Why Malaysia's Surprise Election Result Should Be A Wake-Up Call For Global Leaders

Another national election has produced yet another unexpected outcome. This time it was Mahathir Mohamad's stunning upset victory over Prime Minister Najib Razak—which ended 60 years of rule by the National Front party—that caught many observers of Asian politics off guard

Mahathir Mohamad
Фото: scmp.com
Mahathir Mohamad

But Malaysia’s 14th general election results should come as no surprise. This latest event is affirmation, yet again, of the convergence of powerful forces that are sweeping the world: digital disruption and its economic and social consequences; a middle-class backlash against entrenched and corrupt elites; and, like it or not, the growing influence of China.

How is this playing out in Malaysia and beyond?

Among other things, Mahathir has said he would repeal Malaysia’s hugely unpopular General Services Tax (GST) of 6% and re-examine Malaysia’s big infrastructure projects—including the proposed Kuala Lumpur-Singapore high-speed rail link. He’s said that he wouldn’t seek “revenge” against Najib, but rather, that he would “restore the rule of law to Malaysia.” For many, this could be interpreted as a return to heavy-handed, authoritarian governance.

Initial reaction in the markets has been negative, with the value of the Malaysian ringgit falling 2.4% against the U.S. dollar, the day after the election.

Digital disruption and cyber-politics

Just like the Brexit and Trump election outcomes, data analytics, social media and digital platforms played a major role in determining the winners in this historic election. Malaysia has a smartphone penetration rate of over 75%, with over 40% of the country’s 15 million voters under the age of forty—meaning, as “digital natives,” they get their news almost exclusively via social media.

Facebook, Twitter and YouTube are the predominate platforms, with a whopping 97% of social media users active on Facebook, which makes Malaysia one of the world’s most digitally connected and internet-savvy countries.

Malaysia’s election also featured the now familiar perils of cyber-space election campaigns: bots and fake news. But, all things considered, the overarching impact of AI and data analytics allowed Mahathir’s coalition— Pakatan Harapan— to target specific voters with laser-accuracy via social media.

Backlash against corrupt political elites

Digital technology has also been a power multiplier for a small number of the world’s wealthiest people, resulting in massive wealth disparities within general populations. This wealth disparity has been even more pronounced in emerging markets like Malaysia, spilling over into politics, where increasingly corrupt and dysfunctional institutions are controlled by these same elites.

According to Noel Meldan, a Malaysia expert with Vriens & Partners, a public affairs consultancy, concerns over cost of living was the single most compelling issue for Malaysians-- particularly for 1.4 million young voters, many of whom are feeling increasingly anxious about their economic futures.

Prime Minister Najib’s infamous 1MDB corruption scandal was more than the voting public could stomach. This is remarkable since the ruling National Front party had remained unassailable for decades by successfully exploiting the divisive issues of race. Malaysia’s ethnic-Malay Muslims— who make up the majority of the population— were considered a sure vote for the National Front, since the party effectively promoted affirmative action policies that favored Malays for cheap housing, university placement, government contracts and the like.

But a significant number of these same Malays— or “Bumiputras,” in Malay— decided to cast their votes for the opposition, which also consisted of ethnic Chinese and Indian minority groups.

The backlash against entrenched elites is not confined to Malaysia. It is a force of nature that will continue to shape corporate diplomacy, business execution and public policy throughout Asia and beyond.

China’s growing influence in Malaysia

Malaysia has tilted decisively into Beijing’s orbit since Najib became PM in 2009. According to research from the Yusof Ishak Institute of Southeast Asia Studies, some 14 MOUs and agreements worth $34 billion were signed with Beijing on Najib’s watch.

Much of this money has been earmarked for large infrastructure projects that figure into Beijing’s Belt and Road initiative, with China Inc. conveniently serving as both financier and contractor. One of the projects, the $13 billion East Coast Rail Link (ECLR) is designed to connect Malaysia’s East and West Coasts and form part of a key logistics network, where the state-owned China Exim Bank is providing much of the funding, while another SOE, the China Communications Construction Company, is building the network.

Mahathir has said that he will revisit these Chinese dominated projects, not just because they have swelled Malaysia’s current public debt, but because these big projects have been facilitated by political insiders who lined their pockets with Chinese bribes and inducements.

It’s unlikely that Mahathir will get the support in parliament to roll back these projects but he may delay them. Going forward, the markets, businesses and policy makers will be watching what happens in Malaysia very closely.

Alex Capri, a senior fellow at the National University of Singapore, where he teaches in the business school and in the Lee Kuan Yew School of Public Policy

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