if past is inevitably prologue, Malaysia would do wise to heed the critics. Rafizi Ramli, the Vice President of Parti Keadilan Rakyat, urged that the project be reconsidered, saying no such plan had ever been discussed in the governing Pakatan Harapan coalition. No attempt has been made to assess the cost, no decision has been taken which agency would assume responsibility, no move has been made to abolish swingeing excise taxes on cars.

Image result for Barry Wain and Mahathir

 

The saga of the Proton Saga – the name given the first national car – is contained in “Malaysian Maverick,” the highly regarded biography of Mahathir written by the late Wall Street Journal editor and columnist Barry Wain, who pointed out that for most of its existence, Proton lost RM35,000 (US$8,587 at current exchange rates) on every car sold.

Proton’s dubious success, Wain wrote, “came at a heavy cost to Malaysian consumers: taxes ranging from 140 percent to 300 percent on imported vehicles, and up to 40 percent on cars locally assembled from imported kits.”

Proton cost Malaysia’s taxpayers billions in direct subsidies and untold billions more in opportunity costs as those who didn’t want a rebadged Mitsubishi Lancer were forced to pay enormous excise taxes on foreign-made cars. Thousands went ahead and bought Toyotas, Hondas and Nissans anyway, paying the extra freight. They also bought even more-expensive Mercedes-Benzes and Jaguars anyway despite the extra cost.

Image result for Barry Wain and Mahathir

Already dated by the time Malaysia started importing the Lancer kits, the car was lackluster at best. Given Malaysia’s population at that point of fewer than 30 million, it was impossible to gear up to beat the economies of scale enjoyed by Toyota, Honda, Nissan and other manufacturers, who turned out millions of cars every year in their home bases and satellite plants.  Attempts to sell Protons overseas failed. Cars sold in China and England, for instance, had no heaters because they weren’t necessary in Malaysia. In order to sell the car in the UK, 400 technical modifications had to be made.  In the end, exports accounted for only about 10 percent of sales.

Worse, as Wain wrote, the country’s thriving assembly industry, which employed thousands, was decimated by the favoritism shown to Proton. By contrast, Thailand welcomed the entry of foreign firms to assemble cars there, ultimately becoming the export hub of Southeast Asia and ending up what was called the “Detroit of the East.”

Image result for Original Proton Saga 1986 Model

Read this: http://autobuzz.my/2016/09/27/feature-seven-things-may-not-know-proton-saga-video/

As Proton attempted to increase local content, with Malaysian engineers and designers producing more and more of the components of the cars, they fell even further behind, unable to compete with the technical expertise of the Japanese, Koreans and other carmakers.

In the end, there was little to show for Proton other than the Malaysian Islamic hood ornament, a symbol of pride. Mitsubishi “bailed out of Proton in 2004, ending a two-decade partnership that proved extremely profitable for the Japanese group” at the same time Malaysia was left “with dozens of uncompetitive local auto parts makers and vendors.”

Now Mahathir wants to do it again. He may get his way.  But the national car encapsulates a more worrisome concern for the country, and that is that the ideas that failed – besides Proton but including a long string of grandiose projects — cost the exchequer as much as RM100 billion in mismanagement and corruption, according to Wain’s book. Mahathir during the campaign that ousted the massively corrupt Najib Razak claimed he was now willing to share power and ideas. The car is a disturbing throwback, and raises the possibility that there are more such projects in the wings. For those who read Wain’s 2009 book, revised and updated in 2012, it might pay to go back and reread it.

Malaysia’s May 2018 General Election and Foreign Policy


August 8, 2018

Malaysia’s May 2018 General Election and Foreign Policy

by Thomas Daniel

Image result for asia-pacific bulletin

Asia Pacific Bulletin, No. 433

Publisher: Washington, DC: East-West Center
Available From: August 7, 2018
Publication Date: August 7, 2018
Binding: Electronic
Pages: 2
Free Download: PDF
Thomas Daniel, Analyst at the Institute of Strategic and International Studies in Malaysia, explains that “In Malaysia’s May 2018 elections, foreign policy appears to have been a significant part of the campaign…but  the claim that foreign policy was a major deciding factor in Malaysian elections is still a bit of a stretch “

The 14th Malaysian General Elections (GE14) held in May saw the then main opposition alliance of Pakatan Harapan, together with an allied party from East Malaysia, win a surprising 121 of 222 Parliamentary seats, allowing them to form a simple majority government. Former Prime Minister Dr Mahathir Mohamad is once again leading the nation at the age of 92. The Barisan Nasional coalition, which ruled from even before independence, now sits on the opposition bench alongside the Islamist party PAS, while Barisan’s election allies from Sarawak in East Malaysia already have left the coalition to form an independent block of their own.

