Correspondent, Political and General News
Razak's Feed
Mar 1, 2010
via FaithWorld

Race and religion pose risks in Malaysian politics

Photo

Prime Minister Najib Razak (C) leaves Friday prayers at Putra Mosque in Putrajaya outside Kuala Lumpur July 10, 2009/Bazuki Muhammad

Rising political tension in Malaysia over ethnic and religious rivalries and the trial of opposition leader Anwar Ibrahim are key challenges facing the ruling coalition led by Prime Minister Najib Razak.

Mar 1, 2010

Key political risks to watch in Malaysia

KUALA LUMPUR, March 1 (Reuters) – Rising political tension in Malaysia over ethnic and religious rivalries and the trial of opposition leader Anwar Ibrahim are key challenges facing the ruling coalition led by Prime Minister Najib Razak.

The problems may force Najib to delay or water down some planned economic reforms. Najib needs to lead the government’s fightback from historic poll losses in 2008 if he is to remain in power past the next national elections, which are due by 2013 but may be held as early as next year.

Sovereign 5-year credit default swaps <MYGV5YUSAC=R> are trading at a spread of around 104 basis points, compared to a weighted average of 140 for the Thomson Reuters Emerging Asia Index. The implied risk of a Malaysian default is seen as lower than Thailand, with a spread of 117 basis points, and South Korea at 107, but higher than China, Hong Kong and Singapore.

Following is a summary of key Malaysia risks to watch:

* POLITICAL CONFLICT

The National Front ruling coalition’s dominance through 52 years in power was dented by historic losses in 2008 polls, shifting the political landscape and increasing political friction. The coalition lost control in five states and its once iron-clad, two-thirds control of parliament. Many voters, especially the country’s Chinese and Indian ethnic minorities, abandoned the National Front in favour of Anwar’s three-party opposition and show little signs of returning to the coalition.

While most of the parties in the 12-member National Front coalition saw a drop in voter support, it was the non-Malay component parties which suffered the worst damage, and a number of the parties remain locked in bitter power struggles.

A failure of the National Front component parties to rebuild and re-connect with the country’s minorities will jeopardise the government’s chances of staying power.

Anwar’s ongoing trial on sodomy charges will also provide a flashpoint. Malaysia’s political stability has deteriorated significantly over recent years, and investment will be further damaged if that trend continues.

What to watch:

— Anwar’s trial. Opposition supporters widely regard the trial as politically motivated, and it is likely to further dent Malaysia’s attractiveness for foreign investors. If a contentious or divisive verdict seems likely, more foreign money will be pulled from Malaysia’s markets, pulling down stocks <.KLSE>, bonds and the ringgit <MYR=>. But with limited foreign portfolio investment still in the country, the impact will be muted.

— A leadership tussle in the Malaysian Chinese Association, the second-biggest party in the ruling National Front coalition, might drive more Chinese voters to the opposition.

* ECONOMIC REFORM

The government has promised further economic reform to attract more foreign investment. Najib has rolled back elements of a four-decades-old Malay affirmative policy, relaxing the rule that companies must offer stakes to indigenous ethnic Malays. But Najib is wary of upsetting the Malays, a critical vote bank, and treads carefully on economic reform. This may cause him to dilute or abandon his plans as he attempts to remain in power.

What to watch:

— Government policy implementation and announcements. The government plans more liberalisation, but the announcement did not significantly boost investment inflows into Malaysia’s markets, due to wariness over implementation.

— The government’s moves to reduce crippling fuel and food subsidies. Past fuel price hikes have drawn an intense public backlash, and a key factor to watch is the response to a scheduled announcement of a two-tier fuel price. Initial plans to link to the country’s ID card system appear to have foundered. The issue is seen as a bellwether reform by investors who want Malaysia to reduce its budget deficit of 7.4 percent of GDP.

— The government’s decision to introduce a Goods and Services Tax (GST) that will be implemented next year has drawn vocal criticism from the opposition which says that it would unduly burden lower income earners.

* RACE AND RELIGION

Race and religion have always been explosive issues in Malaysian politics. Najib took power pledging a more inclusive approach to ethnic Chinese and Indian minorities, but his United Malay National Organisation (UMNO) party that is the linchpin of the ruling coalition is beginning to cast this approach aside in a bid to woo conservative Malays.

The caning of three women under strict Islamic laws last month for having illicit sex signalled the government’s increasing adoption of a stronger Islamic agenda, which has worried some investors. A heated row over the use of the word "Allah" by Christians, which sparked attacks on religious establishments, is also threatening to prolong minority unhappiness with the government.

What to watch:

— The government’s court appeal against a ruling that allowed a Catholic publication to use the word "Allah"

— If religious tensions worsen, the government may decide to put on hold further measures to withdraw special privileges for ethnic Malays in case this worsens Malay discontent and undermines support for the government.

— If the government tries to woo Muslim voters with more conservative policies based on Islam, investors may be spooked.

