Murray Hunter
How Malaysia Is Descending Into ‘Banana Republic’ Status – Analysis
Jan 03, 2025
A prison officer escorts carpenter Mohd Affendi Awang to the hall of Al-Muktafi Billah Shah Mosque, where he was to be caned, in Terengganu, Malaysia, Dec. 27, 2024. Photo Credit: S. Mahfuz/BenarNews
The barbaric public caning of a man, breaking the reverence of a Mosque in Terengganu, and the dismissal of criminal charges against high level politicians and family members have greatly tarnished the image of Malaysia.
Malaysia now barbarically intimidates people guilty of moral crimes, akin to long forgotten desert tribal states, ultra vires of the constitution. Public onlookers are something akin to a circus in an environment something like Ali Baba and the Forty Thieves. In Malaysia, the Forty Thieves get off from the judiciary, not only scot-free, but given the highest political positions in the land. The present prime minister was convicted and served a jail term for corruption, the current deputy prime minister was discharged from over 40 criminal charges, and the new Governor of Sabah, was also discharged from his criminal trials.
The decline of Malaysia into something resembling ‘Banana Republic’ status didn’t just occur overnight. The events described above represent only the tip of the iceberg. The decay of governance within the Malaysian state has been going on for decades, being accelerated over the last two years.
This article argues why Malaysia could be categorised as a member of states referred to as ‘Banana Republics”.
The British took great effort to establish the Malay rulers as the prime authorities on the area proclaimed as the Malay Peninsula. They (the British) used this authority to rule. Now the power of the Malay rulers is in a renascence. The Anwar administration has allowed the power of the rulers to increase through the introduction of the 3Rs (speech about race, religion, and rulers), where discussion about those subjects is taboo. This has effectively eliminated any criticisms of the monarchy.
Without any public criticism, the monarchy now escapes any transparency and accountability concerning interference in government affairs and business dealings. The rulers’ actions can go beyond constitutional limitations without question. The monarchy now has a free rein, they have never experienced since federation. There are no constitutional checks and balances because of the lack of public accountability.
The role of the monarchy in ‘who rules’ is now very powerful. This is especially the case as much of the ‘Malay vote’ is split, leading to ‘hung parliamentary results’, where backroom negotiation determines which group or coalition becomes the government. This is the legacy of GE15, which will be most likely repeated in GE16. Governments are now made upon deals and pledges, which anchors future government decisions.
The above drastically changes the nature of democracy in Malaysia today. Democracy cannot be understood without factoring in the role and influence of the monarchy. Foreign investors must be aware of these facts in the business sectors these circumstances affect, particularly at state level.
No level playing fields in the economy
With government linked companies linked companies (GLCs) combined have a market capitalisation of RM 952 billion, this is almost half the total capitalisation on Bursa Malaysia. Many GLCs are rent-seekers supported by artificial monopolies The hopes of diversifying the Malaysian economy are slim.
The government relies on a low-cost base to attract investors. Although Malaysia is successfully attracting investment in data centres, massive rises in the electricity tariffs in 2025, could change the minds of future investors. In addition, the growing uncertainty of social media licensing, could act as a further deterrent.
Monopolies in strategic foods like rice are preventing innovation. Cronyism at state level in land, construction, and infrastructure development are a deterrent to new players and new investments. Most major consortiums in major projects at state level are made up of locally based-crony companies.
Such an environment fixated upon rent-seeking activities and favouring politically connected consortiums just isn’t helping develop new sectors and badly needed innovation. An International Institute for Management (IMD), World Competitiveness Ranking 2024, saw Malaysia fall to 37th position, out of 67 countries. This corresponds to many other indexes that have shown the decline of Malaysia’s productivity over the last decade.
Although Malaysian FDI has dramatically increased over the last two years, this must be compared with the foreign direct outflows over the same period. Net direct foreign investment hasn’t changed very much over the last two years. This may indicate that many foreign forms are leaving to seek lower cost countries. There is a potential issue of capital flight here.
