Balancing growth and fiscal management

Posted on September 20, 2023 by Tricia

This article, which reviews the Mid-Term Review of the 12th Malaysia Plan (12MP MTR), first appeared in the StarBiz7 feature on the 12MP MTR on Saturday, 16 September 2023.

THE Madani economy framework and the 12th Malaysia Plan mid-term review (MTR) do not seem to have a significant difference on the surface, but the latter contains some initiatives which will be game-changers if implemented well. These include the move towards a progressive wage policy and also initiatives in the healthcare sector, including setting up a new mental health institution, a national ageing action plan and a geriatric centre.

More than that, under the MTR, the government plans to optimise the use of data for public policy. An Omnibus Act will govern data-sharing and cloud storage, while an impact study on the Public Sector Data Sharing Policy and National Data Sharing Policy will be done to encourage data-sharing. A new integrated household database (PADU) – a socioeconomic data repository on households – will also be set up.

Appointing a chief digital officer to spearhead digital technology, data governance and digital literacy will be something that all industries, especially those reliant on research and data, will look forward to. A National Digital Identity pilot project will be rolled out in 2025, while the government will transition

to the digitalisation of services under a new government technology programme.

Second, the MTR is forthright about implementing public sector reforms. For instance, it plans to introduce a Public Sector Governance Act and integrity plan as a guide on “corruption-

free governance for all entities, both public and private”, in its goal to aim for the top 25 positions in the

global Corruption Perception Index (CPI) within 10 years.

On this note, it is also positive that beneficial ownership declarations will be reviewed to strengthen transparency of share ownership, specifically within the Companies Act 2016 and Limited Liability Partnerships Act 2012.

A governance and institutional framework and legislation “related to corruption” were also announced, as

well as a special task force on agency reform (STAR). The structure and functions of ministries and agencies are to be reviewed and streamlined. Public sector efficiency is certainly welcome, since civil service performance is essential for the effective delivery of public goods and services.

A third observation is regarding the government’s plans to balance growth with fiscal management. The

12MP is allocating an additional RM15bil, increasing spending to RM415bil. According to the government, increased spending is possible due to savings from subsidy re-targeting various

national expenses as well as reallocating unused GLC and statutory body funds, all of which will be transferred to development expenditure.

While this may be positive at the outset, the additional RM15bil is of some concern. Historically, the government has not had the capacity to fully use the allocated expenditure. Budget documents suggest that the government only managed to spend around 91% of the estimated development expenditure from 2011-2021, except in 2018 where the expenditure was more than the estimate.

Given these aims, the government will have no choice but to engage in long-awaited fiscal consolidation. It has already announced targeted subsidies will be rolled out as soon as early next year for electricity, diesel, petrol as well as other social assistance. PADU will reportedly provide “near real-time micro data on individualssuch as demography, income and social assistance”. This is a bold move, since removing subsidies will result in higher costs of living for some income groups. Some PH MPs have called to

assess these plans as it would have economic impact on small-scale industry players and the M40 community.

But subsidy rationalisation, which has been discussed over the last decade with minimal progress, is key to

ensuring that over the long term, the government can achieve its 3.5% deficit target. This is especially the case given substantial public spending over the last few years during and after the Covid-19 pandemic.

The government’s priority on fiscal responsibility raises the possibility of restoring Goods and Services Tax (GST) as well as implementing Capital Gains Tax (CGT) that was previously announced, both of which would provide more secure buffers for the government’s public spending on a more sustainable, long-term basis.

The Fiscal Responsibility Act and Government Procurement Act (GPA) are two legislative reforms that this government should also enact immediately, to complement efforts on responsible public financial management. The government’s announcement that the GPA has been approved is therefore welcome, but clear timelines on its enactment must now be presented to the public. On this note, plans to enhance the Public Expenditure Review and reactive the Debt Management Committee are also positive.

Finally, a bumiputra economic congress is to be held in January 2024 with the objective of setting a new

direction and approach that is “more fair, equitable and inclusive”. Building bumiputra businesses to increase income levels is positive, but caution might be exercised when aiming to improve effectiveness of aid and support to bumiputra involvement in economic activities.

Encouraging enterprise development is best done by removing barriers to business, most often regulatory

or legal in nature. In the rollout of future economic plans, it is hoped that greater focus on promoting healthy, robust competition among enterprises can be achieved.

An example is updating the Competition Act 2010 to enhance competition in all sectors as well as

conducting a thorough review of the large number of state-owned enterprises and government-linked companies in Malaysia – especially those that are not financially viable. A more competitive environment

that is not encumbered with excessive regulation is what will ensure private sector growth, increased foreign investment and participation towards a thriving economy.

Posted in Economics, Public Administration | Leave a comment

Anwar Ibrahim’s first 100 days in office

Posted on February 17, 2023 by Tricia

Analysis by Tricia Yeoh, PhD

This article was first published on Friedrich Naumann Foundation for Freedom’s website here on 13 February 2023. It was also translated and published in German, available here. Quite pleased to have an article auf Deutsch. More to come, we hope.

Germany’s President Frank-Walter Steinmeier visits Malaysia. He will meet Anwar Ibrahim, the new Prime Minister. Mr. Anwar leads a broad coalition, which includes previous arch-rivals. He spent 25 years in opposition, ten of them in jail due to politically motivated convictions. As Prime Minister, Mr. Anwar has to strike a delicate balance to secure his and his government’s positions. Tricia Yeoh, CEO of Malaysia’s Institute for Democracy and Economic Affairs, analyses Anwar Ibrahim’s first 100 days in office.

Malaysia´s new “unity government” – Pakatan Harapan (PN, or The Pact of Hope) and Barisan Nasional (BN, The National Front) plus two regional coalitions – came about after no single political coalition won a simple majority. Amongst the first endeavours was to ensure stability, which had been tumultuous given three government administration changes in as many years.

Anwar Ibrahim, the new prime minister, chose to appoint Zahid Hamidi as his deputy, a controversial figure given that he is embroiled in a slate of corruption cases. The appointment was surprising as Anwar and his party, Parti Keadilan Rakyat (PKR, the National Justice Party) campaigned on good governance and reform. Nevertheless, it was a politically expedient move. Zahid as President of the United Malays National Organisation (UMNO, the main party of Barisan Nasional) contributed 30 parliamentary seats to the coalition, without which the new federal government could not even have been formed.

The new Cabinet also featured several other BN figures who had in fact lost their seats in the parliamentary election, including Tengku Zafrul Aziz as Minister of International Trade and Industry and Zambry Abdul Kadir as Minister of Foreign Affairs, both of whom were appointed as Senators. These appointments were considerable compromises that needed to be made by Anwar in order to seal a harmonious deal, especially between PH and BN. In December, a unity government agreement was reached and signed by all coalition members. Shortly after, Anwar successfully won a motion of confidence in Parliament. Securing a majority was crucial for a country beleaguered by political instability; only then would the government have the confidence to move forward.

While the coalition agreement was received well in order to restore political stability, parts of it came under heavy criticism from civil society, in particular a clause in which Members of Parliament from coalition parties are deemed to have resigned their positions should they vote as they wish on any procedural matter in Parliament. This prevents backbenchers, for example, from voting conscionably against government policies they disagree with – a matter of principle where they ought to be able to exercise their individual judgment on policy and legal matters, especially on the occasion they take positions that differ from their political parties.

Good governance and economic agenda – present but shaky?

Expectations on Anwar Ibrahim’s premiership are high. He has been able to win some public confidence based on his initial speeches. For example, in one of his first engagements with his staff, he announced that the government under his leadership would not allow leakages and corruption, specifically that there could no longer be procurement approvals without tenders. He also announced that political appointments to government-linked companies (GLC) would be terminated, but later explained that some MPs might be appointed based on set guidelines on professional capabilities, past performance and compliance with regulatory and governance practices. As such, the initial appointment of an UMNO politician as Chair of a plantations GLC was postponed.

Anwar publicly revealed a slogan termed ‘Malaysia Madani’ in January 2023, a concept to drive and restore Malaysia’s dignity and glory in the global arena. The concept is based on six pillars: sustainability, prosperity, innovation, respect, trust and compassion. Clumsily translated into a Malay-based acronym, which caught some public ridicule, the concept is nevertheless welcome. Anwar called on the unity government’s leadership to practice trust, good values and morals as well as fair and effective governance. Alongside an economic plan based on three strategies to eradicate poverty, restructure and restore the economy, and generate the economy based on the Madani principles. Thus far these general thrusts seem to resonate well.

Third, Anwar made the decision to slash constituency development funds for Members of Parliament by almost 75% on the basis of economic constraints. While it is positive that the government recognises the fragile fiscal situation it is in, this may severely impact parliamentarians’ ability to serve their constituencies. Nevertheless, this may provide the very impetus needed for MPs to advocate for systemic change – they ought not be welfare providers over a long-term period, which is the role of government agencies.

