MALAYSIA UNDER PRIME MINISTER ABDULLAH AHMAD BADAWI

ABDULLAH AHMAD BADAWI

Tun Abdullah bin Haji Ahmad Badawi served as Prime Minister of Malaysia from 2003 to 2009. Malaysia’s 5th prime minister since it became independent in 1957, he was also the president of the United Malays National Organisation (UMNO), the largest political party in Malaysia, and led the governing Barisan Nasional parliamentary coalition. He is informally known as Pak Lah, 'Pak' meaning 'Uncle' while 'Lah' is taken from his name 'Abdullah'. He also called Father of Human Capital Development (Bapa Pembangunan Modal Insan).

In October 2003, after 22 tumultuous years in power, Dr Mahathir Mohamad retired and handed power to his anointed successor, Abdullah, who went on to convincingly win a general election in March 2004. After this win, Abdullah was increasingly been criticised by Mahathir for degrading the freedom of the press and for scrapping projects such as a new bridge between Malaysia and Singapore that would have replaced the existing causeway.

Abdullah has been a politician most of his life, Known as “Mr. Clean” and “Mr. Nice-guy,” he served as foreign minister and education minister before being named as deputy prime minister in 1998 when Anwar Ibraham was sacked. He was widely respected among the middle class and regarded as consensus builder. He is calm and affable where Mahathir was brash and abrasive.

Sean Yoong of Associated Press wrote: “Abdullah is considered milder than the blunt-spoken Mahathir, an advocate of the developing and Islamic worlds and known for his fiery criticism of globalization and U.S. policy in the Middle East. Dubbed the "Mr. Nice Guy" of Malaysian politics, Abdullah, who has a degree in Islamic studies and once worked in the civil service, waded into politics after the death of his father, a pioneer member of the ruling party. He entered Parliament in 1978, holding the education, defense and foreign affairs portfolios before becoming Mahathir's deputy. [Source: Sean Yoong, Associated Press, November 2, 2003]

Life and Family of Abdullah Ahmad Badawi

Abdullah born in November 1939 is from Bayan Lepas, Penang. The son and grandson of religious teachers, he attended Bukit Mertajam High School and studied at MBS (Methodist Boy's School) Penang for his 6th form. He graduated with a Bachelor of Arts degree in Islamic Studies from the University of Malaya in 1964. After graduating from university he joined the Malaysian Administrative and Diplomatic Corps (the formal term for the civil service). He served as Director of Youth at the Ministry of Youth and Sport as well as secretary of the National Operations Council (MAGERAN).

Badawi's paternal grandfather, Syeikh Abdullah Badawi Fahim, was of Arab descent. Syeikh Abdullah was a well-respected religious leader and nationalist, was one of the founding members of Hizbul Muslimin, later known as PAS. After independence, Syeikh Abdullah became the first mufti of Penang after Independence. His father, Ahmad Badawi, was a prominent religious figure and UMNO member. His maternal grandfather, Ha Su-chiang was a Utsul Muslim who came from Sanya in Hainan. [Source: Wikipedia]

Abdullah’s first wife didn’t wear a headscarf and was the leader of “Sisters in Islam,” which encourages monogamy as a Muslim ideal. He was 63 when he took office in 2003. After his first wife died Abdullah married again while he was serving as prime minister. Reuters reported: Malaysia’s prime minister tied the knot with the manager of his official residence, marrying for a second time after his first wife died from breast cancer, the official Bernama news agency reported. Abdullah Ahmad Badawi, 67, and Jeanne Abdullah, 53, were married at the premier’s official residence in Putrajaya, the nation’s administrative capital, the report said quoting a family statement. The wedding was attended by close relatives. There was no press coverage at the family’s request. “The prime minister and his wife would like to thank the people for their good wishes for a happy marriage,” the statement said. Shortly after the ceremony, the couple, in beige-coloured traditional Malay dress, visited the grave of Abdullah’s first wife in Putrajaya. A prime ministerial aide said the couple’s first trip abroad would be to Brunei to attend the wedding of the Brunei sultan’s daughter. The prime minister was married to Endon Mahmood, a former colleague in the Malaysian civil service, for 40 years before she died on October 20, 2005, after a lengthy battle with cancer. [Source: Reuters, June 10, 2007]

Political Career of Abdullah Ahmad Badawi

Abdullah won a seat in parliament in 1978 in Mahathir’s UMNO party in the constituency of Kepala Batas in northern Seberang Perai (which had also been represented by his late father), which he still represents today.. His religious background made it hard for fundamentalists to dismiss him as not Islamic enough.

Early during Mahathir's tenure as prime minister, a bitter dispute erupted within the ruling UMNO party and it was divided into two camps, which were colloquially known as 'Team A' comprising Mahathir loyalists, and 'Team B', which supported former Minister of Finance Tengku Razaleigh Hamzah and former Deputy Prime Minister Musa Hitam. Mahathir prevailed, leading to the exclusion of Tengku Razaleigh Hamzah from the newly established UMNO (Baru) or New UMNO. Abdullah was a close supporter of his political mentor Musa Hitam in Team B and as a result, he was sacked from his post of Minister of Defence in the cabinet. He did not join Semangat 46 (Spirit 46) party which was set up by Tengku Razaleigh Hamzah. Semangat 46 is now defunct. [Source: Wikipedia]

When UMNO (Baru) was formed in February 1988, the then UMNO President and Prime Minister Dr Mahathir Mohamad brought Abdullah into the pro tem committee of UMNO (Baru) as the Vice President. In 1990, Abdullah retained his seat as Vice President. During the Cabinet reshuffle in 1991, Mahathir brought him back into the Cabinet as Foreign Minister. He held this post until November 1999 when Syed Hamid Albar succeeded him. Even though he lost his Vice Presidency in the 1993 UMNO elections, he remained in the Cabinet and was appointed Minister of Foreign Affairs. Prior to 1998, he had also served as Minister in the Prime Minister's Department, Minister of Education, Minister of Defence, and Minister of Foreign Affairs. He completed his probation when he was appointed Deputy Prime Minister of Malaysia and Minister of Home Affairs following the dismissal of Anwar Ibrahim.

