by Greg Earl
Australian Financial Review
29 July 2015
Malaysia was once the beacon of modernity in post-colonial south-east Asia, but it is now increasingly at the front line of an unnerving decline in government stability across the region, with Thailand under persistent military rule, Myanmar winding back an open election and Indonesia turning distinctly economic nationalist.
And, after sacking his independent-minded deputy on Tuesday, Prime Minister Najib Razak is looking a lot like Monty Python’s Black Knight as he refuses to acknowledge that his country is facing big questions over its ability to deal with corruption scandals.
He’s now sacked the man who might have replaced him, removed the minister overseeing an investigation getting too close to home, closed the country’s most innovative newspaper and is threatening to sue The Wall Street Journal just when US officials are doing their best to keep Malaysia inside the planned Trans-Pacific Partnership (TPP) trade zone. And that’s not counting dismissing the relentless campaign by former strongman Mahathir Mohamad to tear down all his successors.
But reshuffling his ministry on Tuesday to neuter potential rivals and a corruption investigation, Najib scarcely even conceded a flesh wound.
The sacking of deputy Muhyiddin Yassin means he has now managed to survive three near-death experiences since coming to power in 2009 with the promise that, as the son of a respected former prime minister, he had the personal capital to be able to introduce much-needed economic and political reforms.
But as he has fended off United Malays National Organisation (UMNO) conservatives who thought he had gone soft, then charismatic opposition leader Anwar Ibrahim at the close 2013 election, and now a deputy prepared to say scandals need a proper investigation, he is only demonstrating how Malaysia’s democratic arteries are hardening.
GOVERNMENT ‘ALL MESSED UP’
It is little appreciated that Najib’s UMNO-led coalition government is the longest-serving regularly elected government in the world, having run the country since independence in the late 1950s.
This stability once made Malaysia a favoured destination for foreign investment, but that is coming under scrutiny amid the latest political turmoil this week because of questions about whether it will be able to qualify to join the TPP trade group being discussed in Hawaii.
The United States helped Malaysia out of a dilemma over people-trafficking charges on Monday, but other analysts question whether Najib will be able to accept TPP restrictions on state-owned enterprises and government preference schemes amid the domestic political turmoil.
“The government is in a very weak position and all messed up,” says Wan Saiful Wan Jan of the Institute for Democracy and Economic Affairs think-tank.
“Najib is in office under a modernisation agenda and the TPP is part of that agenda. But if he goes, the party and the society will be less open to modernisation. And most people think he has lost his moral authority to be PM.”
Malaysia dropping out of the TPP wouldn’t be terminal and might even strengthen the rule-making, but it would raise an awkward question about the US pivot to Asia, because only Japan, Singapore, Vietnam and tiny Brunei would be left in the group.
It would also raise some questions about Malaysia’s ability to play a leading role in the region’s own common market – the ASEAN Economic Community – which is due to be launched at the end of this year.
US$700M CORRUPTION SCANDAL
The main corruption allegation facing Najib over how US$700 million allegedly turned up in his bank accounts linked to state-owned company 1MDB perfectly draws together the intersecting political and economic questions facing the country this week.
1MDB is the sort of opaque SOE that the TPP group is promising to rein in to create a regional free market with clear operating rules that go well beyond trade.
It is also now the most egregious example of the Malaysian entities that have grown off the back of the Malay preferences established under Najib’s father, which the Prime Minister once said needed to be reformed to make the country more competitive.
And, perhaps not surprisingly, the money was accumulating before the 2013 election, when Najib faced the greatest ever challenge to UMNO’s hegemony and only just managed to cling to office, winning the most seats but not the most votes.
It is hard not to think six decades is too long for one party to be in power.