The thinking of Singapore’s late founding prime minister Lee Kuan Yew has shaped the country’s foreign policy since its independence in 1965. But the world is changing with the shifting geopolitical balance of power, disruptions caused by digital technology, the rise of populism and the backlash against globalisation. Is Lee’s thinking and strategic vision still applicable in this new world?
On the fourth anniversary of his passing, the question looms large for Singapore. As a small state dependent on the outside world for economic growth, and on larger powers to keep the regional peace, it is particularly vulnerable to how the international order is changing.
There are four elements of his approach to foreign policy that continue to be relevant but will also come under great pressure in the years to come.
First is the idea that a small state like Singapore needs a credible armed forces to deter would-be aggressors. It was a priority when the country suddenly became independent in 1965 and found itself having to build an army from scratch.
Lee’s firsthand experience of Japanese occupation in 1941 as well as the 1965 forced separation from Malaysia had a profound impact on his thinking about security. Singapore has since been unrelenting in building up its armed forces, allocating 30 per cent of government expenditure this year on defence, security and diplomacy.
Developing this military capability has also meant closer ties with the United States from which Singapore buys most of its military equipment, including advanced fighter aircraft. Singapore’s close security ties with the United States are a key part of Lee’s strategic vision but will also come under pressure as the balance of power shifts to a rising China.
Whatever happens, Singapore’s commitment to its own defence that Lee first defined will not change. ‘Without a strong economy, there can be no defence’, Lee asserted, ‘[without] a strong defence, there will be no Singapore. It will become a satellite, cowed and intimidated by its neighbours’.
The second pillar of Lee’s foreign policy stems from his realist view of how a small state can best survive in a world dominated by more powerful actors. Creating space for Singapore has been an unending effort for Singaporean officials, resulting in the many linkages the country has internationally, and its support of multilateral organisations such as ASEAN, the ASEAN Regional Forum and the Comprehensive and Progressive Agreement on Trans-Pacific Partnership.
Lee believed regional peace and stability was best achieved by having the major powers engaged in the region. Not just the United States but also China, Japan, Australia, India and European countries.
Despite the United States being the pre-eminent power in Asia throughout his years in office, he did not anchor Singapore solely in the US camp. Instead he worked hard to expand Singapore’s international space, for example working closely with Chinese leaders to expand economic and political ties.
But China’s rise and its growing assertiveness in pursuing territorial claims in the South China Sea will test how ASEAN, including Singapore, manages the new reality. For Lee the answer lies in continued US engagement in the region. ‘If there is no counterbalance from the US, there will be no room to manoeuvre for smaller Asian countries. When you have two trees instead of one, you can choose which shade to be under’. If Lee were alive today, he would continue looking for more shade.
The third element of Lee’s strategic vision is how to realise Singapore’s strategic goals through developing close relationships with leaders that mattered to Singapore. The best example was Lee’s personal friendship with then Indonesian president Suharto.
They could not have had a worst start after Singapore executed two Indonesian saboteurs in 1968. But the two leaders worked at it, the friendship blossomed and they met regularly over two decades to resolve issues between the two countries.
China–Singapore and US–Singapore ties similarly benefited from Lee’s personal relationship with many of their leaders who respected his deep insights and forthright views. When the world is more uncertain, it is even more important to be able to reach out to reliable friends.
Finally, Lee’s strategic vision of Singapore’s place in the world cannot be divorced from how he saw the country’s own identity: a vulnerable nation that had to be exceptional in Southeast Asia to survive. ‘I decided we had to differentiate ourselves from [others] or we are finished’, he reflected.
Exceptionalism has profound implications for Singapore’s foreign policy and will invariably create problems with neighbouring countries from time to time. When you are different you have to work harder at your relationships, and Singapore’s leaders will have to manage them deftly.
But the greatest challenge to Lee’s vision of Singapore’s exceptionalism will come internally. Can its people and government maintain the high standards, even as other countries progress to narrow the gap? If they do not, all the other elements of Singapore’s foreign policy fall apart. That is what it means to say that foreign policy begins at home.
Han Fook Kwang is Senior Fellow at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University (NTU), Singapore. He was co-author of several books on Lee Kuan Yew including The Man and his Ideas and Hard Truths to Keep Singapore Going. As then Managing Editor of Singapore Press Holdings, he led the editorial team for One Man’s View of the World.
A version of this article originally appeared here on RSIS.
As official China celebrates the four decades of “reform and opening” that began in late 1978 to early 1979, it is instructive to recall the role Singapore played in this process. The fulsome eulogies for Lee Kuan Yew offered by Chinese officials in 2015, beginning with Xi Jinping himself (who has been noticeably less enthusiastic in his praise for Deng Xiaoping given China’s top leader’s “family feud” over who deserves the most credit for the reforms), are just the most obvious indication that Lee and the “Singapore model” more generally have played (quite literally) an oversized role in China’s rapid transition from Maoism to “Market-Leninism”. Appropriately, Lee was honoured late last year as one of the foreigners who helped China most in its reform process.
