A Short History of South-East Asia

by Peter Church

  Under Tun Abdul Razak (the father of the current prime minister, Najib Razak), prime minister until his death in 1976, the Alliance was superseded by a broader coalition of parties, Barisan Nasional (popularly “Barisan”). MCA and MIC remained within this coalition but with their influence diluted. The leading pre‐1969 opposition parties, however, refused to be subsumed within the UMNO‐dominated coalition. The DAP has always remained outside Barisan. Pas joined briefly but soon departed. At the present time Pas controls the state governments of Kelantan and Kedah, but has never been able to win many federal seats.

  Barisan was to prove a device for strong UMNO‐led government. The composition of the coalition fluctuated during the 1970s and 1980s, as did the extent of its winning margins at elections, but following the 1990 general election, Barisan, comprised of nine parties, held 127 of the 180 seats in the federal lower house. Of the 127 Barisan seats, UMNO held 71; no other component party held more than 18. DAP, with 20 seats, led the five opposition parties.

  THE NEP AND ECONOMIC GROWTH

  Even more important for the direction of Malaysian politics was the establishment in 1971 of the New Economic Policy (NEP). Tun Razak and the “second generation” of Malay politicians saw the need to tackle vigorously the economic and social disparities which fuelled racial antagonism. The NEP set two basic goals with a 1990 target date—to reduce and eventually eradicate poverty, and to reduce and eventually eradicate identification of economic function with race. These goals were to be achieved in the context of high economic growth rates over the next two decades. While NEP would be socially redistributive, there would be no absolute losers.

  To meet NEP goals, however, NEP would inevitably mean government favour for the Malays, by far the largest component of Malaysia's Bumiputera peoples. In the early 1970s, Bumiputeras were still predominantly rural‐based and involved in agriculture. Around half of Bumiputera households existed below the poverty line. Bumiputeras owned a mere 1.5 percent of the share capital of companies operating in Malaysia, and accounted for only 4.9 percent of the country's registered professionals.

  The NEP necessitated a dramatic increase in governmental intervention in Malaysian business and in Malaysian society in general. The NEP's “big government” strategies vastly increased UMNO's power and influence. Under the NEP the volumes of public investment and public consumption expenditure increased substantially. In order to increase the Bumiputera stake in the economy, major public enterprises were established to take up share capital “in trust” for Bumiputeras until they were in a position to purchase share capital privately. Some of these enterprises developed elaborate conglomerate business interests.

  The government promoted the education and training of Bumiputeras, and access for them at all levels of the public and private sectors. It also promoted the modernisation of the rural economy, with its predominantly Bumiputera workforce, and of rural life in general, while also supervising the balanced expansion of urban areas. In general, NEP saw the creation of significant Bumiputera commercial, industrial, and professional communities. By 1987, the percentage of Bumiputera households in peninsular Malaysia deemed to be in poverty dropped to 17.3 percent in rural areas and about 8 percent in urban areas.

  Simultaneously with the implementation of the NEP, the Malaysian economy experienced dramatic growth. In the years 1971–90, the country's annual average growth in GNP was 6.8 percent. Per‐capita GDP moved from $380 to $2,200 (in current US dollar terms). Once the purveyor of just two important commodities, rubber and tin, Malaysia became a major exporter of oil/LNG, palm oil, timber, and manufactures. Growth in manufacturing was particularly spectacular. By the late 1980s, manufactures dominated Malaysia's exports. Major manufactures included electrical and electronic products, chemicals, processed foods, textiles, and processed timber and rubber products. Steel and automobile industries had also been established.

  The opening of new economic opportunities and the solid rise in prosperity helped mollify those non‐Bumiputeras who had feared the NEP and who still disliked many of its features, notably the level of government control over business and the favouritism shown toward Malays in areas such as education and employment. Critics of the NEP also argued that its implementation had paid insufficient attention to the non‐Malay Bumiputera communities of Sarawak and Sabah, which were now the states with the worst figures on poverty in Malaysia. In 1987, the percentage of Bumiputera households deemed to be in poverty in Sarawak was 33 percent; the percentage for Sabah was almost 42 percent. The critics also argued that the Chinese and Indian poor had been ignored and that, even within the Malay community, NEP benefits had tended to be spread to UMNO's political advantage rather than on the basis of equity.