In addition, the government must seriously consider other economic solutions to improve the country’s fiscal balance including by widening its revenue base through new forms of taxation. Most recently, the World Bank’s lead economist in Malaysia emphasised that Malaysia under-collects in personal and consumption taxes and agreed that broadening the tax base was essential to increasing government revenue collection.

While some moves have been positive, one faux pas that marks Anwar’s first 100 days in office is his decision to appoint his eldest daughter, Nurul Izzah, as his senior advisor on economics and finance. Losing her parliamentary seat for the first time since 2008, many saw Nurul Izzah´s appointment as bordering on nepotism with a serious conflict of interest. While qualified for the job, and not drawing a salary for this position, she would have been in a strategic position at the Ministry of Finance to potentially advise on decisions over major contracts, appointments and economic policies. Anwar is also Finance Minister in addition to his Prime Ministerial portfolio, which is also not good practice. The move may have been deemed necessary by Anwar, who needs trusted allies close by his side while navigating a precarious political environment. Nurul Izzah has since resigned her position, and instead will co-chair a secretariat formed by an advisory panel for the ministry. With a clearer and more structured mandate, this reflects better on Anwar’s administration although the misstep could have been avoided altogether from the start.

What Lies Ahead for Anwar and his government

The next few months are crucial for Anwar Ibrahim’s government. First, he will face his first full Parliamentary sitting from 13 February onwards, during which he will need to table a new Budget 2023 and obtain a majority vote to pass the government’s first major policy document.

Second, a lot of attention will be given to how Parliament itself will be handled – the new Speaker of the Lower House is a political stalwart from his very party, PKR – and whether or not unbiased treatment will be provided to all MPs alike. But reform is in demand – and he has already introduced new changes, such as a Prime Minister’s Question and Answer (PMQ) session and Minister’s Question Time (MQT) every Tuesday and Thursday respectively. Apart from the anticipated re-enactment of the Parliamentary Services Act, new Parliamentary Select Committees will also be announced in the upcoming sitting. This will indicate the government’s policy priorities on topics ranging from climate change to governance to institutional reforms.

Third, all eyes will be on the upcoming UMNO party election, which must be held by May. On this note, a recent decision was made to ban contests for the positions of UMNO President and Deputy President. This, alongside separate decisions to sack an aspiring UMNO politician, Khairy Jamaluddin, and to suspend several other MPs deemed as threats for six years, indicate a growing unease within the party. Khairy had publicly pronounced his intention to run for UMNO President and to reform the party. While Anwar’s position seems secure for now, the ‘UMNO purge’ may not resonate well with UMNO grassroots. This may impact the UMNO party election. Given the coalition’s makeup, the future of UMNO has a direct bearing on the future of the government’s stability.

Ultimately, while government policies are being highly scrutinised given high expectations of reform, the future lies in Anwar’s ability to manage varying interests, ideologies and expectations from amongst his coalition partners. Most recently, the unity government formed three new committees on communication strategies, state elections and monitoring of political developments and administration, a sign that the coalition partners are coalescing – for now. The opposition, the PN coalition, however, is equally hard at work. It recently announced the country’s first federal Shadow Cabinet. Another challenge in the long-run: managing the country’s increasing ethno-religious polarisation, especially ahead of six upcoming state elections. These are exciting times for Malaysia as the country goes through political renewal amidst rapidly changing global socioeconomic and geopolitical environments.

*Tricia Yeoh (PhD) is CEO of IDEAS (Institute for Democracy and Economic Affairs), an independent public policy think tank in Malaysia.

Posted in Elections, General Politics, Transparency and Good Governance | Leave a comment

Crisis Averted for now: Malaysia’s 15th General Election and What Lies Ahead

Posted on November 29, 2022 by Tricia

Tricia Yeoh

This piece was originally published by the Heinrich Böll Stiftung Southeast Asia website here, on Monday 28 November 2022.

Malaysia’s highly anticipated 15th General Election (GE15) on 19 November 2022, originally intended as a way to end the prolonged political instability over the last two and a half years, had resulted in everything but that for the initial few days.  

With no single coalition winning an outright simple majority, the different coalitions – Pakatan Harapan (PH), Perikatan Nasional (PN) and Barisan Nasional (BN), as well as their counterparts from East Malaysia, Gabungan Parti Sarawak (GPS) and Gabungan Rakyat Sabah (GRS) –engaged in a merry-go-round of negotiations to achieve the necessary collective number of parliamentary seats to form a majority government. There was no clear resolution – until the King stepped in issuing a call for a unity government.

The PH, BN and GPS coalitions ultimately came together to form a federal government, and on Thursday 24 November, Malaysia’s 10th Prime Minister was appointed and sworn in: Dato’ Seri Anwar Ibrahim.

The Brewing Storm of PN vs BN

At the time of Parliament dissolution, the incumbent federal government was a strangely-shaped coalition comprising both PN and BN, led by a BN Prime Minister. The parties comprising PN, Parti Pribumi Bersatu Malaysia (Bersatu) and the Malaysian Islamic Party (PAS), as well as those within BN, the United Malays’ National Organisation (UMNO) and its smaller component parties, had come together in March 2020, replacing the previously elected PH coalition in a series of events now referred to as the “Sheraton Move”.

The PN-BN federal government’s tenure was riddled with uncertainties of its own, cracks between the two showing as early as July 2021, when UMNO announced it was withdrawing support for PN and called for Muhyiddin Yassin to step down as Prime Minister. Muhyiddin was eventually replaced by UMNO veteran Ismail Sabri the following month. Over the subsequent year, the Bersatu-UMNO rifts continued to grow while pressure was increasingly mounted on Ismail to dissolve Parliament and hold an election.

Prime Minister Ismail eventually caved in and dissolved Parliament on 10 October 2022. Looking back, the intense demands from within UMNO to call for an election at this time of year – typically avoided due to the monsoon season and the risk of flooding across the country – was based on multiple factors.

First, UMNO had been emboldened by their stellar performance in the recent state elections within Melaka and Johor, in which they won strong majorities (21 out of 28 in Melaka and 40 out of 56 in Johor). This contributed to the perception they would perform equally well should the GE be called within the immediate future. Second, given their expectations of winning, they believed this would “restore the mandate” and they could govern with a stable majority, even defeating PN at that. Third, this went unsaid but UMNO’s President Zahid Hamidi was still embroiled in his own corruption trials. Winning a GE would have allowed him negotiating rights over his case, he may have imagined.

A Subdued Campaign – but wait, TikTok     

Malaysia therefore faced GE15 with an extremely messy political backdrop, with an unprecedented number of candidates and many seats with multi-cornered fights (as many as 10 in some cases). The campaign period of 14 days was considerably muted relative to previous elections, where one commonly heard trope was that BN could not spend as lavishly as before.

Used to extravagant spending on ground machinery, door-to-door visits, flush with abundant campaign materials, BN in 2022 had less to spend after not being the main player in federal government for an extended period of time – although Ismail was Prime Minister, the largest share of Cabinet positions belonged to PN.

For all intents and purposes, PN assumed the position of incumbency. This was also felt in the lead-up to election day itself. Invoke’s national polling data indicated that PN was the coalition that gained the most ground over the months leading up to GE15, increasing its Malay support by almost 12% between September and post-nomination in November 2022 (Invoke, Forecasting GE15: voter trends and likely outcomes, November 2022).

And indeed, PN’s social media spending seems to have far exceeded that of either the other two leading coalitions. For example, in the final week of campaigning, it targeted TikTok with sophisticated videos accompanied with enticing music featuring young, attractive Malaysian Malays (read: sponsored social media influencers). On hindsight, enlisting TikTok was an extremely effective strategy. Electoral reforms in Malaysia in 2021 that saw the voting age lowered from 21 to 18, as well as automatic voter registration taking place, resulted in 6.23 million new voters being included in the electoral roll. Campaign tactics having somewhat shifted away from the stage and rallies (remote working over the pandemic years contributed too), young voters depended on social media for their political education.

The Long-Awaited GE15 Outcome

Fast-forward to election night – a sleepless one, for most Malaysians following the news – and as expected by most analysts: a hung Parliament. PH was the coalition with the largest number of seats at 82, followed by PN at 73, and BN performed at its worst ever securing only 30 seats. While it was largely expected that no single coalition would cross the magic line of 112 (as a result of one seat yet to be concluded, the majority needed is now 111), it was the rise of PN – chiefly its component party PAS – that took most by surprise.

In a north-easterly wave of sorts (crescent-shaped, uncannily enough), PN swept almost all seats in Perlis, Kedah, Kelantan and Terengganu. Even strongholds held by incumbents Dr Mahathir Mohamed (former Prime Minister) and Nurul Izzah Anwar (Anwar Ibrahim’s daughter, contesting on the mainland of Penang, a northern state) fell to PN. Of this, PAS won 49, close to 70%, of its coalition’s 73 seats.