Many foreign investors to Malaysia are still facing bureaucratic issues that don’t exist elsewhere. These include simple things like the difficulty of opening a bank account, obtaining a work permit, obtaining necessary business licenses, and use their own paid-up capital. One of the most absurd requirements in the freight forwarding industry is that foreign investors can hold 100% equity, while local non-Bumiputeras are only able to hold 49%.
A country that cannot develop a competitive economy, is a country doomed to remaining third-world, and fall behind the rest of the countries in the region. Neighbours, Indonesia and Thailand have shot up in the IMD competitiveness rankings, leaving Malaysia behind.
The roots of poor competitiveness in apartheid ideologies
The NEP, which promoted a resurgence in Ketuanan Melayu or Malay superiority ideology has left its mark in the institutionalisation of apartheid in Malaysia.
The bloated 1.7 million civil service is traditionally used as a voter base for Malay-centric governments. The current one no exception. With the continual practice of giving pay rises to civil servants before elections, with no improved productivity goals, has led the civil service into mass inefficiency. Governments depend upon the civil service more than the civil service depends upon the government, so leaders within the civil service have much bargaining power over elected governments.
The truth is that the civil service, sometimes with elite appointed consultants is the group that actually formulates much public policy. Sitting executive branch government actually has less influence upon policy than most believe. That’s partly why, governments don’t look much different from one another, only the narratives.
The nation requires much administrative reform to make it more competitive, but for the above political reasons, this is unlikely to happen.
The other major area where apartheid has shaped the nature of the nation’s institution is education. Public education is a domain of Malay apparatchiks, who have over the decades produced curriculums irrelevant to the society of today. Standards have declined since the British “O” and “A” levels were abolished. Systems of grading don’t even begin to measure meritocracy, where students graduate in this sheltered environment. At some universities, no students are failed, leading to an overall sub-standard cohort of workers in the economy. One only needs to look at education in neighbouring countries. Intrinsic skills of critical thinking, are much higher in students from Indonesia, Thailand, and Vietnam.
This is very much reflected in those respective nations’ competitiveness. Apartheid doesn’t create meritocracy. With the majority of Malaysia’s senior positions in government reserved for Malays, the nation is only utilising a little more than half of its talent pool.
The Orwellian state
The MCMC is becoming the most powerful government agency under the Anwar administration. The use of the MCMC’s powers have greatly increased since the ‘unity government’ came to power in 2022.
The MCMC and its minister Fahmi Fadzil have been in the news on a weekly basis. Soon after becoming minister in early 2023, Fahmi said on live Tik Tok chat that if anyone criticized him, they should expect a ‘radio car’ outside there house.
The MCMC has blocked a number of news and blogger websites that were critical of the government. notices to social media platform, over what the MCMC considers to be defamatory, fake or obscene.
Malaysia fell 34 places, from 73 to 109 in the 2024 annual Reporters without Borders (RSF) Press Freedom Index. A social media licensing requirements commences on January 1, 2025, with most Big Tech platforms opposed to the new scheme.
The MCMC has carved out a pseudo-judiciary role for itself, where it acts as investigator, judge, and punisher over Malaysia’s online environment.
The mainstream media and most online news portals, with only a few exceptions, very rigorously practise self-censorship. Thus, the media today amounts to little more than a mouthpiece of the government.
Towards a Banana Republic
As the MCMC has been transforming itself into a cyber-gestapo, Muslims in Malaysia are becoming much more restricted about the way they can live, because of further encroachment by politicised Islamic institutions. Over the recent Christmas period Muslims were forbidden to attend any function with a Christmas tree present.
Islam is being used as a means of control.
With the opposition persecuted, the police, MCMC, and MACC weaponised to create a restrictive society, where citizens now live in fear. The Anwar regime is clearly neo-feudalistic, and widening the gap between the top wealthy elite and the middle classes. Ordinary Malays without ‘godfathers’, ‘cables’, or connections cannot expect to share any of the privileges the elite enjoy, under the pretext of positive discrimination towards Bumiputeras.
The elites have a deep sense of entitlement, with crony corporations stripping natural resources such as forests for their own benefit, and selling off strategic assets to foreign companies at bargain basement prices. Those who criticise them face the full force of the law.