In November 1978 Deng, newly installed as China’s paramount leader, visited Singapore. Ostensibly the trip was part of a diplomatic campaign by China against what it considered a growing threat from Soviet-backed Vietnam. But in Singapore, Deng instead became obsessed with the city-state’s purported transformation from a backwater fishing village to a leading global city under Lee Kuan Yew and his People’s Action Party’s (PAP) rule.
In his welcoming remarks, Lee stressed that Singapore’s ethnic Chinese citizens were the sons and daughters of uneducated, landless peasants from Southern China, leading Lee to suggest, as former Foreign minister George Yeo has recently phrased it, if Singapore with its “poorly-educated coolies could make good, how much better mainland China could be if the right policies were adopted.” Deng showed great respect for Lee (going so far as to not smoke in the presence of the fastidious Lee despite the Singapore leader providing him with a spittoon in a well-ventilated room) as he had inherited a broken system that he was quickly trying to fix. In his comments Deng endorsed the (exaggerated) story of Singapore’s miraculous metamorphosis.
Crucially, Deng and Lee developed a special relationship during Deng’s short visit. Both were anti-colonial leaders at the forefront of their countries’ revolutionary movements and committed to political order over chaos. Ezra Vogel, in his monumental 2011 biography of Deng, comments that:
“Deng admired what Lee had accomplished in Singapore, and Lee admired how Deng was dealing with problems in China. Before Deng’s visit to Singapore, the Chinese press had referred to Singaporeans as the ‘running dogs of American imperialism.’ A few weeks after Deng visited Singapore, however, this description of Singapore disappeared from the Chinese press. Instead, Singapore was described as a place worth studying .…. Deng found orderly Singapore an appealing model for reform, and he was ready to send people there to learn about city planning, public management, and controlling corruption.”
Unlike other Chinese party leaders and academics who, as Kai Yang and Stephan Ortmann have shown, were looking at a variety of potential models such as Sweden (seen then to represent a “‘third way’ between Communism and capitalism” and symbolising “the ideals of social equity and harmony”), Deng was single-mindedly focused on Singapore, a fascination that was initially quite idiosyncratic. He was searching for a model that both legitimated party rule and was adaptable to the country’s rapid industrialisation. Deng’s articulation of the “Four Cardinal Principles” in 1979 showed that he still adhered to party orthodoxy in regard to repressing political dissent and reaffirming the party’s monopoly on power. But Deng was also concerned with how the party could guide China through state-led capitalist growth. In this regard, Deng left little doubt his thinking was closer to Lee’s than Karl Marx’s.
It has been difficult for China to find examples of a successful combination of centralised authoritarian rule with effective and corruption-free government in a modern society anywhere else in today’s world besides Singapore. Besides the tiny sultanate of Brunei, Singapore is the only high-income country with a non-democratic regime in East Asia and arguably the only clear case globally, as oil-dependent absolute monarchies are rich but not “modern” in most understandings of the term. China’s observers also tend to see Singapore as “Chinese” and Confucian-influenced (ignoring its distinctive national identity and multi-ethnic character), making it seem more culturally appropriate for emulation.
But more recently China seems to have moved away from adopting Singapore’s “soft authoritarian” style of rule. A recent book by David Shambaugh claims that gradualist political reforms by Xi Jinping’s predecessors Jiang Zemin and Hu Jintao, albeit within a continued authoritarian framework, were “intended to open up the system with carefully limited political reforms,” seeking to “manage political change rather than resist it.” By contrast, Xi’s recent widespread crackdown on dissent has undermining hopes of further, however constrained, political liberalisation. Shambaugh regrets that Singapore’s semi-competitive system, with a dominant party legitimised through limited but significant popular participation, and whose power is constrained by the rule of law, is no longer considered relevant by the Chinese leadership.
Thus, China seems to be moving further away from rather than toward the Singapore model. At the same time, as China takes a more aggressive stance in its foreign policy, particularly the South China Sea, and becomes more confident of its own political and developmental success, its interest in Singapore, which has staked out an independent foreign policy that has sometimes angered the mainland, has declined. After many years in which officials offered a codified version of the “Singapore story” to Chinese observers, Singapore Prime Minister Lee Hsien Loong recently described the island state as little more than a “bonsai tree model of what China is” that might be “intriguing to scrutinise” but from which is hard for a gigantic country like China to draw lessons. Seemingly consigned to a historical period of conservative reformism in China, the “Singapore model” now appears to represent a path not taken by the mainland’s hard-line leadership.