Abdullah takes Office as Prime Minister of Malaysia

Abdullah, became Malaysia's first new prime minister in a generation when he succeeded Mahathir in October 2003. Abdullah was sworn in the same day that Mahathir retired. Hinting of things to come, he spent his first full day in office he visited his home village and broke the Ramadan fast with his mothers an talked to villagers along the way.

Sean Yoong of Associated Press wrote: “ In his first speech as Malaysia's new prime minister, Abdullah Ahmad Badawi vowed to continue his predecessor's policies and urged cheering supporters to back him as he takes over after Mahathir Mohamad's 22-year reign. The nationally televised speech to more than 5,000 people in his native state of Penang consisted mainly of thanking the audience, many of them members of his own party. Abdullah promised to work for greater racial unity in Malaysia and asked supporters to push hard to give the ruling coalition a big win in national elections due by the end of 2004. "I want you to work together with me," Abdullah said. "May Malaysia be more developed. May Malaysia be more successful." [Source: Sean Yoong, Associated Press, November 2, 2003 <+>]

“In his speech, Abdullah paid tribute to Mahathir, saying he left behind a "truly effective, modern and successful government." The crowd hailed Abdullah with flags of the ruling United Malays National Organization and banners reading: "We pledge our loyalty to you, our beloved prime minister." Abdullah also visited the village where he grew up among a clan of religious leaders and politicians in this northern state. Welcomed there by thousands of more supporters, Abdullah met his 79-year-old mother and kissed her hands as a sign of filial piety. After sunset, he dined with her and other close relatives. <+>

“Abdullah has resisted pressure to name a deputy, a coveted post which is traditionally a springboard for advancement. The chief contenders are Najib Razak, the current defense minister and Mahathir's favorite, and Muhyiddin Yassin, the consumer affairs minister. Abdullah faces a big test in leading his party to the elections against a fundamentalist Islamic opposition. While the opposition has almost no chance of winning power outright, a poor showing by UMNO would place Abdullah's leadership under great pressure from within the party. Abdullah takes power on the heels of an international furor that Mahathir sparked by claiming that Jews rule the world.” <+>

Alan Sipress wrote in the Washington Post: For Badawi, the first priority will be to consolidate his position within the deeply divided ruling party and then lead it to a strong showing in elections expected during the first half of next year. That means he will move quickly to shore up his support among poorer Malays, particularly those who feel left behind by policies long favoring the Malay elite, according to sources familiar with his plans. Badawi intends to focus on rural development and reorient Malaysia's affirmative action policies to benefit middle- and lower-class Malays. [Source: Alan Sipress, Washington Post, October 27, 2003]

Thepchai Yong wrote in The Nation, “His image of being "Mr Clean" contrasts with that of the majority of UMNO's leaders who have risen through the ranks or raked in personal fortunes through patronage and cronyism. When asked what difference his political leadership will bring to Malaysia, Badawi was reported to have said recently that he wanted to be a leader who "is fair and caring". But he was quick to add that his style of leadership will be very much consensus-based. Which, of course, means he will need the support of UMNO leaders and in the process may have to make concessions. [Source: Thepchai Yong, The Nation, October 2002]

Abdullah Steps Out Mahathir Shadow

It was thought Abdullah would pretty much follow in Mahathir’s footsteps but that was not the case. A few months after taking office he embarked on a high profile anti-corruption campaign and canceled one Mahathir‘s most cherished pet projects: the $3.7 billion cross-Malaysia railroad project, Malaysia’s largest infrastructure program, whose contact had been awarded to a Mahathir crony. Abdullah has promoted rural development and a moderate form of Islam and freed Anwar, which was seen as a portent of a mild liberalisation.. And he did all this while continuing Malaysia’s impressive emergence from the 1997 economic crisis and maintaining robust economic growth.

A year after Abdullah took office as prime minister,Sean Yoong of Associated Press wrote; “When Mahathir Mohamad retired as Malaysia’s prime minister, year, his successor was asked if he could fill the shoes of the Goliath who had towered over Southeast Asian politics for 22 years. Prime Minister Abdullah Ahmad Badawi replied: “I don’t know how big his shoes are, but I have my own shoes.” The quiet self-assurance Abdullah displayed that day has been the bedrock of his one year in office, demonstrating that he is no longer in the shadow of the man who handpicked him to be Malaysia’s prime minister. [Source: Sean Yoong, Associated Press, October 25, 2004 <=>]

“Since taking office Abdullah has presided over one of the most radical political makeovers Malaysia has gone through, occasionally by reversing Mahathir’s initiatives. “Abdullah’s emphasis seems to be on the well-being of the people,” said Goh Chee Meng, 27, a marketing executive. “He tries to make friends, not foes.”Abdullah, 64, halted Malaysia’s era of expensive infrastructure projects; tacitly approved the release from prison of Mahathir’s former deputy-turned-nemesis Anwar Ibrahim; and healed ties with countries that were often the target of Mahathir’s famously acidic tongue.“Abdullah has his own excellent vision for Malaysia,” said Agus Yusuff, a Malaysian university political lecturer. “He is more democratic than Mahathir, but we still have to wait and see whether his policies are ultimately as effective.” <=>