While many have signaled their concerns over the rise of Islamic conservatism, Malay voters may have swung to PN for a wide possible array of factors: One, dissatisfaction with BN’s leadership splits and internal rivalries, as well as its poor leadership in the form of court-embattled Zahid Hamidi; Two, the perception of PN being a cleaner alternative against a corrupt BN and the turn therefore to a more trustworthy, religious coalition; Three, that they really had been more inclined towards a more stridently Malay-Muslim coalition – but the latter is unlikely to have been the only, or main, reason for the switch.

In the days immediately following GE15, as coalitions tussled over government formation (ultimately, about getting sufficient numbers), TikTok was filled with videos reminding Malaysians about its dark day in history: 13 May 1969, during which ethnic riots split Malays and Chinese communities. While these videos were eventually removed thanks to enforcement agencies, this added to an already tense moment as no government had yet been announced.

Initially looking like a PN-BN-GPS-GRS ensemble, the tide eventually shifted to PH having the advantage. Several incidents played an instrumental role in this. First, due to the anti-party hopping law passed in 2021, coupled with internal party declarations, all 30 UMNO MPs were obliged to move en bloc according to their leader’s decision. Second, the King met with leaders of PN and PH respectively (Muhyiddin Yassin and Anwar Ibrahim), requesting for a unity government to be formed between them. Rejected by the former, and accepted by the latter, there were allegations of PN being derhaka (treasonous). Third, BN and PH successfully inked a deal to form the Perak state government (only one of the three states holding their election simultaneously with the federal Parliament). And fourth, GPS stating they would leave the decision to the King (reversing its earlier endorsement of Muhyiddin).

Finally, despite BN vacillating between various opposing decisions, it finally issued a statement backing a “non-PN” unity government. On Thursday (five days after polling day), the King announced the appointment of Anwar Ibrahim as Prime Minister. The specific coalitions and exact numbers of Parliamentarians were not named; under the Federal Constitution, the King can appoint as Prime Minister a Parliamentarian who “in his judgment is likely to command the confidence of the majority of … that House” (Federal Constitution of Malaysia). No other conditions are stated, including the process through which the King is to come to his decision. 

Implications and What Lies Ahead

With the combined forces of PH (82), BN (30), GPS (23), GRS (6) and others (7), Prime Minister Anwar Ibrahim will govern with 148 seats, more than a two-thirds majority of the 221 seats in total. If this arrangement can indeed last the full five-year term, this will allow him to make the serious institutional reforms the country so desperately needs, which includes legislative and policy changes. Constitutional amendments require a two-third majority in Malaysia.

Among the first things needed are to ensure a built-in mechanism into the ‘coalition of coalitions’ arrangement, to bind all supporting coalitions together for a permanent period of time. This could be done by way of a Memorandum of Understanding (MOU), akin to what was previously signed by former Prime Minister Ismail Sabri and the then Opposition parties. Ideally, this should also include policy commitments and concessions given to parties, transparently spelled out and made publicly available.

Second, the Prime Minister will need to announce a Cabinet lineup within the next week that adequately represents the multiethnic and multireligious makeup of the country; but more realistically, being inclusive really means having to accommodate the various parties and coalitions making up what is being bandied about as a “unity government”. He has already since publicly committed to a leaner Cabinet, and to reducing its members’ salaries.

Finding a sweet spot between ideological splits between member parties and coalitions, however, will be a challenge moving forward – especially in the area of fiscal consolidation, greatly needed in a country that is facing upward pressures on its public debt to GDP ratio. On that note, the first major policy document – Budget 2023 – will have to be quickly worked on, as the previous government had only tabled, but not yet debated nor passed, it in Parliament. At the minimum, a provisional financial Bill needs to be passed to ensure civil servants’ salaries are paid out come January. A vote of confidence in Anwar as Prime Minister is also scheduled on the first day of Parliament on 19 December.

A Series of Elections in 2023

Looking ahead, election season is not quite over. The Padang Serai by-election takes place on 7 December soon, which will be Anwar’s first test. UMNO’s general assembly also in December, as well as its party election in early 2023 may also pose risks to the coalition’s stability if its President Zahid Hamidi – the chief negotiator with PH who supported cooperation – is removed from his position. Resolutions can be passed at the general assembly, and if the division chiefs are upset, they could pass one to force UMNO’s withdrawal of support.

Next, six state elections are due by between July and August 2023, three of which are currently ruled by PH (Selangor, Penang and Negeri Sembilan) and three others by PN (Kelantan, Terengganu and Kedah).

Results will depend on whether BN can consolidate itself and gain grassroots buy-in for their current co-operation with PH, since working with PH is unprecedented, coming after decades of demonizing particularly DAP as a pro-Chinese party. The new coalition could retain PH states but also gain ground in PN states, especially if cracks start to emerge within Bersatu unused to being in federal opposition. Alternately, PN may consolidate, using its existing north-eastern belt to its advantage and in fact increase its seat share in the PH mid-Peninsular belt by accusing BN-PH of having deceived voters after the GE15 outcome (campaigning against the corrupt BN that lost badly yet emerged winners to be a part of the government).

In short, there is a mountain of work ahead for all sides. There is only a sober sense of anticipation, at most relief, at the GE15 resolution. A constitutional crisis and political impasse was indeed averted, but the last few years of political instability and friction have taught Malaysians to temper their expectations.

The last week has seen a very strange but welcome phenomenon of public apologies from several parties, for any comments made in the past: from DAP to GPS in particular. It is time to heal the nation. Representing parties from varied ideologies and backgrounds, it will be fascinating to see how PH and BN will rise to the occasion to do just that.

Whatever the outcome, the results of GE15 point to one clear sign: PAS has strengthened. Previously with a base in the East Coast of the Peninsular, they now have a stronghold in the north and will work on increasing its influence southwards. For those believing in a more inclusive country, it is time to build back middle Malaysia. It is when the centre is weak that the fringes become more dominant, and the converse is true.

There are many challenges yet for Anwar. The previous PH administration must reflect on its failings during its 22-month stint in power, including various ministers who were unsuccessful in working alongside their public service administrators. It must also avoid the perception of being DAP (and hence Chinese)-dominant, and assure Malays their constitutional special position is not under threat.

If GE14 was about one issue – 1MDB and the fall of Najib Razak – GE15 has been a mixed bag of interconnected themes. Weak leadership, race, religion and a post-pandemic struggling economy, coupled by compromise and cooperation as begrudging solutions. Ultimately, there are no clear winners this time. A sizeable proportion of the population would have been dissatisfied no matter the outcome, having seen votes split multiple ways.

Nevertheless, with a 73.9% voter turnout, Malaysians still seem to believe in exercising their democratic right to choose their leaders every four to five years. And that is a good thing, as Malaysia continues its process towards democratic consolidation and learns to negotiate, hopefully along policy instead of patronage-based lines.

Tricia Yeoh is CEO of IDEAS (Institute for Democracy and Economic Affairs), an independent public policy think tank in Malaysia. She holds a PhD from the School of Politics, History and International Relations at the University of Nottingham Malaysia Campus. She writes on national socio-economic policy and has delivered various presentations at national and international platforms.

The views expressed by the author are not necessarily those of Heinrich Böll Stiftung.

Posted in Elections, Ethno-Religious Politics, General Politics, Public Administration, Reflections | Leave a comment

Malaysian Politics: What Just Happened and the Political Outlook

Posted on October 24, 2021 by Tricia

This article was first published by the Heinrich-Boell Stiftung Southeast Asia on its website here, on 20 October 2021.

It is never a dull day in Malaysian politics, but there seems to be a brief pause – for the time being. The last two years saw a series of continuous and rapid political developments, starting with the change in federal government in early 2020, alongside shifts in many state governments, and ending most recently with yet another government change in August 2021. Malaysia has therefore seen three federal governments over a period of two years, with tremendous upheaval in between. This piece unpacks the political developments over the last two years in its various phases, and ends with examining the country’s future political outlook.

The rise of the Perikatan Nasional government

The Pakatan Harapan (PH) government, only having come to power a short 20 months earlier in May 2018, fell when its Prime Minister Mahathir Mohamad resigned from his position. A series of developments in that critical week at the end of February 2020 led eventually to the installation of the country’s 8th Prime Minister, Muhyiddin Yassin, in March 2020.

Muhyiddin’s government, the at the time newly-formed coalition Perikatan Nasional (PN), comprised the parties that previously helmed federal government since the country’s independence: the United Malays’ National Organisation (UMNO), the Malaysian Chinese Alliance (MCA), and the Malaysian Indians’ Congress (MIC), all three of which were already component parties of the Barisan Nasional (BN).

The key difference was that the PN coalition would now also consist of parties that were previously in opposition to the BN: the Pan-Malaysian Islamic Party (PAS), well-known for its longstanding hold on the Malay-Muslim East Coast state Kelantan, as well as Muhyiddin’s own Parti Pribumi Bersatu Malaysia (PPBM).

