January 20, 2021
thoughts on
National Reset

Where to Next for Malaysia’s Social Cohesion Model?

January 20, 2021
Organized by:
UM Asia-Europe Institute & ANU Malaysia Institute Webinar
Featured on:
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I am of the view that Malaysia needs a system reset or nationhood recalibration. I just don’t think you can deal with social cohesion on its own, it is too intertwined with our politics and economics.

Thank you to ANU Malaysia Institute and UM Asia-Europe Institute for having me on this panel and share my perspectives on Malaysia’s Special Cohesion Model. It is a privilege to be on this panel with Prof Terence and Prof Johan and also with Dr Amrita who I know has been following some of my work from Down Under.  

I am the only non-academic on this panel; my insights will come from over 30 years on a front row seat observing the workings between the government and the private sector: I had a 29 year career at CIMB, one of the largest GLC banks; served 12 years on the EPF Investment panel and 4 years on the Khazanah board. In 2019 I was a Visiting Fellow at the Blavatnik School of Government, Oxford University where I focused on Nationhood Recalibration, looking at preconditions for systemic reforms. It was an opportune time to reflect on what I saw and learnt about Malaysian politics, economy and business. 

The recent turn into this new year was especially poignant because we passed 2020; I vividly remember when Mahathir launched Vision 2020 back in 1991 and the sense of bravado it fuelled at the time when our economy was growing at 8-10%, and apparently only 7% was needed to get us to developed nation GDP per capita by 2020. Vision 2020 wasn’t just about the economy, it also envisioned a “united” Malaysian nation – or a bangsa Malaysia - by then. We achieved neither and sadly our politics has become so dysfunctional it is hard to imagine how we turn things around.

To get straight to my main point: I am of the view that Malaysia needs a system reset or nationhood recalibration. I just don’t think you can deal with social cohesion on its own, it is too intertwined with our politics and economics. Even the most harmless reform idea is quickly racialised and sometimes translated in religious and economic terms. It then becomes a political challenge and it has been a long time since any leader had enough political capital to make substantive moves on sensitive matters. So rather than focus on harmony laws and the like I think we need to get back to the table and debate, renegotiate and reset how democracy works – how we chose our leaders and how our institutions function – and the social contract that conditions our attitudes to most things. 

History has shown that our leaders, even those with the best of intentions, get waylaid by what I refer to as the three-headed monster; money politics, identity politics and concentration of power. The best of intentions, reforms and plans – Vision 2020, Multimedia Super Corridor (MSC), Islam Hadhari, New Economic Model (NEM), 1Malaysia - get munched up by this monster. To illustrate why I say that, I will briefly reflect on the system as I saw it.

Malaysia inherited the Westminster system simply because we were a colony; there was little debate about its suitability to our own circumstances; namely our plural society, our stage of development and our history and culture. The system failed at its first real hurdle in our GE3 in 1969. We then had about 21 months of Emergency Rule during which the system was recalibrated with the introduction of Rukun Negara or National Principles, sedition laws against raising sensitive or inflammatory issues in public, the New Economic Policy to eradicate poverty and rebalance wealth between races and a grand coalition government or Barisan Nasional. 

The authors of the 1970 system however acknowledged that they were innovating out of desperation – we were beating each other up - and that the system needed to be reviewed from time to time, yet after 50 years it still remains substantially intact. In the case of the NEP, there was even a specific time frame of 20-years. 

Whereas NEP was initially all about mobilising the public sector to accelerate growth and facilitate redistribution, in the early 1980’s the introduction of the “Malaysia Inc” policy saw a shift in emphasis to the private sector, then amplified by the privatisation policy. Ironically Malaysia Inc actually increased the influence on the government in the economy with decisions on sale of government assets and public-private partnerships adding to government companies, licensing, regulation and procurement. The NEP was then used to justify the opacity in decision-making from privatisations to government contracts to identifying businessmen to be backed by the government and state banks. To be clear, it wasn’t just bumiputra businessmen that was built this way; the government also helped non-bumiputra ones. 

The reason why the system had to be opaque was to enable politics to take precedence. In the mid 1980’s there were intense contests for UMNO party posts and little to prevent candidates from using cash or contracts to win support. I saw, at first-hand, IPO share allocations for bumiputras diverted from savings institutions for the rakyat, to individuals for political support. I saw at first hand directed lending by banks to businessmen with very little idea what they were doing. 

In a further twist, I saw businessmen who were capable to be successful on their own find that once you get to a certain size and prominence the monster comes to find you. If they don’t feed the monster then it comes to bite you - contracts blocked, licenses not renewed and tenders uninvited. The cancer of money politics took on another dimension when BN and UMNO’s electoral support began to wane in the late 2000’s. Huge amounts of money were mobilised to support national campaigns for the parties themselves. This of course was the genesis of the 1MDB debacle.