“Abdullah does not have his former boss’ magnetism or charisma, and some worried that he lacked support within the ruling National Front 13-party coalition. But he swiftly stamped his authority. He shelved a $14.5-billion railway project Mahathir had championed and launched an anticorruption crackdown that led to the arrest of a tycoon allied to Mahathir. Abdullah’s “policies sit very well with the business community,” said Nicholas Zefferys, president of the American Malaysian Chamber of Commerce.Abdullah has worked to shore up ties with countries such as the United States, Australia and Singapore, which traded barbs with Malaysia in the past over bilateral disputes, Mahathir’s human rights record and his abrasive criticism of Western policies. <=>

“But the biggest turnaround was the September 2 release from prison of former deputy prime minister Anwar Ibrahim, who marshaled street protests against Mahathir in 1998 and was subsequently arrested and sentenced to prison terms totaling 15 years for corruption and sodomy. Indeed, Abdullah, who is known as a pious Muslim, has buoyed his popularity by avoiding Mahathir’s penchant for belligerently berating his political rivals. In March, Abdullah secured his own five-year mandate when the National Front won 90 percent of the seats in Parliament, one of its best electoral results ever.” <=>

Malaysia General Election in 2004

In the March 2004 general election, the National Front led by Abdullah had a massive victory, virtually wiping out the PAS and Keadilan, although the DAP recovered the seats it had lost in 1999. This victory was seen as the result mainly of Abdullah's personal popularity and the strong recovery of Malaysia’s economy, which has lifted the living standards of most Malaysians to almost first world standards, coupled with an ineffective opposition.

Abdullah’s and Mahathir’s National Front coalition took 198 (90 percent) of the 219 seats. It was the biggest parliamentary majority ever. The Islamic Party PAS, collapsed from 27 to 7 seats. The Democratic Action Party became the major opposition party by increasing the number of seats from 10 to12. Keadilan (National Justice Party) held on to only one of its previous five seats, the seat held by Anwar’s wife Azizah Ismail.

Abdullah seemed to have the right mix of continuing some Mahathir policies and establishing new ones. His anti-corruption campaign and his religious background gave him the moral high ground and deprived the opposition of their complaints and issues with the ruling party. The opposition alleged fraud and demanded new elections. Not much came of the allegations or demands. In July 2004, Abdullah secured the top position in the ruling party after his top opponent couldn’t even secure enough nominations to oppose him.

Abdullah Ahmad Badawi Settles in as Prime Minister

As Abdullah settled into his job he has sought to win party support by relaxing spending curbs after pursuing a period of austerity that proved unpopular since many UMNO members depend on government contracts. To address these concerns the government launched a $15 billion project to improve the infrastructure of the southern state of Johor, a UMNO stronghold. Abdullah accused the West of being too preoccupied with terrorism and not doing more to help the poor. He accused Malaysians of being too preoccupied with race and religion. Human rights abuses weren’t much of an issue. And in any case, after 22 years of Mahathir, most Malaysians tryied to avoid trouble and didn’t care that much anyway about human rights issues beyond those associated with Israel and the Palestinians.

In the summer of 2005,Philip Bowring wrote in the New York Times, “July seems to have been a watershed month in the administration of Malaysia's low-key prime minister, Abdullah Badawi. After months of growing gripes that his good reformist intentions were not matched by decisiveness orwillingness to take on vested interests in the governing United Malays National Organization (UMNO), there is now a sense that fundamental changes are taking place. The merit of Abdullah's Fabian tactics is becoming clearer as symbols and personalities of the Mahathir bin Mohamad era slowly fade into history. [Source: Philip Bowring, New York Times, August 5, 2005 ><]

“Many positive things had already happened in the previous 20 months since he came to office. The courts were left free to release jailed former Deputy Prime Minister Anwar Ibrahim; a report on the police pulled no punches in its descriptions of corruption and abuse of power; a senior UMNO minister was suspended and investigated for corruption; the news media became slightly more open to opposition views; backbench members of Parliament were not discouraged from querying government deals; new senior appointments appeared to go to people with clean, professional reputations; relations with America, Australia and Singapore were patched up. ><

“Nonetheless, there was a sense that Abdullah remained the captive of the party. The cabinet remained largely unchanged, and he was under constant pressure from Mahathir-era interests. His preference for delegating authority slowed decision making and upset those in the business community who relied on government contracts. He left power in hands of people who did not always share his enthusiasm for clean, institution-led administration by strong institutions. He was evidently more popular with the public than with the party. However, he emerged from the party's annual assembly last month with flying colors. He declined to back off his pursuit of clean government and his admonitions of Malays for not appreciating the opportunities offered to their community to raise their wealth and educational levels and remaining too reliant on preferential status. ><

“The assembly also coincided with an unseemly row between Mahathir and a former close ally, Trade Minister Rafidah Aziz, over car import permits. This left the old guard divided and being seen as having distributed favors meant for Malays generally to a small elite. Abdullah on the other hand appeared clean and to be promoting ministerial accountability and open government. The permits issue has also helped smooth the government-approved sacking of the head of Proton, the national car maker and a pet Mahathir project. Earlier he had been backed by Mahathir in opposing selling a large minority to a foreign automaker. ><

“The July watershed did not touch all issues confronting Abdullah. For example, a significant start has yet to be made re-orienting the state's role in religious affairs to make it more responsive to the kind of modern, inclusive Islam necessary for a well functioning multiethnic, trade-dependent nation. But if anyone can do it without offending Malay Muslim sensibilities, it should be Abdullah, who is seen to embody an Islam focused on ethics, not rituals. Do not expect fast progress, showdowns or confrontations. Economic growth will likely be 5 percent, not the 8 percent of the heady pre-crisis days. The inefficiencies and bureaucracy associated with pro-Malay policies will mostly remain. But if Abdullah is given the time by UMNO, he will do a lot to repair the social and institutional damage done by Mahathir without destroying his predecessor's positive legacy.” ><

Polices pursued by Mahathir that were continued under Prime Minister Abdullah Ahmad Badawi, who took office in October 2003. Abdullah cut development and infrastructure project to reduce the deficient while consolidating the banking sector, boosting the stock market and improving corporate management.

