Malaysia Today - Your Source of Independent News
Malaysia Today - Your Source of Independent News |
- The Chinese ‘Third Force’ finally sees life
- WIKILEAKS: Malaysia Promotes Islamic Finance: US Firms Concerned over Governmental Preferences
- WIKILEAKS: PM CHIMES IN ON "ISLAMIC STATE" DEBATE
- WIKILEAKS: ANWAR IBRAHIM PROJECTS OPPOSITION GAINS, DECRIES LACK OF PRESS ACCESS IN JULY 11 ...
- WIKILEAKS: High-Tech toilets for tourism; rising Ringgit. Economic Update Dec 2006
- WIKILEAKS: MALAYSIA'S MOST PROMINENT THINK TANKS
- WIKILEAKS: FURTHER MALAYSIA RESPONSE TO TANCHON COMMERCIAL BANK ACCOUNTS
- WIKILEAKS: 2006 UMNO GENERAL ASSEMBLY: ABDULLAH OVER MAHATHIR
- WIKILEAKS: GOM Touts "Record" Manufacturing Investment Approvals for 2006; Rampant ...
- WIKILEAKS: ELECTORAL REFORM NOT ON THE HORIZON
| The Chinese ‘Third Force’ finally sees life Posted: 26 Sep 2011 05:04 AM PDT
This is going to paint an entirely new scenario come the next election. MCA, MIC, Gerakan and Pakatan Rakyat are all fighting for Chinese and Indian support. But the Chinese and Indians are not impressed with political power (especially against the backdrop of an ineffective MCA, MIC and Gerakan and a not-going-anywhere DAP and PKR). They are only interested about anyone who can give them financial support, in particular for their education needs. THE CORRIDORS OF POWER Raja Petra Kamarudin While politicians and political parties like MCA, MIC, Gerakan, DAP, and PKR, and movements like Hindraf, have been jostling and elbowing one another in trying to position themselves as champions of the Chinese and Indian communities, three leading Chinese tycoons have been quietly getting together without any fanfare to set up an education charity fund called the Community Chest. *************************************** Genting to buy Pan Malaysian Pools for RM2.5bil? ********************************** Malaysia's Tanjong sells stake in gaming unit for RM2.1 billion |
| WIKILEAKS: Malaysia Promotes Islamic Finance: US Firms Concerned over Governmental Preferences Posted: 26 Sep 2011 01:00 AM PDT
A primary constraint in developing the Islamic finance industry is the lack of consensus among Islamic scholars from the Middle East and Southeast Asia on what is permissible under Sharia (Islamic law). Two fundamental differences account for the main barriers between how Islamic finance is practiced in Malaysia vs. the Middle East: the selling of debt instruments and the mingling of conventional and Islamic funds. THE CORRIDORS OF POWER Raja Petra Kamarudin
1. (U) Summary: Demand for Islamic financial paper continues to outstrip supply, due in large part to the growing interest of Middle East petrodollar holders to park their money in Sharia compliant instruments. The biggest success story to date is the Islamic bond (sukuk), the only product Islamic scholars from different parts of the globe have reached consensus on regarding their permissibility under Islamic law. The Government of Malaysia (GOM) continues to push for global consensus on a wider range of Islamic products and it is implementing regulatory and tax preferences for firms offering such products in an effort to make Malaysia a global hub for the industry in this growing niche market. As part of the GOM promotion effort, Malaysian Central Bank Governor Dr. Zeti Aziz has agreed to be the keynote speaker (see para 7) at a conference on Islamic Finance organized by the American-Malaysian Chamber of Commerce in Washington this October. Private sector views on the potential for Islamic finance are mixed but some U.S. firms have expressed concern that the GOM's preferential policies are creating an uneven playing field in Malaysia's financial market. End summary. Lack of Consensus on Sharia Compliance is a Major Constraint 2. (U) A primary constraint in developing the Islamic finance industry is the lack of consensus among Islamic scholars from the Middle East and Southeast Asia on what is permissible under Sharia (Islamic law). Two fundamental differences account for the main barriers between how Islamic finance is practiced in Malaysia vs. the Middle East: the selling of debt instruments and the mingling of conventional and Islamic funds. 3. (U) In Malaysia, Islamic scholars have accepted the practice of selling a debt instrument, while Middle Eastern scholars have determined that this is forbidden. In the Middle East, a bank practicing both conventional and Islamic finance conducts both types of business off the same balance sheet. In Malaysia a conventional bank engaging in Islamic finance is required to maintain a separate "window" with a separate set of books. The Islamic Bond: No Secret about its Success 4. (U) The concept of an "Islamic bond," however, has been accepted as Sharia-compliant by Islamic Scholars in both Southeast Asia and the Middle East. In fact, it is the only Islamic financial product on which consensus has been reached. This consensus is widely credited for driving demand for it through the roof. For example, earlier this year Khazanah, a Malaysian government-owned investment corporation, decided to offer a US$600 million equity-linked Islamic bond denominated in U.S. dollars. The bond was thirteen times oversubscribed; subsequently Khazanah decided to increase the amount on offer by 42% to US$850 million (REF A), with fifty percent of the issuance allocated to investors from the Middle East. Building Consensus on Other Islamic Principles 5. (U) Recognizing that consensus on Sharia compliance will be essential to developing this niche market, the GOM has established the Malaysian International Islamic Finance Center (MIFC) which includes a board of Islamic scholars from an array of different Muslim-majority countries. The GOM sponsors board meetings in Paris, London, and elsewhere in an effort to encourage consensus-building on Sharia compliant financial instruments. Central Bank Governor Dr. Zeti Akhtar Aziz told U.S. Ambassador Lafleur that she expected broad consensus among Southeast Asian and Middle Eastern Sharia scholars within two years (REF B). Consistent with the GOM's effort to promote Islamic finance, Central Bank Governor Dr. Zeti has agreed to deliver the keynote address at a conference in Washington, D.C. on October 18 entitled "Islamic Finance in Southeast Asia: Local Practice, Global Impact." Malaysia's Federal Budget Delivers More Favors for Islamic Finance 6. (U) The GOM is also using its Federal Budget Proposal for 2008, released September 7, to introduce provisions designed to promote Malaysia as a hub for Islamic Finance. These include: -- Non-resident experts in Islamic finance will be exempt from income tax, subject to verification of their credentials by the Malaysian International Islamic Financial Center (MIFC). This is designed to attract more talent from countries in the Middle East, many of which do not impose income tax. (This provision was championed by Citibank Malaysia which engages in both conventional and Islamic finance.) -- An existing tax exemption for management fees for Islamic funds for foreign investors will be extended to Islamic funds managed for local investors as well. -- Tax exemptions for issuers of Islamic Financing through Special Purpose Vehicles will be expanded. -- Specific tax provisions for Islamic insurance (takaful) operators will be introduced. Players Get Energized 7. (U) With such strong GOM encouragement, interest in Islamic finance is accelerating in Malaysia. On September 17 Bank Islam Malaysia signed a strategic partnership with London-based European Islamic Investment Bank PLC, according to press reports. The partnership is intended to link up the European and Asian markets for financial products that are compliant with the principles of Sharia (Islamic law). Bank Islam Managing Director Zukri Samat told reporters the bank planned to bid on arranging several Islamic bond issues, including one for US$300 million jointly with its new partner. Conventional Finance Being Crowded Out? 8. (SBU) Brad Bennett, CEO of American Home Assurance Company Malaysia, a wholly-owned subsidiary of U.S.