Malaysia: The Mess Mahathir created

July 29, 2015

Malaysia: The Mess Mahathir Made

by  Dan Slater, University of Chicago
Mahathir Lawan Najib

At least embattled Malaysian Prime Minister Najib Razak is right about one thing. The current mess in Malaysian politics is the making of his greatest nemesis, Mahathir Mohamad, who led the Southeast Asian nation with an iron fist from 1981–2003. What Najib fails to fathom is that Mahathir has not produced this mess by criticising his leadership, but by paving Najib’s path to power in the fashion he did during his decades in office. Mahathir may believe that he can end the crisis by bringing Najib down. But history should judge Mahathir himself as the author of a long national decline that has culminated in this latest crisis.

To be sure, Najib’s fingerprints are all over the current mess. The proximate source of the crisis has been the collapse of Najib’s pet sovereign-investment company, 1Malaysia Development Berhad (1MDB). This has caused Malaysia’s stock market and currency, the ringgit, to plummet in turn. All this has transpired amid credible allegations that the prime minister siphoned an eye-popping US$700 million into his personal bank account.

But this road toward ruin commenced with Mahathir, not Najib. It is vital to realise that Mahathir rose to power in blessed circumstances. Malaysia’s economy had been growing healthily for decades, thanks to the prudent economic management of a highly capable bureaucracy. Governance and tax collection were effective, and debts were few. Natural resource wealth, including oil, was professionally stewarded. A decade of muscular redistribution to the country’s ethnic Malay majority had restored social stability after the race riots of 1969. Incoming foreign investment was copious and about to mushroom even further. Mahathir commanded one of the most cohesive ruling parties (the United Malays National Organization, or UMNO) and coalitions (the Barisan Nasional, or BN) in the world. The regime was authoritarian, but not intensely repressive or disliked in comparative terms. In short, Mahathir was holding a winning hand when he became Prime Minister in 1981.

Then came the debt. Obsessed with following in the footsteps of Asia’s technological leaders, Mahathir began borrowing heavily to fund his ‘Look East’, state-led heavy-industrialisation program. Privatisation was part of his growth package, but the beneficiaries were businessmen of loyalty more than talent. When the global economy went into recession in the mid-1980s, patronage started drying up. UMNO split, largely in reaction to Mahathir’s strong-armed style of rule. Mahathir’s two most talented rivals, Tengku Razaleigh and Musa Hitam, bolted from UMNO despite their deep personal ties to the party, mostly to get away from Mahathir himself. Mahathir responded by launching a police operation under the pretext of racial tensions, imprisoning and intimidating political rivals, and cementing his autocratic control.

Hence by the late 1980s, all of the defining features of Malaysia’s current crisis under Najib’s leadership were already evident under Mahathir. The regime was increasingly repressive. The office of prime minister was becoming a haven of autocracy. Ethnic tensions had been reopened to political manipulation. The economy was worrisomely indebted. UMNO was shedding some of its most capable leaders. This was the beginning of Malaysia’s sad national decline, under Mahathir’s watch and at his own hand.

Fast-forward a decade and all of these syndromes would recur in even nastier forms. The Asian Financial Crisis of 1997–98 punished Malaysia for the unsustainable dollar-denominated debts it had accumulated under Mahathir’s single-minded push for breakneck growth. Mahathir blamed everybody but himself for the crash. He sacked and imprisoned his popular and gifted deputy, Anwar Ibrahim, largely for his temerity in suggesting that Malaysia needed deeper reforms to regain economic health.


Mahathir didn’t pull Malaysia out of its crisis with economic reform or adjustment, but with more and more borrowing and spending. This was possible because Malaysia was still sitting on the fiscal reserves it had been amassing for half a century, since the British colonial period. Mahathir grandiosely claimed that his imposition of capital controls had saved the economy. But capital flight had basically run its course by the time controls were implemented. Mahathir imposed them to facilitate political repression as much as economic recovery. The spectre of anti-Chinese riots in neighbouring Indonesia was then callously manipulated to keep ethnic Chinese voters in the BN fold in the 1999 elections.