Abdullah aimed to shift the emphasis in development to smaller, less-costly infrastructure projects and to break the previous dominance of "money politics." Foreign direct investment was still pursued but priority was given to nurturing the domestic manufacturing sector.

In July 2005, William Pesek Jr. of Bloomberg wrote: “Mahathir's successor as prime minister, Abdullah Ahmad Badawi, is a quieter sort, who prefers steady, behind-the-scenes policy making to banner headlines. Abdullah's success in paring the deficit bolstered the country's debt ratings, making it cheaper for companies like Telekom Malaysia to borrow overseas. Admittedly, Mahathir was more fun for journalists to cover; his periodic outbursts against capitalism and Jews brought terrible publicity to Malaysia's economy and financial markets. It's hard not to think that the less-controversial Abdullah is exactly what Malaysia needs right now. [Source: William Pesek Jr., Bloomberg, July 28, 2005 <<<]

"As the exchange rate appreciates, that could improve the government debt ratio, and we also think that it could be good for domestic demand, which could raise the level of economic growth," says Steven Hess, an analyst at Moody's Investors Service. "We view the move as a positive." <<<

“Abdullah also has been pushing Malaysia's economy toward the next phase of development. He is cracking down on corruption, demanding greater transparency, improving ties with neighbors like Singapore and reviewing deals between politically connected business people and the government. Education reforms are being stepped up, as are efforts to make the government more efficient when dealing with the business world. These steps are meant to attract foreign investment at a time when so much of it is flowing to China. <<<

Economic Policy Under Abdullah Ahmad Badawi

Dante Pastrana wrote in the World Socialist Web Site: “When Mahathir stood down in 2003, Abdullah took over as prime minister and, under pressure from business, began to moderate the previous economic controls. He offered a more moderate image, cracked down several figures known for their corruption under Mahathir and won a landslide victory in 2004. He called for more foreign investment, the privatisation of government assets and signed a free trade agreement with Japan, one of Malaysia's major trading partners. [Source: Dante Pastrana, World Socialist Web Site, April 2, 2009]

Philip Bowring wrote in the New York Times, Change was also “driven by the ending of the ringgit peg to the dollar, which has been a form of protection for inefficient industries and held back both corporate reform and consumption. The currency has been seriously undervalued. A current account surplus that was running at 8 percent of gross domestic product even before the commodity price boom has ballooned to nearly 20 percent. High commodity prices can be either a crutch supporting hand-outs and extravagant schemes, or used to spur productivity and a shift toward a higher-wage, service-oriented economy. The chances now are better that the end of the peg will help Abdullah's strategy to reduce the links between government and business. [Source: Philip Bowring, New York Times, August 5, 2005 ><]

But there were problems. Thomas Fuller wrote in the New York Times, “From the vantage point of central Kuala Lumpur, the country appears to be booming. The sounds and sights of jackhammers, cranes and backhoes across the city are testament to the continued transformation of what was once a sleepy backwater into a thriving, cosmopolitan Southeast Asian capital. But many Malaysians say they are worried about the country’s economic prospects. In a survey of 1,026 registered voters released by the Merdeka Center in January, only 19 percent of ethnic Chinese, who form the cornerstone of the country’s business community, said they expected the economy to improve in the coming year.Price increases for food and fuel, both of which are subsidized here, are major campaign issues. Voters surveyed listed inflation, inequality, ethnic relations and a rise in crime as their top concerns. Income distribution in Malaysia is the least equal of all Asian countries but Papua New Guinea, according to United Nations statistics. [Source: Thomas Fuller, New York Times, March 7, 2008]

By 2006, things were starting to wrong for Abdullah. By that time he had lost much of the goodwill he received when he took office in 2003. Associated Press reported: “Abdullah was blamed for failing to properly manage inflation, crime, corruption and most importantly ethnic tensions between the minorities and the majority Malays. Minorities have complained of increasing discrimination, citing a 37-year-old affirmative action program for Malays that shows no sign of being diluted despite their rising standards of living. The program gives Malays preference in government jobs, business, education and religion. [Source: AP, March 7, 2008]

“Mr. Abdullah is being portrayed both by the opposition and by some high-profile members of his own party, the United Malays National Organization, as sluggish and listless. Mahathir bin Mohamad, who preceded Mr. Abdullah as prime minister and is from the same party, reiterated his regret for having chosen him as his successor and called for Malaysians to elect a strong opposition — a stunning reversal for a man who while in office sent opposition politicians to jail. “He looks a bit out of touch,” said Ibrahim Suffian, director of the Merdeka Center, an independent polling agency. At a time of rising crime, higher food prices and ethnic tensions, he added, “He’s basically telling people that there are no problems.” /~/

Growth in Malaysia in the Mid-2000s

Growth was 7.2 percent in 2004, the fastest in four years. Semiconductors, hard-disk drives and other electrical and electronic products accounted for around half of Malaysia’s exports. Growth was 5.1 percent in 2005. In July 2005, Malaysia scrapped the ringgit’s peg to the dollar which had been in place since 1998. In November 2005, Malaysia raised its benchmark interest rate for the first time in more than seven years to curb inflation. Again exports were strong.

Growth was 5.9 percent in 2006.That year there was 2.5 percent inflation and 3.5 percent unemployment. Growth was 6.3 percent in 2007. That year there was 2 percent inflation and 3.3 percent unemployment.

