Najib takes a brick from the wall
By Simon Roughneen
SINGAPORE - As Najib Razak, Malaysia's new prime minister, marks his first
month in power, a dramatic policy change announced last week could mark the
start of the dissolution of Malaysia's debilitating race-based politics. The
promised policy shift ticks a couple of important boxes as Najib bids to
contain mounting economic problems and overhaul the increasingly negative image
his ruling United Malays Nasional Organization (UMNO) has among young voters
and non-Malay minorities.
On April 22, Najib told reporters that foreigners investing in parts of the
service sector will no longer be required to take on ethnic-Malays as business
partners, as has been required by the New
Economic Policy (NEP). The partially deregulated sectors will include health,
tourism and business and technology services. His government also said this
week it will allow foreigners to hold 70% of local insurers and non-commercial
investment banks, up from the previous 49% cap.
The changes indicate how a central tenet of Malaysia's race-based political and
economic system has come under pressure as the country struggles to cope with
the global economic crisis and attract more foreign investment.
Ooi Kee Beng, a Malaysia expert at the Institute for Southeast Asians Studies
in Singapore, told Asia Times Online that addressing economic problems will be
crucial for Najib's political survival. Official forecasts suggest the
Malaysian economy will contract in the first half of this year, while private
economists suggest the full-year contraction could be as much as 3.5%.
Politically, the NEP reforms could be transformative. The policy was
implemented nearly 40 years ago after aggrieved ethnic Malays murdered, by some
estimates, more than 1,000 Chinese-Malaysians in race riots. One of the NEP
stipulations required that foreign investors must collaborate with ethnic
Malays, tailoring foreign direct investments to favor the demographically
dominant, but economically less well-off Malays, who make up around 60% of the
Or so goes the official narrative. The European Union's representative in
Malaysia caused ructions in mid-2007 by claiming that the NEP was an impediment
to transparent foreign investment, and joined calls by some Chinese and
Indian-Malaysians to have the policy scrapped. The controversy was fueled
further by academic reports that suggested the NEP had long since met its
target of enabling ethnic Malays to achieve a 30% share of the country's total
equity, which Najib's UMNO has argued remained unmet.
The question remains whether Najib's suggested unpicking of the NEP sets a
reform precedent or merely means that he will dismantle regulations in a
piecemeal fashion and within the limits of what his party's ethnic Malay
support base will tolerate. As Bridget Welsh, associate professor of Southeast
Asia Studies at the Johns Hopkins School of Advanced International Studies,
told Asia Times Online, Najib must implement reforms to win support from
cynical or disaffected voters, but he is challenged by an inherently
conservative system that resists change.
Meanwhile, there is much skepticism surrounding Najib as he takes over the
premiership. Aside from the politics of reviving UMNO in a prohibitive
political and economic context, and withstanding the growing challenge from the
opposition coalition led by Anwar Ibrahim, Najib is dogged by a murder
controversy involving a Mongolian model and interpreter, who was executed with
explosives outside Kuala Lumpur in October 2006. Two policemen have been
sentenced to death for her murder.
Some observers fear the fallout from the case will include further limits on
media freedom in Malaysia, including restrictions on the increasing numbers of
bloggers and others who use the Internet, where commentators have openly linked
Najib to the case. Raja Petra Raja Kamarudin, who runs the popular Malaysia
Today website, is one of the most prominent of Najib's critics.
The critical blogger recently skipped a court hearing for a sedition charge
based on an article he wrote that allegedly implied the prime minister was
involved in the murder of the aforementioned Mongolian model. Raja Petra wrote
on his site on Thursday that he feared he would be arrested again under the
colonial-era Internal Security Act (ISA), which allows for indefinite detention
without trial of suspects who are believed to threaten national security. The
writer was previously jailed under the ISA for allegedly stoking "ethnic
While Najib has tackled the NEP, the ISA will not likely be reformed anytime
soon. Some of its most prominent victims include representatives of the Hindu
Rights Action (HINDRAF) lobby group, which protested against the UMNO-led
government's alleged discrimination in November 2007. Five of the group's
leaders were detained under the ISA and three remain under lock and key. Najib
released two of the leaders soon after becoming prime minister, and the
pressure group has signaled a willingness to talk.