Image result for Mahathir the winner 2018

 

What role did foreign policy play in Malaysia’s recent elections? Foreign policy by itself has rarely been an issue in Malaysian elections. Some external observers might consider this odd for a nation whose prosperity depends significantly on regional and international trade and peace. Domestic issues – the economy, social dynamics, internal peace and security – have always been dominant concerns of the Malaysian electorate. Where foreign policy matters have popped up, they are limited to rather specific issues, often the flavour of the day. Traditionally, politicians from both sides of the divide have often – and rather flippantly – attempted to use Malaysian involvement or positions on global and regional affairs against each other as a smear tactic. For the most part however, foreign policy as a subject has largely been a domain of the few – policymakers, diplomats, academics and other practitioners.

At first glance, in Malaysia’s May 2018 elections, foreign policy — both directly and indirectly — appears to have been a significant part of the campaign – driven mainly by Pakatan Harapan. A large part of this has to do with former Prime Minister Najib Razak himself and the fallout from the 1 Malaysia Development Berhad (1MDB) scandal.

After vast sums of money initially linked to 1MDB which were deposited in Najib’s personal accounts turned out to be a ‘donation’ by a Saudi royal to Malaysia channelled directly to the former Prime Minister, there was chatter amongst Malaysians on the nature and impact of such ‘donations’ by friendly countries and what countries could be considered as ‘allies’ of Malaysia. This led to further conversations on whether non-alignment and neutrality was still a central tenet in Malaysian foreign policy and on the extent of Malaysia’s involvement in the Saudi-led Islamic Military Counter Terrorism Coalition, including even whether Malaysia was a silent participant of the Saudi offensive in Yemen.

The 1MDB saga itself was a major part of the campaign against the Najib and his ruling party. Various local investigations into the scandal had cleared him of wrongdoing. Nevertheless, the financial irregularities of 1MDB continued to be investigated by authorities in seven countries – including the United States. This further eroded the credibility and reputation of both the government and its associated institutions in the eyes of the Malaysian electorate, which came to see them as damaged goods when articulating Malaysia’s interests and reputation on the global stage.

Image result for malaysia-china relations

Another major foreign policy factor was the nature of the Malaysia-China relationship, and perceived notions of the influence that the latter has over the former. It became part and parcel of the campaign against Najib and his party. A key driver here was the rapid and staggering rise of investment and acquisitions by Chinese companies – both private and state-linked – in Malaysia. Foreign direct investment from China, which stood at RM4.8 billion in 2013, surged to nearly RM21 billion by the end of 2016. It now encompasses diverse sectors like construction, real estate, manufacturing, ports and power generation facilities. Concerns remain over how much of the money coming in were investments, and how much were in fact loans for various projects, and if the previous government was honest to Malaysians about the nature of such transactions.The fact that Chinese companies or capital can be seen in almost every major ongoing or planned project in Malaysia unnerved many – especially the average man-on-the-street. The purchase of majority stakes in several key Malaysian companies which are household names in Malaysia by Chinese interests did not help the perception.

1MBD related scandals come into the picture once again as some of these deals include the purchase of investments and assets previously owned by the wealth fund, which helped the troubled company meet its debt payments. The allegation that China helped bail out the troubled Malaysian sovereign fund and by extension the Prime Minister thus making him beholden to China, possibly compromising Malaysia’s national interests, was a popular narrative amongst the anti-Najib camp.

Despite the above mentioned issues, the claim that foreign policy was a major deciding factor in Malaysian elections is still a bit of a stretch. The campaign for the GE14 might be one where certain aspects of foreign policy and external relations played a role – at least more than previous elections. However, they are issue-specific, or in this case, personality-specific, and driven primarily by a domestic undertone. The ‘foreign policy’ approach used by the opposition when speaking about these issues ultimately relate back to local narratives that the electorate holds dear – the price of living, the future of their children, and to an extent, national prestige. Additionally, the manifestos released by the contesting parties also barely touched on foreign policy. There were, at best, vague remarks on continuing or restoring (depending on who the author was) Malaysia’s reputation and record within global institutions.

Nevertheless, moving forward, policymakers and campaign managers need to take into account that foreign policy issues could become a more common fixture in Malaysian political campaigns. The signs, despite being faint, are there. Conversations about Malaysia’s relationship with China and the Saudi Arabian royal family, for example, persist in a post-GE14 Malaysia both amongst politicians and voters. The situation becomes ever more pertinent when one takes into account that Malaysia has a combination of a relatively high internet penetration rate and coupled with an active social media presence amongst its connected citizenry.