  Eventually economic pressures compelled modification of the NEP's big‐government strategies. In the mid‐1980s a drastic fall in commodity prices, virtually across the board, threatened a serious balance‐of‐payments crisis. The then–prime minister, Dr Mahathir, pegged back government spending and instituted a policy of privatisation of public enterprises. Mahathir, a strident champion of Malay advancement, was also motivated to modify the NEP strategies by his fear that Malay featherbedding would prove self‐defeating. The NEP was replaced by the NDP (New Development Policy), which, though retaining NEP's broad goals, aims in Dr Mahathir's words to “strike an optimum balance between the goals of economic growth and equity.” NDP continued until 2000, when it was to be wound back. Malays objected and demanded NEP be reinstated.

  MAHATHIR AND THE CENTRALISATION OF POWER

  Malaysia's fourth prime minister, Datuk Seri (now Tun) Dr Mahathir Mohamad, was a controversial figure. Before achieving the prime ministership in 1981 he was often viewed as a Malay radical who might exacerbate Malaysia's ethnic tensions. In power, however, he proved a more complex political personality.

  Mahathir championed the Malays yet he lambasted the dependent attitudes which he considered the NEP fostered. Although NEP in its purest form has been watered down over the years there is no doubt many preferences remain for Bumiputera that are not present for Non‐Bumiputera.

  Mahathir promoted Islam in Malaysia, yet reined in its more doctrinaire elements and sharply rebuked Islamic “fanaticism.” He insisted on the political overlordship of UMNO more forcefully than any previous administration, yet made it clear that non‐Malays could work within the Barisan system securely and profitably. Mahathir went to the brink in pursuit of his political goals, yet never actually plunged Malaysia into any of the impasses, ethnic or cultural, of which it could have been capable, and even his controversial methods of dealing with the regional economic crisis of 1997, described ahead, appear not to have harmed the country's long‐term prospects.

  Even so, there was a clear theme to Mahathir's prime ministership—the centralisation of all significant power in the hands of the person who jointly headed UMNO and, as prime minister, the national government. Mahathir argued that such concentration of power was necessary for social stability and economic development. Critics argued that he unnecessarily diminished the democratic freedoms which Malaysia—unusually in its region—enjoyed. They also claimed that the growth of government power led to the abuse of power. Barisan government is continually dogged with rumours of corruption and crony capitalism, though the rumours remain unproven and Malaysia has not experienced the levels of corruption of some neighbouring nations.

  Ironically, Mahathir's major battles for control concerned divisions within the Malay community, not intercommunal divisions. The opposition party, DAP, at that time commanded a majority of Chinese votes but was politically impotent except as a persistent if cautious critic of government. Mahathir's biggest political challenge occurred in 1986–87 when elements of his own party rebelled against his leadership. Partly this was a matter of personalities and of discontent with Mahathir's dominating style, but the revolt also signalled Malay alarm at the administration's retreat from the NEP's big‐government strategies. Mahathir retained the UMNO pres
idency by a mere 43‐vote margin over his rival, Tunku Razaleigh Hamzah (the voting was 761 to 718). After his victory, Mahathir purged his cabinet.

  Political tension persisted and, in October 1987, Mahathir clamped down, detaining 106 people including leading opposition personalities. Three newspapers were closed, including The Star, which carried a column by the late former prime minister, Tunku Abdul Rahman, which was often critical of Mahathir's government. Most of the detainees were released within weeks, Mahathir's drastic action having subdued much of the political agitation.

  Elements of the judiciary questioned the legal extent of the government's powers of detention without trial. The detentions had been ordered under the Internal Security Act (ISA), a measure originating in British Emergency days and originally intended for use against communists. The threat of invoking the ISA has been a useful tool to intern Islamic fundamentalists suspected of being associated with extremist organisations in the wake of the September 11, 2001, terrorist attacks in the United States, and, more recently, to suppress opposition to prime minister Najib Razak over the 1Malaysia Development Berhad (1MDB) scandal (see further below).