Mahathir, alongside Muhyiddin and other leaders, had in 2017 left UMNO to form PPBM at the height of the infamous international 1MDB scandal. Then allies, Muhyiddin’s move to join forces with UMNO and PAS in 2020 saw the two leaders parting ways. Central to Mahathir’s decision not to align himself with UMNO in particular was that he was deeply opposed to a partnership with those who had pending court cases related to 1MDB. Mahathir, after all, had launched a highly public campaign against former Prime Minister Najib Abdul Razak in the previous 2018 national election, criticizing the case of grand corruption, unprecedented only in scale, but not practice – which, arguably, alongside other factors such as his teaming up with the PH coalition – led to the downfall of BN for the first time in the country’s history.

That BN was back in power, but under a different coalition name, struck a raw nerve for many who decried it as a “backdoor government”, having been voted out in the 14th General Election. Nevertheless, Malaysia’s system of parliamentary democracy premised on a constitutional monarchy means ultimately that the King has the legitimate right to appoint as Prime Minister the parliamentarian who, in his judgment, commands the majority of the Lower House. Obtaining statutory declarations and meeting parliamentarians individually was his chosen method that informed this decision. This was not unprecedented, the practice of which was accepted in the case of the Perak constitutional crisis of 2009, in which the then Pakatan Rakyat state government was toppled by the Barisan Nasional, on the basis of three state assemblypersons defecting by way of statutory declarations.

The precarious state of Muhyiddin Yassin’s government

Then Prime Minister Muhyiddin Yassin took over federal government at a most crucial time, precisely when the second wave of the COVID-19 pandemic was escalating rapidly. A regional evangelical Muslim tabligh had just been held, the source of a major cluster of infections in March 2020. His administration had to launch immediately into the business of managing the pandemic, issuing the first nationwide lockdown (the first Movement Control Order, or MCO, beginning in March 2020).

Each of the following pandemic waves in the country was successively worse, with exponentially increasing daily cases. The Sabah state election that took place in September 2020 led to a rapid wave of infections, peaking at 2,525 new daily cases by the end of the year. The perception that this came about as a result of politicians “bringing the virus back” from East to West Malaysia, coupled with an almost year-long series of poor public policy coordination resulting in confusion (instructions from the police often conflicted with that from ministers and standard operating procedures from ministries had to be revised multiple times), meant that there was already growing frustration with the Muhyiddin administration.

Muhyiddin’s government was already dangerously unstable. After all, when he took over, he had a razor-thin majority, which even then continued to be questioned throughout his leadership. In October, Muhyiddin requested but was denied a national Emergency; his reason was that the government needed to respond to the national COVID-19 crisis, although it was widely speculated that this was done on political grounds given his precarious position. Muhyiddin’s legitimacy had not yet been determined in Parliament, and calling for a general election in the middle of a pandemic was impractical. Of course, the Opposition could have, but failed, to use the tabling of the 2021 Budget in November 2020 as a way to unseat the PN coalition. Thus, 2020 ended with Muhyiddin’s government still intact, but barely.

Grasping for straws and the rapid decline

In January 2021, again Muhyiddin requested that an Emergency Proclamation be announced, which this time the King agreed to, and Parliament was suspended on account of the Emergency. This Emergency would last from 12 January till 1 August. A slate of Emergency Ordinances were issued, which gave the Prime Minister the unilateral ability to spend without seeking parliamentary approval, enabled the government to withdraw RM5 billion from a National Trust Fund for the first time on COVID-19 related spending (representing almost a third of the fund’s total deposits), and restrict freedom of speech under a specific “fake news” Ordinance. In reaction, civil society organisations protested against what was considered infringements of fundamental liberties.

Throughout this period, the relationship between PPBM and UMNO was already weakening, and by March, the latter announced it would not co-operate with PPBM in the next general election. One of its most vocal spokespersons was Azalina Othman, the Deputy Speaker, also decried parliamentary suspension publicly, which won over some public sentiment. The previously semi-authoritarian dominant party of UMNO, despite being back in government,  was no longer in the driver’s seat and in fact issued public statements against PPBM’s increasingly poor handling of the worsening COVID-19 crisis. The intra-coalition cracks were beginning to widen into rifts, and very visibly so.

As Malaysia entered its third nationwide lockdown in June, while pandemic cases escalated at an alarming rate, the nation saw the King – who by convention plays a ceremonial role and by constitution acts upon the advice of the Prime Minister – intervening into what descended into a constitutional crisis. On 9 June, the King met with leaders of the political parties, and on 16 June, he issued a statement calling for Parliament to reconvene as soon as possible to allow debate of the Emergency Ordinances and a COVID-19 recovery plan. Although Muhyiddin appointed UMNO parliamentarian as his deputy in early July, UMNO still withdrew support for the coalition and called for Muhyiddin’s resignation over pandemic mismanagement.

What followed was a very unusual and unprecedented public spat between the Palace and the federal government regarding the Emergency. On 26 July, the day of the special parliamentary session, the PN law minister announced that there was no need to debate the Ordinances, as they had already been revoked, which was then publicly rebuked by the Palace three days later, saying that the revocation was done without the King’s consent and is not in line with the country’s constitution and laws. Muhyiddin eventually agreed to consider debating the emergency laws in Parliament.

However, after maintaining that he held the majority of Parliament throughout his embattled tenure, Muhyiddin finally conceded on 13 August that he did not have a majority. Stunningly, he offered an attractive reform package to the Opposition in exchange for support in a confidence vote, and committed to elections taking place by July 2022.

Amongst the reforms promised were a two-term limit of Prime Ministership, lowering the voting age to 18, equal constituency funding for all members of parliament, an anti-hopping law, more parliamentary special select committees to involve all MPs with 50% opposition chairpersonship, pre-tabling consultation of bills and budgets with all MPs, and remuneration and facilities for the Parliamentary opposition leader on the rank of a senior minister (Wong, 2021). Enticing as it was, the deal was felt to be ‘too little, too late’ and was rejected unanimously by all PH parties. Muhyiddin stepped down as Prime Minister, and Ismail Sabri was installed as the country’s 9th Prime Minister on 21 August 2021.

The final (for now) shift of power – and new ‘understandings’

The most significant development of Ismail Sabri’s new premiership thus far has been his success at securing Malaysia’s first-ever confidence and supply agreement between the federal government and the Opposition, officially known as a ‘Memorandum of Understanding on Transformation and Political Stability’ (MoU). What is crucial to note throughout this series of political events is that no single party commands a strong majority of Parliament, which is what likely led to Ismail pushing for the MoU to be signed even after having ascended into power. Despite some glaring gaps (for instance, there are no commitments to a political financing law to address political corruption), there are many positive elements that address both COVID-19 management and institutional reform.

The MoU committed to, for example, the National Recovery Council including public and private sector experts as well as Opposition members, cash aid of RM10 billion, for the Opposition to contribute meaningfully to the 2022 Budget, limiting the Prime Minister’s term to 10 years. On institutional reforms, the MoU committed to hastening the implementation of lowering the voting age to 18, automatic voter registration, an anti-hopping law and having balanced representation between government and opposition MPs in Parliamentary Select Committees.

There has been some skepticism over whether or not the government would be serious in implementing these commitments, while others believe it is a step in the right direction. Most recently, the new memberships of Parliamentary Select Committees has been announced, which saw the inclusion of 50% of opposition MPs in each one. The Opposition leader has also been granted ministerial-level status and the necessary corresponding amenities.

Yet, after all the developments that led to the most recent change in government, the Cabinet composition of Muhyiddin’s and Ismail’s governments are not very different. Critics have observed that the move reeked more of a Cabinet reshuffle. For example, a few short weeks after the government change, Muhyiddin was appointed as National Recovery Council chairman, the position considered a minister-level appointment. In short, while UMNO holds the position of Prime Minister, the government is still very much influenced by PPBM.

The future of Malaysian politics

What accounts for the unusual composition of, and hence influence within, the current federal government is simply, as alluded to above, the doing away of dominant party politics in Malaysia. The term that best characterizes Malaysian politics over the last two years is ‘fragmentation’. A stalwart party as old and institutionalized as UMNO has suffered the consequences of deep factionalism, while many of its key leaders continue to be weighed down by their associations with 1MDB. UMNO Cabinet members, for example, do not hold key positions within the party itself.

The PN experiment seemed to be ideal partnership when it was formed. Indeed, in September 2020, a public poll by Merdeka Center for Opinion Research placed the coalition as the most popular of the available options. Painting itself as the grand Malay-Muslim coalition that stood for the rights of the majority Malay community in the country, it was meant to attract the support of constituents. Ultimately, however, electoral politics in Malaysia requires competition – and the three parties PPBM, UMNO and PAS would be contesting against each other in similar seats, hence the eventual breakdown between PPBM and UMNO. This leaves Malaysia, then, with the options of the BN consociational model and the multiracial PH model, the latter of which did not have the time it needed to test its potential success over at least one term.