-based American Insurance Group, told ECONOFF he was concerned that preferential regulatory treatment of Islamic Insurance (takaful) was crowding out conventional insurance products in Malaysia. The company had applied for a license to do Islamic insurance in Malaysia, but has yet to receive approval. Meanwhile, customers are switching, he said. On August 29, Central Bank Deputy Governor Zamani Abdul Ghani invited applications for reinsurance licenses (REF C). 9. (SBU) Citigroup Malaysia CEO Sanjeev Nanavati expressed similar concerns, saying the GOM's special concessions and incentives for Islamic finance gave its practitioners an unfair advantage. But Citi continues to believe Islamic finance faces so many obstacles that it will continue to struggle, even with GOM support. 10. (U) Comment: The Government of Malaysia is determined to make the country a global hub for the industry and thereby maintain the leading edge its financial firms currently possess in this growing niche. Moreover, it is coming through with the funding, the political pressure, and the regulatory and tax advantages to smooth development for financial companies in this highly regulated economy. Obstacles and opportunities in this niche market will be reviewed septel. (September 2007)
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| WIKILEAKS: PM CHIMES IN ON "ISLAMIC STATE" DEBATE Posted: 25 Sep 2011 01:00 AM PDT
The debate over whether Malaysia is an "Islamic state" continued with Prime Minister Abdullah Badawi's August 4 (2007) comments that Malaysia is neither a theocratic state nor a secular one. These remarks came as Minister Bernard Dompok broke ranks and stated his disagreement with the description of Malaysia as an Islamic state. THE CORRIDORS OF POWER Raja Petra Kamarudin
C O N F I D E N T I A L SECTION 01 OF 02 KUALA LUMPUR 001278 STATE FOR EAP/MTS AND DRL -- SARAH BUCKLEY
E.O. 12958: DECL: 08/09/2017 TAGS: PGOV, KDEM, SOCI, KISL, MY SUBJECT: PM CHIMES IN ON "ISLAMIC STATE" DEBATE
REF: A. KUALA LUMPUR 1174 (NAJIB'S ISLAMIC STATE REMARK) B. KUALA LUMPUR 949 (COURT RULES AGAINST APOSTATE) C. 06 KUALA LUMPUR 2167 (UMNO EXTENDING MALAY AGENDA) D. 06 KUALA LUMPUR 1975 (MALAYSIA'S CHINESE MINORITY) E. 06 KUALA LUMPUR 1516 (RELIGIOUS FREEDOM DEBATE WARNINGS)
Classified By: Political Section Chief Mark D. Clark for reasons 1.4 (b) and (d).
Summary 1. (C) The debate over whether Malaysia is an "Islamic state" continued with Prime Minister Abdullah Badawi's August 4 comments that Malaysia is neither a theocratic state nor a secular one. These remarks came as Minister Bernard Dompok broke ranks and stated his disagreement with the description of Malaysia as an Islamic state. Dompok supported the "Merdeka Statement" which calls for Malaysia to use its multicultural and multi-religious diversity to complete Malaysia's political, social, and economic development. Prime Minister Badawi's non-declaration, while still leaving him vulnerable to criticism from the Malay right-wing, is probably the safest route to denying the divisive "Islamic state" issue further energy ahead of general elections. End Summary. Prime Minister Responds by Taking the Middle Ground 2. (U) Debate continues over whether Malaysia is an "Islamic state," following Deputy Prime Minister Najib Razak's remarks to this effect on July 17 (ref A). Prime Minister Abdullah Badawi, who was abroad when the controversy first broke, responded to journalist inquiries on the issue on August 4. Badawi said, "We are not a secular state. We are also not a theocratic state like Iran and Pakistan which PAS (Malaysia's Islamist opposition party) wants us to be, but we are a government that is based on parliamentary democracy." He also noted, "We (the government) consist of leaders from the various religions -- Islam, Buddhism, Hinduism, and Christianity and everyone is involved in discussions to reach a consensus on national development policies." Minister Breaks Ranks 3. (U) Bernard Dompok, Minister in the Prime Minister's Office, stated at the launching of the "Merdeka Statement," an civil society-driven agenda for the country's future, that he disagrees with his "colleagues in the government" that Malaysia is an Islamic state. Dompok, a Christian who heads the United Pasok-Momogun Kadazandusun Organization (UPKO, a Sabah political party), argued that the nation's founders did not intend for Malaysia to be an Islamic state when they created the Malaysian Federation in 1963, after Sabah, Sarawak, and Singapore joined with Malaya. One of nine non-Muslim ministers out of 32 total ministers, Dompok is the only Minister to object publicly to the Islamic state claim. Opposition party leader Lim Kit Siang praised Dompok's comments for their "honesty, courage, and conviction in speaking the truth that Malaysia is not an Islamic State." Merdeka Statement 4. (SBU) Forty-two local civil society organizations contributed over a six-month period to the development of the Merdeka (Freedom) Statement, the release of which is timed to coincide with Malaysia's 50th independence anniversary. The wide-range of NGOs includes the Malaysian Bar, the Human Rights Society of Malaysia (HAKAM), the Centre for Independent Journalism, Sisters in Islam, the Council of Malaysian Churches and Education & Research Association for Consumers (ERA Consumer). The Merdeka Statement advocates the government adopt an eight-prong strategy for moving Malaysia forward as a fully developed nation. The core element of the strategy is using Malaysia's multicultural, multilingual, and multi-religious character to advance the country's social, economical, and political development. The Merdeka Statement focuses heavily on the supremacy of the Federal Constitution as "the primary reference point for strengthening national unity," which its drafters see as implicitly backing arguments in favor of Malaysia as a secular state. Comment 5. (C) Prime Minister Abdullah's non-declaration, while still leaving him vulnerable to criticism from Malay Muslim conservatives, is probably the safest route to denying the "Islamic State" issue further energy and avoiding divisiveness within the ranks of the National Front government ahead of the general elections. This is consistent with the Prime Minister's approach to the Article 11 controversy last year (ref E). When public debate of Article 11, the freedom of religion clause in Malaysia's Constitution, heated up, Abdullah warned both sides to stop the discussion and took the issue off the table, at least in public forums. The government's heavy influence over the media and other societal controls can restrain the public debate, but leaves the fundamental issue unresolved. LAFLEUR (August 2007)
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| WIKILEAKS: ANWAR IBRAHIM PROJECTS OPPOSITION GAINS, DECRIES LACK OF PRESS ACCESS IN JULY 11 ... Posted: 24 Sep 2011 01:00 AM PDT
Anwar, in this and previous conversations, recognized the pitfalls of appearing overly close to the U.S., and while he called on us to lobby for democratic reform, he was unable to offer practical suggestions for making such a U.S. approach effective. Anwar's comments on Abdullah and Najib are in line with his earlier statements, in particular Anwar's public attacks on Najib. Khalid Ibrahim failed to impress us in this meeting as PKR's new secretary general, though we note he has occupied this position for little over one month. Khalid appeared more comfortable speaking of his business management experience with palm oil plantations rather than opposition politics. THE CORRIDORS OF POWER Raja Petra Kamarudin
REF: A. KUALA LUMPUR 950 - ANWAR'S STRUGGLE FOR RELEVANCE B. KUALA LUMPUR 905 - ANWAR AT PAS CEREMONY C. KUALA LUMPUR 867 - PM AIDE ON ANWAR AND ELECTIONS D. KUALA LUMPUR 291 - IMPLICATIONS OF MURDER PROBE E. KUALA LUMPUR 153 - ANWAR ATTACKS NAJIB
Classified By: Ambassador Christopher J. LaFleur for reasons 1.4 (b and d).