  Western governments, especially the United States, which at times had been critical of the ISA, during the Bush Presidency supported its invocation to intern suspects indefinitely without trial. In 2002, Malaysia and the United States announced plans for the establishment of a joint antiterrorism training centre in Malaysia to serve the ASEAN countries.

  Other areas in which Mahathir insisted on imposing his power included the promotion of Islam in Malaysia, the reduction of the powers of Malaysian royalty, and centre‐state relationships.

  From the 1960s, Malaysian government had to deal with increased levels of Muslim political assertiveness. The traditionally quiet religious culture of the Malays has been shaken by the dakwah (mission) movement and by the claims of party, Pas, that UMNO is insufficiently concerned with religious matters. The dual thrust of the dakwah movement has been to foster personal devoutness and to pressure Malaysian government to support a more Islamic society. The movement has been particularly identified with young, educated, and politically aware Malays.

  In response, Barisan government has demonstrated strong support for Islam in a range of ways. With government patronage, Malaysia today is a much more insistently Islamic society than it was. But government activity in this area has also had a restraining dimension, aiming to bring Islamic enthusiasms under government oversight and regulation. Since the 1980s, successive legislative measures have tightened government powers over religious organizations and their teaching. On occasion, the government has resorted to its tough detention and censorship powers to silence persons considered a threat to social order on religious grounds. As well, government has used all its political skills and media control to diminish the credibility of Pas in Malay eyes. In 2002, Pas suffered a setback when Trengganu's assembly was forced by the federal government to reverse a decision to ban the wearing of bikinis and force all future resorts to have separate swimming pools for men and women. Aside from concern at the drop‐off in tourism which would have resulted, Mahathir was acting to ensure there would be no threat to his positioning of Malaysia overseas as an advanced, moderate Islamic nation deftly able to reconcile Western economic modernity with custom and tradition.

  Mahathir's determination to curtail the influence of Pas amongst Malaysia's youth was again in evidence following controversial plans announced in late 2002 to overhaul the education system following a major government review inspired by Mahathir himself. The changes effectively ended all government subsidies to Islamic schools in an effort to absorb the approximately 126,000 students enrolled within them back into the government education system. There have even been suggestions that these schools—which Mahathir baldly stated were engaged in brainwashing—may eventually be banned entirely in an effort to address concerns that young Muslim children were being radicalised and led astray by the promotion of political Islam which, the government fears, will serve only to drive the youths into the embrace of Pas and other even more extreme groups. The guidelines also served to remove all religious instruction from the state school curriculum, with students instead receiving it during special afterschool classes from which all political content had been removed. By so doing, the government can carefully regulate and monitor the administration of religious learning.

  Besides this, the government had become alarmed at the fact that, by 2002, only one in 20 ethnic Chinese students attended government schools, down from 98 percent in 1964, and has floated the possibility of compulsory national service for all 18‐year‐old boys, regardless of social class, religion, or race, in an effort to force them to mix with other Malaysian youths and counteract the effects of a growing ethnic polarisation evident in the country's schools. In addition, in 2003 it was announced that, as a result of falling English‐language standards affecting Malaysia's ability to compete in world markets, all schools would soon be forced to conduct mathematics and science classes in English. Mahathir, who as education minister in the 1970s had spearheaded the push to replace English with Malay, was behind this U‐turn, stating, “We have to accept English whether we like it or not.”

  Mahathir removed the powers of the Malaysian king to veto legislation, and minimised royal power to delay legislation. He also cut the powers and privileges of the country's nine royal state rulers, following an orchestrated media campaign in the mid‐1990s which alleged the contempt of some rulers for the law, their questionable business dealings, and extravagant lifestyles. Once held up as the symbols of historic Malay culture, the rulers were instead satirised as “feudal relics,” at odds with the contemporary business and technology‐oriented Malay. The Malaysian Bar Council's view was that the executive's reduction of the rulers' powers was a further attack on constitutional democracy in Malaysia.