What makes of the Opposition throughout this tumultuous period? There were instances in which Opposition Leader Anwar Ibrahim claimed to have the majority of parliamentary support – in September 2020, January 2021 and again in August 2021 – but at each turn he was not ultimately able to swing things in his favour. Sitting at the table to contribute to national plans is probably the best outcome for the Opposition at this time. For example, members of the PH coalition have been invited to provide their input at consultation meetings on Budget 2022, which will be tabled in Parliament at the end of October. There was also no public criticism of the recently announced 12th Malaysia Plan by the Opposition, which may be a sign of this new political realignment.

Of course, time will tell whether this partnership will remain. There will be increasing pressure on both the government and opposition to follow-up on concrete commitments in the MoU, including the tabling of an Anti-Hopping Bill, lowering the voting age to 18 and the 10-year Prime Ministerial limit by the first parliamentary sitting of 2022. And there is a clear deadline, since there is assurance that Parliament will not dissolve before 31 July 2022 – but what then, after this date? The decision to hold elections will also be determined by COVID-19: will there be yet another wave, with waning vaccination efficacy?

The 15th General Election must be held by May 2023. It can be called anytime sooner, but this is highly unlikely to happen, since there are tremendous incumbency advantages held by the sitting government. In the meantime, all political parties will be using this relatively peaceful period to oil their ground machinery, which is so imperative in the grassroots and community service typology of Malaysian politics. UMNO especially will make use of long-established and deeply-rooted networks to its benefit. Over the next two years, funds – it is impossible to determine what is legitimate since the country does not have a Political Financing Act – will be raised, circulated and distributed.

One thing is certain. The single-party dominant nature of Malaysian politics has changed for good. Unless rapid consolidation can take place, which is highly unlikely, no one party will have the ability to dominate, and parties will have to compete to be part of strong(er) coalitions. And one positive outcome is that such negotiations are now premised on better-quality policies, a step in the right direction of policy-driven politics. At such an acute time of economic and political uncertainty, this is surely something to be hopeful about.

__
Tricia Yeoh is CEO of IDEAS (Institute for Democracy and Economic Affairs), an independent public policy think tank in Malaysia. She is also a PhD candidate at the School of Politics, History and International Relations at the University of Nottingham Malaysia Campus. She writes on national socio-economic policy and has delivered various presentations at national and international platforms.

The views expressed by the author are not necessarily those of Heinrich Böll Stiftung.

Posted in Elections, Ethno-Religious Politics, General Politics, Reflections | Leave a comment

CPTPP as Malaysia’s opportunity for post-Covid growth

Posted on October 10, 2021 by Tricia

This article was published on The Malaysian Insight on 7 October 2021, here.

IN a webinar held by the Institute for Democracy and Economic Affairs (IDEAS) recently concerning a progress update on the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the lead negotiator from the Ministry of International Trade and Industry (Miti) shared that their target for tabling the CPTPP to the cabinet is end-2021. The CPTPP could be a major catalyst to rejuvenating global trade and economies following the Covid-19 pandemic. Unlike other free trade agreements (FTAs) that solely focus on tariffs, the CPTPP extends its coverage to non-tariff measures, movement between member countries and many other provisions that further ease trade between members.

In such global conditions where many countries are hesitant to open their borders due to discrepancies of Covid-19 SOP, the CPTPP with its blanket coverage of quality standards could be a mitigating measure. With its current 11 members equivalent to 13.5% of total global trade, the CPTPP also further integrates the markets of its members with reduced trade barriers.

Market integration is key, because integrated markets ease production for the global value chains (GVC) that are vital to the manufacturing sectors of  each member’s economy – a golden opportunity for recovery. IDEAS calculates that ratifying the CPTPP would boost our GDP by over RM14 billion (a 1% increase) and create 140,000 new jobs. Post-pandemic, this is a much-needed low-hanging fruit that Malaysia can immediately benefit from.

New market opportunities await 

In fact, as more countries join the CPTPP, the amount of markets, trade networks and supply chains will increase. What started out as a more exclusive club among select countries is rapidly becoming more inclusive as more have applied for accession. With the United Kingdom, China, South Korea and Taiwan formally applying for accession, the potential gains increase even further.

While Malaysia has welcomed China’s bid to join the CPTPP, stating that it is confident that bilateral trade and investment ties between the two would grow, only member countries are able to make decisions over new applicants. Not having ratified means Malaysia’s opinion does not carry much weight. Yet, member countries such as Australia have signalled that China must convince its members of its track record of complying with existing trade agreements, and hence fully implement its commitments under the CPTPP’s high standards.

As well, the benefits to Malaysia for Taiwan joining the fray are also very apparent given the existing GVC integration between both economies. Malaysia and Taiwan already share a strong trade and investment relationship – Taiwan is Malaysia’s fifth-largest trading partner –  and deep underlying industrial collaboration. Taiwan’s participation in the CPTPP would further liberalise trade in electronics, machinery and chemicals, in turn encouraging Malaysia’s efforts to upgrade and innovate in its Fourth Industrial Revolution (4IR) adoption. IDEAS’ research also found that Taiwan’s membership of the CPTPP would further increase Malaysia’s GDP by over RM2 billion and create 20,000 additional jobs. Taiwan has revised several domestic laws and regulations to meet the agreement’s high standards over the past five years, which would make accession smoother.

How SMEs can derive benefits from the agreement

For Malaysia, examining how the CPTPP would create value for manufacturing SMEs is crucial since manufacturing contributes to almost 20% of SME activity, registering a share of 34.6% of SME GDP, and representing 16.3% of SME total employment (Department of Statistics, 2019).

The CPTPP with its trade diversification measures has the potential to reach new markets, thereby extending export opportunities for local SMEs. With the standardised trade measures put in place, SMEs will be able to export at a higher rate without complications of certification or quality control. Given Malaysia’s existing strengths in manufacturing and electronics, this may bring about added potential. In addition, Malaysian SMEs would be enabled to source cost-effective raw materials, parts and components. 

A 2021 Center for Strategic and International Studies report shows that firms in existing CPTPP member countries have already experienced gains. After two years of the agreement being in force, 45% of medium and larger firms report that the CPTPP has helped them gain new customers, 39% have scored new sales and 36% have diversified into new markets. Even micro and small exporters have experienced similar gains, with 31% able to diversify markets and 29% reaching foreign customers. More impressively, small online sellers on e-commerce platforms such as Shopee and Lazada also reported gains in diversifying markets (51%) and reaching foreign customers (36%).

Finally, there is a dedicated SME chapter in the CPTPP, which is designed to support the growth and development of micro and other SMEs. For example, the Cooperation and Capacity Building chapter addresses SMEs’ specific needs, which would allow participating members to learn from each other. Other economies like Australia, New Zealand and even new applicants such as Taiwan and the UK that have transitioned rapidly into high-value economies, can provide valuable lessons for Malaysia. Taiwan’s SMEs at the same time have an inclination for overseas investment, which will benefit Malaysia’s overall FDI condition and improve the competitiveness of Malaysia’s SMEs.

Taken collectively, these reforms would strengthen our production capabilities as we work towards a more healthy and competitive environment. CPTPP or not, SMEs will require these reforms to prepare our domestic economy for the challenges that lie ahead. The ratification presents us a valuable opportunity to make these reforms happen now.

Potential pitfalls to avoid and mitigate for

That said, Malaysia must prepare for potential pitfalls as well. For instance, ratification might mean that although both imports and exports will be boosted, Malaysia is expected to experience a trade imbalance, resulting in more imports than exports, to the amount of US$2.4 billion per annum (Banga, 2019). Ultimately, if there are benefits to both consumers who can access a wider selection of goods, as well as to local exporters who can access more markets for export, this should not be considered a devastating loss.

Second, there may be some concern over the liberalisation of technology digitalisation and e-commerce, where for instance some provisions call on non-discriminatory treatment for digital products and a ban on data localisation. However, upon deeper analysis the CPTPP actually includes robust digital regulations, provides for deep market access and can help shape firms already using data in their operations. Firms operating within existing CPTPP member countries in fact report that the e-commerce provisions are “very or somewhat beneficial” for their businesses (Center for Strategic and International Studies, 2021).

Malaysia has in the past already successfully achieved significant carve-outs for matters of national interest, including Bumiputera procurement and on SOEs. On the balance of things, while there may be winners and losers as a result of ratification, what is more important is for Malaysian economic policymakers to plan well, and to place the agreement within a more broad-based and long-term economic policy for the nation.

This would send a strong signal to the international community that Malaysia is ready to be a competitive player in the region and the world, comply by international standards, and more importantly, prepared to provide a robust institutional framework and system to accommodate these intentions. As Malaysia plans for the structural economic changes ahead, it is clear we cannot isolate our economy from global reach. As long as transparency, good governance and strong communication is provided for by the government with industry players, Malaysia can once again be an open economy – and invest and reap the benefits of multilateralism with other member countries, as well as be open to welcoming new economies on board, especially those we already have strong economic ties with. – October 6, 2021.

* Tricia Yeoh is CEO of IDEAS.