Summary 1. (C) Former Deputy Prime Minister Anwar Ibrahim told the Ambassador during their July 11 discussion that he believed opposition parties could capture some 40 parliament seats or more in the next general election, projecting from results of the April Ijok by-election. Anwar's People's Justice Party (PKR) lost in Ijok due primarily to the ruling National Coalition's overwhelming advantage of money and state resources, he explained, but PKR nevertheless secured the majority of Chinese votes and almost half of the Malay vote. The PKR leader decried the unfair electoral playing field, particularly the opposition's lack of access to the government-controlled media. He praised the work of U.S. democracy NGOs NDI and IRI, along with NED, and hoped other groups, including the Carter Center, would play a role in encouraging reform. Anwar urged the U.S. and other countries to lobby Prime Minister Abdullah and other senior leaders over issues like press freedom. The Ambassador noted that overt U.S. pressure for certain political changes could be counterproductive, a risk Anwar acknowledged. Anwar criticized current affirmative action policies for Malays as harming Malaysia's competitiveness, but did not spell out a way to sell his alternative to Malay constituents. The Ambassador briefed Anwar on the state of play with Free Trade Agreement talks. Anwar described PM Abdullah as a "dear family friend" and well-meaning, but "completely incompetent." Nevertheless, Abdullah was preferable to his deputy, Najib Tun Razak, who "cannot be trusted." We assess that the increased opposition gains projected by Anwar are not impossible but remain highly unlikely, and the PKR itself is the weakest of the opposition parties. Anwar's chances for a return to high office are obscure, and his most plausible route back to power - being invited back into UMNO - remains closed for now. End Summary. Opposition Could Double Parliament Seats 2. (C) The Ambassador, joined by DCM and polchief, hosted prominent opposition figure and former Deputy Prime Minister Anwar Ibrahim for lunch at the Residence on July 11, the latest in a continuing series of meetings with senior leaders of Malaysian political parties. PKR President Wan Azizah (Anwar's wife), PKR Secretary General Khalid Ibrahim, and PKR Treasurer William Leong accompanied Anwar. In response to the Ambassador's query, Anwar stated that opposition parties could win 40 parliament seats in the next general election, and hoped that this figure might reach 60 (currently opposition parties hold 20 out of 219 seats in Parliament; PKR holds only one). Chinese-majority Penang and Sabah with its turbulent political scene represented the states where PKR hoped to make the most gains. Anwar based his 40 seat estimate on projections from ethnic voting patterns in the April by-election in Ijok. PKR lost that contest against the ruling National Front (BN), but nevertheless attracted some 40 percent of the total vote. Anwar claimed that in Ijok PKR received 60 percent of the Chinese vote, roughly half of the Malay vote, and 15 percent of the Indian votes cast, and he had used these figures as a basis for his national projection. Ijok Lost to Money Politics 3. (C) Anwar and Khalid Ibrahim, who stood as PKR's candidate in Ijok, ascribed their loss in the by-election to BN and the leading UMNO party's extensive use of money politics ("one thousand ringgit given to every household") and state resources. The government also employed harassing tactics, such as police interfering with and sometimes disallowing campaign speeches. PKR's dismal showing among Indian voters reflected BN's choice of an ethnic Indian candidate (while Khalid is a Malay) and the inability of PKR to campaign within plantations that are home to many Indians. Khalid, who is a prominent businessman, former executive of Mahathir's National Capital Agency, and former CEO of a large state-owned plantation holding company, described the Ijok election as a "rough introduction" to politics. BN Advantage Less Pronounced in Nationwide Election 4. (C) UMNO's huge advantage in resources and party machinery would be less of a factor in the national election, Anwar noted, as UMNO could not afford to finance hundreds of campaigns at the same level of the Ijok poll. Also, BN did not have the capacity to direct government officials, particularly the police, to interfere with opposition campaigns simultaneously across the nation, but instead would need to focus such tactics on a few high-priority electoral districts. He claimed many lower level officials and police were sympathetic to him, and would not take prejudicial action against the opposition without specific direction from senior officials. Anwar observed that in practice the government restricted PKR's activities more than those of the Islamist opposition party PAS. Anwar offered no predictions of the election's timing, while Wan Azizah said PM Abdullah might be waiting until after presentation of the budget in Parliament on September 7. Anwar Encourages Democracy NGOs, Foreign Election Groups 5. (C) Anwar praised the democracy strengthening activities undertaken by U.S. NGOs the National Democratic Institute and the International Republican Institute, along with funding provided by the National Endowment for Democracy, while noting that such support remained very small relative to funds for neighboring Indonesia. The U.S. NGO support for the establishment of "election watch" and "media watch" bodies was very important. Anwar said he continued to encourage the involvement of the Carter Center and European NGOs, along with bodies from Indonesia and Turkey, in some sort of democracy monitoring activities. At the very least, the foreign group's presence and attention would lead to better understanding of Malaysia's political reality and democratic shortcomings, Anwar offered. However, when asked how monitors would obtain the requisite visas, Anwar acknowledged that the government would never accept international election monitors. Anwar also agreed that too-public U.S. lobbying for better treatment of the opposition could be counterproductive in Malaysia's highly nationalistic environment, one in which politicians could easily whip up public indignation by branding the opposition - as Anwar himself had been - as doing US bidding. On the other hand, Anwar and the Ambassador agreed, on-going, low-key U.S. democracy programming was making an important contribution to Malaysia's political future. Seeks U.S. Lobbying on Press Freedom 6. (C) The Ambassador queried Anwar on the effect of the media on opposition prospects. Anwar noted, only half in jest, that former PM Mahathir's use the media to attack political opponents was preferable to PM Abdullah's orders to the government-controlled press to ignore the opposition, particularly Anwar himself. Anwar continued to address occasional large rallies, and put his views out through the internet press, but he admitted that lack of access to the mainstream media constituted a severe handicap. During the Ijok election, he noted that he faced a barrage of press attacks on his character, including repeated airing of footage of a jig he performed on a campaign stage with commentary describing this as unbecoming of a Muslim (and juxtaposed with footage of President Bush at an African dance performance to imply that Anwar is in America's pocket). Anwar urged the U.S. to lobby Prime Minister Abdullah and other senior leaders in a discreet manner to encourage press freedom, among other