 

Cosy Relations with China (PRC) led to Pakatan Harapan’s GE-14 Victory


August 6, 2018

Cosy Relations with China (PRC) led to Pakatan Harapan’s GE-14 Victory

by Dr. Adam Leong Kok Wey

“Domestic voices matter in Malaysia’s foreign policy decision-making. In a world of mass open communication via the internet and wide choices of alternative news and information sources, the Malaysian public are exposed to international affairs as well as the strategic logic behind these issues. The Malaysian election results may signify the end of elite foreign policymaking in Malaysia and augur a new era in which Malaysia’s foreign policy will hopefully be shaped and influenced by domestic views and concerns.”–Dr. Adam Leong

http://www.eastasiaforum.org/2018/07/28/foreign-policy-concerns-swayed-malaysias-voters/

Image result for Malaysia's Cosy Relations with China

Malaysia’s recent election on 9 May 2018 saw a dramatic result — the incumbent Barisan Nasional ruling coalition that had ruled Malaysia for 61 years crumbled, and Pakatan Harapan, a coalition of opposition parties, emerged victorious. One of the numerous reasons why the ruling party lost in the elections is that Malaysia’s foreign policy was perceived by a large segment of its people to be too cosy to China.

Malaysia’s foreign policy decision-making has long been the purview of the elite leadership with most final decisions being made by the Prime Minister. As leader of Barisan Nasional, Najib Razak wanted Malaysia’s foreign policy to involve working more closely with China — especially in drawing investment from the country. This resulted in massive Chinese investment in infrastructure and transport projects and large loans by China to Malaysia to co-develop these projects. For its part, China sees Malaysia’s geographical position as an important link in its Belt and Road Initiative, which is key for China to promote its strategic interests and project its power on a global scale.

Image result for chinese projects in malaysia

 

One example is the East Coast Rail Line project, which will link Malaysia’s west coast with the east coast at a cost of RM55 billion (US$13.6 billion). In November 2016, Malaysia awarded the contract to build the project to the state-owned China Communications Construction Company with the cost financed by a loan from the same firm. (The project was suspended in July 2018 shortly after Najib’s May election defeat.) Another example is Iskandar Malaysia, a township development project established in November 2006 in Johor where large chunks of property have been bought by Chinese migrants. This has caused much fear and consternation among locals around the influx of foreigners into the state.

Image result for Robert Kuok, China and Malaysia

Malaysia’s warm relations with China under Najib had also put Malaysia’s claims and interests in the South China Sea on a back burner. China’s claims in the South China Sea overlap with some maritime areas of Malaysia’s exclusive economic zone and Malaysia’s own territorial claims. Malaysia had been muted on China’s moves in the South China Sea leading to some uneasiness among Malaysians around China’s growing assertiveness in the contested waters, which will have lasting strategic consequences for Malaysia.

These factors created worries among large segments of the Malaysian population — including its ethnic Chinese population — about emerging security and economic risks posed by China. Fears that China will control regional politics as well as Malaysia’s indebtedness to China combined to create strong domestic opposition to the ‘too-warm’ ties with China. An often-cited example of Malaysians’ apprehensions about over-dependence on China is Sri Lanka’s failure to service its debt with China, resulting in the 99-year leasing to China of the Hambantota Port.

Image result for Robert Kuok, China and Malaysia

 

Malaysians decided that foreign policy decision-making had to change. The massive electoral losses incurred by the Barisan Nasional on 9 May plausibly reflect the rejection of Malaysia’s foreign policy by its people and the need to re-orient Malaysia’s future decision-making processes to account for the views of its domestic population.

Domestic voices matter in Malaysia’s foreign policy decision-making. In a world of mass open communication via the internet and wide choices of alternative news and information sources, the Malaysian public are exposed to international affairs as well as the strategic logic behind these issues. The Malaysian election results may signify the end of elite foreign policymaking in Malaysia and augur a new era in which Malaysia’s foreign policy will hopefully be shaped and influenced by domestic views and concerns.

Dr Adam Leong Kok Wey is an Associate Professor in Strategic Studies and the Deputy Director of Research with the Centre for Defence and International Security Studies at the National Defence University of Malaysia.

Malaysia: Embracing Abe-san and Bro Modi


August 1, 2018

Dr. Mahathir’s Look East (Japan) and West (India) Geo-Economics–Embracing Abe San and Bro Modi

by Dr. Shankaran Nambiar, MIER

http://www.eastasiaforum.org/2018/07/13/mahathirs-foreign-policy-reset/

Image result for Mahathir and Modi

Malaysian Prime Minister Dr.Mahathir greets Bro Modi

Prime Minister Mahathir Mohamad appears to be setting the tone for a revision of Malaysia’s geo-economic policy, if the bilateral meetings with his Indian and Japanese counterparts in the early days of his administration are anything to go by. 

