Monday, March 10, 2008

Malaysia a ‘New Dawn’

AFTER five decades of political power, Malaysia's ruling coalition suffered a humiliating rebuff at the weekend, ushering in one of the biggest shifts in Southeast Asian politics in almost 40 years.

Anwar Ibrahim, (pictured right) the former deputy prime minister to Mahathir Mohamad, delivered a crushing blow to the ruling Barisan Nasional coalition by rallying the opposition parties to their best performance in Malaysian history, taking five states and more than a third of the parliamentary seats.

The result means that, for the first time in 40 years, Malaysia's ruling coalition no longer enjoys the two-thirds majority needed to change the constitution, which it has done more than 40 times since independence from Britain in 1957.

A jubilant Anwar said the opposition had to prove it was a credible alternative to the coalition, which has dominated Malaysian politics for half a century. "It's a new dawn for Malaysia," the opposition leader said. "People want to see justice. I don't think Malaysian politics will ever be the same again."

This election was timed so that Anwar could not run himself because of the ban applying to former prisoners. But that ban runs out next month and one of his supporters will resign so that he can enter parliament.

The performance has even revived talk of Anwar as a future prime minister, after the lost decade that followed his 1998 fall from grace when he was convicted on sex and corruption charges trumped up by Mahathir.

The last time Malaysia saw an election result like this - in 1969 - there were race riots with hundreds killed. Malaysia will be lucky to get through this result without serious disturbances. But Malaysia is a much more middle class, and stable, society today than it was in 1969.

Note: My apologies for the largely cut ‘n paste content of this post. I was caught on the hop, not really believe the loaded Malaysian political system would allow an Anwar Ibrahim comeback. I wonder if this isn’t yet a dramatic example of that pendulum swing away from the ideological right.


lindsaylobe said...

I hope they get through it okay, it sounds like good news. But the Kuala Lumpur Composite Index slumped 7.2%(greatest fall since 1998)after the announcement so they need to take decisive action to bring calm from an economic perpective.

The sitaution is not helped by extremely poor data coming out of the US on reducing payrolls, suggesting recession over there and sending Asian & Australian markets into yet another downward spirial.

The Reserve in the US has agreed to put another $ 200Bilion into the banking markets to reduce credit fears, but the news keeps getting worse.

Best wishes

Cart said...

Thanks Lindsay. I was under the impression the same dynamic of International pressures were at play in Malaysia. Still I will always bow to greater knowledge.

lindsaylobe said...

Indeed Malaysia is a country hugely dependant upon foreign trade which represents 180% of their GDP and probably the most vulnerable country imaginable to an American recession after Canada and Mexico.

Notwithstanding exports contracting 15% last year, Malaysian GDP growth remained a strong six per cent, supported by heavy internal infrastructure spending.

But the cost of funding and insurance against default has increased dramatically. It is important they can continue to stimulate their economy and counter the downturn in exports, both from their perspective and ours as an important neighbor.

I think they can but the markets were initially exceptionally bearish about the changes, compared to other markets, albeit they were all in negative territory.

However Asian stocks rebounded yesterday from an initial further decline amid strong speculative rumors the U.S. Federal Reserve will further broaden measures to pump prime the failing US economy.

Best wishes

Cart said...

Lindsay, i can't tell you how pleased I am to have someone locally with a good handle on economics/markets and can tell the difference.
I have been distracted lately, but want to look more closely at some of Australian economic dynamics.
I guess if I can get my head around the questions you might just straighten me out :)

lindsaylobe said...

I am very pleased to confirm Rio Tinto and Cahya Mata Sarawak Berhad US$2bn aluminum smelter project in Similajau, has been granted to day a manufacturing license by the Malaysian Industrial Development Authority, an agency for the Malaysian Government.
It is expected contribute up to RM2.4bn to GDP, and nearly 5000 new jobs.
Rio is responsible Austraian corporate citizen; personally I think its great news.

Aluminum smelters will cater for the growing demand from China. At present capacity is restrained. Rio is also environmentally aware as a company, and is developing technologies to reduce emissions as far as I can gather from reading their latest 100 page report to day.
Best wishes

Cart said...

Lindsay you keep on with these fascinating insights. I'm inclined to invite you in as a guest blogger on these issues. You have a great understanding of the issues.

Will this move give Rio any strength against BHP?