A tiger may change its stripes

Things came to a head when Anwar was told to ready a 2 billion ringgit (1 Malaysian ringgit = $0.31903) bailout for Mahathir’s son’s sinking shipping line. “I didn’t say no. I said it had to go through the process, including being placed before Parliament,” says Anwar. “He saw this as insubordination.” After the financial crisis the accusations of corruption and worse followed. “Before that we had no problems.”

Pramit Pal Chaudhuri, Hindustan Times

Writing articles about Southeast Asian politics was once a journalist’s purgatory. The sun’s rise was less predictable than a Singaporean election. Nothing was less important than a Thai change of government. Vietnam and Myanmar were in authoritarian straitjackets. And Malaysia was dominated by one party and one man.

Suddenly it’s a different story. Thailand is a bi-colour nation. Aung San Suu Kyi is back on the campaign trail. Even Singapore’s ruling has suffered ballot box humiliation. But it is in Malaysia that political ferment is producing something genuinely heady.

Anwar Ibrahim, the leader of Malaysia’s opposition party, was days ago acquitted by a court of charges of sodomy. He returned to Kuala Lumpur this weekend to prepare for elections next year. Ibrahim has long argued that the charges he faced arouse only from his rivalry with Malaysia’s former ruler, Mahathir Mohamad.

Ibrahim, recently in Mumbai, rhetorically questions whether his country can resist the winds of political change that have swept the Arab world and are stirring Myanmar.

RivalsAnwar is attracting eyes for two reasons. One, the rivalry between him and Mahathir has almost no precedence in Asia in terms of length, intensity and international interest. Challenged to find a parallel, Anwar could only come up with the Sheikh Hasina vs Khaleda Zia battle in Bangladesh. But the Malaysian struggle is clearly a quantum level higher in its animosity.

Both Mahathir and Anwar, in public and private, say that while personality was an issue so was policy.

Malaysia is often cited as the quintessential “Asian tiger.” It was an almost textbook case of a country that used cheap labour and business friendly policies to attract foreign manufacturers to spur export-driven growth. This “New Economic Policy” was Mahathir’s baby. And it worked.

Malaysian incomes increased fourfold under him. A country that, as he liked to say, used to be confused with Malawi became an international brand.

But the NEP had a local bias: the bumiputera system. This was a drastic and pervasive reservation system that favoured the Malay community in everything from college seats to government contracts to public housing — and all at the cost of the smaller Chinese and Indian populations. When launched it was seen as a politically and socially useful means to give a boost to the more numerous but poorer Malays.

Limping
Today Malaysia’s economy is limping. Its labour is now expensive, so many of the export-oriented factories are fleeing to Indonesia, Vietnam and China. The economic stats are still robust, but mainly on the back of global demand for the country’s tin, petrochemicals and palm oil.

Mahathir’s successors have each recognized that the bumiputera system must be reformed or abolished if Malaysia is to develop its own entrepreneurial class. Even Mahathir concedes reservations have been flawed. “The NEP has largely been a success, and an impressive one,” he wrote in his memoirs, but it “has also created a disabling culture of entitlement among many other Malays.”

The present prime minister, Najib Razak, is known to believe that the reservation system and export-dependency have stunted entrepreneurship among Malays. Anwar was among the first Malay leaders to publicly say the bumiputera system had run aground. But his criticism goes much further: the NEP has devolved into kleptocracy. Yes, the lot of Malays has improved, but a handful have done criminally well. Anwar argues “nine families” control the country’s wealth. And the rot is worst at the head: the opposition says it is the relatives and inner circle of people like Mahathir and Najib who have enriched themselves, leaving the majority of Malays to live off of crumbs.

This is borne out by the numbers: income inequality began rising dramatically within the Malay comunity from 1990 onwards. A troubled government has simply stopped printing the statistics in recent years. Kuala Lumpur’s leaders denunciations of the West and attempts to portray themselves as defenders of Islam are, in the opposition’s view, little more than attempts to divert attention from their pocket-lining.

Corruption
It was policy but more perks that led to the famous battles between Mahathir and the then finance minister Anwar during the Asian financial crisis of 1997. Mahathir accused Anwar of adhering to close to the IMF line. But while his boss was denouncing George Soros and financial speculators, Anwar’s ministry was showing there was no evidence  this was true. “Soros was attacking the Thai bath, but he wasn’t touching the ringgit,” says Anwar.

Things came to a head when Anwar was told to ready a 2 billion ringgit (1 Malaysian ringgit = $0.31903) bailout for Mahathir’s son’s sinking shipping line. “I didn’t say no. I said it had to go through the process, including being placed before Parliament,” says Anwar. “He saw this as insubordination.” After the financial crisis the accusations of corruption and worse followed. “Before that we had no problems.”

Anwar, who wants the reservation system to be needs-based and a more liberal politybe introduced to Malaysia, combines all this with Islamic piety. He likes to tell other Malaysian Muslims of the example of millions of Indian Muslims living in secular and open India. The Malaysian ruling party uses Islam but, Anwar argues, their hypocrisy is evident to all.

Consider: the government sentenced a young Malaysian model for un-Islamically drinking beer in 2009 even while Mahathir’s son holds the multi-million dollar franchise for San Miguel beer.

“Najib says the same things about Malaysia’s problems as I do, but he doesn’t do anything,” says Anwar. Ultimately it’s about “whether you’re prepared to share your money.”

The Malaysian prime minister has attacked him for daring to criticise the bumiputera system. But enough lower-income Malays, who joke the NEP is short for nepotism and who have been seen only the claws of the Asian tiger economy, are rallying to Anwar — along with the majority of Indians and some Chinese — that his party came within a whisker of victory in the last election.

“I’m dubbed a traitor to the Malay race,” he smiles. “But corruption knows no race. Look at the Arab spring. The most conservative countries in the world, even their the people had to react to the abuse of power and wealth.”