The current leadership of the ‘unity government” are either convicted felons, or been released from corruption charges by courts under the current government. The economy cannot expected to become competitive if 30-40 percent of government spending disappears through leakage.
These are the beginnings of a nation resembling what could be called a ‘Banana Republic’.
Originally published in Eurasia Review 1st January 2025.
The balance of political power is now tilted towards the Malay rulers
The British took great effort to establish the Malay rulers as the prime authorities on the area proclaimed as the Malay Peninsula. They (the British) used this authority to rule. Now the power of the Malay rulers is in a renascence. The Anwar administration has allowed the power of the rulers to increase through the introduction of the 3Rs (speech about race, religion, and rulers), where discussion about those subjects is taboo. This has effectively eliminated any criticisms of the monarchy.
Without any public criticism, the monarchy now escapes any transparency and accountability concerning interference in government affairs and business dealings. The rulers’ actions can go beyond constitutional limitations without question. The monarchy now has a free rein, they have never experienced since federation. There are no constitutional checks and balances because of the lack of public accountability.
The role of the monarchy in ‘who rules’ is now very powerful. This is especially the case as much of the ‘Malay vote’ is split, leading to ‘hung parliamentary results’, where backroom negotiation determines which group or coalition becomes the government. This is the legacy of GE15, which will be most likely repeated in GE16. Governments are now made upon deals and pledges, which anchors future government decisions.
The above drastically changes the nature of democracy in Malaysia today. Democracy cannot be understood without factoring in the role and influence of the monarchy. Foreign investors must be aware of these facts in the business sectors these circumstances affect, particularly at state level.
Major political parties practising fraudulent democracy
A warped democracy exists within the very foundations of most of the major political parties. The ‘no contesting’ rule for the top party positions and deferring elections two or even four years makes a mockery of democracy.
The result of the above, is that the same old faces dominate most political parties, and by extension governments. This inhibits change and protects a group of Malay political elites, who have been at the top of the national political scene for decades. Even the current prime minister was a deputy prime minister in a previous administration almost four decades ago. There are a number of political dynasties across the political spectrum, where leadership has become a family business. This severely hinders the off the rise of fresh faces to come into government. This isn’t seen in many other countries.
With the Malay old guard still in command policy development, ideas have become so bankrupt. The New Economic Policy (NEP) has been turned into something ideologically apartheid, as a tool of domination, allowing the development of a very wealthy elite. Such policies are destroying Malaysian competitiveness internationally.
A warped democracy exists within the very foundations of most of the major political parties. The ‘no contesting’ rule for the top party positions and deferring elections two or even four years makes a mockery of democracy.
The result of the above, is that the same old faces dominate most political parties, and by extension governments. This inhibits change and protects a group of Malay political elites, who have been at the top of the national political scene for decades. Even the current prime minister was a deputy prime minister in a previous administration almost four decades ago. There are a number of political dynasties across the political spectrum, where leadership has become a family business. This severely hinders the off the rise of fresh faces to come into government. This isn’t seen in many other countries.
With the Malay old guard still in command policy development, ideas have become so bankrupt. The New Economic Policy (NEP) has been turned into something ideologically apartheid, as a tool of domination, allowing the development of a very wealthy elite. Such policies are destroying Malaysian competitiveness internationally.
No level playing fields in the economy
With government linked companies linked companies (GLCs) combined have a market capitalisation of RM 952 billion, this is almost half the total capitalisation on Bursa Malaysia. Many GLCs are rent-seekers supported by artificial monopolies The hopes of diversifying the Malaysian economy are slim.
The government relies on a low-cost base to attract investors. Although Malaysia is successfully attracting investment in data centres, massive rises in the electricity tariffs in 2025, could change the minds of future investors. In addition, the growing uncertainty of social media licensing, could act as a further deterrent.
Monopolies in strategic foods like rice are preventing innovation. Cronyism at state level in land, construction, and infrastructure development are a deterrent to new players and new investments. Most major consortiums in major projects at state level are made up of locally based-crony companies.
Such an environment fixated upon rent-seeking activities and favouring politically connected consortiums just isn’t helping develop new sectors and badly needed innovation. An International Institute for Management (IMD), World Competitiveness Ranking 2024, saw Malaysia fall to 37th position, out of 67 countries. This corresponds to many other indexes that have shown the decline of Malaysia’s productivity over the last decade.