democratic reforms. Criticism of Economic Management and NEP 7. (C) The PKR leaders criticized Malaysia's economic management and doubted the country's growth could keep pace with other Asian economies. Anwar explained his rejection of the government's long-standing Malay affirmative action programs, referred to as the New Economic Policy (NEP), which he said left Malaysia at a comparative disadvantage in seeking foreign direct investment, generated racial tension and only benefited Malay elites. Instead, he favored a needs-based approach that would better assist disadvantaged Malays and others, but he did not outline a convincing strategy for selling his views to the Malay voters. Khalid Ibrahim, who previously played a key role in implementing NEP objectives, appeared less enthusiastic about opposing Malay affirmative action and somewhat confused as to Anwar's own approach. Ambassador Briefs on FTA 8. (C) The Ambassador briefed Anwar on the status of the Free Trade Agreement talks, noting the essential point of reaching a good agreement that would attract U.S. congressional support regardless of fast track trade promotion authority. Anwar and Khalid expressed disappointment that Malaysia failed to reach an agreement with the U.S., while South Korea had succeeded. Anwar Prefers Incompetent Abdullah Over Corrupt Najib 9. (C) Anwar made a point of describing Prime Minister Abdullah as a "dear family friend" and a well-intentioned politician. Abdullah, however, was "completely incompetent," and had left the government without leadership, an opinion enthusiastically endorsed by Wan Azizah. Nevertheless, Abdullah was preferable to his deputy, Najib Tun Razak, who "cannot be trusted" and was thoroughly corrupt. Anwar expressed dismay at the huge pay-off Najib reportedly received as part of Malaysia's purchase of French submarines. The PKR leaders referred to the on-going murder trial of Najib advisor Razak Baginda and two policemen as symbolic of the government's lack of integrity and disarray. Comment 10. (C) The increased opposition gains projected by Anwar for the next election are not unimaginable but remain highly unlikely. Even Anwar's high estimate of sixty opposition seats in Parliament would fall short of the key one-third - needed to block any constitutional changes that might be proposed by the UMNO-led coalition - which has always been viewed here as the minimum that the ruling coalition must secure to sustain its grip on power. It is, in any case, highly unlikely that Abdullah would be so visibly gearing up for early elections if such loses were likely. Among opposition parties, Anwar's PKR appears to have the worst prospects with its already limited machinery weakened by a spate of defections following its party congress in June. Moreover, at this moment UMNO appears to be focusing more on Anwar and PKR than on the other opposition elements, with PM son-in-law Khairy Jamaluddin calling for voters to "bury" PKR in the polls. Malaysia's mainstream media, although arguably less constrained under Abdullah than it was under Mahathir, remains subject to government direction, and the general inability of opposition voices to reach the public through the press is a longstanding obstacle only partially alleviated by increasing public access to the - so far - largely un-censored internet. 11. (C) Anwar, in this and previous conversations, recognized the pitfalls of appearing overly close to the U.S., and while he called on us to lobby for democratic reform, he was unable to offer practical suggestions for making such a U.S. approach effective. Anwar's comments on Abdullah and Najib are in line with his earlier statements, in particular Anwar's public attacks on Najib. Khalid Ibrahim failed to impress us in this meeting as PKR's new secretary general, though we note he has occupied this position for little over one month. Khalid appeared more comfortable speaking of his business management experience with palm oil plantations rather than opposition politics. 12. (C) Anwar remains one of the most charismatic figures - some would argue the only charismatic figure - in Malaysian politics. Although his ban from political activity (based on his past conviction for misuse of his government position) does not expire until April, 2008, he appears to have shaped for himself a role as the de facto leader of his party which the government appears willing to tolerate. 13. (C) However, Anwar's chances for a return to high office - which virtually everyone here assumes to be his ultimate objective - remain obscure. He is unlikely to even get the chance to gain a parliamentary seat as most expect Abdullah to call elections well before Anwar's political ban expires next year. (Should this be the case, Anwar's backup plan probably entails arranging the resignation of an elected PKR MP after April 2008, forcing a by-election in which Anwar then could run. This possibility may contribute to the UMNO drive to prevent PKR from gaining any seats.) The current disquiet among the Chinese community with the Malay chauvinism expressed by many UMNO leaders could cut into the ruling coalition's totals in that election, but disgruntled Chinese are more likely to turn toward the Chinese opposition party DAP than to Anwar, whom many still remember as a quite chauvinistic Malay leader in his own right when he was in UMNO. In any event, while few expect the ruling coalition to do as well in the next election as it did in 2004, no objective observer here anticipates the ruling coalition losing control of the parliament. 14. (C) Anwar's most plausible route back to power remains the one he used to get there in the first place - being invited back into UMNO. When Abdullah was under attack from Mahathir last year, some perceived a chance of a split between Abdullah and his only obvious successor, Deputy PM Najib, that would lead to one or the other bringing back Anwar, who is thought to retain residual support in the party grass roots. However, Mahathir's apparent health problems and Najib's oft-rumored connection to the Mongolian murder case currently in the courts have effectively eliminated any near-term challenge to Abdullah's pursuit of a second five-year term. Anwar therefore appears to be concentrating his attacks on Najib in hopes he can help bring about the DPM's fall and open up fissures in UMNO middle ranks that will give him other opportunities. The fact that some UMNO leaders recently proposed a new party regulation, which would deny party membership to former PKR members, suggests that Najib's supporters still see Anwar as a threat that cannot be written off. LAFLEUR (July 2007)
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| WIKILEAKS: High-Tech toilets for tourism; rising Ringgit. Economic Update Dec 2006 Posted: 23 Sep 2011 01:00 AM PDT
In response, the GOM installed 23 high-tech, self cleaning toilets in major shopping areas and tourist sites in and around Kuala Lumpur. Each air-conditioned toilet, which reportedly costs RM 400,000 (USD 113,000), has an automatic seat cleaner that washes, scrubs and dries the bowl after every use, according to the city authorities. Users are charged RM1 (USD 0.28) per use. Deputy Prime Minister Najib, who tested one of these toilets during their debut, said clean toilets were a measure of a country's level of civilization. THE CORRIDORS OF POWER Raja Petra Kamarudin
