Over the past few months the Malaysian Prime Minister, Najib Razak, has been embroiled in a scandal over allegedly diverting funds from the state development fund 1MBD, to his personal account. But on January 26th, Najib was cleared of these allegations, as news emerged that the bank transfer actually came from the Saudi royal family.
Amidst an international backdrop of fear based upon the ever-growing threat of fundamentalist terrorism, Malaysia has had its own fair share of security threats. Indeed, according to a source close to the royal family, the money transferred to Najib’s account by the Saudis was a donation meant to help him combat the rising threat of the Muslim Brotherhood, which made up a part of the Pakatan Rakyat opposition coalition, in the 2013 election.
Throughout 2015, the corruption scandal has weighed heavy on Malaysia’s outlook, bringing down investor confidence and leading to significant losses in the value of the ringgit. However, with charges out of the way, economic pundits hope that the country will quickly rebound. The investigation came to a close not a moment too soon, as a series of political, economic and security factors makes 2016 a challenging year.
Even if the Brotherhood was defeated in 2013, this has not stopped similar organizations from crawling out of the woodwork. Most formidable of these is ISIS, which has recently issued threats against the Malaysian government and extended the call to jihad to the country’s Muslim populace. There have been whispers and rumors, in the press especially, that Malaysia is midway through a process of Islamization, but much of that suspicion is directly a result of Malaysia’s pre-emptive approach to dealing with terrorism. In light of growing threats, a controversial security law championed by Najib was successfully put to use and seven arrests of suspected ISIS terrorists were carried out in the week before the threats were even made.
Security issues aside, Najib’s greatest concerns over the coming year most probably relate to the domestic economy. Although a plan, dubbed the “Vision 2020”, is in place to help Malaysia achieve high-income status by the year 2020, the outlook for 2016 remains uncertain for the region as a whole, chiefly due to slowing economic growth in China.
For Malaysia in particular, being the second-largest oil and natural gas producer in Southeast Asia, the recent slump in global oil prices will certainly have its impact. Indeed, when the original 2016 budget was released in October last year, crude oil stood at US$48 per barrel as opposed to the current trough of US$30, a cruel blow for an oil producing state that has already, largely due to political scandals and a loud opposition, found itself struggling with a loss of investor confidence. A revised budget has just been released which aims to accommodate this short term change of fortunes, attempting to optimize operational expenditure to maintain both long term strategy as well as the welfare of the nation’s populace. Indeed, under Najib’s leadership, Malaysia has achieved one of the lowest poverty rates in the world, a remarkable feat. Hence, despite the fiscal restraints, part of the revised budget is focused upon providing skills training for the unemployed and a free rice scheme for the seriously impoverished.
If domestic economics are an on-going concern, then equally so is the impact of developments on the global economic arena. It is, after all, by being party to organizations such as ASEAN and the Trans Pacific Partnership (TPP), that Najib’s government will be able to to achieve its Vision 2020 aims. For instance, it is predicted that the TPP alone will increase Malaysia’s GDP by 8%. Similarly, Malaysia’s role as a leading actor in the formation of the recently established ASEAN Economic Community (AEC) will be likely to reap significant rewards. All of this has only been possible, however, due to the course that Najib’s government has steered in order to allow it to cast the net a little wider than China and other traditional markets. In the upcoming summit in the US, where Malaysia will stand alongside the host as a twin lighthouse of leadership on both the TPP and AEC, Najib will be perfectly placed to steer his nation to safer waters and provide the kind of security he has so doggedly aimed for.
Currently, Malaysia commands a unique position of importance in the political make up of Southeast Asia. A year or so ago, it became one of a number of nations that was vying for regional dominance, one of a number that seemed to have left the respective ball-and-chains of nationalism and regionalism firmly in the past. In that time, however, the competition has steadily dropped out of the running. Thailand, for instance, was turned from a famously progressive economy into a police state almost overnight under the auspices of its military old guard, and Vietnam’s communist equivalent performed effortlessly during the recent national congress in removing progressive PM, Nguyen Tan Dung, from power. Coups do not always occur at the end of a barrel, as in the latter example and as in Malaysia’s case. The difference is, that against all the historical odds, Najib has managed to weather the political storm, and is now well placed to see his country taking the initiative in ASEAN.
*Alicia Conway is currently undertaking a Master’s in Economics and Management in London