Malaysia after regime change

Greg Felker, New Mandala

The government’s influence over the mainstream media enables it to tout its progress, as when it has highlighted declines in certain crime statistics, or as when the World Bank’s 2012 Ease of Doing Business Report ranked Malaysia’s regulatory environment as significantly improved. 

Credibility and the search for a new developmental model

In comparative politics the word “regime” refers to the formal and informal institutions by which political power is acquired and exercised. In political economy, a regime refers to an enduring combination of “socio-economic alliances, political-economic institutions, and a public-policy profile” (Pempel 1998: 20). In the case of Malaysia, the Barisan Nasional (BN) regime’s durability in the former, political sense has been closely associated with a particular sort political economy, or regime in the second sense. Despite significant changes over the years, Malaysia’s hegemonic-party political system, centered on United Malays National Organisaion’s (UMNO) dominance, has since the early 1970s practiced a form of developmentalism that has shaped Malaysian society in profound ways. As the Pakatan Rakyat (PR) understands, its challenge to the BN’s national political monopoly is inescapably a contest about Malaysia’s economic development model, as well. To what extent, and in what ways, does the prospect of change in Malaysia’s political regime imply a change in the country’s pattern of development?

Contemporary debates make clear the close connection between political contestation and economic policy choices. Indeed, one of the UMNO-led government’s vulnerabilities is a sense, growing in recent years, that the Malaysian development miracle has wavered and, for large segments of the population, inadequately fulfilled its promise of a steadily improving quality of life. The notion of the “middle-income trap”, first popularised in a global context by Geoffrey Garret in 2004, quickly became a frame for discussions of possible policy reform within Malaysia and among foreign observers. Two themes have been prominent in these discussions. One is the issue of the quality of governance as this affects broader economic efficiency and productivity. Second is the mooted necessity of a broad liberalisation of restrictions and regulations to enable greater flexibility and entrepreneurial dynamism. In both areas, the opposition and pro-reform civil society organisations have made telling critiques of the incumbent leadership. For its part, Najib Razak’s administration has launched a series of reform initiatives under the New Economic Model (NEM) that speak to the same concerns about governance and the structural challenges to Malaysia’s continued economic development. This dimension of the new competitiveness in Malaysia’s politics adds programmatic substance to a political tableau in which mass protest, scandal, and cultural controversies have comprised much of the drama.

PR has sought to highlight evidence of deterioration in the quality of Malaysian governance. Within that broad rubric, PR officials have pointed to figures on budgetary ‘leakage’, capital outflows, and investor perception surveys as evidence of substantial corruption. For its part, the Najib administration has pledged to implement a Government Transformation Program (GTP) to foster a more responsive, decentralised, and efficient system. A major focus of the liberalisation debate concerns the impact of preferential policies (still widely referred to as the New Economic Policy/NEP) for Malaysia’s Bumiputera majority. A range of academic and policy studies have argued that the NEP has hindered a shift towards knowledge- or innovation-based development by restricting the development and availability of relevant, highly-skilled workforce talent (Henderson & Philips 1997; Woo 2009; World Bank 2011). The PR’s agenda, as laid out in its 2010 Buku Jingga (Orange Book), pledges to replace NEP-style preferences with a set of income-focused welfare policies, noting that their disproportionate representation among the poor means that Malays would be the primary beneficiaries. The government’s Economic Transformation Programme (ETP) makes more qualified pledges to reform the administration of preferential policies, including a parallel emphasis on assisting lower-income Malaysians through a revamped safety net.

Given that both the opposition and government have recognised these issues and advanced proposals for change, the credibility of reformist pledges becomes politically important. The government’s influence over the mainstream media enables it to tout its progress, as when it has highlighted declines in certain crime statistics, or as when the World Bank’s 2012 Ease of Doing Business Report ranked Malaysia’s regulatory environment as significantly improved. The degree to which these claims of change are felt at the grass roots level, or credited by key segments of the electorate, is another matter. Such assurances have been a recurrent theme at the advent of each new UMNO administration (think of Mahathir Mohamed’s pledge upon assuming the Premiership to make government bersih/clean, cekap/efficient, amanah/trustworthy). The PR’s record of economic management in the states that it governs is a potentially significant source of credibility, though state governments’ control over key factors in the cost of living is limited (the Buku Jingga pledges that a PR Federal government would renationalise or heavily regulate privatised utilities.)