Posted in Economics, Transparency and Good Governance | Leave a comment

PM Muhyiddin Yassin’s resignation signals UMNO’s back in driver’s seat

Posted on August 28, 2021 by Tricia

This was first published on Channel NewsAsia on 16 August 2021, here.

KUALA LUMPUR: Malaysian Prime Minister Muhyiddin Yassin submitted his resignation letter to the King on Aug 16 (Monday) which the latter accepted, but the political impasse has still not yet been resolved.

Though Muhyiddin has been appointed caretaker prime minister until a new prime minister is identified, the political crisis has only deepened.

And yet Muhyiddin felt he had no choice. His hand was forced when it became clear in the last few weeks that his already razor-thin majority was coming into sharper focus.

His government has come under fire for the country’s COVID-19 situation, which has seen infection numbers skyrocket to more than 20,000 cases and a few hundred deaths each day.

Last Friday (Aug 13), he offered a slew of political reforms to the opposition that curb the powers of the ruling coalition and office of the prime minister while strengthening diversity of representation in Parliament, in exchange for support for a confidence motion.

This last-minute gesture was rejected wholesale by Pakatan Harapan, alongside other opposition parties.

While the opposition would have opposed the deal regardless of what it contained, they knew they had the upper hand. These proposed reforms – including limiting the prime minister position to two terms – could only have been offered by a weak government.

Yet now, these reform promises are likely to be out the window. It’s a huge pity.

Now that the cards have been dealt, the next few weeks will be fraught with even more uncertainty.

UMNO’S RETURN TO POWER?

To start, there doesn’t seem to be consensus over who the prime minister will be.

At the time of writing, no one Member of Parliament clearly commands the majority of the Lower House of Parliament.

With political leaders distracted with ensuring their survival and earning a plum position in the new government, public policy could be left largely in the hands of the civil service.

There are also questions surrounding the leadership of the national immunisation programme and the national recovery plan, both crucial parts of the country’s COVID-19 management.

Malaysia is at a pivotal point in its COVID-19 battle and is clocking some of the highest cases the country has seen. It will be unfortunate if the turn of events results in a setback in the pace of Malaysia’s vaccination efforts.

Second, UMNO is set to return to power since it is the largest party in the ruling coalition, with 36 of the 222 parliamentary seats, compared to Bersatu, which has 31 according to the Malaysian Parliament’s official website. It holds most of the cards if it can maintain party unity.

The situation primarily benefits UMNO as it will likely be given key ministerial positions in any deal it makes with other parties to form a ruling coalition. UMNO’s grassroots networks will be strengthened with the eventual distribution of government funds through these prime positions.

However, UMNO is split several ways, meaning it is unclear which faction will have its say over the prime ministerial candidate.

Even if they coalesce around a single candidate, this may only represent a weak minority of support within the party and may not guarantee certainty. Let’s not forget Members of Parliament can defect to another party – leaving any government formed fragile, even shaky.

For now the frontrunners are Ismail Sabri and former deputy prime minister Tengku Razaleigh Hamzah.

UMNO president Zahid Hamidi seems to be in support of the latter, while former prime minister Najib Razak’s name has not surfaced as a potential candidate, possibly due to his ongoing 1MDB-related court cases.

For Malaysians, the return of UMNO is a signal that the country has regressed from its path of democratic consolidation. The very party voted out in the 14th General Election (GE) in 2018, rejected by voters, has not only returned to hold all the keys to forming just the government, but the choice of prime minister.

In Malaysia, the prime minister wields the most power and control over the government’s administration, with access to an extremely wide network of public resources.

If that scenario plays out, UMNO is in a stronger position to consolidate between now and the 15th GE. This includes the ability to entice MPs back from Bersatu, or even force a situation in which Bersatu would have to dissolve as a party altogether.

Being the party in government with the largest number of MPs would also restore its position of “big brother” within the coalition, determining who contests in which seat for the 15th GE, as well as eventually overshadow the other parties.

For all its years in BN, UMNO operated as the dominant party, while coalition parties like Malaysian Chinese Association and Malaysia Indian Congress were only ever given rudimentary decision-making powers, if at all.

If that happens, Malaysians could revert to a culture of political party patronage and corruption that has plagued the political system for far too long.

UMNO has been used to operating as the party synonymous with government, and hence has been able to make use of state institutions to gain political advantage without being too concerned over any conflict of interest.

UMNO as a dominant party until May 2018 has also never seriously embarked on any reforms despite the progressive wing of the party pushing for a rethinking. This is likely to be its position when it returns to power.

REFORMS MUST COME WITH CHANGE IN GOVERNMENT

 A last scenario is the formation of a unity government held together by a Confidence and Supply Agreement (CSA) – which bundles together bills and a motion of confidence that MPs vote on, in exchange for allocations of funds for use in their constituencies.

It was a huge pity when such a CSA was already part of the deal Muhyiddin had offered. The package would have essentially given the opposition a seat at the table through opportunities to co-lead pandemic and economic management and positions within Parliamentary Select Committees.

Other reforms that Muhyiddin had promised included equal constituency development funding to all political parties alike, the lowering of the voting age to 18 years, and laws to prevent MPs from defecting to another party – deals the opposition had previously pressed for.

Had Muhyiddin been given the chance to push these through in Parliament and carried them out as promised by July 2022, these would have strengthened the opposition’s position ahead of the 15th GE. There is no guarantee a new CSA to support a unity government can match the reforms Muhyiddin had put on the table.

Three weeks remain until the next parliamentary sitting is due to take place on Sep 7. Until then, all political parties including those within Perikatan Nasional and Pakatan Harapan will likely be negotiating an advantageous solution that works for them, at least until elections can be safely held.

Tricia Yeoh is CEO of the Institute for Democracy and Economic Affairs.

Posted in Elections, General Politics, Public Administration | Leave a comment

This political impasse in Malaysia is a calm before the storm

Posted on August 8, 2021 by Tricia

This article first appeared on Channel News Asia here, on 6 August 2021.

Should a motion of confidence in PM Muhyiddin Yassin succeed, the Opposition might still attempt a defeat of 2022 Budget, says Tricia Yeoh

Events over the last week have deepened Malaysia’s political crisis.

Prime Minister Muhyiddin Yassin’s already questionable majority was publicly challenged when an UMNO minister resigned and the party announced the withdrawal of 11 of its Members of Parliament.

This followed a special Parliamentary sitting, in which it was revealed the Cabinet wanted – but failed – to revoke the Emergency Ordinances, resulting in tense public exchanges between the prime minister and the king about whether royal consent was required, unprecedented in a constitutional monarchy like Malaysia.

Despite UMNO’s withdrawal from the Perikatan Nasional coalition, Muhyiddin’s government is still in place for several reasons.

First, Malaysia’s federal constitution does not recognise political parties, and stipulates that only the king shall appoint as prime minister a Member of the House of Representatives (lower house of Parliament) whom he believes commands the confidence of the majority in the Lower House.

Second, there are only three ways in which any one parliamentarian’s majority can be tested: Through a general election, a vote of confidence (or no confidence) in Parliament, or through evidence submitted directly to the king, for example statutory declarations affirmed by members of the Lower House, as was the case that paved the way for Muhyiddin’s assumption of the top office in February 2020.

THE OPPOSITION MUST DECIDE ON A LEADER FOR PM

The record surge of COVID-19 infections in Malaysia has given Muhyiddin an out. For public health reasons, he can fend off calls for a parliamentary motion of confidence earlier than his announced September session.

That at least 11 COVID-19 cases were reported in Parliament last week bolsters the public impression that lawmakers meeting when a pandemic is raging can be risky, despite the fact that all parliamentarians already have been vaccinated and hence parliamentary sessions can actually be held safely with the appropriate restrictions in place.

But this doesn’t render the Opposition – which now claims to hold the majority – inert. In fact, opposition MPs have three options at its disposal.

First, they can lobby the Agong, for he can advise the government for another special parliamentary sitting to be held sooner rather than later in September.

Second, if Parliament is not brought forward, the Opposition has one month to strategise and plan for the September sitting.

Doing well entails for the motion of confidence to be submitted to the Speaker Azhar Azizan and any necessary procedure according to parliamentary standing orders to be strictly adhered to so that the Speaker has no procedural grounds for rejection.

Apart from a motion of no confidence in PM Muhyiddin, like the one Opposition leader Anwar Ibrahim submitted in late July thrown out on the grounds it was “too early”, the Opposition must also ensure it also submits motion(s) of confidence in a Member of Parliament it is prepared to support as prime minister, whether Anwar Ibrahim or otherwise.

In such a scenario, it is possible that parliamentarians from UMNO will support Anwar. However, the Opposition must also be aware of potential parliamentarians from its side of the bench who may not necessarily vote in favour of the selected candidate.

Apart from Anwar, the other likely candidate is former Prime Minister Mahathir Mohamed. But he is unlikely to command the favour of PKR, given how dynamics between Anwar and Mahathir was what precisely ignited the political crisis of February 2020 in the first place.