Other minorities are making high-profile waves. The Catholic Herald, Malaysia's
main Catholic newspaper, has been at loggerheads with the government in recent
months over the use of the word "Allah" by Malaysian Christians. Editor Father
Lawrence Andrew told this reporter that Malaysian Christians have used "Allah"
as their term for God for centuries. In its most recent edition, the Herald
slated a new locally produced Bible, which perhaps even more controversially
uses the Hebrew word Elohim instead of "Allah" for God.
The issue looks set to go to court, with Malaysian authorities arguing that the
word should be used only by Muslims, who form the bulk of the country's
multicultural population. (All ethnic Malays are designated as Muslim by the
state.) In a possible concession to religious pressure, Legal Affairs Minister
Nazri Aziz last week banned the conversion of children to Islam without the
consent of both parents.
The decision follows the highly publicized case of a 34-year-old Hindu woman -
named Indira Gandhi, no less - whose estranged husband embraced Islam then
converted their children to the same religion. The minister said minors were to
be bound by the common religion of their parents at the time of marriage, even
if one parent were later to become a Muslim.
Rights-based issues are of less concern to the business elites close to Najib's
government, who are doubtless excited at a US$16 billion stimulus package
announced by Najib as a means to cope with trade-oriented Malaysia's
vulnerability to global recession.
Cynics see the old UMNO cronies as likely beneficiaries, with some grandiose
building projects being revived, among them an enlarged bridge linking Malaysia
with Singapore. This was read by some as an indication that former premier
Mahathir Mohamed is reinvigorating his influence within the party, as the
bridge was a pet project of his later stalled by his successor and Najib's
predecessor as prime minister, Abdullah Badawi.
After loosening some of the NEP's regulations, Najib this week announced a
liberalization of the financial sector, promising to issue licenses for up to
nine financial institutions by 2011 and allowing higher foreign-equity
participation in select sectors - with a particular focus on sharia banking -
that is, banking consistent with the principles of Islamic law - which Malaysia
sees as an opportunity for fast growth by offering services to Muslims from the
oil-rich Gulf and beyond.
Doubtless the moves will please the country's bankers, including the prime
minister's younger brother, Datuk Nizar, 41, who is chief executive of
financial services firm CIMB and its parent company, Bumiputra Commerce
Holdings. But they could also fuel cynicism and opposition criticism about
UMNO-led politics. Those criticisms could offset whatever feel-good spin might
come from the initial dismantling of the NEP, particularly given the low levels
of popularity that greeted Najib when he took over as essentially Abdullah's
Najib's UMNO and Barisan Nasional governing coalition suffered a setback at
last year's general elections, when the coalition lost its traditional
two-thirds majority in parliament and control over five of the country's 13
states. Two days into Najib's premiership, the government lost two
by-elections, with Chinese Christian and Indian Hindu Malaysians preferring to
vote for Islamist opposition candidates rather than the UMNO-backed runners.
The octogenarian former premier Mahathir, moving back into the public eye, was
asked in China on Tuesday, by a Malaysian student, if the present economic
crisis would lead to political crisis back home.
The advice he proffered to Malaysia's new leadership - and to governments
across Asia - sounded wearily familiar, a call for a strong hand and an
aversion to any form of dissent. He said a government without a strong majority
and beset with street demonstrations would not be able effectively to tackle an
economic crisis when it was being attacked and uncertain of its position.
He added: "It is important that we try to return to a situation where the
government is strong, where the government can have a two-thirds majority.”
That, many feel, is the political motivation behind Najib's early efforts to
overhaul the NEP and his party's declining popularity.
Simon Roughneen is a roving freelance journalist. He has reported from
over 20 countries, and is currently based in Southeast Asia.