Remaking a country: Malaysia’s new leaders get to work

Maria Chin Abdullah has faced death threats, detention without trial in solitary confinement and numerous police investigations, as she campaigned against corruption in her native Malaysia. She still faces prosecution for illegal assembly and is banned from travelling to the state of Sarawak in Borneo.

Yet Abdullah will today, as she has for the past two weeks, go to work as an MP for Malaysia's new governing Pakatan Harapan (Alliance of Hope) coalition. The 61-year-old mother of three is a powerful symbol of everything that has changed since the electoral shock on May 9th, when the ruling party was thrown out of power for the first time since independence in 1957.

After decades battling human rights abuses by Malaysia's authoritarian governments, most recently that of former prime minister Najib Razak, she must now confront an arguably bigger challenge: dismantling the old regime and implementing root-and-branch reform in her role as an MP.

“For 61 years, it was only criticism but now we have to implement what we say,” says Abdullah. “It’s a tall order as the new coalition is not all homogeneous. Ironing out our differences and the principles of our new democracy will take some years.”

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The coalition rode a wave of anger against the perceived corruption of the Najib government. It represents one of the most dramatic, bloodless rejections of authoritarian rule in recent global politics, with the United Malays National Organisation (Umno) – in power for more than 60 years – ousted at the ballot box.

Even more remarkable is the fact that this reformist revolution was led by former strongman Mahathir Mohamad, prime minister from 1981 to 2003, in alliance with his protégé-turned-nemesis Anwar Ibrahim.

As the initial jubilation fades, Mahathir (92), restored as prime minister, faces the monumental task of delivering on his coalition’s promises to repeal repressive laws, reform corrupt institutions and ensure a fairer division of the economic spoils.

Scepticism over his Damascene conversion to participatory democracy is only one of the many hurdles in front of his government.

Brain drain

During its long rule, Umno bent the legal system, civil service and state-owned companies to its own ends. But the repression, electoral manipulation and allegations of corruption reached their zenith under Najib, who has been banned from leaving the country after Mahathir launched a new investigation into accusations that billions of dollars were misappropriated from the debt-ridden 1MDB state fund set up by Najib.

If Mahathir can get it right, this multi-ethnic nation of 31 million people could become an example in a region beset by repressive governments, reversing a years-long brain drain and transforming the prospects of this emerging market, which has attracted a wide range of global investors.

But, from Myanmar to South Africa and Indonesia to Egypt, transitions from authoritarianism to more democratic systems have proved difficult. Anwar, the Pakatan Harapan figurehead freed from prison last week, is under no illusions about the challenge facing him – and Mahathir – if he takes over as prime minister within one or two years, as planned. "I'm a student of history," he says. "I realise how revolutions and people's movements have disappointed the masses."

He adds: “The central issue is still governance ... and democratic accountability. We can’t have the election commission involved in a fraudulent exercise, we can’t have the judiciary acting at the behest of the government, we can’t have a media that’s being cowed.”

Even critics admit that Mahathir has moved rapidly since he was sworn in on May 10th to start dismantling the system he helped create. The prime minister won a full royal pardon for Anwar, who was first jailed under Mahathir between 1998 and 2004 before he was imprisoned again under Najib in 2015, and secured the departures of the attorney general and head of the Malaysian Anti-Corruption Commission.

He has set up committees to advise on institutional and economic reforms, and to investigate 1MDB, from which at least $4.5 billion was diverted and laundered, according to the US Department of Justice.

But suspicion remains. Although Mahathir has appointed some leading civil society advocates and technocrats to these committees, he has chosen others, such as economic adviser and former finance minister Daim Zainuddin, who many Malaysians doubt are genuine reformers. His cabinet also contains a mix of opposition stalwarts such as Wan Azizah Wan Ismail, the deputy prime minister and Anwar's wife, alongside more recent converts to reform such as Muhyiddin Yassin, a former Umno heavyweight and now home affairs minister.

Freedom of speech

Many Pakatan Harapan supporters are giving Mahathir a chance to prove he has changed his spots, after his marshalling of the disparate coalition parties and his popularity with rural Malay voters helped them to win the election against great odds. They say he must maintain the reform momentum in order to keep together his coalition, which includes his Malay-dominated party of Umno defectors, Anwar’s People’s Justice party and the ethnic Chinese-dominated Democratic Action party.

"The new government has made a good start but they're facing a huge task, particularly in terms of legal reform," says Sevan Doraisamy, executive director of Suaram, a human rights group. Suaram is one of several organisations that waged a decades-long battle to stop the Umno government and the police using vague laws to crush dissent.

Last year alone, his organisation documented 155 cases where people faced legal action that violated their freedom of speech and recorded 280 cases of detention without trial under heavily criticised laws.

Doraisamy and other activists want the government to institute an immediate moratorium on the use of such laws, before they can be amended or repealed when parliament returns in the next few months. Mahathir showed his new colours by using Twitter to rebuke the police for arresting a man who criticised him on Facebook and promising to review the relevant law when parliament convenes.