If both motions are successful, the power vacuum would be filled and the position of prime minister and the government would be determined. But these steps will require detailed planning and careful coordination.

WOULD OPPOSITION VOTE DOWN THE 2022 BUDGET?

Third, if the Opposition is unsuccessful in unseating Muhyiddin Yassin as Prime Minister in September, there is still one remaining opportunity this calendar year, when the 2022 Budget must be tabled in October.

Attempts last October to defeat the 2021 Budget failed after the government launched a campaign to lobby for support, with the king also urging politicians from both sides of the aisle to unite behind the goal of safeguarding economic recovery and people’s well-being.

It will be very politically unpalatable for the Opposition to oppose the Budget when livelihoods and businesses are at stake, but this seems like the final opportunity this year for the Opposition to demonstrate that Muhyiddin no longer controls the majority of the House.

However, the Opposition could also vote down the Budget on the grounds that it disagrees with certain allocations, and if played well, could reverse this sentiment.

(Parliament is scheduled to sit between Oct 25 to Dec 16 to debate the Budget.)

The problem is the longer the political impasse drags on, the more time there is for parties and political leaders to entice, cajole and persuade individual parliamentarians over to their respective sides.

In the Sabah state election campaign, the Pakatan Harapan had claimed that as much as RM32 million (US$7.6 million) was offered to each state assemblyman to defect.

Settling the question about political leadership and bringing forward the vote of confidence as soon as possible would reduce the window for such dealings.

However, that decision lies solely in the hands of the prime minister. We also cannot rule out further backdoor dealings even after one side has won the prime minister’s office.

PLAYING THE INCUMBENCY CARD

Prime Minister Muhyiddin Yassin continues to have the upper hand at present, if only because of the power of incumbency. Notwithstanding any plans the Opposition might have, there are still steps that Muhyiddin can take to shore up his position.

If he plays his cards right, he could still steer things in his favour and even maintain a minority government if no other parliamentarian possesses the confidence of a majority.

The Opposition’s uphill climb to build a consensus on a PM candidate may even help Muhyiddin. The longer they take to coalesce around a single leader, the better for Muhyiddin.

After all, it’s really up to him and the Speaker of Parliament to allow a motion of confidence in Parliament.

Alternatively, Muhyiddin might also decide to tie the motion of confidence with the tabling of the 2022 Budget, upping the stakes and tying his fate to the popular desire for more government aid.

It would be extremely challenging, given the economic circumstances and the need for government to approve and distribute additional aid, for the Opposition to be seen blocking the Budget.

Muhyiddin could also engineer a confidence and supply agreement (CSA) with political parties like the Democratic Action Party (DAP) to win favour, taking a leaf from UMNO’s playbook.

In Perak, UMNO managed to secure sufficient support to oust the Bersatu Chief Minister in December 2020 in a no-confidence motion after providing constituency development funds to opposition state assemblypersons in exchange for support, and subsequently had one of its representatives assume the role.

Providing lucrative constituency development funds to opposition Members of Parliament can be attractive at this stage when politicians are increasingly depended upon to provide cash and food aid to hungry and pandemic-struck constituents.

Finally, Muhyiddin could capitalise on government institutions to discredit opposition leaders in the public eye, for example, putting pressure on the Malaysian Anti-Corruption Commission to fast-track investigations of corruption.

Already Syed Saddiq, founder and sole MUDA parliamentarian has been charged on Thursday (Aug 5) with two counts of corruption which he pled not guilty to. Opposition MPs who attempted to enter Parliament last Monday are also being investigated by the police under the Penal Code and Peaceful Assembly Act.

Unless the impasse is resolved quickly, Malaysia’s national outlook will be plagued by the consequences of political instability, as a pandemic continues to ravage the country.

A final note, however, is that whichever political coalition comes to power will likely function with a small majority. We have witnessed the end of dominant party politics and both Malaysian politicians and society will have to adapt and react likewise.

Tricia Yeoh is CEO of the Institute for Democracy and Economic Affairs.

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In the fight against COVID-19, what can states do?

Posted on July 20, 2021 by Tricia

This article first appeared on Malaysiakini here, on 14 July 2021.

As the country continues to battle Covid-19, several states have attempted to take matters into their own hands. For example, as of July 13, the Sabah and Sarawak state governments allowed dine-in at eateries, despite not being allowed to do so under the federal government’s National Recovery Plan (NRP).

Both states have moved from Phase 1 to Phase 2 of the NRP, whereas the NRP only permits dine-ins for states in Phase 3.

Separately, some have called on local governments in Selangor to use their powers to take stricter measures against factories. The Local Government Act 1976 gives power to local governments to issue operating licences to factories.

So local councils – which receive instructions from the state government – could withdraw licences for factories to operate, superseding the letters that some factories received from the Ministry of International Trade and Industry (Miti) allowing them to continue operating under the enhanced movement control order (MCO).

These incidents call into question the overlapping and conflicting powers of the federal and state governments in Malaysia, which have arisen multiple times since the start of the MCO issuances in March 2020.

Can the states contest nationally-set rules with regard to the MCOs and on what grounds can they do so? What can federal and state governments do better – separately and together – in addressing the public health and economic crises we currently face?

How can cooperative federalism, where both federal and state governments work together flexibly to achieve common goals, be put into action?

Contestation and conflict between federal, state and local governments

First, all MCOs in the country are currently issued under federal law, specifically under the Prevention and Control of Infectious Diseases Act 1988 (PCIDA).

Because a corresponding order defines the “infected area” to include all states and the three federal territories of Malaysia, one legal interpretation is therefore that all states must comply with the MCOs as gazetted by the Attorney-General’s Chambers.

Further, Article 81 of the Federal Constitution requires that states must “comply with federal law to not prejudice or impede the executive authority of the federal government”.

However, an alternative view (that I previously wrote about here) is that the Federal Constitution places public health, sanitation and prevention of infectious diseases within the Concurrent List in the Ninth Schedule, which means that both federal and state governments must jointly decide on these matters.

And since all laws need to adhere to the supremacy of the Constitution, even the PCIDA and all regulations related to it should have had joint state approval. That the states were not meaningfully consulted on the regulation of these MCOs (whether full MCO, enhanced MCO, recovery MCO or otherwise) could be a matter for future debate.

Secondly, what has been obscured by the thicket of government jargon is that the NRP is not grounded upon any law or federal Act. It is just a plan – for now.

Because of this – and precisely because federal and state governments constitutionally have joint jurisdiction over public health, sanitation and prevention of infectious diseases, there is a strong argument to be made that state governments can interpret the finer details of what is entailed within the NRP, either jointly with or separately from the federal government.

Sabah’s Deputy Chief Minister Jeffrey Kitingan has also urged for Sabah to enact state legislation over public health, to avoid confusion over the matter.

Third, it is certainly important to consider the role played by local governments. The Local Government Act 1976 grants local governments a wide array of powers, including the ability to preserve public health and prevent the outbreak and spread of diseases, to regulate and enforce quarantine and the disinfection of persons and of places and things.

Equally relevant is their authority to regulate business operating hours and to set conditions for issuing licences and permits.

While it is true that state governments can direct local councils to withdraw or suspend operating licences from factories as urged by some, this however may not be an ideal move as withdrawals are of a permanent nature and may cause unnecessary bureaucratic hurdles in re-issuing them again.

This would also send a negative signal to investors already jittery about the worsening business conditions in the country, given the prolonged political instability.

Strengthening shared rule and self-rule

What, then, can state and local governments do in the fight against Covid-19? In considering available options, one must consider how to strike that often delicate balance between shared rule and self-rule, where shared rule refers to how subnational units like states can participate in decisions that concern the entire nation, and self-rule refers to the extent to which states can decide, finance and implement their own policies.

First, the federal government must incorporate state governments meaningfully into the decision-making process. What Finance Minister Tengku Zafrul Abdul Aziz as the Coordinating Minister for the NRP must now do – if not already being done – is to consult directly with all heads of state governments, regardless of their political affiliation, on a daily or weekly basis.

However, some questions remain. Will this replicate or replace the role currently played by the National Security Council? Will NRP updates be provided publicly and transparently? Instead of duplicate federal bodies that make top-down decisions, a Federal-State Pandemic Council should be set up immediately that makes states equal partners with the federal government.

Regardless of institutional set-ups, a free flow of data must be exchanged regularly between federal and state governments with regard to:

  • Sources of infection (raw data, as well as analysed data on clusters, positivity rates and more)
  • Testing (location, number and types of tests being carried out)
  • Vaccination (location, number and types of vaccinations being given)

This includes a regular exchange of data from respective state government mobile applications, such as Selangor’s SELangkah.

Second, as called upon by many, the federal government must decentralise the vaccination process more widely. Again, it is a good thing that states like Selangor have begun trying to procure their own vaccines independent of the federal government’s National Covid-19 Immunisation Programme.

States can independently procure vaccines if they have the resources to do so. State governments (and through private initiatives like Pikas) should also be allowed to embark on massive vaccination education programmes, including public relations campaigns to discourage vaccine hesitancy, which is still a problem, especially in the more rural constituencies.