That 1MDB happened over a long period and to such extent was symptomatic of the concentration of power in the PM’s office which can be traced back to the mid-1980’s when the powers of the judiciary, civil service and Rulers were systematically curtailed in favour of a “the Dr knows best” system. Indeed, Tan Sri Sheriff Kassim, the former Secretary General of the MOF, remembers Tun Dr Mahathir telling civil servants at the time “Malaysia cannot afford the luxury of democracy and the time-consuming bureaucratic procedures of the civil servants”. 

It may have moved things faster but the highly centralised system generally led to poor decision-making. It rarely came down to analysis, debate and merit. If you had the PM’s ears, the path would just open up for you. I would argue that these led directly to companies or conglomerates rising on political access as opposed to business acumen, and most were brought down to earth by the Asian Financial Crisis. Many of their businesses were then nationalised into GLC’s which of course also meant that there remained no change in their presence in the nexus of politics and business: Ultimate decision-making was still with the UMNO President and PM and, of course, his courtiers. As in any court, there were always Rasputin-like figures, advising and skimming for themselves: Jho Low was just the most infamous of them. Incidentally, I would say that the PH government was also damaged by ‘Rasputins’; but that is a story for another day. 

When PH came to power in 2018 I, like many Malaysians, was optimistic that we were on the path to major reforms, not least since that was what their manifesto said. Instead, their failure to neither reform much or stay in power long reaffirmed how the system is in a log jam. When in power, PH had to compete against the racial-religious outbidding by the UMNO-PAS alliance and couldn’t even deliver relatively benign reforms like signing ICERD or endorse UEC. On its part, DAP struggled to hold on to its support base as in coalition it had to moderate its position of communal issues. 

It will take years if not lifetimes to wean Malaysians away from identity as the main driver of political allegiance. Political scientists will be familiar with how this continues to undermine the essence of how democracy is meant to deliver for the national interest. While we can be encouraged by the rise in multi-racial parties, what is more urgent is to move from the current electoral system that incentivises racial-religious outbidding. We need to move from our First Past the Post and rural constituency biased electoral system to a more proportional system or at least one with a preponderance of mixed constituencies. But again, such a change would be impossible to effect on its own. It would immediately be couched as an attack on the position of the Malays. It needs to form part of a holistic new deal.

In short, Malaysia’s system is like a badly written play, no matter how good the chosen actors are, the play will still be bad. What we need to change is the script itself.

In partnership with some academics and civil society I have embarked on a 6 -month study to gather the view of Malaysians across various spectrums of society directly and digitally at mybetterfuture.org. Our aim is to describe what a better Malaysia could look like and convince people that there is a better system and we should go through the painful process of system reset. 

Malaysia is fortunate to have gone through such a process before, back in 1970  we had a NCC, comprising 67 people that represented a cross section of society from politicians to businessmen to trade unions to religious groups and so on. In the safety of a deliberative platform they rigorously debated what needed to be done to bring the country back from the abyss of racial strife; which led to the reforms I mentioned earlier.

By coincidence we gather today just as the country is once again under a state of emergency, with parliament and democracy suspended. Whether or not this was a necessary step, political dysfunction had reached a new low with the government on the verge of being brought down at a time when the conventional recourse of a GE would have been a deadly proposition. Whether or not it was a necessary step, it is an opportune time to system reset. 

Interestingly the deliberative platform as an alternative to parliament of elected representatives is gaining significant currency around the world. We can think of James Fishkin’s America in one room, Belgium’s Ostelbelgian model and of course the Irish Citizen’s Assembly that debated the hugely controversial issue of legalising abortion. It is clear to me that there is room to innovate the basic democratic structures that we have become accustomed to, where we elected one person to represent us on every issue for 4 to 5 years. And we find that most of the time they don’t speak for us but in accordance with the instruction of the party whip and always with a view to the timing of the next election. How can that be a good platform to discuss long term structural issues, to negotiate a new deal of the scale and complexity that Malaysia now needs? 

What would be the key foundations of a Better Malaysia? At the risk of pre-empting the results of the study I would suggest: 

  • New institutional arrangements to have an effective referee to political competition
  • Clear separation of business, government and politics
  • Electoral reforms 
  • New social contracts between communities and between the government and the governed
  • Greater clarity in the role of Islam and the state
  • Communal integration to include defining and legislating against racism and prejudice

The immediate goal of our project is just to garner support for the setting up of another NCC-like deliberative platform. NCCII would need to debate and decide on many critical principles and reforms that will the define what would truly be New Malaysia.

To conclude: We need to be brutally honest and acknowledge that the system no longer works. Unless we take the bold step to overhaul it, I fear that we will continue to plod along and remain in this state of subpar economic growth, dysfunctional politics and divided communities. The state of the nation demands that we strive for discontinuity and reset. If the conventional wisdom is that national resets need a proper crisis like the Asian Financial Crisis in Indonesia or end of apartheid in South Africa, Malaysia is already in a Covid-crisis and State of Emergency. 

Thank you