Hence even before the turn of the millennium, Malaysia was hurtling down the very trajectory of decline we are witnessing in the current crisis. Like Mahathir, Najib assumed autocratic control over the economy and embarked on reckless borrowing and investment schemes, especially 1MDB. Like Mahathir, Najib unleashed a torrent of repression under antiquated security laws to protect his own position amid rising criticism from civil society and from within UMNO. Like Mahathir, Najib has recklessly played the ethnic and religious card as his position has weakened. And in consummate Mahathir style, Najib has now even sacked his deputy, Muyhiddin Yassin, for questioning Najib’s repression of the media in response to the 1MDB scandal. In sum, Mahathir has nobody to blame more than himself as he watches Najib drive Malaysia even further into the ground.

The 2015 Najib Cabinet

Neither Najib nor any of his current plausible replacements appear capable of reversing Malaysia’s decades-long decline. Herein lies perhaps Mahathir’s worst legacy of all. By forcing the three most capable politicians beside himself out of UMNO during their prime, Mahathir ensured that only relative lightweights would command leading positions in Malaysia’s most powerful political institution. If Malaysia is to exit this crisis on a path to restored health rather than steeper decline, the political and economic reforms first demanded in the reformasi movement of the late 1990s will finally need to put in place: either by a new generation of leadership within UMNO, or by Malaysia’s repressed but resilient political opposition.

Dan Slater is associate professor in political science at the University of Chicago.

Darkness has descended on Malaysia

July 24, 2015

Malaysia: Darkness has descended when the Fourth Estate is under attack

by Lim Kit Siang


Three days ago, I warned: “A darkness is descending on Malaysia.” Two days ago, DAP MP for Petaling Jaya Utara Tony Pua was barred from leaving the country to fly to Yogyakarta, Indonesia and may be investigated under the new-fangled offence of “activities detrimental to parliamentary democracy” which could send him to jail up to 20 years.

Today, the Home Ministry suspended the publishing permit of The Edge Weekly and The Edge Financial Daily for three months from July 27, for reporting on the RM42 billion 1MDB scandal which were regarded by the Najib premiership as “prejudicial or likely to be prejudicial to public order, security or likely to alarm public opinion or is likely to be prejudicial to public and national interest”.

Darkness is swiftly descending in Malaysia. Malaysia has become a topsy-turvy world. It is freedom of speech, thought and expression, and the freedom of the press, which are the sine qua non of a free society and a fully developed nation. It is not such freedoms but corruption, abuses of power and avarice which are prejudicial to public and national interests.

After spearheading six years of National Transformation Programme, Malaysia of Prime Minister, Datuk Seri Najib Razak has been “transformed” into a country where the expose of the biggest financial scandal in Malaysia, the RM42 billion 1MDB scandal, and not the 1MDB scandal which has become “prejudicial to public and national interest”.

More than three weeks after the Wall Street Journal report and allegation that US$700 million (RM2.6 billion) had been deposited into Najib’s personal bank accounts in AmBank in March 2013 just before the 13th General Election, not one of the three enforcement agencies in the “special task force”, namely Bank Negara Malaysia, the Royal Malaysian Police and the Malaysian Anti-Corruption Commission, had yet interviewed Najib himself.

Press FreedomThank You, Tun Dr. Mahathir, you started it

Instead of going on leave until the outcome of an investigation by independent and respected Malaysians who are not subordinate and answerable to the Prime Minister, we have Najib remaining in office to “mastermind” the counter-attack against all those who had sought to pry upon the 1MDB scandal and to ensure that the “special task force” set up to investigate into the WSJ report on July 2 and the 1MDB scandal would clear him of any wrongdoing – and Najib had no hesitation in announcing such a result at the early stage of inquiry by the “special task force”.