Third, the federal government should consider devolving some of the decision-making over lockdowns and loosening up of lockdowns to state governments. State and local governments are in closer proximity to the affected areas and are thus in better positions to make informed decisions over potential highly infectious areas.

This is premised on subsidiarity, which is the principle that a central authority should have a subsidiary function and perform only those tasks that cannot be performed at a more local level. Successful pandemic management in some states may further incentivise other states to mimic best practices.

Conversely, state and local governments should also be empowered to decide over loosening strict lockdowns, especially in green zones where small businesses should be allowed to operate.

Small traders and micro, small and medium enterprises (MSMEs) in low-risk districts should not have their livelihoods adversely affected if it is safe for them to operate.

Instead of painting the entire state as high-risk, more detailed and systematic analysis over which districts or regions within states are safe should be conducted.

Strict compliance of SOPs (for instance, not crossing between districts) can be monitored, but within those green bubbles – and the geographic lines can be jointly determined between local and state governments – activities should be allowed to operate.

Schools within these green bubbles should therefore also be allowed to reopen. On this note, all teachers and educators should be given priority in the national vaccination programme.

Emergency as a wild card – and long-term planning

On a final note, there may be questions arising as to the impact of the emergency on state rights. No regulation or plan was actually implemented by the federal government with regard to combatting Covid-19 itself.

But because the current emergency extends throughout the country, the federal government could therefore dictate state government behaviour and step into state public policy matters, which includes how state governments manage the NRP.

Hence, if the federal government wants to, it could legally step in to take action against the Sabah and Sarawak state governments under the guise of the emergency.

However, this will be greatly unpopular, especially since the emergency is slated to end in less than a month from now, on Aug 1.There is a possibility that the present federal government will request for the emergency to be extended, but this would be a foolish move by all measures.

Finally, over the longer term, there should be a consideration over moving Medicine and Health from the Federal List in the Constitution to the Concurrent List.

As of July 2021, public hospitals in the Klang Valley are critically short of medical equipment (which private initiatives such as this have resorted to raising funds for).

A state like Selangor which has adequate financial resources to support such distressed hospitals would be able to contribute funds, which it currently is not permitted to.

Malaysia needs to prepare for future pandemics or medical emergencies. Emerging from Covid-19, the public healthcare system will require innovative and sustainable financing.

The Covid-19 pandemic continues to pose important questions as to the dynamics of the relationship between the federal and state governments in Malaysia. Developments over the last one and a half years reveal that it is time for a thorough review to be done over the Ninth Schedule.

In our highly administratively centralised government, steps can be taken in the immediate future to consider how some – not all – public policy or health policy areas can be decentralised to state and local governments for increased efficiency, effectiveness, responsiveness and equity.

While national standards and norms can be set by the centre, state and local governments should be empowered with the capacity, skills and knowledge to implement these regulations. A national crisis is a good time to begin the decentralisation planning process.

TRICIA YEOH is the CEO of the Institute for Democracy and Economic Affairs (Ideas). She is also a PhD candidate at the University of Nottingham Malaysia.

Posted in Federalism, Health, Public Administration | Leave a comment

Will Pakatan Harapan’s Hold on Selangor Continue?

Posted on January 22, 2021 by Tricia

This was published as a Trends by the ISEAS-Yusof Ishak Institute in January 2021, and the full publication can be accessed here.

Executive Summary

• When the Pakatan Harapan (PH) federal government fell in
February 2020, PH also lost control over the states of Johor,
Malacca, Perak and Kedah. In Sabah, PH-aligned Warisan was
replaced by the PN-aligned United Alliance of Sabah.


• PH maintained its hold on three states—Selangor, Penang and
Negeri Sembilan. Selangor’s position is of unique interest, given the
largest share of PH assemblypersons comprising members from the
People’s Justice Party (Parti Keadilan Rakyat, or PKR), the party
which has faced significant elite splits in 2020.


• The present stability of PH’s survival in Selangor can be accounted
for by the sheer majority it possesses within the legislative
assembly, comprising forty-one out of fifty-six state seats. Unless a
significant share of assemblypersons were to defect, the change in
state government would be highly unlikely.


• PH built a strong base in Selangor during its time in power over
more than a decade, securing performative legitimacy and rooting
itself strongly within the community.


• PH has benefited from the highly urbanized and educated
demographic profile of Selangor. However, the economic fallout
from the COVID-19 pandemic has likely changed the landscape,
which may in turn affect how constituents will now respond to
goodies offered by the federal government.


• Although PH in Selangor has survived the national storm, its future
performance remains uncertain. This year’s political realignment,
public opinion towards PN and the 2018 redelineation exercise
where the number of Malay-majority seats has grown may hamper
PH’s ability to maintain its strong margin.

Posted in Federalism, General Politics, Selangor | Leave a comment

State Governments and the 2021 Emergency: Unfettered Powers at the Centre

Posted on January 22, 2021 by Tricia

This commentary was first published on Fulcrum, ISEAS-Yusof Ishak Institute’s commentary website, here on 22 January 2021.

On 12 January, the Agong and the Prime Minister separately announced that the former had approved an Emergency Declaration for Malaysia that took effect as of 11 January. The justification for this decision was the seriousness of the Covid-19 situation, which in fact was already being dealt with by the Movement Control Order 2.0 to begin on 13 January. The Emergency has been considered by several analysts as unnecessary given the existing MCO.

That said, what are the implications of the Emergency on the 13 state governments throughout the country? What has been rigorously discussed is that Parliament is suspended and no general election will take place. On that note, state legislatures are also suspended and no state election will be allowed throughout this period. The most immediate implication of this is that the Sarawak state election that is due to be held by 17 August this year may have to be postponed – if the Emergency is prolonged beyond the scheduled end date of 1 August.

According to Emergency Ordinance 2021, the state governments and their executive councils or cabinets are still in power. Their legislative assemblypersons (Ahli Dewan Undangan Negeri, or ADUNs) are also supposed to continue carrying out their duties. On the surface of things, it would seem that the status quo remains since all state governments will carry on as per usual, exercising both their executive and legislative functions.  

In reality, there are many questions that arise.

First, without the legislators actually being permitted to conduct legislative assembly sittings, it will be impossible for ADUNs – as their federal counterparts in Parliament – to perform their “legislative functions” like scrutinise budgetary expenditure, amend or legislate new laws, or provide oversight over any executive decisions being made. Motions of confidence – or no confidence – will also not be voted upon during this period.

While it may be feasible for select committees to meet online, there has not been any precedent of the entire legislative assembly sitting taking place online. And even if permitted, not all legislative assemblies especially in the more rural parts of Malaysia may have the necessary internet connections and bandwidth to do so. So how will state assemblypersons actually exercise their legislative functions?

Second, can the federal government intervene into state affairs? The Federal Constitution says it can. Article 150(4) gives the federal government overwhelming powers to intervene into state matters during an Emergency. Despite the legitimacy of state governments, the federal government can legally step in to direct state governments to act in ways they dictate. The only exception to this would be for matters under Islamic laws, Malay customs, native laws or customs in Sabah and Sarawak, religion, citizenship or language. This is in line with Article 150(6A).

The federal government could very well step into state public policy matters, instructing state governments to transfer state land to the federal government, take over control of local councils, replace local councillors with their own appointees, and more. The Ninth Schedule of the Federal Constitution spells out what state governments control, the list of which includes land, local government, and agriculture and forestry. Regardless of whether this will actually happen, the fact is the federal government can legitimately step in to take control, and that’s alarming.

Finally, the Emergency also paves the way for political intervention of the centre in the case of inter-party or intra-coalition leadership disputes. In the past, the federal government did in fact declare states of emergency in several states when there were political disputes, and these resulted in changes in state governments: in Sarawak in 1966, and in Kelantan in 1977. The question is whether the current federal government would make use of the present Emergency to do the same within states if there were uncertainties surrounding the confidence of a certain leader’s majority, and hence command of the assembly.

While there are serious consequences of the Emergency at the national level, the effects at the state level are equally as chilling if followed through. In short, the Emergency has provided the Executive arm of the federal government unfettered powers, giving it far-reaching abilities to intervene into the very intricate functioning of all 13 state governments throughout the country if it so wished. Some have expressed frustration at having included Sarawak into the national emergency too; Sarawak had only recorded less than 2,000 cases when the emergency was announced. Indeed, these sentiments are fair.

It remains to be seen when the Emergency will be called off, and it would be wise at that point in time to examine what – if any – consequences would have been on the state governments then. Would state legislators really be permitted to perform their legislative functions as set out by the Emergency Ordinance? Would the federal government have intervened in any public policy matter under the states’ constitutional control? Would they have interfered politically in any state-level leadership disputes that arose? The next few months will provide a hard look into how the federal government might use its Emergency powers to intervene in state governments’ functions.

Posted in Federalism, General Politics | Leave a comment