1. (U) Summary: The Government of Malaysia is ready to launch its drive to attract more tourists this year in honor of its 50th anniversary. Initiatives include a multi-million dollar Ferris wheel, sorely needed lessons in customer service, and 23 self-sanitizing toilets at a cost of USD 113,000 each, in addition to a generous appropriation for an advertising campaign. Meanwhile, the Ringgit continues to strengthen against the dollar, but less so than some other currencies in the region. End Summary. Launch of Visit Malaysia Tourist Campaign 2. (U) Malaysia will soon kick off a grand tourism campaign entitled "Visit Malaysia Year 2007" (VMY 2007) with the theme "One Golden Celebration." The campaign, in honor of Malaysia's 50th year of independence from Britain, aims to draw in over 20 million tourists and generate spending of RM 44.5 billion (USD 12.7 billion). In 2006 Malaysia drew 17.5 million tourists who spent an estimated RM38 billion (USD 10.8 billion), mostly coming from Singapore, Thailand and Indonesia. 3. (U) On January 6, Prime Minister Abdullah will launch the VMY 2007 campaign at the Titiwangsa lakeside park in Kuala Lumpur with a "Colors of Malaysia" celebration that will include a portable 60 meter high giant Ferris wheel named the "Eye on Malaysia." A Malaysian Tourism Promotion Board (MTPB) official told FSN Econ Analyst that the RM30 million (USD 8.5 million) Ferris wheel will face the Kuala Lumpur skyline. Other activities will include a water screen display on Malaysia's history, rides, and performances by local artists. Several fireworks displays are also scheduled throughout the year. 4. (U) According to the MTPB official, the Ministry of Tourism is coordinating over 240 events for VMY 2007 nationwide, with 50 major events showcasing Malaysia's tourist attractions. The MTPB has invited print and electronic media representatives to publicize the campaign and is working to link up local tour companies and airlines with international operators to highlight places to visit in Malaysia. The GOM is developing tour packages tailored to specific travel interests such as shopping, exotic cultures, or nature vacations. MTPB's targeted markets are ASEAN, China, India, the Middle East and Europe, with special attention being given to countries where cold winters are more likely to entice travelers to visit warm exotic places. The government-owned radio station is working with a private production house to air tourism programs. Plans for VMY2007 5. (U) Malaysia has allocated RM 200 million (USD 56.7 million) for promotional activities to bring in the tourists. Working with other countries in the ASEAN region, the MTPB has come up with new programs such as a "one destination, two nations" package that promotes both Malaysia's and a neighboring country's tourist sites through the national airlines of both countries. The VMY 2007 organizers will also coordinate with the state governments to promote region-specific tourism. On average, MTPB said tourists spend about RM 2,600 each but the tourism industry is hoping to entice tourists to increase their spending to RM 3,500 each with new packages and special deals. The Tourism Ministry hopes to increase tourists' spending in part by asking local tour operators to promote tourist destinations outside or in addition to the typical preferred destinations. Cheap Hotels; Courtesy Courses; Taxi Crackdown 6. (U) A representative of the Malaysia Hotel Owners Association told FSN Econ Analyst that few hotels acted on last year's approval by the Ministry of Tourism to increase prices. Competition is fierce due to Malaysia's abundance of hotel rooms, which helps keep prices among the lowest in the region. 7. (U) The Ministry of Tourism has started to train some 20,000 service providers in the tourist industry, including taxi drivers, hotel and shopping mall staff, tour coach operators, and Customs and Immigration officials. Programs include crash courses in Malaysian tourist attractions, customer service, and basic spoken English communication. 8. (U) The GOM also is taking stern action against unlicensed taxi service providers at the Kuala Lumpur International Airport. A draft amendment to the Road Transport Act would carry a fine of up to RM 50,000 (USD 14,000) and a sentence of up to five years in jail, or both, for providing non-licensed taxi services from the airport. These providers normally offer cheaper fares but the GOM finds their solicitation of arriving passengers "aggressive" which, according to Tourism Minister Datuk Seri Tengu Adnan, "could reflect poorly on the country during VMY2007." High Tech Toilets 9. (U) Malaysia's public toilets have become a hot issue for the GOM because of tourist complaints that they are often dirty with water everywhere and basic items such as soap and toilet paper missing. In response, the GOM installed 23 high-tech, self cleaning toilets in major shopping areas and tourist sites in and around Kuala Lumpur. Each air-conditioned toilet, which reportedly costs RM 400,000 (USD 113,000), has an automatic seat cleaner that washes, scrubs and dries the bowl after every use, according to the city authorities. Users are charged RM1 (USD 0.28) per use. Deputy Prime Minister Najib, who tested one of these toilets during their debut, said clean toilets were a measure of a country's level of civilization. The Strengthening Ringgit 10. (U) On December 22, Malaysia's ringgit appreciated to 3.5278 against the U.S. dollar, its highest level in nine years. The currency had weakened to a two-week low against the dollar on December 18 following news of Thailand's imposition of capital controls but bounced back when Thailand reversed its decision a day later. Several senior Malaysian government officials and the central bank immediately announced Malaysia would not impose similar capital controls. The ringgit subsequently fluctuated between 3.53 and 3.54 during the final week of 2006. 11. (U) Malaysian officials appeared to shrug off concerns that the strength of the ringgit against the dollar would hurt the nation's trade-driven economy. The press reported that Second Finance Minister Nor Mohamed Yakcop said the government was not worried about the ringgit's rise because the currency's strength is mainly the result of the U.S. dollar's weakness. He said the ringgit was not that strong when viewed against other currencies and has not approached a level which could hurt exports, noting that other Asian currencies have appreciated more against the US dollar. For 2006 the ringgit gained 7% against the dollar while the Thai baht appreciated 13% and the Indonesian Rupiah 8%. (Comment: Malaysia shifted the ringgit peg to a managed float system based on a basket of trade-weighted currencies in July 2005. The Central Bank closely monitors fund flows in and out of the country and intervenes in the market in an effort to maintain the ringgit within in a range to ensure economic stability.) 12. (U) Bank Negara data indicated that from July 2005 to the end of September 2006, the ringgit had appreciated 3.1% against the US dollar and 7.9% against the Japanese yen, but during the same period had weakened by 7.6% against the Thai baht, by 7.3% against the Philippine peso, by 6% against the Korean won, by 3.3% against the Indonesian rupiah, by 2.8% against the Singapore dollar and by 1.4% against the Chinese renminbi. 