With the latest assaults on press freedom, Malaysia is plunging to the bottom of the World Press Freedom Index, when we had already fallen to a historic low of 147th out of 180 countries, a 25-point drop from 122nd ranking in 2012.

Is there light at the end of the tunnel? Is it possible to save Malaysia from a free fall to become a failed state? These are questions which the birthday bash for the Prime Minister would not waste time on, for it is a night for celebration – but these two questions should be sombre food for thought for another birthday bash tonight for the person who had previously caused darkness to descend in Malaysia, whether he could now help save Malaysia from the free fall of becoming a failed state.

Malaysia: Full Autonomy for Sarawak–A Political Mirage?

July 24, 2015

Malaysia: Full Autonomy for Sarawak–A Political Mirage?

by Joe Fernandez

The Sarawak Government is in negotiations with the Federal Government for full autonomy through the devolution of powers.

adenan-satemFull Autonomy for Sarawakians

Interestingly, the July 22 Sarawak Independence celebrations on Wednesday has been overtaken by the theme of Chief Minister Adenan Satem’s speech on the joyous occasion when he agreed with the Sarawak4Sarawakians sentiments of his people at large: Sarawak did not enter into the Federation in 1963 for Britain to simply hand over its colonial responsibilities in the territory to Malaya.

The proof of the pudding, they say, is in the eating. The die is cast i.e. there’s no turning back. Adenan’s critics would want to see him deliver on the contents of his bold July 22 speech this year. The question is whether full autonomy would come before the forthcoming state election, due by mid-2016, or after the polls.

In short, full autonomy for Sarawak, as an equal partner of Malaya and Sabah in the Federation. Equal partnership is the historical, legal and political reality where the South China Sea does not divide but brings together the two halves of the Federation i.e. one half in the peninsula and the other half in Borneo, remnants of the British Empire in the region.

keep-calm-and-love-sarawak-8Time for Autonomy to Sarawakians

The Sarawak Government wants the Federal Government to confine itself to national defence, foreign affairs and security while the rest would be taken care of by the state government. Adenan indicated that the way forward i.e. devolution of powers was now being negotiated with the Federal Government.

When that happens, Sabah would no doubt get full autonomy as well and on a silver platter. In fact, it was the activists in Sabah who first began the rights movement with the Sabah4Sabahans campaign in 1985 and, after a lull, revived the rights issue in 2008 when the ruling party lost for the first time its coveted two-thirds majority in Parliament.

When full autonomy comes, it would still be the Federation of Malaysia under the equal partnership concept, and not the Federation of North Borneo, Sarawak and Malaysia as many activists in Borneo have been urging. They feel that a Federation of three territories, as reflected in the name, would truly translate the concept of equal partnership.

July 22 this year is perhaps the most significant speech ever made by any head of government in the Federation since 1963 and marks a clear watershed. It was a speech which cut the Gordian Knot. The Gordian Knot is one that Alexander the Great cut through in Turkey, to pave the way, for conquering his way across Asia right up to that part of India by the banks of the Indus River.

It’s a speech where the past has caught up with us in the present to haunt the future.There’s unlikely to be a Referendum in Sarawak on Adenan’s full autonomy approach. In his words, full autonomy was the intention in 1963, meaning the founding fathers in Borneo. So, it’s not a Referendum issue.

Adenan, in pushing for full autonomy, has firmly ruled out Sarawak’s secession from the Federation and even perhaps defused the issue, although he conceded that the sentiments are out there, and there are calls for a Referendum towards that end, even as Inspector General of Police Khalid Abu Bakar warned that he would go after the “secessionists”, unnamed, in Sarawak.

Adenan, unlike Bingkor assemblyman Jeffrey Kitingan, isn’t questioning why Article 160 of the Federal Constitution defines Federation as that in the Federation of Malaya Agreement 1948. Jeffrey’s take is that Malaya was masquerading as Malaysia under Article 160, since it’s not the Malaysia mentioned in the Malaysia Agreement 1963 (MA63).