  A traumatic external shock occurred in August 1997, when currency woes brought on by the devaluation of the Thai baht spread to Malaysia's financial markets and, within six months, precipitated a halving of the value of the ringgit and a three‐quarter slide in the value of the share market. Western economists blamed a combination of structural problems for this fall, including an unsustainably large current account deficit, a diversion of private domestic capital into economically unproductive sectors such as land and stock‐market speculation, and massive government and private‐sector spending on unnecessary prestige infrastructure projects. In addition, a culture of cronyism and nepotism enabled individuals and companies connected to UMNO to obtain government contracts for projects of dubious economic merit. While this worked fine during the good times, when the economy turned sour the effects were amplified by this lack of transparency, leading to a crisis of investor confidence.

  Mahathir characteristically had his own explanation for this. Malaysia was, he said, the victim of conspiracy of international financiers, whose aim was to destroy the prospects of an industrializing country and, moreover, to profit from its misfortune. He particularly targeted the currency hedge funds based in New York and Western Europe which sought to exploit instability in emerging markets by “taking a position” in the currency, precipitating instability, and then causing a crisis of confidence.

  Mahathir's strident calls for reform of the international financial sector, especially as regards leveraging, found many sympathetic ears both at home and abroad. In a radical experiment, in 1998 Kuala Lumpur imposed strict controls on the ringgit and the domestic equity market in order to try to insulate them from foreign manipulation and thereby prop up their value, at least in the short to medium term. His unorthodox response not only stabilised the economy but positioned Malaysia for a resumption of sustained growth in the new century. (It is also true that two countries in the region that also suffered severe downturns, Thailand and South Korea, also recovered and grew as well, and they both followed orthodox policies laid down by the International Monetary Fund.)

  A further issue confronting Ma
laysia in the new millennium is the extent to which the entrenched rights afforded Malays will be lessened, thereby pushing Malaysia toward a meritocracy with greater inclusion for the ethnic Chinese and Indians. The momentum against affirmative action was driven by Mahathir, who repeatedly accused Malays of becoming soft and squandering their government‐prescribed privileges. In 2002, an editorial in a leading newspaper thought to have been inspired by the prime minister created a storm when it stated that affirmative action had fostered a subsidy mentality that was counterproductive to economic growth. Shortly afterwards, Deputy Prime Minister Badawi (who replaced Mahathir as prime minister in 2003) stated, “The Malays must think positively of their own ability, for it is one's own negative perception that makes one weak. The time has come for us to give up the crutches and start walking independently.” Such comments increased UMNO's palatability among Malaysia's non‐Malays.

  The question of succession, never far from the surface during the close of the 20th century, came to the fore explosively in 1998 with the arrest of the deputy prime minister, finance minister, and anointed heir, Anwar Ibrahim. During a midyear UMNO conference, Anwar was the victim of a whispering campaign, apparently undertaken with the approval of the prime minister, in which his ability to continue in his ministerial role was undermined with the circulation of a highly personal pamphlet attacking his right to succeed Mahathir. This was the first tangible evidence pointing to a rumoured falling out between the two men. In September, Mahathir claimed Anwar had acted incompetently in the face of the financial crisis and promptly sacked him. Soon afterwards, the police formally charged him with performing homosexual acts and corruption. Taken into custody, he was subsequently assaulted by the police commissioner, who was later forced to resign after admitting his role. In 1999, he was sentenced to a minimum of five years in prison, with a further nine years added for additional offences the following year. He was freed in 2004 when the federal court overturned his conviction for sodomy and, since he had already served his sentence for corruption, ordered his release from prison. He returned triumphantly to parliament after winning a landslide by‐election victory in the seat of Penang in August 2008. This was in spite of UMNO vigorously campaigning against him and attempting to discredit his political party, the People's Justice Party. Anwar described his victory as “an endorsement of our policies and a rejection of the obsolete and corrupt policies of the government.” Although only a single seat was at stake, the event transfixed Malaysians.