Tropical rain is bucketing down when P. J. Thum arrives for our meeting at a semi-outdoor Starbucks amid high-rise public housing flats on Singapore’s unfashionable north side. Seeking quietness, we move inside a nearby shopping mall to a cafe offering beverages of a local flavour: black tea with the option of evaporated or condensed milk – the tannin-laden, chalky legacy of long-gone British military men.
Dr. Thum Ping Tjin, a fellow Singaporean and Research Associate at the Centre for Global History at the University of Oxford.
Thum – full name Thum Ping Tjin – is 38 years old, athletic and preppy in tortoiseshell spectacles and a pink shirt. From Singapore’s ethnic Chinese majority, he has an Oxford doctorate in history, is a former Olympic swimmer and has an unblemished military service record. All of which makes him the ideal candidate to go far in Singapore’s kind of meritocracy − perhaps joining the “men in white” of the People’s Action Party, in power since 1959.
Except Thum made the wrong career choice for that. As his history specialisation developed, he’d been thinking of a biography of Vespasian, the Roman legionnaire who, after invading Britain and quelling the Jewish revolt, was installed as emperor by acclamation of his troops and ended a period of instability.
“Then I thought, ‘There are other people who can do that, many people doing way better work on Roman history than I could,’ ” he tells me. “ ‘But who’s going to do Singapore history?’ ”
Soon after his return to a postdoctoral fellowship at the National University of Singapore (NUS), a historic windfall came his way: the British government declassified its archive for the tumultuous year of 1963 in Singapore and Malaya when the two self-governing former colonies were moving to join up in the new, pro-Western nation of Malaysia, standing against the communist tide sweeping South-East Asia.
It contained documents about Operation Coldstore, the sweep by Singapore’s Special Branch in February 1963 to detain more than 100 politicians, trade unionists and activists without trial, ostensibly to prevent the underground Malayan Communist Party instigating unrest to hinder the formation of Malaysia.
From these documents, Thum found the proof of what many had long suspected: that then Chief Minister Lee Kuan Yew mounted Coldstore chiefly to nobble the leftist opposition party, Barisan Sosialis, looming as a serious challenge to his People’s Action Party (PAP) in forthcoming elections. The archive shows Lee virtually admitting as much to British officials. It set a pattern of ruthless use of communist scares and preventive detention powers that Lee employed for decades.
As he wrote and talked about these findings, Thum soon got the answer to his question about who would write Singaporean history.
“Only someone brave or stupid enough,” he says. “Here it is almost career suicide to do Singapore history, because eventually you run into the problem of either you have to censor yourself in Singapore or you leave Singapore and you enter an industry which is not interested nowadays in this sort of niche history.”
Within a year, a senior NUS administrator pulled him aside. “I am not supposed to tell you this, but a directive has come down from the top,” the official said. “You’re blacklisted: no renewal, no extension, no new contract. You’d better make plans.”
Thum went back to Oxford, then returned to Singapore with funding from the Open Society Foundations of George Soros and other donations big and small to start New Naratif, a web platform for research, journalism and art in South-East Asia.
In Singapore he is not alone in myth-busting. In 2014, he contributed to the book Hard Choices: Challenging the Singapore Consensus, which queried many PAP narratives. It regarded meritocracy as a cover for elitism and groupthink; low taxes and migrant labour benefiting the wealthy and punishing ordinary locals; the purchase of government flats a trap rather than economic security.
The writers saw themselves as helping point Singapore to a more sustainable prosperity, explains co-author Donald Low, an economist and former finance ministry official, in what seemed at the time a new era of flexibility and contested policy on the part of the PAP.
In 2011, in the economic doldrums after the global financial crisis, voters gave the party and Prime Minister Lee Hsien Loong – the eldest son of Lee Kuan Yew – a severe shock. The PAP vote dropped by 6.5 points to 60 per cent, the lowest since 1963. The Workers Party gained six of the 87 seats, the best opposition result since Singapore broke from Malaysia in 1965. In a separate presidential election, a widely liked maverick came close to beating the PAP’s preferred candidate.
Lee responded with social policy reforms, hints of openness and some humble gestures, notably cutting his own salary by 36 per cent to $S2.2 million and that of his ministers to $S1.1 million. The PAP has long argued that these salaries, still the highest in the world for elected officials, are necessary to attract top talent and lessen corrupt temptations.
However, in 2015, Lee Kuan Yew died, aged 91. After an effusion of national mourning his son called a snap election, in which the PAP vote rebounded to nearly 70 per cent. “The result of 2015 removed whatever impetus or pressure there was, both within and without,” Low tells me, over beers and another local adaptation of British cuisine, crispy-toasted Spam. “The reform appetite has completely gone out the window in Singapore in the last three years.”
Dig deeper, he says, and Singaporeans are far from the “crazy rich Asians” of this year’s hit film set in the glittering south side of the island, with its heritage hotels, fusion cuisine and rooftop infinity pools.