Adenan clearly doesn’t intend to revisit either Jeffrey’s contention that the Federal Government has been in non-compliance on MA63.

Non-compliance, critics say, is the “dead horse” that’s being flogged by Jeffrey who has made the issue his constituency even before the Parti Bersatu Sabah (PBS) Government came to power in Sabah in 1985 under his elder brother and Huguan Siou Joseph Pairin Kitingan. Jeffrey even spent nearly four years under detention without trial in the 1990s, under the draconian Internal Security Act (ISA), for allegedly plotting to pull out Sabah from the Federation.

Earlier, when it appeared that the Police were not in favour of July 22 being observed, the Sarawak Government was accused in the social media of caving in to the official line that “Sarawak achieved its independence through Malaysia”.

Immediately, the demand in the social media was for the Sarawak Government to state clearly, viz. in no uncertain terms, when Sarawak obtained its independence from Britain in 1963 i.e. July 22 or September 16.The question has now been answered.

Shashi Tharoor on British Colonialism: The Indian Experience

July 22, 2015

Shashi Tharoor on British Colonialism: The Indian Experience

This is for all those who believe India benefited more than that it lost from being ruled by the British. Here’s a wonderful speech at the Oxford Union Society by Congress MP Shashi Tharoor on the motion “This house believes Britain owes reparations to her former colonies.”

In his stirring speech he brilliantly explains how India was governed for the benefit of the Britain and the effect of 200 year rules. What did 200 years of British rule cost us? India had been 23% of the global economy in the early 18th century. When the British left 200 years later, they’d managed to bring it down to a mere 4%! …and that is just a fraction of what the British did. He also spoke about how Britain’s industrialiation was anchored on the de-industrialisation  of India.

Before listening to Dr. Tharoor, hear the views of Henna Dattani–Britain Does Owe Reparations.

Malaysia: UMNO’s Corporate Cornucopia

July 14, 2015

Malaysia: UMNO’s Corporate Cornucopia

by John Berthelsen@wwwá

How Malaysia’s companies funneled money into the country’s biggest political party

UMNO's N and M(We are rerunning this article from October 13, 2010 as a companion piece to Murray Hunter’s adjoining article to give specifics of exactly how rent-seeking and institutional corruption eventually enveloped the economy.)

In the 1980s and 1990s, Halim Saad and Tajudin Ramli were two of Malaysia’s brightest stars, picked by former Prime Minister Mahathir Mohamad to lead the country’s ethnic Malays onto the national stage as exemplars of a new Bumiputera business culture that would catch up with the ethnic Chinese who had dominated commerce as long as Malaysia had been in existence.

When Mahathir took office, insiders say, his plan was to create a cadre of 100 super-rich bumis who in turn would help rural Malays into prosperity under a konsep payung, or umbrella concept routed through the United Malays National Organization, much the way he envisioned driving the country into industrialization through massive projects.

But greed intervened. Once the privileged got rich, there was little incentive to share it with the kampungs, the Malay rural villages. Many of the companies eventually collapsed and are being supported by government institutions such as Kazanah Nasional, the country’s sovereign investment fund, or the Employee Provident Fund.

Rise of the UMNOputeras

Although the UMNO connection was widely assumed during Mahathir’s 22 year rule as Prime Minister, today a flock of explosive court documents filed in different Kuala Lumpur courts appear to be breaking open conclusively the open secret that Tajudin and Halim and others were essentially front men for UMNO, the country’s biggest ethnic political party and part of a class of rentier businessmen who became known as Umnoputeras, a play on the word Bumiputera, or native Malaysians, predominantly ethnic Malays.

