Malaysian drift
International Herald Tribune
MARCH 14, 2006
Philip Bowring 

KUALA LUMPUR At the end of this month, Malaysia will issue a document which may determine the length of the tenure of Prime Minister Abdullah Badawi.

Like its predecessors, the Ninth Malaysia Plan 2006-2010 will be a heavy tome of data, targets and platitudes. But it gives Abdullah a unique opportunity to set his own economic and social agenda, and rescue his administration from well-meaning drift typified by the minimal changes he has made in the cabinet he inherited.

Two years after a landslide election victory, Abdullah's caution has disappointed many. It has enabled rivals in the governing United Malays National Organization and assorted critics - including corporate allies of former Prime Minister Mahathir bin Mohamad - to gain traction.

The Ninth Plan provides Abdullah with a new platform and should stimulate the economy. But it will test his ability to keep the loyalty of his Malay constituency at the same time as advancing the cohesion of a society whose races have been drifting further apart.

For one accused of indecision, Abdullah pulled off a surprise last month, but one which went down badly with an otherwise supportive public: a huge increase in fuel prices to relieve the government budget of a fuel subsidy.

It made fiscal sense but the political cost could be high unless he can show that money thus saved will be spent on projects which help all Malaysians, not just the Malay elite.

Abdullah has been under pressure to set more numerical targets for Malay ownership of the economy via quotas and preferences. Believing, like Mahathir, in the corrosive impact of the existing preferences, he is unlikely to take that route.

Instead he is likely to focus on measures to reduce poverty, which primarily but not exclusively affects Malays, and on developing human skills rather than building monuments. The trick is to push an agenda that helps Malays but without further alienating the non-Malay 40 percent.

The past two years of fiscal conservatism will help fund projects in the Ninth Plan. But Abdullah is still burdened with finding the money for a slew of projects pushed through by Mahathir in his final days.

He also faces a dilemma over who gets the new projects. UMNO insiders see projects as ways to support their political and personal aspirations, but Abdullah is committed to reducing graft and the links between government and Malay business, and to getting better value for public money.

Abdullah remains personally popular among all races, but there is a current of discontent among non- Malays, too, particularly in the Klang valley, the region around the capital, where the service and construction economy has been sluggish.

Energy-related price increases and a modest rise in interest rates suggest things could get worse before they get better.

Though growth in gross domestic product is more than 5 percent, recent beneficiaries have largely been oil, palm oil and electronics export industry profits, which have not flowed through to personal incomes.

Non-Malay business leaders used to strong leadership are complaining of indecision.

Abdullah will need the impetus of Ninth Plan spending and a check on interest rate rises to sustain economic growth.

He will also have to hope that the private sector invests more of Malaysia's huge current account surplus at home. That means keeping non- Malays and foreigners confident of their future.

While he juggles Malay versus non- Malay interests, Abdullah must also try to retain the confidence of those who want to see his personal commitment to a plural society and tolerant, inclusive Islam followed up by more decisive action to curb government and religious officials who lay down their own narrow versions of Islam and a notion of Malaysian identity that weakens the national commitment of non-Malays.

Abdullah is not in danger of being unseated. But UMNO elections in 2007 could test his ability to survive beyond the next national election, which is likely to be in 2008. Enemies within a party notorious for internecine feuds could use a continuing sense of drift or declining public popularity to force his exit after one term.

Abdullah's strength is his weakness. He is a reformist at heart and his preference for gradualism, for consensus, for tolerating criticism, for giving some freedom to the news media, for mending relations with the United States and dealing adroitly with neighbors is refreshing.

But many feel that he has frittered away the chances he had for real reform after his 2004 election triumph.

The Ninth Plan will contain nothing startling. But it does provide a platform for Abdullah to regain some political initiative and pursue his goals of clean government, ethnic harmony and religious tolerance with more vigor than he has shown to date.

Copyright © 2006 the International Herald Tribune