For a few, the island is like this. A bungalow sold last month for $S95 million, reflecting the top-end wealth created by income tax rates that plateau at 22 per cent at $S320,000 a year and the absence of capital gains or inheritance taxes. IT start-ups are thriving. British inventor James Dyson has just chosen Singapore to manufacture his new electric car.
For the rest, things are pretty stagnant. Citizens are now only about 60 per cent of the 5.6 million population, their wages and job openings depressed by workers imported from the wider region. The 85 per cent living in Housing and Development Board flats that they have been persuaded to buy have seen values flatten. They are likely to decline steadily once their “ownership” gets to the halfway point of what are actually 99-year leases.
Low and Thum see few responses coming out of the PAP now.
The fall of the similar-vintage United Malays National Organisation in Malaysia’s election this year has been a new shock. Under the returned Mahathir Mohamad, Kuala Lumpur is breaking its mould, ending capital punishment while Singapore steps up its hanging, winding back ethnic Malay privilege, and exposing how Goldman Sachs bankers, some based in Singapore, helped loot the 1MDB fund of billions.
It’s attracting some envy. “Because really we are the same country,” Thum said. “We just got split up by politicians who couldn’t get along. There are so many similarities that Singaporeans look north and see a society that looks so similar to ours but is heading in a different direction, with hope and vision, things that we lack.”
Singapore’s problem is ennui, not massive scandal. PAP leaders look back, arguing about who best embodies Lee Kuan Yew’s legacy. In the 2015 election one even boasted about the lack of promises, since promises can be broken.
Lee Hsien Loong is only 66 and highly competent, but looks older than his years, after overcoming two types of cancer, then fainting while speaking at a national day rally two years ago. He has said he will retire at 70, so the next election, widely expected to be next year, will be his last before handing over.
But to whom? The consensus is that a third-generation Lee family member, such as the Prime Minister’s pushy second son Li Hongyi, an IT specialist, could be a risk, especially after a public family squabble about the disposal of Lee Kuan Yew’s old house that diminished the dynastic aura.
The alternative comes down to three candidates among younger ministers, with senior military rank and closeness to Lee Hsien Loong their main selling points inside the party. “They’re all bland, interchangeable, boring, uninspiring male Chinese,” Thum says. “The problem is compounded by the fact there is a clear, popular leader that Singaporeans want.”
This is current Deputy Prime Minister, Tharman Shanmugaratnam, 61. A former head of the Monetary Authority of Singapore, and later Finance Minister, he is credited with the post-2011 reforms that helped the PAP rebound in 2015. But he was then shifted into a vague coordinating role in cabinet.
There is more history here. In 1987, Lee Kuan Yew used internal security powers again, in Operation Spectrum, to detain 22 young Catholic social activists, some of whom, after soft torture, confessed on TV to having been unwitting tools of the communists. Studying at the London School of Economics, Shanmugaratnam had mixed with one of the detainees, and an exiled Singaporean leftist lawyer, Tan Wah Piow. “I can only speculate that the PAP feels that Tharman is a useful tool but he can’t be trusted to lead because he will take Singapore in a very different direction, especially one away from the Lee family,” Thum said.
And of course, he is of Tamil descent. As Flinders University political scientist Michael Barr wrote in his recent book The Ruling Elite of Singapore: “Today the ideal Singaporean is no longer an English-educated Singaporean, but an English- and Mandarin-speaking Chinese.” Lee Kuan Yew got the PAP hooked on the notion that only strong individuals, like the ideal Confucian junzi (righteous gentleman), could preserve the nation, not strong and independent institutions.
Meanwhile, the PAP leadership plays it by its time-tested book of legal action against opposition figures: for defamation, contempt and sometimes minute financial irregularities, such as using office stationery for private purposes.
Three MPs of the Workers Party are in court facing charges of financial laxity in the local council they also run, with the government-owned media breaking away from what Low calls its usual “Panglossian cheerleading” to give the trial reams of coverage.
Even a stalwart of Lee Kuan Yew’s era, diplomat and “Asian values” proponent Kishore Mahbubani, fell foul of the system. His offence was an op-ed, after Chinese officials blocked the Hong Kong transit of Singapore armoured vehicles being shipped back from exercises in Taiwan, saying that small countries had to put up with such things. He was removed as dean of the Lee Kuan Yew School of Public Policy at NUS.
In March, Thum himself appeared before the Singapore parliament’s Select Committee on Deliberate Online Falsehoods, to argue among other things that a government defending Operation Coldstore had its own problems with truth. He found his academic credentials questioned for six hours in what was clearly a prepared ambush by the law and home affairs minister, K. Shanmugam, the government’s main political attack dog.