— A severe worsening of tensions could raise the spectre of sectarian unrest, but this is not regarded as likely for now.

* CORRUPTION

Malaysia used to be regarded as one of the region’s more reliable countries, but worsening corruption and a perceived lack of judicial independence have damaged investment.

What to watch:

— Government efforts to deal with a scandal over a port trade zone close to the capital of Kuala Lumpur that exposed links between politics and business. False government guarantees given when the bonds were sold have triggered concerns among holders of $1 billion of bonds that they might not be repaid. (Editing by Andrew Marshall)



Feb 5, 2010

Malaysian media shapes battleground in Anwar trial

KUALA LUMPUR (Reuters) – Malaysian media photos showing “in camera” proceedings in the sodomy trial of opposition leader Anwar Ibrahim prompted complaints of bias in the politically charged trial on Friday.

The graphic picture in Friday’s edition of government-controlled Malay language Utusan Malaysia showed a 24-year-old man, who says Anwar had sex with him, gesturing toward a bed.

Feb 2, 2010

Malaysia opposition head to call PM in sodomy case

KUALA LUMPUR, Feb 2 (Reuters) – Malaysian opposition leader
Anwar Ibrahim said on Tuesday he would subpoena the country’s
premier in a bid to escape what he says are trumped up charges
of sodomy that could see him jailed for 20 years.

Speaking outside a packed courtroom and cheered on by 250
supporters shouting “justice for Malaysia, justice for Anwar”
the 62-year-old former deputy premier said the presence of so
many foreign embassy staff in court on the first day of his
trial showed the “interest, concern and disgust” it was
attracting.

Feb 1, 2010

Five political risks to watch in Malaysia

KUALA LUMPUR, Feb 1 (Reuters) – The ruling coalition of Malaysian Prime Minister Najib Razak may delay some planned economic reforms as tensions rise over the trial of opposition leader Anwar Ibrahim and ethno-religious rivalries.

Sovereign 5-year credit default swaps for Malaysia <MYGV5YUSAC=R> are trading at a spread of around 101.67 basis points, compared to a weighted average of 134.40 for the Thomson Reuters Emerging Asia Index. The implied risk of a Malaysian default is seen as lower than Thailand, with a spread of 111.00 basis points, and South Korea at 103.75, but higher than China, Hong Kong and Singapore.

Following is a summary of key Malaysia risks to watch:

* POLITICAL CONFLICT

The National Front which has ruled Malaysia for 52 years recorded its worst performance in last year’s general election, losing control in five states and its once iron-clad two-thirds control of parliament. Voters, especially the country’s Chinese and Indian ethnic minorities, abandoned the National Front in favour of Anwar’s three-party opposition.

Anwar’s upcoming trial on renewed sodomy charges will provide a flashpoint. Malaysia’s political stability has deteriorated significantly over recent years, and investment will be further damaged if that trend continues.

What to watch:

— Anwar’s trial. Opposition supporters widely regard the trial as politically motivated, and it is likely to further dent Malaysia’s attractiveness for foreign investors. If a contentious or divisive verdict seems likely, more foreign money will be pulled from Malaysia’s markets, pulling down stocks <.KLSE>, bonds and the ringgit <MYRX=>. But with limited foreign portfolio investment still in the country, the impact will be muted.

— A leadership tussle in the Malaysian Chinese Association, the second biggest party in the ruling National Front coalition, might drive more Chinese voters to the opposition.

* ECONOMIC REFORM

The government has promised further economic reform to attract more foreign investment. Najib has rolled back elements of a four-decades old Malay affirmative policy, relaxing the rule that companies must offer stakes to indigenous ethnic Malays. But Najib is wary of upsetting the Malays, a critical vote bank, and treads carefully on economic reform. This may cause him to dilute or abandon his plans as he attempts to remain in power.

What to watch:

— Government policy implementation and announcements. A further bout of liberalisation has been trailed by the government, although while investors have greeted positively measures so far, little money has flowed into Malaysia’s markets as they are wary over implementation.

— The government’s moves to reduce crippling fuel and food subsidies. Past fuel price hikes have drawn an intense public backlash, so the reaction to the government’s expected announcement of a two-tier fuel price in May will be key.

— The appointment of a new head of state oil-firm Petronas, with President and Chief Executive Officer Hassan Marican’s contract reported to expire in February. A failure either to extend the contract of Hassan — who is renowned for his no-nonsense approach in running the oil firm — or to replace him with a rank outsider may be read as an attempt to put in place an executive more pliable to government whims, which could sour market confidence.

* RACE AND RELIGION

Race and religion have always been explosive issues in Malaysian politics. Najib took power pledging a more inclusive approach to ethnic Chinese and Indian minorities, but his United Malay National Organisation (UMNO) party that is the lynchpin of the ruling coalition cast this approach aside to try to prevent further loss of support amongst its Malay powerbase.