Problems were brewing however. In January 2008, Radio Australia reported: “Malaysian retailers have begun rationing cooking oil purchases due to the government introducing restrictions to curb a shortage. It's believed price-hike rumours have caused panic buying of cooking oil. Rationing of five kilograms per customer per purchase was supposed to be enforced from Monday. The parliamentary opposition has criticised the measures, which it says is harming restaurants, consumers and vendors. Supermarket shelves were stripped of cooking oil in several states of Malaysia last week, with retailers not able to replenish supplies fast enough. [Source: Radio Australia, January 7, 2008]

Malaysia and the Global Financial Crisis in 2008-2009

During the Global Financial Crisis in 2008-2009 growth slowed and unemployment rose in Malaysia as its palm oil, rubber, oil and natural gas sectors were hit by falling commodity prices and its electronics industry and exports in general were hit hard by declining global demand.

During the economic slowdown Malaysia into its first recession in a decade. Growth reached a record low of -6.2 percent in the first quarter of 2009 but bounced back reaching an all time high of 5.9 Percent in the third quarter of 2009 . The economy contracted by 1.7 percent in 2009.

In August 2009, Liz Gooch wrote in the New York Times, “Malaysia recorded 31,392 layoffs from January through July, and the country’s unemployment rate rose to 4 percent in the first quarter of 2009. That was up from 3.1 percent in the fourth quarter of last year. The average monthly wage in the manufacturing industry has risen to 650 to 700 ringgit ($183 to $197) in the last three months, up from 450 ringgit, the national news agency Bernama reported. Figures released by the government showed that the economy had emerged from recession in the second quarter. Mr. Rajasekaran, the labor leader, said that although job losses were easing, the unions thought the freeze on foreign workers should continue. If there is a need for more workers in the coming months, he said, companies should be able to extend the visas of foreign workers already in the country. [Source: Liz Gooch, New York Times, August 31, 2009]

Malaysia Introduces a $16 Billion Stimulus During the Global Financial Crisis in 2008-2009

In March 2008 as the Global Financial Crisis in 2008-2009 was taking hold and elections were a few weeks away, the Malaysian government announced an ambitious $16 billion stimulus program. Elffie Chew wrote in the Wall Street Journal, “Malaysia's government unveiled a 60 billion ringgit ($16.26 billion) economic-stimulus plan that will strain government finances in an effort to shield the economy from the global downturn. The plan -- larger than expected and the biggest economic stimulus initiative Malaysia has ever taken -- amounts to 9 percent of gross domestic product and will drive the fiscal deficit to 7.6 percent of GDP this year. It will be implemented during 2009 and 2010, Finance Minister Najib Razak said. [Source: Elffie Chew, Wall Street Journal, March 11, 2008]

The plan follows seven billion ringgit in stimulus steps announced in November and complements efforts by the central bank to support the economy. Bank Negara has cut policy interest rates a total of 1.5 percentage points in three policy moves since November. Yeah Kim Leng, chief economist at Kuala Lumpur-based rating agency RAM Holdings Bhd., said the new spending will help boost confidence as it focuses on curbing unemployment and helping distressed companies affected by the downturn in exports. "The plan should help cushion the negative effects from the deteriorating global conditions and prevent the local economy from spiraling downwards," Mr. Yeah said.

The program will include 15 billion ringgit in fiscal spending and 25 billion ringgit in so-called guaranteed funds. The government also will make 10 billion ringgit in equity investments, and plans 10 billion ringgit of other measures including tax breaks.Malaysia, a major producer of palm oil and rubber, is taking these steps amid a climate of falling commodity prices. Its electronics industry has been hit hard by declining global demand, hammering the country's exports.

Robert Prior-Wandesforde, a Singapore-based economist at HSBC Bank, said the measures are too late to provide much support to growth in the first half of the year when the economic pain will be at its peak. But they will start to kick in just as the central bank's rate cuts begin to work and possibly as China's slowing economy regains its footing, helping support regional trading partners such as Malaysia, he said.

Malaysia had forecast a 4.8 percent budget deficit for this year before unveiling these new measures, which will involve large amounts of public debt to pay for the excess outlays over revenue. Higher public borrowing often tends to push up market interest rates, making it more expensive for private companies to raise funds or access the bond market. But Mr. Najib played down the impact of the aggressive plans, saying that "financing of the deficit will not crowd out the private sector." He said "there is ample liquidity in the domestic financial system" to absorb a pumped-up level of sovereign debt. He also said conditions in the economy could get worse.

Mr. Najib predicted unemployment would hit 4.5 percent this year, higher than the 3.7 percent registered in 2008. He also said he expects foreign direct investment flows into Malaysia to fall to 26 billion ringgit in 2009 from 51 billion ringgit in 2008. "It will be a deep and prolonged global recession," he said.

Criticism of Abdullah Badawi

By 2006, things were starting to wrong for Abdullah. By that time he had lost much of the goodwill he received when he took office in 2003. Associated Press reported: “Abdullah was blamed for failing to properly manage inflation, crime, corruption and most importantly ethnic tensions between the minorities and the majority Malays. Minorities have complained of increasing discrimination, citing a 37-year-old affirmative action program for Malays that shows no sign of being diluted despite their rising standards of living. The program gives Malays preference in government jobs, business, education and religion. [Source: AP, March 7, 2008]

“The Chinese and Indians are also angry at a string of court decisions in religious disputes that have gone in favor of Malays. Indians were incensed by the demolition of Hindu temples by authorities last year. "The problem is not with the Malays. The problem is with the corrupt leadership of this country," opposition leader Anwar Ibrahim told a rally in Kuala Lumpur Thursday night. Anwar, a former deputy prime minister under Mahathir, promised to end racial discrimination if his People's Justice Party wins, a virtually impossible scenario. "We want strong Malays, strong Chinese, strong Indians ... Take the best Malays, let them work with the best Chinese and the best Indians," he said to roaring applause.” [Ibid]

