Prime Minister Najib Razak @flickr by UN Women
As Najib Razak, Malaysia's current Prime Minister, struggles for political survival on the back of the 1MDB scandal, observers are questioning whether this signals the end of his position as the nation's leader - especially with a vote of no-confidence planned for October 19th. And the accusations are flying thick and fast, as investigations into Najib's role in the scandal, an alleged transfer of state funds into a personal offshore account, appear to have opened up a whole series of old wounds and patiently awaited petty revenges.
Many of Najib's problems lie in the perception that the nation is in poor economic position at present, with the 1MDB scandal threatening to push the country over a cliff. A media spat with former Prime Minister Mahathir Mohamad, who has linked Malaysia's economic ails to Najib's refusal to step down, only served to heighten volatility. The value of the ringgit, for example, has plunged against the dollar, at lows not seen since the Asian crash of the late 90s. Investor confidence is also at an all time low, with foreign investment into Malaysia falling by around 50% during the first half of 2015. However, this bleak picture has little to do with Najib's handling of the economy - as Malaysia is still outperforming many of its neighbors - but rather with China's recent slowdown. Why then is Mahathir linking Malaysia's finances to the banking scandal?
On further scrutiny, all is far from being doom and gloom. Moody's is still maintaining an A3 credit rating for the nation, a clear show of confidence in its ability to bounce back. Despite being an export-dependent country, Malaysia has significantly diversified its economy and seems well placed to weather the storm caused by the 1MDB allegations and the overall slump affecting emerging markets. Furthermore, figures show that but the country has done well under Najib's leadership: Malaysia will grow this year by a forecast of 5%, helped by having a current account surplus, a low unemployment rate of 3% and high levels of savings. As such, Najib re-activated in September a $4.6 billion state funded operation called the ValueCap fund, designed to shore up the country's worst hit stocks. Thanks to a multi-pronged investment program, the country is still on track to reaching "high-income" status by 2020, a feat only achieved by 13 nations since the 60s (out of 101 middle income countries).
Moreover, despite some speed bumps thrown its way by China's insatiable thirst for natural resources, Malaysia has been one of the most innovative in the region, through a sustained push to fight climate change. Under Najib, much of this innovation has been focused upon improving renewable energy sources: especially that of solar energy. Arising directly from Najib's economic policies and tax incentives aimed at promoting the solar energy industry, the country became the world's fourth largest producer of solar panels in 2014.
Too friendly with the US?
However, Najib's leadership is haunted by a particularly Southeast Asian ghost - the ghost of regimes past. In Malaysia's neighbor to the north, Thailand, there is currently a military junta in power, a junta which superficially claims to have taken up the reins in order to protect Thai sovereignty, but in reality did so to protect the economic interest and established power base of Siam's old guard. Although not quite to the same extent, a similar state of affairs could be argued to exist in Malaysia, and the 1MDB scandal has provided the perfect excuse for the old guard to bring Najib to task over what is seen as a leaning away from traditional policy. The talismanic former Prime Minister, Mahathir Mohamad, is a leading voice of this old guard and in recent interviews has pulled no punches over his disapproval with the way that his former protégé Najib is perceived to be running things. Ostensibly his disapproval stems from that tried and tested political executioner's axe: patriotic sentiment. However, reading between the lines one underlying issue arises: Malaysia's widening involvement with the US.
Under the former Prime Minister, Malaysia's lot lay firmly with the Chinese. Mahathir has always been highly critical of US foreign policy: "The U.S. tends to have a finger in every country, and when they come in, there will be trouble...They wanted to come to Malaysia also, but during my time I rejected their approach." This recent diatribe, and further dialogue in support of it, lays claim to that very pro-sovereignty sentiment that some might say we hear so often from politicians who have struggled to keep up with the pace of democracy in the 21st century; and what Mahathir describes with the insidious image of 'fingers' others might describe as the necessary mechanisms of international governance. It is often the most insular people who fear such mechanisms, who are unable to see beyond their immediate environment and into the global arena we all now inhabit. But Najib has been one of the few successes of Obama's "pivot to Asia", as he has steered his country closer to the US, eliciting much vitriol from the country's traditional power base. Unlike neighboring Thailand, Malaysia was a loud supporter of the TPP, even to the point of defying popular opinion. Traditional power sets do not like open market agreements with multiple or more powerful partners. Not only are their powers to trade to their own advantage weakened, but their practices are exposed to the eyes of the regulating bodies that always accompany agreements of this ilk. Whereas Najib is happy to move his nation forward into a mutually beneficial arrangement with the US, he is moving against the beliefs and creed of a political top brass whose mindset is still operating firmly in the 1950s.
As critical as Mahathir and his supporters are of Najib, in reality they will find it difficult to whip up enough support to have the vote of no confidence work against him as they would wish. Support within the coalition is as strong as ever, and despite some public opposition to his tenure, his position looks relatively solid.
If he is voted back in, as expected, the opposition voice championed by Mahathir is unlikely to be silenced and we can almost certainly expect further dramas to unfold.