Dr M the Political ConstructNor were they alone. Others included Syed Mokhtar Al Bukhary, one of Malaysia’s richest men, as well as Yahaya Ahmad, who headed Mahathir’s national car project and who tragically was killed with his wife in a helicopter crash, and Samsuddin Abu Hassan, introduced by Mahathir to the government of Nelson Mandela but who had to flee South Africa after being accused of misappropriating millions and evading South African debts totaling about R50 million (US$7.233 million at current exchange rates). Samsuddin left behind his glamorous wife, Melleney Venessa Samsudin, along with a failed Durban bank, and returned to Malaysia.

Samsudin ultimately ended up on the Board of Directors of Mitrajaya Holdings Bhd., another Umno-linked company that has played a significant role in major national projects including the Kuala Lumpur International Airport, KL’s Light Rail Transit System, the CyberJaya Flagship Zone and numerous other projects.

23 companies vehicles for UMNO

At least 23 of Malaysia’s biggest companies (see list below) appear to have been vehicles for Umno to siphon off vast amounts of money in government contracts as Mahathir’s plans went awry. The companies and the people who run them are so hard-wired into UMNO, the government and its investment arms that de-linking them would probably destroy the party. That in effect makes a mockery of Prime Minister Najib Tun Razak’s widely publicized speech in July in which he promised to root corruption out of his party.

Much of the ownership appears to have been channeled through a mysterious company, Realmild, that emerged in 1993 to stage an RM800 million management buyout of a major chunk of Malaysia’s media including the New Straits Times Press (M) Bhd and TV3. Realmild already owned a controlling interest in Malaysian Resources Corporation Bhd, which got the contract to develop the massive Kuala Lumpur Sentral transport hub. It also acquired ownership of the Labuan and Sabah Shipyards, which supply the Malaysian Navy, as well as Redicare and Medivest, which were awarded lucrative contracts to supply medical supplies to government hospitals.

Thieves fall out, details emerge in court

In September, Syed Anwar Jamalullail, the brother to the Raja of Perlis, and others testified in a tangled court battle in a Kuala Lumpur High Court that Daim Zainuddin, the Prime Minister’s close associate, often told Malay businessmen to act as nominees in the management of Malaysia’s top companies. The long-running suit was launched five years ago in 2005 by Khalid Ahmad, a former Realmild Director, who alleged he had been cheated out of a RM10 million payment for five percent of Realmild’s shares by Abdul Rahman Maidin, thought to be the beneficial owner.

According to the testimony, Abdul Rahman paid out the RM10 million but later reneged after he learned from Mahathir that the shares actually belonged to UMNO. The trustees for Realmild in fact were Mahathir himself as well as former Berita Harian Group Editor Ahmad Nazri Abdullah, New Straits Times Group Editor Abdul Kadir Jasin and Mohd Noor Mutalib. Another witness, Ahmad Nazri, said in a deposition that he held the majority share of 80 percent in Realmild, although 70 percent of the shares were actually in trust for Mahathir.

The companies others ran included Faber Group Bhd, a member of the UEM Group, now involved in integrated facilities management and property solutions sectors; KUB Malaysia Bhd. A holding company dealing in information, communications & technology, property, engineering & construction and food related industries.

Companies mismanaged into state ownership

The companies have been involved a wide variety of activities including media, property development, construction, toll roads, hospital equipment, logistics and distribution, cellular telephony and other businesses. What they had in common was that most of them benefited from government contracts doled out by the Barisan Nasional, the ruling coalition that has controlled Malaysia since its inception as a country. The other thing they had in common was that at some point most of them were mismanaged into financial trouble of one kind or another and had to be bailed out or bought out by the government.

Realmild unloaded Malaysian Resources Corporation Bhd onto the Employee Provident Fund in late 2005 as part settlement for an outstanding Rm500 million loan. Putera Capital Bhd, is threatened with bankruptcy. It formerly owned the Putra World Trade Center, UMNO’s headquarters, which rents out office space to businesses. UEM Builders Bhd, an offshoot of United Engineers Malaysia (UEM), along with UEM World Bhd, was dumped onto Kazanah Nasional, the investment holding arm of the government and the government’s strategic investment vehicle.