Thomas Fuller wrote in the New York Times, “Public protests are frowned on by Malaysia’s mildly authoritarian government and often broken up by the riot police. So when a group of opposition party members and activists wanted to send a message to Prime Minister Abdullah Ahmad Badawi earlier this year they chose a softer and safer alternative — delivering a pillow to his office. “He has a reputation for liking to sleep,” said Rahmat Haron, a poet and self-styled government critic. Mr. Rahmat helped lead the small delegation, which made it as far as the security checkpoint. “He sleeps in cabinet meetings, he sleeps in Parliament,” he added. “So we thought, why not make him more comfortable?” [Source: Thomas Fuller, New York Times, March 7, 2008 /~/]

“Mr. Abdullah is being portrayed both by the opposition and by some high-profile members of his own party, the United Malays National Organization, as sluggish and listless. Mahathir bin Mohamad, who preceded Mr. Abdullah as prime minister and is from the same party, reiterated his regret for having chosen him as his successor and called for Malaysians to elect a strong opposition — a stunning reversal for a man who while in office sent opposition politicians to jail. “He looks a bit out of touch,” said Ibrahim Suffian, director of the Merdeka Center, an independent polling agency. At a time of rising crime, higher food prices and ethnic tensions, he added, “He’s basically telling people that there are no problems.” /~/

“In the face of the repeated criticism that he figuratively and literally sleeps on the job, the prime minister has come across as defensive. “We are not deaf, for we hear what the people say,” Mr. Abdullah said this week, according to the state-run news agency Bernama. “We are not asleep, for we are working.” If the governing coalition’s majority is narrowed significantly, Mr. Abdullah’s position would be weakened inside his party, and he could face pressure to step down at a party conference scheduled for later this year, analysts say. /~/

Tan Sri Abdullah Ahmad, a confidant of Dr Mahathir’s, told The New Yorker that, if anything, corruption has grown worse. “They’re making hay while the sun still shines.”

Clash Between Mahathir and Abdullah

Sharp differences with Mahathir emerged after Abdullah cancelled the contract for several major projects, including a new bridge to Singapore. In 2007 Mahathir publicly denounced Abdullah, who managed to head off an inner party challenge by using the same autocratic methods Mahathir had employed earlier.

Richard Lloyd Parry wrote in The Times in 2006: “It sounds a depressingly familiar Malaysian story. An outspoken political activist accuses the Prime Minister of being corrupt, authoritarian and intimidating opponents. The two antagonists meet, but the lone crusader refuses to stay silent. Soon he is reporting the inevitable retribution — threats against his relatives, and a whispering campaign casting doubts on his sanity. But this is not the story of an isolated human rights activist or lonely left-wing MP. [Source: Richard Lloyd Parry, The Times, October 30, 2006 ///]

“The figure in question is 80-year-old Mahathir Mohamad, Malaysia’s former Prime Minister, famous for his merciless intolerance of dissent and opposition. The object of his denunciations is his successor, 66-year-old Abdullah Badawi, a man known, if anything, for his mildness of temper. For months tension has been rising between the two men. Last week it boiled over, just before the third anniversary of the handover from Dr Mahathir to Mr Abdullah. The older man accuses his one-time protégé of running a “police state”, of tapping text messages and eavesdropping on the internet. ///

“During his 22 years as prime minister, Malaysians grew accustomed to Dr Mahathir’s short fuse and rants against the West, liberal democracy and anything else that upset him. But even they are shaking their heads over the ironies of his latest outburst.” Mahathir’s own record of repression and human rights abuses “which makes his criticisms of Mr Abdullah rather hard to swallow. It is rather as if Margaret Thatcher were to have spent her retirement denouncing John Major for his abrasive manner and refusal to build consensus. ///

“Under the new Prime Minister, the press has become more free to criticise the authorities, and alleged Islamic fundamentalists have been released from their detention without trial. Dr Mahathir also accuses Mr Abdullah of improperly helping a relative to obtain contracts under the notorious UN oil-for-food programme in Iraq — accusations that he denies. “In a situation where no one can criticise the Prime Minister, I have to voice my criticisms on matters that do not concern my personal being but only those concerning the interest of the religion, race and country,” Dr M, as he is known, said. “A climate of fear has enveloped this country.” ///

“If he didn’t seem as sharp as a scalpel in other respects, you may suspect that Dr Mahathir had gone a bit potty — a suggestion that he addressed last week. “Attempts are made to disparage me so badly that I am made out to be of unsound mind,” he said. “Repeatedly, allegations were made that the administration during my time was worse.” A meeting between the two men ago did nothing to clear the air. Mr Abdullah spoke wearily of Dr Mahathir’s “doses of venom”. “What else can be done?” he asked. “He wants to continue.” ///

“Having reluctantly relinquished the reins of power three years ago, Dr Mahathir claims that he is “saving the nation from disaster”, he has launched streams of unproven and damaging allegations against Abdullah Ahmad Badawi, his successor as Prime Minister. These include nepotism, incompetence and even selling out the country — this last because of the sensible decision to cancel a pet Mahathir mega-project, a somewhat pointless bridge that would have gone only halfway across the Johore Strait between Malaysia and Singapore. Datuk Badawi not only has done nothing to prevent him having his say, but also, after months of suffering his sniping with dignified calm, invited him a week ago to his official residence for a “peace meeting” with no one else present. There, for nearly two hours, he dutifully took notes as Dr Mahathir listed his grievances. The courtesy was ill-rewarded; the very next day, Dr Mahathir called a press conference to announce that he was the victim of a “police state” that had “taken away” his civic rights. ///

“This is no joking matter. The problem is not unfamiliar. Dr Mahathir admits that he considered Datuk Badawi “harmless” — in other words, content to take dictation. He is hardly the first political leader to be appalled by the discovery that apparently docile protégés can develop a mind of their own once installed in office, or the first to take that revelation badly. Baroness Thatcher’s disillusion with John Major comes to mind. But Dr Mahathir has gone far beyond mutterings of discontent. He denies it, but it is by now obvious that he is openly campaigning to replace Datuk Badawi, who won a landslide electoral victory only two years ago, with Najib Razak, the deputy prime minister whom he publicly regrets not having chosen for the top job. Malaysia may have had a surfeit of forced consensus politics during Dr Mahathir’s long reign, but the vendetta he is conducting has little to do with robust political debate, and a lot to do with one man’s obsession with himself. ///