Amanda Whiting, professor of Malaysian law at the University of Melbourne, says the problem goes far beyond the law itself to a "deeply entrenched" culture of intolerance for criticism and meddling in the judicial process.

“There needs to be a cultural shift, they can’t just change the laws,” she says. “There’s a complete lack of trust in some of the major public institutions like the attorney general. There are severe doubts about the probity of decisions made – and the willingness of senior people to bow to pressure – and these are under investigation now.”

Corruption

This culture of corruption, collusion and nepotism has become deeply embedded in Malaysia’s bloated civil service, on which Mahathir has promised to bring the axe, starting with the 17,000 political appointees who served under Najib.

Wong Chen, a Pakatan Harapan MP, claims that up to 40 per cent of annual government spending, which is forecast to be $59 billion (€50 billion) this year, is lost to corruption and wastage, with previous Umno governments readily handing out grants and contracts to friendly parties. "The path we need to take is clear," he says. "The question is: do we have the will?"

The allegations of corruption rose markedly under Najib, particularly surrounding 1MDB. At one point, $681 million was paid into Najib’s own bank account, in what he later said was a gift from Saudi royalty, most of which he said he repaid. He has always denied any wrongdoing over 1MDB.

Mahathir has gone after his predecessor with zeal, appointing respected anti-graft officials to a task force to investigate possible criminal charges related to the fund. He has authorised the police to conduct extensive searches at properties used by Najib and his family, with several hundred designer handbags and dozens of suitcases full of jewellery, cash and other valuables confiscated from one luxury apartment complex in Kuala Lumpur alone.

Najib’s lawyer has criticised the “cavalier and irresponsible” manner of the police conduct, but Mahathir says the new government is following the rule of law, rather than seeking payback.

“If anyone made any mistake, the law will decide, but I’m not going to take revenge in any form,” said Shukri Abdull, the new head of the anti-corruption commission, on Tuesday. The former deputy head of the commission claimed that he was forced out of the organisation during Najib’s reign after receiving death threats for pursuing the 1MDB case.

‘Shady deals’

With debt coupons to be paid, Mahathir is under pressure to move fast on 1MDB. New finance minister Lim Guan Eng says that the last government has injected nearly $1.8 billion into 1MDB since April 2017 to cover debt service obligations.

“There are a lot of issues,” says one banker in Kuala Lumpur. “They need to identify where all the liabilities are, what shady deals have been done and what is the residual risk.”

But Peter Mumford, the Asia director of Eurasia Group, a political risk consultancy, argues that there is a limit to how far the new prime minister will go to tackle corruption. "Mahathir needs to demonstrate he is cleaning up the system, but he will be cautious and selective in draining the swamp," he says. "There are lots of skeletons in plenty of closets."

The opposition’s anti-graft campaign message was popular because it linked anger at the high cost of living and wide social inequality to the alleged excesses of the Najib administration.In particular, Pakatan Harapan promised to abolish the 6 per cent goods and sales tax introduced by Najib in 2015, to praise from international economists who believed it was wise for the government to diversify its revenue base away from oil production.

The GST will be scrapped from June 1st. But the government has yet to come up with concrete plans for how to replace the lost money – which was forecast this year to be around $12 billion, or nearly a fifth of state revenues – or fund other populist pledges, such as reinstating some fuel subsidies and abolishing highway tolls.

A senior economic adviser to the government says the rebound in oil prices since 2015 will give Malaysia ample breathing space for now – but not all analysts are convinced.

"How are they going to make up for the lost revenues from the GST?" asks Steve Clayton, chief executive of JPMorgan in Malaysia. "There's a pretty substantial hole to fill."

Mr Mahathir will also have to lay out how he will ensure that the fruits of Malaysia’s rapid economic growth – with gross domestic product expanding by 5.9 per cent last year – are more fairly distributed.

Sweeping changes

Promised reviews – and possible renegotiations – of multibillion-dollar infrastructure projects agreed with the Chinese government as part of President Xi Jinping's Belt and Road Initiative could help create more local jobs and business opportunities. But redrawing what Mahathir has called "unequal treaties" with China will be tough. Implementing so many sweeping changes at once is complex - and risky. Expectations are high and Malaysians are determined to hold the country's leaders to account.

“Our greatest fear is that the bad habits sneak back in and we end up with UMNO 2.0,” says Baharom, a 52-year-old personal trainer and supporter of Anwar. “But the difference this time is that the people have spoken. If they don’t reform, we will kick them out.”

Timeline

1981: Mahathir Mohamad becomes prime minister for the first time

1993: Anwar Ibrahim appointed deputy PM

1998: Mahathir sacks Anwar, has him arrested and he is subsequently convicted of corruption and sodomy

2003: Mahathir steps down as PM and is replaced by Abdullah Badawi

2004: Anwar is released from prison

2009: Najib Razak replaces Abdullah as PM and later sets up 1MDB

2015: Anwar jailed again after second sodomy conviction

2016: Anwar and Mahathir start reconciliation talks

2018 (May): Mahathir elected as PM and frees Anwar, while putting Najib under investigation for corruption – Copyright The Financial Times Limited 2018