Kazanah Nasional now also owns PLUS, which held the tollway contract for the national north-south highway, as well as Pharmaniaga, a former UEM subsidiary dealing in hospital supply and other services. Court documents show that MAS, then the state-owned flag carrier, was taken over and privatized by Tajudin Ramli only to lose an estimated RM8 billion (US$2.77 billion at current exchange rate), with a major part of that being funneled into a Frankfurt, Germany cargo logistics company whose directors were closely connected to Tajudin.

According to the website Malaysia Today, Tajudin’s lawyers revealed that Tajudin had only been a front man for UMNO and that UMNO “not only has to protect him from prosecution but that they also had to ensure that the government bought back the shares at the same price that they were sold to him although the shares were only worth a portion of the real value.”

Realmild unloaded Malaysian Resources Corporation Bhd onto the Employee Provident Fund in late 2005 as part settlement for an outstanding Rm500 million loan. Putera Capital Bhd, is threatened with bankruptcy. It formerly owned the Putra World Trade Center, UMNO’s headquarters, which rents out office space to businesses. UEM Builders Bhd, an offshoot of United Engineers Malaysia (UEM), along with UEM World Bhd, was dumped onto Kazanah Nasional, the investment holding arm of the government and the government’s strategic investment vehicle.

Overpriced government contracts provide a lifeline

Other depositions made available in recent weeks have listed a long series of documents detailing misdoings in UEM/Renong, once headed by Halim Saad, which has long been accused of looting the government treasury through vastly overpriced construction contracts. Halim told the press in September that he had left the UEM/Renong board in 2001, saying authorities wanted Kazanah to take it over “to prevent a systemic risk to the banking system in Malaysia and to enable a sustained restructuring of the group.”

UEM itself is still at it. The government-linked company was given the contract to build a second bridge from the mainland to the northern city of Penang at a price estimated in 2007 at Rm2.7 billion. It has since climbed to RM4.3 billion without figuring in a variety of ancillary costs including compensation for fishermen and project development costs of RM285 million, with the total now nearing RM5 billion.

Other documents show how completely the country’s press was in the thrall of UMNO. Media Prima Bhd, a listed company, apparently took over the ownership from Realmild of TV3, 8TV, ntv7 and TV9 as well as 90 percent of the equity in The New Straits Times Press (Malaysia) Bhd, which publishes three national newspapers; the New Straits Times, Berita Harian and Harian Metro. It also owns three radio networks, Fly FM, Hot FM and One FM. Other cross media interests of Media Prima include content creation; event and talent management.

It also owns outdoor advertising companies Big Tree Outdoor Sdn Bhd, UPD Sdn Bhd, Right Channel Sdn Bhd, Kurnia Outdoor Sdn Bhd and Jupiter Outdoor Network Sdn Bhd. It is online through a digital communications and broadcasting subsidiary, Alt Media, with the Lifestyle Portal and the newly launched TonTon, a cutting-edge video portal with HD-ready quality viewing experience that offers the individualism of customized content and interactivity of social networking.

The companies:

  • Faber Group Bhd
  • KUB Malaysia Bhd
  • Malaysian Resources Corp. Bhd
  • Media Prima Bhd
  • New Straits Times Press (M) Bhd
  • Putera Capital Bhd
  • UEM Builders Bhd
  • UEM World Bhd
  • PLUS
  • Pharmaniaga
  • Utusan Melayu (M) Bhd (partly owned by Syed Mokhtar Albukhary, another Mahathir crony and one of Malaysia’s 10 richest men according to the Forbes List
  • Renong Bhd
  • Realmild Sdn Bhd
  • Mahkota Technologies (Also a partnership with Syed Mokhtar Al Bukhary)
  • Malaysian Airlines
  • Celcom
  • Malaysian Helicopter Service
  • Temasek Padu Sdh Bhd
  • Sabah Shipyard
  • Labuan Shipyard
  • Redicare
  • Medivest