13. (U) Analysts say the ringgit has more room to strengthen on expectations of further appreciation of other Asian currencies, particularly the renminbi. The Malaysian Institute of Economic Research (MIER), an economic think tank, estimate that the ringgit is still undervalued and expect it to reach 3.5 to the dollar by the end of the first quarter of 2007. Commerce International Merchant Bank (CIMB) also revised upwards its forecast for the ringgit, raising its forecast from 3.55 to 3.45 by end of 2007. A Dow Jones Newswires poll of 10 financial institutions put expectations at 3.535 to the dollar by the end of March and 3.455 by the end of 2007. Inflation Eases 14. (U) Malaysia's consumer price index (CPI) rose 3% year-on-year in November, the lowest rise in 15 months. For January to November, the CPI increased 3.7% from a year ago. For the full year, inflation is expected to reach 3.6%, below the Ministry of Finance official projection of 3.9%, and is expected to continue to ease. Although the government has not made a forecast for next year's inflation, CIMB has projected inflation to retreat to 2.7% in 2007, provided there is no hike in fuel prices. Comment 15. (SBU) The GOM's lavish spending to attract tourists bears all the marks of typical government waste and economic micro-mismanagement. The concept of letting the private sector do what the private sector does best has not quite caught on in Malaysia. It is the government, not the private tour operators, putting together the packages and telling people where they ought to want to go. The bright side is that the GOM seems aware of the need to improve customer service throughout the country; training in this area could prove a worthwhile investment. The same cannot be said for an 8.5 million dollar Ferris wheel and two dozen hundred-thousand-dollar toilets. SHEAR (January 2007)
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| WIKILEAKS: MALAYSIA'S MOST PROMINENT THINK TANKS Posted: 22 Sep 2011 01:00 AM PDT
The Minister of Agriculture and UMNO Vice President, Muhyiddin Yassin, called the report 'rubbish' and like other Malay officials refused to address the reports findings and characterized it solely as an attempt to incite racial tension. ASLI, realizing that it would not be able to take on the government, distanced itself from its own report, leading to the resignation of Dr. Lim from the think tank. Notwithstanding the opportunistic political attacks against ASLI, the GOM has not taken any serious action against any think tanks. THE CORRIDORS OF POWER Raja Petra Kamarudin
1. (C) Summary: Malaysia's most prominent think tanks all have historical ties to and receive substantial funding and material support from the Government of Malaysia. The Institute of Strategic and International Studies (ISIS), the Malaysian Institute for Economic Research (MIER), and the Asian Strategic and Leadership Institute (ASLI) represent Malaysia's most prominent think tanks. The Penang state government maintains a think tank that focuses on local policy issues. Although they all comprise well-educated and politically connected academicians and professional researchers, true independence is often lacking. Think tanks often play an active role in developing and advancing domestic policies and agendas, and by providing important input into the annual government budget process. The government's ultimate control of the purse strings and limitations on public discourse concerning issues of race relations, government transparency and religion are the dominant factors in limiting the over all scope of work. This cable responds to RFI in Ref D (C-AL7-00170). End Summary. 2. (SBU) WHAT ARE THE THREE TO FIVE MOST PROMINENT HOME-GROWN THINK TANKS IN MALAYSIA. WHAT ARE THE SOURCES OF FUNDING FOR THESE THINK TANKS? A. (SBU) Institute of Strategic and International Studies (ISIS), established in 1983, is reputed to be the first Malaysian think tank and was the brainchild of former Prime Minister Mahathir Mohamad. Although the initial funding to establish the think tank came from the government, ISIS has evolved into an independent and self-sustaining entity through returns from its investments. The GOM no longer provides direct support for ISIS' operational costs, but the institute continues to benefit from its use of a substantial government-owned office and meeting facility. ISIS continues to receive project-based funding on an ad hoc basis from the government for events and conferences it hosts. ISIS Chairman and CEO, Jawhar Hassan, is closely associated with the current political leadership and is the Chairman of the New Straits Times Press, owned by the dominant United Malays National Organization (UMNO). Jawhar has lamented to Embassy officers that the ISIS faces financial difficulties. ISIS also acts as the Malaysian representative to the Network of East Asian Think tanks (NEAT); a member of the secretariat for the Council for Security Cooperation in the Asia Pacific (CSCAP); and annually hosts the Asia Pacific Roundtable and East Asia Congress. B. (SBU) Malaysian Institute for Economic Research (MIER) is a non-profit, semi-private think tank established in 1985 devoted to economic, financial and business research. The Institute was first mooted by the Prime Minister's Economic Panel during Mahathir's administration and later promoted by the Council of Malaysian Invisible Trade (COMIT). MIER is also a consultant to national oil company PETRONAS and is located at a premise owned by the company. MIER's income is derived from economic research projects commissioned by clients in both the private and public sectors and from overseas. The Japanese International Cooperation Agency (JICA) is one of MIER's main clients and the Institute provides capacity building training courses for JICA-sponsored invitees from developing countries such as Laos, East Timor, Burma, and Afghanistan. The Institute's Executive Director is Professor Emeritus Dr. Mohamed Ariff, a prominent economist and economic advisor to several banks and to the government on an ad hoc basis. However, the Institute remains quite independent and has at times crossed swords with the government on various economic policies, while remaining a vital policy resource for PETRONAS. In contrast to ISIS, which maintains a relatively large staff of scholars, MIER has a thin bench both in terms of number and quality. Particularly since the departure of Deputy Director Kevin Chew in fall 2006, MIER has no scholars with public stature other than Dr. Ariff. C. (SBU) Asian Strategic and Leadership Institute (ASLI) was established in 1993 through funding from the Sunway Group of Companies, a private property development company whose Chairman and CEO Dr. Jeffrey Cheah is a close associate of former PM Mahathir. Mirzan Mahathir, the eldest son of the former prime minister, has served as ASLI's president since its inception. Although ASLI portrays itself as an independent think tank, it is located in a government-owned building and gets funding from the government for providing training for civil servants. The think tank's Chief Executive Officer Michael Yeoh is also the Executive Director of the Sedar Institute, a private think tank funded by ruling Barisan Nasional component Parti Gerakan Rakyat Malaysia (Gerakan). Yeoh also serves as a Commissioner on the Malaysian Human Rights Commission (SUHAKAM). D. (SBU) The Penang state government maintains its own think tank, the Socioeconomic and Environmental Research Institute (SERI), which provides policy input on local policy issues. As Penang is at the leading edge in terms of economic and social development in Malaysia, the issues SERI tackles sometimes provide a signal of future national developments (e.g., a rising consciousness about the need to address urban environmental issues created by extensive economic development in a confined space). SERI works closely with academics at the University Sains Malaysia (USM) in Penang. Its policy agenda is largely set by the state government, although it has some latitude to pursue independent interests. Executive Director Dr. Yee Lai Wan has been on the job less than a year and has launched a reorganization process. It is not clear as yet what this will mean for the institute. 