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Comment on “Economic Reforms in the Aftermath of Regime Change in Malaysia”

2020; Wiley; Volume: 15; Issue: 2 Linguagem: Inglês

10.1111/aepr.12300

1832-8105

Mohamed Ariff,

Socioeconomic Development in Asia

Lee (2020) provides a fairly crispy analysis of economic reforms underway in Malaysia subsequent to the dramatic regime change through the ballot box on May 9, 2018. As is often said, there is more to it than meets the eye. Economic reforms have long been overdue in Malaysia. There were no reforms even in the aftermath of the 1997–1998 Asian Financial Crisis. While many affected countries in the region, including South Korea, Thailand and Indonesia, undertook serious reforms with International Monetary Fund (IMF) guidance in the wake of currency meltdown and political upheaval, Malaysia remained in a denial mode, blaming currency speculators. Malaysia was able to desist IMF intervention, as its short-term external debt was small enough to be managed on its own, with no political fallout. There has been a crying call for reforms in Malaysia with the sacking of the then Finance and Deputy Prime Minister Anwar Ibrahim in 1998 by the then Prime Minister Mahathir Mohamad under whose authoritarian rule institutional checks and balances were compromised. While Mahathir might have drawn a line that he would not cross on moral grounds, there was no such restraint for his successors, which led to many mindboggling financial scandals with huge domestic and international ramifications. Malaysia's fourteenth general election (GE-14) was a game changer, which brought 93-year-old Mahathir back as prime minister, after beating the formidable incumbent coalition that had ruled the country ever since Independence in 1957. Mahathir could not have done it on his own, without Anwar's consent or the support of Anwar's multiracial Justice Party which won the largest number of seats in the parliament. The “New Malaysia” euphoria, however, has petered out, as the promised reforms became elusive. The new regime has faced much criticisms for failing to deliver election promises. In fairness, it must be pointed out that the new government is not only saddled with huge inherited problems, but also daunted by explosive expectations. Much time has been spent cleaning up the mess left behind by the previous regime and renegotiating several lopsided big-ticket contracts, saving costs in the billions of ringgits. Some progress has been made in the realm of governance with greater transparency and accountability. Obviously, more needs to be done. However, the magnitude and the array of political, social, economic, and institutional issues are out of the ordinary. The GE-14 manifesto had promised a slew of reforms which include institutional overhauls, an independent judiciary, corruption-free administration, freedom of the press, best practices, and need-based affirmative action plan, to mention a few, which were bandied as the hallmarks of New Malaysia. It would be foolhardy to expect New Malaysia to be in place overnight, as it takes time to evolve, perhaps a decade or two, given the nation's multiethnic social fabric where Malays constitute over 60% of the total population. Race-based politics runs deep in Malaysia, especially after the May 1969 racial riot which led to the New Economic Policy (NEP), giving special privileges to Malays and other indigenous ethnic groups, touted as “positive discrimination” aimed at closing the interethnic income gap. As a result, inter-ethnic income inequality has narrowed considerably, but intraethnic disparity has widened markedly, because the NEP benefits were unevenly distributed, with politically connected people grabbing the lion's share of it. Malay households account for 80% of the bottom 40% with no more than a hand-to-mouth existence, which shows that NEP has failed. Hence, the rationale for a needs-based affirmative action approach which is distinctly pro-poor regardless of race or religion. In this, Malays will be the main beneficiaries as they constitute the bulk of the poor. However, there are powerful vested interests agitating for race-based affirmative agenda for political gains. Bigots and zealots are out to undermine national unity. There are claims that a “deep state” is at work to destabilize the new government, with gutter politics threatening to tear things apart. Mahathir's reluctance to set a transparent timeframe for Anwar's succession has also heightened political uncertainties. Under such tumultuous conditions, reforms can only take the back seat. Mahathir is not a reformer. It is ironic that the proposed reforms would dismantle many things that Mahathir had left behind in his previous incarnation as prime minister. It would be naive to expect him to spearhead reforms aimed at undoing his own legacy. Reforms would be possible if and when Mahathir hands over the reins to Anwar. Voters are upset, not because the promised reforms are not yet in place, but because the political will for reforms has evaporated under Mahathir's watch. The ruling coalition has lost four by-elections in a row, reflecting its sagging popularity. The most shocking one was the Tanjung Piai by-election in November 2019, when it was crushed by a massive margin. Hopefully, it may turn out to be the “best” loss suffered, if the chilling message is taken seriously by the administration. Thus, this watershed may mark either the beginning of the end, or a new beginning, for the new regime. A return to the old normal is certainly not the way to go.