Najib, who took office in April last year, received a boost in approval ratings following measures to liberalise the economy and a pledge to promote inclusiveness. His gains, especially among minority ethnic groups, are in doubt after religious tensions flared over whether Christians could use the word "Allah" to describe God. The row sparked anger among ethnic Malays and deep unhappiness among non-Muslims.

What to watch:

— If religious tensions worsen, the government may decide to put on hold further measures to withdraw special privileges for ethnic Malays in case this worsens Malay discontent and undermines support for the government. A severe worsening of tensions could raise the spectre of sectarian unrest.

— If the government tries to woo Muslim voters with more conservative policies based on Islam, investors may be spooked.

* CORRUPTION

Malaysia used to be regarded as one of the region’s more reliable countries but worsening corruption and a perceived lack of judicial independence have damaged investment.

What to watch:

— Government efforts to deal with a scandal over a port trade zone close to the capital of Kuala Lumpur that exposed links between politics and business. False government guarantees given when the bonds were sold have triggered concerns among holders of $1 billion of bonds that they might not be repaid.

— How Najib handles the dilemma of bolstering his core support bloc while also cracking down on corruption. Investors are watching to see whether promised reform materialises.

— Indicators gauging corruption in Malaysia. Transparency International’s 2009 Corruption Perceptions Index saw a significant deterioration in Malaysia’s ranking to 56th out of 180 countries from 47th the previous year.

* SECURITY

The insurgency in southern Thailand has implications for Malaysia, particularly if it starts to draw more attention and sympathy from Malaysians for the ethnic Malay fighters across the border. A less likely danger is that al Qaeda-linked groups manage to establish a foothold in the area.

Much of the leadership of regional al Qaeda offshoot Jemaah Islamiah came from Malaysia or spent considerable time there. The main JI organisation is thought to have abandoned violent attacks on foreign targets but splinter groups remain at large.

In January, police said 10 people, nine of them foreigners, had been arrested on suspicion of links to international militant groups. Local media reports that the suspects were linked to the Nigerian passenger who tried to detonate a bomb on a flight into the United States on Dec. 25 could not be verified.

What to watch:

— Signs the insurgency in Thailand is becoming more of a political issue in Malaysia could worsen regional tensions and unsettle markets. Any evidence al Qaeda is gaining traction in the region would also be a negative factor for markets. (Editing by Andrew Marshall)



Jan 15, 2010

U.S. warns of possible attack in Malaysia’s Sabah

KUALA LUMPUR (Reuters) – Police stepped up security after the United States Embassy in Malaysia warned on Friday that criminal and terrorist groups were planning attacks against foreigners in the Borneo island state of Sabah.

A “warden notice” posted on the embassy’s website (malaysia.usembassy.gov/), dated Friday, said resorts located in isolated areas of eastern Sabah, a state bordering the southern Philippines, were of “present concern.”

Jan 12, 2010

Malaysian Christian challenges “Allah” CDs seizure

KUALA LUMPUR (Reuters) – A Christian is challenging the confiscation of CDs referring to “Allah,” church officials said on Tuesday, a case that could deepen a row over Christians’ use of the word to refer to God in mostly Muslim Malaysia.

Rising religious tensions could threaten Prime Minister Najib Razak’s efforts to rebuild a ruling coalition hit by big losses in 2008 elections as well as Najib’s efforts to put Malaysia back on the global investment map, analysts said.

Jan 8, 2010

Malaysian Muslims rally after church attacks

KUALA LUMPUR (Reuters) – Malaysian Muslims rallied on Friday to protest against Christians using the word “Allah” for God after a spate of attacks on churches that threatened to stoke racial and religious tensions.

At least three churches were struck early on Friday in an unprecedented spate of attacks in this mainly Muslim country as a row over a court ruling that allowed a Catholic newspaper to use the word “Allah” in its Malay language editions presented a major challenge to the government.

Jan 8, 2010

Malaysian churches attacked as Allah row worsens

KUALA LUMPUR (Reuters) – Arsonists attacked at least three churches in Malaysia early on Friday, prompting tighter police checks at churches nationwide ahead of mass demonstrations in a row over the use of the word “Allah” for the Christian God.

Protests were due to take place later in the day to denounce a court ruling last week in predominantly Muslim Malaysia allowing the Catholic Herald newspaper to use “Allah” in its Malay-language publication.

Jan 5, 2010
via FaithWorld

Q+A – What’s next in Malaysia’s “Allah” row?

Photo

Facebook group protesting Allah ruling, 5 Jan 2010/Bazuki Muhammad

Malaysia’s government has filed for a stay of execution pending its appeal of a court ruling allowing a Malay-language Catholic paper to describe the Christian God as “Allah”, amid growing Islamic anger in the country. We reported on the dispute here yesterday, including how it has spilled over into Facebook.

What lies ahead in this row threatening to increase religious tensions in the mainly Muslim but multi-racial Southeast Asian country?