Still, history does have its rewards. After one talk, a man in the audience approached Thum. He had been a Coldstore detainee: the stigma of being a communist dupe had remained after his release. Now Thum had shown there was no such evidence. “The man said that because of my work, he can look his wife and children in the eye,” Thum said. “He said: ‘P.J., you’ve given me my pride and my dignity back.’ I will never forget the privilege to be able to make someone’s life better like that.”
This article was first published in the print edition of The Saturday Paper on November 10, 2018 as “Singapore sting”.
Hamish McDonald is The Saturday Paper’s world editor.
This opinion piece is part of the Silver Lining Series written by members of the Council of Asian Liberals and Democrats (CALD), an organization of liberal and democratic parties in Asia, to celebrate its 25th anniversary in 2018.
For decades, Asian values, under the guise of Confucianism, have been used by the region’s autocrats to ward off criticisms, mainly from the West, about their undemocratic ways. This argument’s most artful proponents are Singapore’s former Prime Minister, the late Lee Kuan Yew, and Malaysia’s Dr. Mahathir Mohamad during his first stint as the country’s leader.
With the region in the thrall of dictatorships – from Korea’s Park Chung-hee in the north to Indonesia’s Suharto in the south – there seemed to be a seductive ring to the uniqueness of the Asian political culture.
But there is nothing quite like a few revolutions, mainly peaceful ones, to debunk the no-democracy-please-we’re-Asians theory. Taiwan, the Philippines, South Korea, Indonesia, Myanmar, Mongolia, and Thailand overcame repressive governments to establish democratic systems. The extent of reform may be limited, as in the instance of Myanmar, or has backslid, as in Thailand. But the trend toward democratic change has been unmistakable.
The New Democrats in Malaysia headed by former Asian Values proponent, Dr. Mahathir Mohamad took over Putrajaya after resoundingly defeating UMNO-BN in GE-14
The most recent example is, of course, Malaysia where after 61 years of one-party rule, Malaysians staged an electoral revolt of their own and sacked the Barisan Nasional government.
So, have Asian peoples jettisoned Asian values and adopted Western ones? Of course not. Remember that for the better part of the last two centuries, much of Asia toiled under the subjugation of Western colonialism, where the concepts of freedom and universal suffrage were as alien as the languages imposed on the natives.
The truth is that, regardless of the part of the world they inhabit, man has always sought to lord over his fellow beings. But it is just as ineluctable that the masses will, at some point, rise up to show despots the boot and claim their freedoms.
To avoid sounding simplistic, however, let me point out that the factors contributing to the demise of autocratic regimes in Asia are varied. Distressed economic conditions in the Philippines and Indonesia contributed massively to the overthrow of Ferdinand Marcos and Suharto. In Taiwan and South Korea, it was the burgeoning educated middle-class that grew intolerant of the oppressive military regimes.
Even so, these revolutions were not a result of spontaneous combustion. There were years of relentless campaigning and sacrifice by individuals who saw the need for change and, more importantly, found the courage to stand up and rattle the authoritarian cage. Regional organizations like the Council of Asian Liberals and Democrats, a body comprising political parties (both ruling and opposition) committed to advancing democracy in Asia, have been keeping freedom’s agenda on the front burner.
The 1998 Reformasi paved the way for Malaysia’s New Democracy of 2018
Again, take the most recent case of Malaysia. Those who cried reformasi and fought corruption and abuse of power did not just surface during the historic elections this year. It was a struggle that spanned two decades, one which saw the opposition leaders and activists harassed, humiliated, and jailed. In the end, like in the other countries, the democrats prevailed.
The mother of all ironies is that it was Mahathir, the leader of the opposition coalition that toppled incumbent Najib Razak, who wrote in 1995 that Asia’s rejection of democracy came from the “Eastern way of thinking.”
Singapore’s current Prime Minister Lee Hsien Loong, unwilling or unable to read history, continues this charade. In a recent interview with CNN’s Christiane Amanpour, he denied that his administration is repressive. Politics in Singapore, he insists, is the way that it is because Singaporeans voted for it. Of course, he did not mention that he had to change the rules for the presidential elections so that only his party’s nominee qualified as a candidate. There are elections and there are free and fair elections.
The not-so-hidden message for autocrats and democrats alike is that the mood in Asia has irrevocably altered. The idea that democracy is ill-suited to the Asian mind has been exposed for the propaganda that it is.
No wonder the fight for democracy is alive and well.
Chee Soon Juan is the secretary general of the Singapore Democratic Party and former chairperson of CALD.
It takes time, but Justice will come eventually to Najib Razak and Rosmah Mansor
93-year-old Dr. Mahathir Mohamad, who heads Malaysia’s reform coalition Pakatan Harapan, has lost no time in knuckling down to work. A week after he assumed office in the wake of the political earthquake of the country’s May 9 general election, he terminated the contracts of 17,000 political appointees as a drain on public expenditure.