Scandals, Corruption and Protests Under Abdullah

Thomas Fuller wrote in the New York Times, “Abdullah’s administration has been beset by scandals and controversies that have challenged the prime minister’s now widely mocked nickname, Mr. Clean. A top aide to the deputy prime minister is on trial, charged with abetting the slaying of his Mongolian mistress, a killing that two police commandos who also served as Mr. Abdullah’s bodyguards are charged with carrying out. And the nation was stunned last year by the release of a videotape of a prominent lawyer apparently brokering judicial appointments with a top judge. The videotape was made before Mr. Abdullah came to power but has led to renewed calls for reforms of the judiciary. [ Source: Thomas Fuller, New York Times, March 7, 2008]

David Chance of Reuters wrote: “After decades in power, corruption and nepotism have grown to plague UMNO and the entire Barisan Nasional governing coalition, alienating core Malay voters who feel they have gained little while party leaders and the elite have prospered. It was a pledge to stamp out corruption that won Abdullah a landslide victory in elections in 2004, and the failure to do so saw the government slump to its worst ever election result in March 2008 and eventually forced him out of office. Malaysia's ranking in the Transparency International corruption index fell to 43rd from 37th during his tenure. [Source: David Chance, Reuters, October 9, 2008]

In November 2007 two anti-government rallies occurred, precipitated by allegations of corruption and discrepancies in the election system that heavily favoured the ruling political party, National Front. The 2007 Bersih Rally which was attended by 40,000 people was held in Kuala Lumpur, Malaysia, on 10 November to campaign for electoral reform. Another rally was held on 25 November in the Malaysian capital led by HINDRAF. The rally organiser, the Hindu Rights Action Force, had called the protest over alleged discriminatory policies favouring ethnic Malays. The crowd was estimated to be between 5,000 and 30,000. In both cases the government and police tried to prevent the gatherings from taking place. In 16 October 2008, HINDRAF was banned when the government labelled the organisation as "a threat to national security". [Source: Wikipedia]

In July 2008, thousands protested a 40 percent rise in fuel prices despite warnings that rally was illegal. Al-Jazeera reported: “At least 5,000 Malaysians have protested in the capital, Kuala Lumpur, against a steep increase in fuel prices despite a warning from police that the opposition-backed demonstration was illegal. Petrol rose by 40 percent in Malaysia last month, when the government scrapped billions of dollars in fuel subsidies. The authorities banned the rally, saying that organisers did not have the permit needed for gatherings of more than four people. Protesters were undeterred and gathered at a stadium wearing red bandanas and T-shirts bearing the word "down" to demand a reduction in oil prices. [Source: Al-Jazeera, July 6, 2008 ***]

“Public anger over fuel prices has heightened in recent weeks after the government led by the National Front Coalition increased petrol by 41 percent and diesel by 63 percent last month. Hatta Ramli, from the Islamic opposition party, PAS, told the crowd: "Today we gather to show our anger. We still have time because today we will gather until the fuel price is reduced." Hatta demanded that Abdullah Ahmad Badawi, the Malaysian prime minister, step down if prices are not reduced. There was no unrest and no visible presence of security forces in and around the stadium. ***

“The rally was organised by an opposition alliance directed by Anwar Ibrahim, the Malaysian opposition leader and former deputy prime minister. The government said it had to cut petrol subsidies, which it says account for about one-third of the national budget. But critics, backed by the opposition, argue that there was no need for such a drastic measure given the revenues Malaysia earns from its oil exports.Hatta said to the crowd: "Our aim is not to cause trouble, but to get the message to the government that fuel prices must come down and we will not stop our protests until this happens. "The protests will only get worse until the government listens to the voice of the people to ease their burden and suffering." ***

Abdullah Ahmad Badawi and the 2008 Elections

Dante Pastrana wrote in the World Socialist Web Site: “The outcome plunged UMNO into crisis. Sections of the UMNO leadership blamed Abdullah and his moderate policies for the defeat. The resurgent opposition got a further political boost after Anwar convincingly won a by-election in August and entered parliament despite the dredging up of new sodomy charges. With Anwar threatening to topple the government, Abdullah's opponents forced him last October to agree to step aside in early 2009. None of the underlying conflicts inside UMNO have been resolved. Sections of the party continue to back economic and political reforms as a means of sustaining the Malaysian economy amid the deepening global recession. [Source: Dante Pastrana, World Socialist Web Site, April 2, 2009]

See Separate Article 2008 ELECTIONS IN MALAYSIA

Abdullah Ahmad Badawi’s Downfall

Initially Abdullah rejected calls to resign after the 2008 election, claiming he won a "strong" mandate in elections that gave the opposition its biggest gains in the country's history. He acknowledged that support for his National Front coalition had plunged—from 91 percent of the parliamentary seats to 63 percent - or 140 seats in the 222-member chamber— but said the ruling coalition managed to get a "strong majority," just eight short of two-thirds of the seats, Abdullah said in an interview on state television."This is still a mandate given to me. I will not run away from my responsibility to carry out the wishes of the people," he said. [Source: Associated Press, March 14 2008 ^*^]

“Abdullah's late-night comments came hours after boisterous ruling party activists demonstrated in two states won by the opposition before dispersing when police arrived. Such partisan struggles are almost unheard of in the Southeast Asian nation, whose government - in power since 1957 - insists political stability is necessary to attract foreign investment and keep racial peace between majority Malays and ethnic minority Chinese and Indians. The sense of instability intensified Friday after the son of former Prime Minister Mahathir Mohamad asked Abdullah to resign to take responsibility for the election debacle. ^*^