3. (SBU) WHAT ROLE DO THE THINK TANKS PLAY IN POLICY DEBATES AND POLICY FORMATION? POSSIBLE EXAMPLES OF IMPACT WOULD INCLUDE ITS POLITICAL PATRONS OR CONNECTIONS, THE STATURE OF ITS LEADERSHIP, ITS CONTRIBUTION TO DRAFTING LEGISLATION, THE APPOINTMENT OF ITS STAFF TO GOVERNMENT COMMITTEES, OR THE EXTENT TO WHICH ITS CONFERENCES ARE ATTENDED AND BY WHOM. CONVERSELY, WHAT SERVICES DOES THE GOVERNMENT LOOK TO THINK TANKS TO PROVIDE AND WHEN, IN THE POLICY PROCESS? A. (SBU) The three prominent think tanks, when engaged by the government, make policy recommendations on national and international economic issues; defense, security and foreign policy issues; strategies on nation building and other issues such as on the environment and so forth. The government generally expects the think tanks to provide recommendations during the policy formulation stage. For instance, MIER was involved in formulating the Third Industrial Master Plan (IMP) for the Ministry of International Trade and Industry (MITI). According to one official with MIER, MITI was not thrilled with some of the recommendations made by MIER. When the final IMP was presented MIER noticed that some of their recommendations were omitted from the plan. During the Mahathir era, ISIS was given a major project to formulate strategies on nation building and on national unity. In early 2006, ISIS organized workshops and brainstorming sessions between its scholars, other academics and government officials to develop elements of the Ninth Malaysia plan. ISIS scholars continue to provide input to the government on socioeconomic issues, such as immigration policy. B. (SBU) ISIS formulated the "Vision 2020" strategy in 1993 that seeks to transform Malaysia into a developed nation with a united Malaysian race by the year 2020. The government used ISIS' recommendations for its 1995 general election manifesto and the ruling coalition (BN) won one of its largest majorities in Parliament. The "Vision 2020" theme remains a prominent element of the Ninth Malaysia Plan. C. (SBU) With its close ties to government, ASLI often focuses its efforts on government priorities and missions. ASLI provides yearly input into the GOM budget consultation process. For the 2007 budget, ASLI presented a list of twelve recommendations for consideration in developing and implementing national budget priorities which would encourage national development and racial diversity in the work place. ASLI also hosts yearly conferences aimed at advancing national priorities as determined by the Malaysian cabinet. Already in 2007, ASLI has hosted or planned and organized conferences and fora on advancing the developmental goals of the Organization of Islamic Conference (OIC) and promoting Non-Aligned Movement (NAM) agendas such as advancing South-South trade. ASLI has adopted PM Abdullah's focus on transparency in government and created focus papers and hosted a variety of luncheons and speakers promoting world ethics and government transparency. 4. (SBU) WHAT ROLE DO THINK TANKS PLAY IN POLICY ADVOCACY AND PROMOTING PUBLIC AWARENESS OF POLICY? POSSIBLE AREAS OF INQUIRY INCLUDE THE THINK TANK'S REPUTATION AMONG THE PUBLIC, THE EXTENT OF ITS MEDIA RECOGNITION OR COVERAGE, THE EXTENT IT NETWORKS WITH NGOS OR OTHER ELEMENTS OF CIVIL SOCIETY, ITS CONTRACTUAL WORK WITH THE BUSINESS COMMUNITY, THE NATURE AND SIZE OF ITS MEMBERSHIP, TRAINING OPPORTUNITIES IT OFFERS, OR HOW WELL ITS PUBLICATIONS SELL. A. (SBU) In terms of policy advocacy and promoting public awareness of policies, Malaysia's prominent think tanks only play a role if a particular policy has a major impact on the general populace. For instance, every year the major think tanks conduct seminars and forums prior and after the tabling of the national budget in Parliament. The think tanks discuss issues that they believe the public would want the government to include in the national budget. After the budget is tabled in Parliament, these think tanks focus on the impact of the budget on the people and businesses. Although the prominent think tanks mentioned are highly reputed, they primarily cater to and interact with elites, such as officials, professionals, researchers, and academics. Although they address issues of public concern, they do not focus on public forums. The think tank publications, which are readily available, are also targeted to an academic audience. Think tanks attract press coverage when their events feature a senior government figure or they raise issues of keen public interest. For instance, the press gave wide coverage when MIER Executive Director Prof. Ariff stated at a forum in February that it was an opportune time for the government to call for a snap election as the economy was doing well. The controversy over ASLI's findings on bumiputra (ethnic Malay/indiginous peoples) corporate equity holdings also received wide coverage both in print and electronic media (see refs A and B). B. (SBU) Although, ISIS, ASLI and MIER focus on certain niche groups, there are other politically connected smaller think tanks such as the Social Strategic Foundation (funded by the Malaysian Indian Congress, MIC), Sedar Institute (funded by Gerakan) and Insap (funded by the Malaysian Chinese Association, MCA) that cater to the needs of the their respective political party members. These think tanks tend to focus on micro-issues such as employment, race relations, and education opportunities. They also highlight training and employment opportunities for both party members and the public, especially in the private and public sectors. In some instances, these smaller think tanks cooperate with foreign foundations such as the Konrad Adenaur and Friedrich Naumann Stiftung Foundations from Germany to fund their forums and activities. In one such example, the Gerakan think tank Sedar co-hosted a race relations forum in 2006 with the Konrad Adenaur foundation. C. (SBU) The Malaysian Strategic and Research Center (MSRC) is another local think tank that once shared excellent relations with local civil society groups. As discussed more fully in ref C, MSRC was an influential political and defense based research organization that benefited extensively from its close ties with the Deputy Prime Minister, Najib Tun Razak. MSRC's conferences and workshops enjoyed support from many foreign missions, including the United States. However, in late 2006 after MSRC's Executive Director Abdul Razak Abdullah Baginda was charged with abetting the murder of a Mongolian national, the think tank quickly faded from importance and influence. No other think tanks have yet emerged with such extensive connections to civil society and international influence. D. (SBU) SERI does not have a direct influence on the federal level, but some of its ideas are picked up and broadcast by others. For example, SERI work on waste disposal has influenced NGOs in other parts of Malaysia, who in turn have sought to influence federal and other state government policies on waste disposal. 