The move was hailed by a public taken aback by the numbers of people involved, although some are concerned that the shock and awe of Mahathir’s move would generate the same kind of guerilla underground that cropped up when Paul Bremer, the American proconsul in Iraq, disbanded the army and civil service in 2003. That played a major role in the eventual creation of the Islamic State which has terrorized Syria and Iraq for the past several years.
Nonetheless, the sackings are looked upon by Malaysia’s 31 million people as just the start of the cleanup of decades of appalling corruption. Police seized 72 bags alone of loot from deposed Prime Minister Najib Razak’s residence in the days after the May 9 election, of which 35 contained RM114 million (US$28.6 million) in cash in 26 different currencies. Another 35 bags contained jewelry and watches, and 284 boxes were filled with designer handbags including Ellen Birkin bags by Hermes that can cost upwards of US$200,000. The former Premier is not likely to go hungry. He is believed to have hundreds of millions more stashed overseas. Famously, in 2013 US$681 million appeared in his personal account at Ambank in Kuala Lumpur and almost immediately was moved overseas.
The biggest mess, of course, is the state-backed development fund 1Malaysia Development Bhd., from which US$4.5 billion is said by the US Justice Department to have disappeared in corruption and mismanagement. Mahathir has said the scale of corruption is even greater and has demanded a full explanation. The Finance Ministry, now under Lim Guan Eng of the Democratic Action Party, says Malaysia’s total government debt and liabilities exceed RM1 trillion (US$250.7 billion).
The number of no-bid contracts awarded to crony companies and government-linked companies – now termed by many to be government-linked crookedry – is overwhelming.
Mahathir for instance cancelled a high-speed rail contract from Kuala Lumpur to Singapore that cost RM70 billion which, with other government commitments including operating expenses over 20 years ran the total to RM110 billion. “Estimates are that in a proper open tender, the project could have been done for a maximum of RM25 billion,” said a well-placed business source in Kuala Lumpur.
Equally questionable is a contract for Malaysia’s Eastern Corridor Rail Line, awarded to a Chinese company at RM67 billion. The payment was time-based, not on a completion basis. As such, 40 percent of the total payment has been made while only 7 percent of the work has been completed. The project cost is widely believed to have been a subterfuge for Chinese help in paying off 1MDB’s massive debt.
Next is the Sarawak and Sabah gas pipeline, again awarded on time-based payments with 87 percent of RM9 billion paid and only 13 percent of the work completed.
Contracts such as these are aplenty. The gadfly website Sarawak Report reported on June 10 that a car rental company headed by an official with a Barisan-aligned party in Sarawak received a RM1.25 billion no-bid contract to install solar energy facilities for 369 Sarawak schools. The three-year contract, allegedly steered by Najib himself, has been underway for 18 months. Not a single solar power unit has ever been installed.
But beyond that, dozens of government-linked companies have been found to be paying exorbitant salaries to their executives. Malaysia has the fifth highest number of GLCs in the world, for which Mahathir himself must share the blame, since many came into existence during the 22 years he headed the government from 1981 to 2003.
Many are household names – the national car project Proton, now peddled to China’s car company Geely; the national energy company Petronas, the electrical utility Tenaga Nasional, the electric utility Telekom Malaysia, the Tabung Haji Pilgrimage Fund, the Federal Land Development Authority, Malaysian Airlines, The Majlis Amanah Rakyat (Malay People’s Trust Council), the Sime Darby plantation and property conglomerate.
Publicly traded GLCs currently comprise 36 percent the market capitalization of Bursa Malaysia and 54 percent of the benchmark Kuala Lumpur Composite Index according to a study by the think tank Institute for Democracy and Economic Affairs. They employ 5 percent of the national workforce. According to the study, government bailouts of GLCs have “resulted in a huge drain on the public purse.” They include RM1.5 billion for Proton in 2016 and RM 6 billion for Malaysia Airlines in 2014.
”One estimate suggests that around RM85.51 billion has been used to bail out GLCs over the past 36 years,” according to the report putting pressure on commercial interest rates as a result of recurring budget deficits that “may have been a separate factor operating to crowd out private investment, at the margin.”
As an example of exorbitant salaries, the Transport Minister, Anthony Loke, told reporters that the executive chairman of the Aviation Commission (MAVCOM), retired Gen. Abdullah Ahmad, drew a monthly salary of RM85,000 (US$21,325). The figure is over four times the basic recorded salary of the Malaysian Prime Minister and is similar to the salary of millionaire CEOs of successful private enterprises.
Veteran journalist, R Nadeswaran, formerly of The Sun Daily, reported that his investigations into MAVCOM, an independent body established in 2015 to regulate economic and commercial matters relating to civil aviation, revealed that RM570,000 had been paid in directors’ fees, and a further RM770,000 on directors’ travel and accommodation.