Although Malaysian FDI has dramatically increased over the last two years, this must be compared with the foreign direct outflows over the same period. Net direct foreign investment hasn’t changed very much over the last two years. This may indicate that many foreign forms are leaving to seek lower cost countries. There is a potential issue of capital flight here.
Many foreign investors to Malaysia are still facing bureaucratic issues that don’t exist elsewhere. These include simple things like the difficulty of opening a bank account, obtaining a work permit, obtaining necessary business licenses, and use their own paid-up capital. One of the most absurd requirements in the freight forwarding industry is that foreign investors can hold 100% equity, while local non-Bumiputeras are only able to hold 49%.
A country that cannot develop a competitive economy, is a country doomed to remaining third-world, and fall behind the rest of the countries in the region. Neighbours, Indonesia and Thailand have shot up in the IMD competitiveness rankings, leaving Malaysia behind.
The roots of poor competitiveness in apartheid ideologies
The NEP, which promoted a resurgence in Ketuanan Melayu or Malay superiority ideology has left its mark in the institutionalisation of apartheid in Malaysia.
The bloated 1.7 million civil service is traditionally used as a voter base for Malay-centric governments. The current one no exception. With the continual practice of giving pay rises to civil servants before elections, with no improved productivity goals, has led the civil service into mass inefficiency. Governments depend upon the civil service more than the civil service depends upon the government, so leaders within the civil service have much bargaining power over elected governments.
The truth is that the civil service, sometimes with elite appointed consultants is the group that actually formulates much public policy. Sitting executive branch government actually has less influence upon policy than most believe. That’s partly why, governments don’t look much different from one another, only the narratives.
The nation requires much administrative reform to make it more competitive, but for the above political reasons, this is unlikely to happen.
The other major area where apartheid has shaped the nature of the nation’s institution is education. Public education is a domain of Malay apparatchiks, who have over the decades produced curriculums irrelevant to the society of today. Standards have declined since the British “O” and “A” levels were abolished. Systems of grading don’t even begin to measure meritocracy, where students graduate in this sheltered environment. At some universities, no students are failed, leading to an overall sub-standard cohort of workers in the economy. One only needs to look at education in neighbouring countries. Intrinsic skills of critical thinking, are much higher in students from Indonesia, Thailand, and Vietnam.
This is very much reflected in those respective nations’ competitiveness. Apartheid doesn’t create meritocracy. With the majority of Malaysia’s senior positions in government reserved for Malays, the nation is only utilising a little more than half of its talent pool.
A crooked legal system
Since Anwar Ibrahim has become prime minister, a number of high-profile court cases were terminated with a “Discharge Not Amounting to an Acquittal” (DNAA), allowing the political elite defendants to walk free from the courts.
These included the deputy prime minister Ahmad Zahid Hamidi, former prime minister Najib Razak and his wife Rosmah Mansor. In addition, former prime minister Najib Razak had his prison sentence reduced by the pardons board from 12 years to 6 years, with a 75% discount on his fine reduced from RM 210 million to RM 55 million.
The Malaysian Anti-Corruption Commission (MACC) has acted as the government’s attack dog to investigate and humiliate Anwar’s former adversaries through call ups for interview regarding allegations in the Panama Papers, without laying any charges.
The current modus operandi of the police is the bullying and intimidation of critics of the government with impunity. The police in collaboration with the MACC and the Islamic Development Department (JAKIM) conduct raids on citizens, rarely leading to any criminal charges ever being laid. Most of these raids are about public comments and moral issues not affecting third parties.
Lawfare and persecution are now specialities of the state. A number of prominent opposition politicians have been dramatically arrested, while the press was accompanying the police and charged with draconian laws such as sedition.
There is great conjecture as to whether the Attorney General’s Chambers has been purposely throwing cases involving political allies of Anwar and his ‘unity government’. This is as the judicial system is being used to attack and silence critics overseas. British journalist Claire Rewcastle Brown was sentenced to two-years prison in absentia over a book covering corruption in the 1MDB financial scandal.
