Malaysia: Mahathir’s Mixed Signals

2001

Dr Peter Searle

Is Malaysia drifting toward crisis or major change in the near future?

Mixed signals have emerged from Malaysia in recent months. In the run-up to the UMNO General Assembly, critics of party leader and Prime Minister Dr Mahathir have focussed on the party’s continued loss of its Malay base to the opposition Islamic party, PAS, and the extent to which UMNO has become synonymous with corruption and cronyism. Dr Mahathir has reacted to his critics in the characteristic ‘Malaysian way,’ that is through a combination of repression, manipulation and responsiveness.

Repressive measures have included the arrest and detention of nine leaders of the opposition and the silencing of critics within UMNO. However manipulation and responsiveness have been more the hallmark of Mahathir’s political style of late. Key indicators in that regard include: the dismissal of six senior UMNO members for involvement in ‘money politics’, the resignation of the controversial finance minister Daim Zainuddin, the putting on hold of corporate bailouts (all too often associated with a small coterie of Malay entrepreneurs with close ties to UMNO), and the withdrawal of Mahathir’s son from corporate activity. At the same time the judiciary has reasserted its independence, letting detainees go and demanding abolition of the draconian Internal Security Act .

Do these developments signal a greater openness and transparency? Major reform in the corporate sector is unlikely, as a defining characteristic of the Mahathir administration has been the forging of the nexus between government and business – a development critical to the transformation of UMNO into a party of patronage. On the political front major change is also unlikely, though an attempt to recover the Malay vote (by coaxing PAS to joining the ruling coalition) would be in keeping with Mahathir’s past bold attempts to coopt the Islamic opposition.

In the near future, crisis or major change is unlikely in Malaysia. The UMNO General Assembly was carefully managed, and, in a country where all groups place a high premium on political stability, change is also unlikely to be orchestrated from the streets (as in Jakarta or Manila). For the time being change is more likely to be confined to Malaysian institutions such as the judiciary, the bureaucracy and a plethora of NGO’s – all of which have demonstrated a remarkable resilience in the face of the repressive features of the Mahathir administration.

WATCHPOINT: Crisis is not imminent in Malaysia and for as long as Mahathir remains at the helm structural change is likely to be limited.

 

About our company:

AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.

Go to top