 

Indian Prime Minister Narendra Modi called on Mahathir not too long after the latter assumed office. The meeting was significant in so far as Modi is keen on ‘Acting East’ and forging stronger ties with ASEAN. With Mahathir at the helm, Modi may well have an active and influential partner in the region.

India is likely to be an economic powerhouse in the coming decade or two, and any long-term economic architecture in the region will have to take this reality into account.

Does Mahathir run the risk of disrupting Malaysia’s economic relations with China by engaging with other partners? Not quite, but he does want to tilt the balance.

Mahathir is not questioning China’s intention to build friendly, harmonious and prosperous relations with the region or with Malaysia. But he is adding a dose of reality to some of the more questionable investment agreements that Malaysia has entered into with China and wants these deals to be reviewed. Mahathir has said that ‘we will be friendly to China but we don’t want to be indebted to China’.

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With Ali Baba’s Jack Ma of China

The Prime Minister is keen to do business with anyone who means business, provided there are no hidden caveats and Malaysia is not compromised. If there was any question of wanting to cut off China, Mahathir would not have met with Chinese entrepreneur Jack Ma.

This brings us to Mahathir’s meeting with a second foreign leader, Japanese Prime Minister Shinzo Abe. Why did Mahathir choose to go to Japan on his first official overseas trip soon after he came to power?

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Teaming with Abe-San on Look East Partnership with No.7 Jersey

Mahathir probably sees value in reviving his ‘Look East’ policy, which he pursued while prime minister in the 1980s, perhaps in a different form and for slightly different reasons. There is an element of nostalgia, to be sure. But Mahathir is not is not a sentimentalist.

The previous Najib administration did not treat the notion of equidistance from global superpowers with the sensitivity it deserved. There was a tumbling over to China coupled with a reticence to engage with Japan, at least with nothing of the enthusiasm that Tokyo enjoyed during the Mahathir 1.0 era.

Mahathir has always believed in maintaining equidistance from other powers, preferring to work with the larger economies as equals. Mahathir would, by logical extension, be willing to cooperate with China’s Belt and Road Initiative as long as the partnership is fair and without Beijing using Malaysia as its playground. In that respect, reaffirming Malaysia’s long friendship with Japan is a reassertion of Mahathir’s pragmatic approach to geo-economic policy.

But equidistance is not possible without the existence of something like the Non-Aligned Movement. In lieu of that, Mahathir will likely pursue equidistance through a more integrated ASEAN in partnership with other countries such as the United States, China, Japan, South Korea, India and the Central Asian states. This would be a revival of his East Asian Economic Caucus (EAEC) concept.

A close-knit ASEAN, through the EAEC, would be able to give countries such as Malaysia more access to foreign markets without having to pay an onerous price for doing so. It would allow countries like India to trade and invest in Southeast Asia or other places while being able to show their home constituencies that they can make gains without paying for them with tough commitments.

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Strengthening ASEAN’s economic cohesion and including other powers through the EAEC would mean that neither the United States nor China could dominate Malaysia’s foreign policy. Malaysia would not have to choose between aligning with either power.

Mahathir’s discussion with Jack Ma after his India and Japan meetings shows the Prime Minister’s pragmatism — more than being caught up in great power politics, Mahathir wants to push ahead with attracting no-strings-attached investment, be it from China, India or any other part of the world.

Mahathir understands that trade and investment are Malaysia’s lifeblood. Improving Malaysia’s networks with the rest of the world’s markets must take top priority to foster better trade and investment connections.

Mahathir’s meetings with Modi and Abe will set in motion a couple of initiatives. Malaysia will return to its default position of maintaining equidistance between superpowers. Japan will not feel it is being edged out of Malaysia’s investment landscape.

Malaysia will stand for a free and unaligned ASEAN, with Mahathir leading a campaign for a new trade architecture that might be more palatable to Southeast Asian countries  and which will minimise the conflicting demands of China, the United States and India by embracing Japan.

Of course, the EAEC idea will have its share of detractors and non-adherents. Much as Mahathir has a tough job setting domestic affairs right now, he has the no less difficult task of realigning the country’s geo-economic policy.

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Shankaran Nambiar is a senior research fellow at the Malaysian Institute of Economic Research.

A version of this article originally appeared here in The Sun Daily.