“Mahathir Mohamad called for Abdullah's resignation, saying his successor "has destroyed" the National Front. Mukhriz Mahathir said:"The message is clear from the results of the elections. That's the voice of the people. We have to respect it. It is a very humbling experience and points to dissatisfaction of the prime minister's leadership.” Mukhriz was the first UMNO member to openly demand Abdullah's resignation, and his views signaled the beginning of an internal revolt. ^*^

“About 300 UMNO members protested outside the administrative headquarters of the state government in the Chinese-majority Penang state in the first sign of partisan tensions after the elections. Chanting "Long Live Malays," they demanded that the newly installed Penang government, now controlled by the Chinese-dominated opposition Democratic Action Party, retain a decades-old affirmative action program for the majority Malays. They dispersed after an hour when police arrived. ^*^

“A few weeks after that Associated Press reported: “The main ruling party faced an open revolt, with hundreds of supporters meeting at a Kuala Lumpur hotel on Tuesday to demand Prime Minister Abdullah Ahmad Badawi's resignation. More than 500 people, members of Abdullah's United Malays National Organisation (UMNO), cheered as former premier Mahathir Mohamad and his son, elected MP Mukhriz Mahathir, called for Abdullah's leadership to be challenged to save the party. "UMNO risks becoming no longer relevant because there are now more 'yes men' than those who are willing to give dissenting views," said Mahathir, 82, himself intolerant of dissent during 22 years in power which ended when he retired in late 2003."We must look at ourselves and be brave and take action to correct UMNO." In another sign of turmoil, a party supporter caused an uproar by suggesting Anwar be allowed to rejoin UMNO. There were shouts of "Bastard!" and several men grabbed the supporter, one by the neck, and hauled him out of the meeting. [Source: AP, April 1, 2008]

Mahathir and Coalition Partners Quits the Ruling Party

In May 2008, Mahathir quit the main ruling party of Abdullah and urged others to follow suit. News services reported: “The still influential Mahathir, who was prime minister and leader of the UMVO for 22 years until 2003, said he would only return to UMNO after Prime Minister Abdullah Ahmad Badawi quit as leader. Mahathir urged other UMNO members to quit but not to join the opposition, which is seeking to seize power from the ruling Barisan Nasional (BN) coalition by wooing defectors. "It's like pulling another brick out of the crumbling wall," said Tricia Yeoh, director of the Center for Public Policy Studies. "Once Mahathir resigns, some others will too."[Source: Agencies, May 20, 2008]

“If UMNO lawmakers quit the party and declare themselves independents, meaning no party commands a clear majority in parliament, it will send Malaysia into the political wilderness. UMNO, backbone of the 14-party BN that has ruled since independence from Britain in 1957, holds 79 of its 140 seats. The opposition, led by former deputy premier and Mahathir foe Anwar Ibrahim, needs to gain just 30 seats to win a simple majority and form the government.” [Ibid]

In September 2008, Reuters reported: “A small party in Malaysia's ruling coalition walked out on as Prime Minister Abdullah Ahmad Badawi ceded his finance job to his increasingly powerful deputy. The Sabah Progressive Party (SAPP) announced it would quit the 14-party Barisan Nasional coalition, three months after it proposed a no-confidence vote against Abdullah, in the first defection in the coalition since March elections. SAPP, which accounts for only two of Barisan's 140 MPs, has little clout but there are concerns that more non-Malay parties could abandon the coalition now headed by Abdullah's UMNO party. "If UMNO leaders continue to harp on Malay supremacy and race relations continue to strain, I think more non-Malay parties will leave," said political analyst Agus Yusoff.[Source: Jalil Hamid, Reutersm September 17, 2008]

Abdullah Ahmad Badawi Retires

In October 2008, Abdullah announced that he was stepping down because of the poor showing of his party and coalition in the March 2008 general elections. Sean Yoong of Associated Press wrote: “Prime Minister Abdullah Ahmad Badawi announced that he would not defend his presidency of the party amid intense demands for his resignation. Support for Abdullah has slumped since he led the governing coalition to disastrous losses in March general elections. The government's popularity has plummeted amid racial disputes, a weak economy and corruption claims. It returned to power with only a simple parliamentary majority in March and has since been rattled by opposition leader Anwar Ibrahim's threats to seize power through defections. [Source: Sean Yoong, Associated Press, October 20, 2008]

Abdullah official stepped down in April 2009. Al-Jazeera reported: The move is part of a carefully orchestrated transition that will see Abdullah hand power to his deputy, Najib Abdul Razak. The king has already given his consent for Najib to be sworn in as prime minister, and he is expected to take the oath of office, loyalty and confidentiality at the palace in Kuala Lumpur. [Source: Al-Jazeera, April 2, 2009]

“Abdulla was pressured to step down following a dismal performance by the ruling Barisan Nasional (BN) coalition in last year's general elections. He is likely to be remembered for allowing more public freedoms than his predecessor Mahathir Mohamad, who was known for his semi-authoritarian rule during his 22 years in office. But he also failed to fulfil promises to eradicate corruption, reform the judiciary and strengthen institutions such as the police and the civil service. Earlier this week Abdullah told Malaysian media editors that his time in office was marked by "missed opportunities", and that the poor electoral showing in 2008 was his biggest regret.” [Ibid]

Image Sources:

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, Lonely Planet Guides, Library of Congress, Malaysia Tourism Promotion Board, Compton’s Encyclopedia, The Guardian, National Geographic, Smithsonian magazine, The New Yorker, Time, Newsweek, Reuters, AP, AFP, Wall Street Journal, The Atlantic Monthly, The Economist, Foreign Policy, Wikipedia, BBC, CNN, and various books, websites and other publications.

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© 2008 Jeffrey Hays

Last updated June 2015

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