More revelations have followed. One “former minister turned adviser” in Najib’s Prime Minister’s Office received a monthly wage of RM200,000 (US$50,177), which is about 10 times Najib’s official salary. Other “advisers” were paid from RM70,000 upwards per month in a country where per capita income on a PPP basis is RM26,900 annually.
Other ministries, together with the newly-revitalized Malaysian Anti-Corruption Commission (MACC), have been directed to investigate the various GLCs and political appointees Apart from the allegations of huge bonuses and exorbitant salaries, it has also been alleged that officials of various GLCs collaborated with contractors to submit false claims for maintenance work. The MACC is investigating.
The almost daily revelations of cronyism and large-scale corruption have been described by one Malaysian as akin to “Chinese water torture,” when water is slowly dripped onto a person’s forehead and drives the restrained victim insane.
Loke’s disclosure also prompted the veteran MP, Lim Kit Siang, Mahathir’s onetime adversary turned ally, to demand transparency and public accountability in the wages of the heads of the GLCs. He proposed the implementation of a public website showing the perks, salaries and remuneration of all GLC heads and members.
Lim wanted to know how many of the heads of the GLCs are political appointees and how many of the UMNO/Barisan Nasional appointees have resigned since Najib lost power.
Malaysians responded swiftly to Loke’s report. One person multiplied Loke’s figure by the number of existing GLCs and was astounded by the money which taxpayers had to fork out for GLC directors’ fees. Who approved the salaries of the board members in this public regulatory body?
A Foreign Friend In Cambodia asked me, “Din, is your recently pardoned felon running a parallel government?” And I answered, “For Malaysia’s sake, I hope not.–Din Merican
Surprisingly, the revelations over the GLCs are in contrast to those by newly released and pardoned former Opposition leader, Anwar Ibrahim, the PM-in-waiting, who told a crowd in Perak that chief ministers should not rush to take action against GLCs, and to refrain from being vengeful.
“I have no problem with GLCs, if their performance is good and the Menteri Besar (Chief Minister) thinks it’s appropriate to continue, we accept (the continuance),” unless, he added, “that it was proven at the federal level, there was wasteful overlapping and excessive payment of allowances to political figures.”
Malaysians demanding intense scrutiny of GLCs wonder what to make of the PM-designate’s remarks and actions.
Mariam Mokhtar is a Malaysia-based reporter and regular contributor to Asia Sentinel.
Malaysia’s recent national election was a stunner for many reasons. Not only did the election return a nonagenarian to power, but it also ended the six-decades-long one-party hegemony of Barisan Nasional (BN). For the first time in Malaysia’s post-independence history, the opposition is in power. Crucially, long-time opposition leader and democracy activist Anwar Ibrahim has been pardoned and released from prison, enabling him to eventually take the helm of the Malaysian state, paving the way for deep political reforms.
Yet Mahathir Mohamad’s return to power is not only potentially transformative for Malaysian domestic politics. It also has far-reaching strategic implications. First of all, Malaysia may revisit its increasingly cordial, if not acquiescent, bilateral ties with Beijing, which heavily invested in upgrading relations with the previous Najib Razak administration.
Similar to the case of the Philippines during the Benigno Aquino III administration, domestic anti-corruption initiatives in Malaysia could have a significant impact on external relations with China. Former President Aquino III’s good governance reforms primarily targeted Beijing-backed projects launched under the Gloria Macapagal-Arroyo administration. These anti-corruption efforts against China-backed projects, along with Aquino III’s tough South China Sea policy, led to an overall deterioration in Philippine-China bilateral ties, which reached its apotheosis in 2016 as the Philippines won a decision at an international tribunal in The Hague against Beijing’s claims to an expansive “nine-dash line” of territory in the South China Sea.
Malaysia under Mahathir may quickly implement anti-corruption reforms; he has already apparently barred Najib from leaving the country, and vowed that the government will reopen investigations into the 1MDB state fund scandal. A major issue driving the Mahathir-led Pakatan Harapan coalition victory was the nationwide uproar against the 1MDB corruption scandal.
The former Prime Minister and his associates have been accused of embezzling as much as $1 billion from the state fund. The 1MDB debacle also sparked international investigations into the Najib government, as the United States, Singapore, and Switzerland, among other countries, froze accounts and launched investigations against Malaysia’s investment fund body.
But as Western governments began threatening criminal probes against top Malaysian officials, Najib began to fortify strategic and economic relations with China, which became a key source of investments for Malaysia. And the former prime minister was unapologetic about it.
As the new Mahathir government moves towards potentially prosecuting Najib after placing him under a travel ban, greater scrutiny of Chinese investments could be coming. Before the election, Mahathir complained about the potential for rising housing costs for Malaysians triggered by an expansion in real estate projects by Chinese companies, and a potential influx of Chinese property buyers. “Here we gain nothing from the [Chinese] investment… [W]e don’t welcome that,” he recently lamented. Mahathir also has repeatedly expressed concerns about over-reliance on Chinese technology, engineering and labor for Malaysian infrastructure projects.