Malaysia clearly has a two-tier system of justice where politically aligned elites are ignored, while ordinary citizens receive harsh penalties for petty crimes.
Since Anwar Ibrahim has become prime minister, a number of high-profile court cases were terminated with a “Discharge Not Amounting to an Acquittal” (DNAA), allowing the political elite defendants to walk free from the courts.
These included the deputy prime minister Ahmad Zahid Hamidi, former prime minister Najib Razak and his wife Rosmah Mansor. In addition, former prime minister Najib Razak had his prison sentence reduced by the pardons board from 12 years to 6 years, with a 75% discount on his fine reduced from RM 210 million to RM 55 million.
The Malaysian Anti-Corruption Commission (MACC) has acted as the government’s attack dog to investigate and humiliate Anwar’s former adversaries through call ups for interview regarding allegations in the Panama Papers, without laying any charges.
The current modus operandi of the police is the bullying and intimidation of critics of the government with impunity. The police in collaboration with the MACC and the Islamic Development Department (JAKIM) conduct raids on citizens, rarely leading to any criminal charges ever being laid. Most of these raids are about public comments and moral issues not affecting third parties.
Lawfare and persecution are now specialities of the state. A number of prominent opposition politicians have been dramatically arrested, while the press was accompanying the police and charged with draconian laws such as sedition.
There is great conjecture as to whether the Attorney General’s Chambers has been purposely throwing cases involving political allies of Anwar and his ‘unity government’. This is as the judicial system is being used to attack and silence critics overseas. British journalist Claire Rewcastle Brown was sentenced to two-years prison in absentia over a book covering corruption in the 1MDB financial scandal.
Malaysia clearly has a two-tier system of justice where politically aligned elites are ignored, while ordinary citizens receive harsh penalties for petty crimes.
The Orwellian state
The MCMC is becoming the most powerful government agency under the Anwar administration. The use of the MCMC’s powers have greatly increased since the ‘unity government’ came to power in 2022.
The MCMC and its minister Fahmi Fadzil have been in the news on a weekly basis. Soon after becoming minister in early 2023, Fahmi said on live Tik Tok chat that if anyone criticized him, they should expect a ‘radio car’ outside there house.
The MCMC has blocked a number of news and blogger websites that were critical of the government. notices to social media platform, over what the MCMC considers to be defamatory, fake or obscene.
Malaysia fell 34 places, from 73 to 109 in the 2024 annual Reporters without Borders (RSF) Press Freedom Index. A social media licensing requirements commences on January 1, 2025, with most Big Tech platforms opposed to the new scheme.
The MCMC has carved out a pseudo-judiciary role for itself, where it acts as investigator, judge, and punisher over Malaysia’s online environment.
The mainstream media and most online news portals, with only a few exceptions, very rigorously practise self-censorship. Thus, the media today amounts to little more than a mouthpiece of the government.
Towards a Banana Republic
As the MCMC has been transforming itself into a cyber-gestapo, Muslims in Malaysia are becoming much more restricted about the way they can live, because of further encroachment by politicised Islamic institutions. Over the recent Christmas period Muslims were forbidden to attend any function with a Christmas tree present.
Islam is being used as a means of control.
With the opposition persecuted, the police, MCMC, and MACC weaponised to create a restrictive society, where citizens now live in fear. The Anwar regime is clearly neo-feudalistic, and widening the gap between the top wealthy elite and the middle classes. Ordinary Malays without ‘godfathers’, ‘cables’, or connections cannot expect to share any of the privileges the elite enjoy, under the pretext of positive discrimination towards Bumiputeras.
The elites have a deep sense of entitlement, with crony corporations stripping natural resources such as forests for their own benefit, and selling off strategic assets to foreign companies at bargain basement prices. Those who criticise them face the full force of the law.
The current leadership of the ‘unity government” are either convicted felons, or been released from corruption charges by courts under the current government. The economy cannot expected to become competitive if 30-40 percent of government spending disappears through leakage.
These are the beginnings of a nation resembling what could be called a ‘Banana Republic’.
Originally published in Eurasia Review 1st January 2025.
No comments:
Post a Comment