Not long ago, the Malaysian government thought that mastery of the internet was a path towards economic development. In February 1996, it launched the Multimedia Super Corridor (MSC), essentially a special economic zone, to entice high-technology corporations like Microsoft to set up shop in Malaysia.
Malaysia’s leadership must be extremely satisfied on two counts: their success in negotiating the Trans-Pacific Partnership (TPP) agreement and the parliament’s favourable position on the agreement.
It is amazing that Malaysia has negotiated to preserve the Bumiputera agenda, obtain a minimum five-year grace period to reform state-owned enterprises (SOEs), and gain exemption for Khazanah from investor-state dispute settlement (ISDS) provisions for two years after the deal comes into force.
Recent data reveals that Malaysian exports for December grew slower than analyst predicted they would due to weaker commodity demand on the world market, according to Reuters. Natural gas output dropped as well, but experts believe government policy and higher domestic demand could compensate for lacking exports. The government also adjusted its budget late last month in recognition of lower oil prices.
It has been a rather challenging year for the Malaysian economy. Political disruptions and economic shocks have rocked the nation. Prime Minister Najib Razak has been strenuously committed to undertaking fiscal reform. He has repeatedly stressed the importance of reducing fiscal deficits.
Najib intends to reduce annual deficits from an estimated 3.2 percent of GDP in 2015 to a surplus of 0.6 percent of GDP by 2020. Despite difficult circumstances, the government has taken action to achieve a balanced budget by 2020.
These are tiring times for Malaysian Prime Minister Najib Razak. Najib has so far managed to stay in power despite the flurry of attacks on his leadership. Political debacles have almost cost Najib his prime ministership and the popularity of the ruling coalition Barisan Nasional (BN). Facing the prospect of losing the people’s mandate in the 2018 general election, Najib is racing against time to regain public confidence.
Malaysia is currently in crisis; the ringgit seems to be on an inexorable downhill slide, ethnic tensions have deteriorated from an uncomfortable simmer to an open flame, and both the government and opposition coalitions are unravelling. Malaysian politics and society have hit rough patches before. The dominant United Malays National Organisation (UMNO) party fractures about once a decade, opposition parties fall in and out of love like teenagers, and cyclical economic downturns summon forth the usual host of scapegoats and bogeys.
The Irish poet WB Yeats was not thinking about Southeast Asia when he wrote ‘things fall apart; the centre cannot hold’, but his words may accurately describe the situation in Malaysia. The monarchy governing the state of Johor is rattling the federation agreement and talking of secession. Sarawak wants significant devolution. In addition, Sabah is gearing up for the same demand.
So is secession a real possibility? In addition, why has the issue of federalism suddenly emerged after half a century of relative calm?
Malaysia’s manufacturing sector is reversing to a state reminiscent of its post-colonial stage of development. Regrettably, this situation was avoidable.
When the Federation of Malaya gained independence from Britain in 1957, economic conditions were ripe for rapid and sustained growth. Its primary export sector was showing immense potential for expansion. Primary commodities — particularly tin ore and natural rubber — accounted for a third of Malaysia’s GDP and over 75 percent of exports by 1970, a legacy of its colonial past.
As it tussles with multiple crises of political legitimacy and governance, Malaysia has reached a decisive point in its more than half-century history as an independent nation. What started as a shocking but not exceptional scandal has turned into a political crisis of unprecedented proportions. The Bersih 4 protests on 29–30 August in Kuala Lumpur underlined this, attended by an estimated 250,000 yellow-T-shirted Malaysians.
According to government data, Malaysia’s economy expanded at a slow rate of 4.9 percent in the second quarter, amid such factors as political instability and a stagnant currency, according to AFP. The country has also suffered from drops in exports and private consumption.
The world economy has not been kind to Malaysia, especially when it comes to the issue of lower oil prices. The Southeast Asian country relies a great deal on energy exports to maintain a prosperous economy, but the nation’s devalued currency has hit exports across the board.