Prime Minister Dr. Mahathir Mohamad will review relations with Xi Jinping’s China
Among China-led projects that could be reconsidered is the $13 billion East Coast Rail Link (ECRL) railway, connecting Kuala Lumpur with less developed eastern regions. Mahathir has indicated that he may scrap the whole project. He has also warned about the threat of a debt trap, citing the case of Sri Lanka, which was forced into humiliating debt-for-equity deals with China due to its inability to repay ballooning debts to Chinese state firms.
Secondly, Mahathir likely will take a stronger stance against China’s growing strategic assertiveness across Southeast Asia. Under the Najib administration, Malaysia remained reticent to openly highlight Beijing’s behavior in the South China Sea, eager to maintain booming economic ties with China.
Under Mahathir, Malaysia’s policy of strategic acquiescence toward Beijing could change. Unlike Najib, Mahathir seemingly views China as a potential strategic threat. He has described the Xi administration as “inclined towards totalitarianism” and increasingly belligerent, a government that “like[s] to flex [its] muscles” and “increase [its] influence over many countries in Southeast Asia” in a “very worrisome” manner. Mahathir further has warned against growing militarization of the South China Sea, where Malaysia is one of the four Southeast Asian claimant states.
Malaysia is currently occupying multiple land features, including the Swallow Reef, a reclaimed island with its own naval base. Historically, China has been less assertive within Malaysia’s exclusive economic zone in the South China Sea than it has been in the economic zones of the Philippines and Vietnam, due to cordial bilateral relations with Malaysia. In recent years, however, Chinese navy and coast guard have been more active within Malaysia’s exclusive economic zone in the area. Nonetheless, the Najib administration adopted a softer tone than other Southeast Asian states such as Vietnam and the Philippines, which filed an arbitration case against China.
Finally, Mahathir could place his country, once again, at the center of Southeast Asian affairs, where senior, high-profile figures tend to play an outsized role in setting the regional agenda.
In fact, the Association of Southeast Asian Nations (ASEAN) regional organization largely owes its existence as well as peaceful evolution over time to the efforts of powerful, often domineering regional leaders like former Singapore Prime Minster Lee Kuan Yew as well as Mahathir during his previous two-decades-long stint as Malaysian Prime Minister from the 1980s to early 2000s Mahathir shaped ASEAN’s relations with great powers, including China, and its response to regional economic and strategic crises, especially the 1997 Asian Financial Crisis.
Mahathir’s return to the center of power in Malaysia could also provide leadership and foster internal coherence within ASEAN, which has increasingly lost its way in recent years due to in-fighting among member states and the growing influence of China in Southeast Asia.
Mahathir is expected to build on the efforts of his predecessors, who managed to improve historically tense relations with neighboring Singapore, the current chairman of the ASEAN, over the past two decades. His personal gravitas, as a regional elder statesman, could also mean greater deference among his significantly more junior colleagues in the regional body.
“Notwithstanding his age (ninety-two years old) and his need to focus on domestic political challenges including the 1MDB scandal, rising inequality, and rebuilding political institutions, Mahathir’s return to the stage could give more purpose and substance to the ASEAN.”–Richard Javad Heydarian
In recent years, Philippine President Rodrigo Duterte has a dominant figure within ASEAN. Yet Duterte has been mired in controversy, coming under fire for his human rights record and, especially, too cozy relations with China. Last year, with the Philippines holding the organization’s rotating annual chairmanship, ASEAN kept largely silent over South China Sea disputes as well as the Rohingya crisis in Myanmar, probably the two largest regional challenges. As a result, ASEAN often appeared irrelevant in shaping regional affairs.
Notwithstanding his age (ninety-two years old) and his need to focus on domestic political challenges including the 1MDB scandal, rising inequality, and rebuilding political institutions, Mahathir’s return to the stage could give more purpose and substance to the ASEAN. Throughout the decades, Mahathir has been a constant fixture in regional meetings, seen as a regional bigwig and an indispensable source of strategic wisdom across Southeast Asia. Indeed, it is likely that Malaysia’s Prime Minister will once again try to leverage his influence within ASEAN to advance not only his country’s interests, but also make the regional body a more relevant player in addressing key challenges, including in the South China Sea. Mahathir’s unlikely and stunning return could be not only a game changer domestically, but for the whole Southeast Asian region.
Richard Javad Heydarian is a nonresident fellow at ADR-Stratbase Institute, Manila, and the author of The Rise of Dutere.
Lee’s firsthand experience of Japanese occupation in 1941 as well as the 1965 forced separation from Malaysia had a profound impact on his thinking about security. Singapore has since been unrelenting in building up its armed forces, allocating 30 per cent of government expenditure this year on defence, security and diplomacy.
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