5. (SBU) WHAT EXTENT OF AUTONOMY DO THINK TANKS HAVE FROM THE GOVERNMENT? AREAS TO EXPLORE INCLUDE THE REVOLVING DOOR PHENOMENON, SOURCES OF FUNDING, OR THE EXTENT OF POLICY CONGRUENCE. EXAMPLES OF WHEN THINK TANKS HAVE CRITICIZED POLICY WOULD BE PARTICULARLY HELPFUL. (SBU) Generally speaking, Malaysia's think tanks enjoy a wide degree of autonomy but remain driven by their sources of funding. Think tanks may find themselves confined by the racial and social biases that focus and compartmentalize many elements of Malaysian society. For instance, the think tanks were asked for input in the formulation of Malaysia's Five Years development plans the latest being the 9th Malaysian Plan (2006 - 2010). ASLI's input included a report on "Corporate Equity Distribution: Past Trends and Future Policy", part of a larger report prepared for submission to the government. ASLI's Centre for Public Policy Studies (CPPS), headed by Dr Lim Teck Ghee, had invited a multi-ethnic group of academics to review urgent issues, including the alleviation of poverty, the reformation of the civil service and tertiary institutions, and the plight of the nation's highly marginalized communities, in particular the Orang Asli. Although there was a wide array of recommendations in the ASLI's report, the government focused only on the section on corporate ownership of bumiputras, which ASLI estimated to be 45%, far higher than the government's figure of 18%. The GOM's lower estimate justified the continued existence of the New Economic Policy, an affirmative action policy in favor of the majority bumiputra community. In response, the government dismissed the report outright. The Minister of Agriculture and UMNO Vice President, Muhyiddin Yassin, called the report 'rubbish' and like other Malay officials refused to address the reports findings and characterized it solely as an attempt to incite racial tension. ASLI, realizing that it would not be able to take on the government, distanced itself from its own report, leading to the resignation of Dr. Lim from the think tank. (See ref A and B for a complete discussion on GOM reactions to the ASLI report). Notwithstanding the opportunistic political attacks against ASLI, the GOM has not taken any serious action against any think tanks. 6. (SBU) WHAT ARE THE PROCEDURES FOR REGISTERING A THINK TANK? WHAT LAWS APPLY TO THINK TANK ACTIVITIES? WHAT RECOURSE DOES A GOVERNMENT AND/OR MILITARY HAVE TO ADDRESS ERRANT BEHAVIOR BY THINK TANKS? (SBU) Under Malaysian law, think tanks can register either under the Societies Act or the Company Act. In practice, nearly all think tanks opt for the Company Act, as there are fewer restrictions compared to the Societies Act, particularly in the area of fund raising. Entities generally avoid registration under the Societies Act where the Registrar of Societies has stronger enforcement powers to limit topics of discussion and discourse. Although the Government has not yet taken action against any think tank, the Registrar of Companies could be used as a punishing agent against errant organizations by auditing the financial records or by challenging the required registrations, taxes and disclosure requirements of registered companies. Perhaps more immediate to the company's continued existence, the government could cancel contracts for training and consultancy work or, as in the case of ASLI, simply reject the findings or recommendations from the "errant" organization. 7. (C/NF) WHAT TOOLS DOES THE GOVERNMENT HAVE TO EMPLOY TO MONITOR OR LIMIT THINK TANK ACTIVITIES? HOW DOES THE NATURE OF THE POLITICAL SYSTEM AFFECT A THINK TANK'S FREEDOM TO MANEUVER? EXAMPLES OF WHEN THINK TANKS WENT AWRY OF THE GOVERNMENT WOULD BE PARTICULARLY USEFUL. (C/NF) The government's most effective tool is the power of the purse. Of the three major think tanks discussed, none are sufficiently self sustaining that they could survive without government assistance or contracts. Notwithstanding this limitation, the think tanks are generally staffed with highly educated, forward thinking professionals. The best of them can and do take public stands in opposition to government policy (e.g., Dr. Ariff called for freeing the ringgit from its peg to the dollar for several years prior to Bank Negara's decision to liberalize its currency policy). The government recognizes the value of independent thinkers, and while political change is sometimes glacially slow in Malaysia, prominent think tanks play an active role in advancing new ideas and research. However, Malaysian think tanks, like many other facets of Malaysian society, seem to be limited by government-enforced restraints on open discussions regarding race relations, religion, and government transparency. Three of the nation's lingering social issues remain off the table for public discussion, even among think tanks. ASLI's venture into the discussion of bumiputra equity (see para 5 above), though a minor part of their overall report, epitomized the acceptable limits of research and reporting. LAFLEUR (March 2007)
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| WIKILEAKS: FURTHER MALAYSIA RESPONSE TO TANCHON COMMERCIAL BANK ACCOUNTS Posted: 21 Sep 2011 01:00 AM PDT
Both the FIU and Maybank would like to see on the evidence supporting the alleged link between Tanchon and Maybank so that Bank Negara can confirm whether such a relationship exists. They also requested information on the process for correcting USG records of suspicious transactions. If Bank Negara confirms that there is no relationship between Maybank and Tanchon, they would like to ask that this allegation be expunged from the record. THE CORRIDORS OF POWER Raja Petra Kamarudin
1. (C) Econoff met with Koid Swee Lian, Director of Bank Negara's Financial Intelligence Unit (FIU) and FIU official Rahman Abu Bakar June 2 at their request to discuss the alleged relationship between Tanchon Commercial Bank and Malayan Banking Berhad's (aka Maybank) Singapore branch (Ref A). The FIU also invited Shamsul Bahrin Baharuddin, Maybank's Head of Compliance Risk Management and Abdul Alim Mahmood, Senior Relationship Manager for the Americas, who presented Econoff with a letter detailing their internal investigation and categorically denying any relationship between Tanchon and Maybank Singapore or Maybank Malaysia. Both the FIU and Maybank officials reiterated their earlier requests for more information regarding the alleged relationship so that they may investigate deeper. They also expressed concern that this issue is remains open even though they requested information substantiating the allegation over a month ago. Specifically, they do not want this allegation to come out publicly nor do they wish to be surprised should the U.S. government be contemplating such an action. As they have found no ties between Maybank and Tanchon, FIU once again requested that the U.S. government expunge this allegation from the record. 2. (C) Both the FIU and Maybank remain very concerned about this case. Maybank explained to Econoff that it had not found any relationship between Maybank's Singapore branch and Tanchon. They also explained Maybank's policy regarding correspondent banks. (Note: the talking points per Ref B referred to Tanchon's "correspondent relationship with Malaysian Banking Berhad Singapore Branch." End Note.) Maybank explained that its corporate regulations require any branch entering into a correspondent relationship to seek Maybank headquarters approval. There is no record of the Singapore branch ever making such a request nor has Maybank found any record of a relationship between Tanchon and the Singapore branch. 3. (C) Action Requested: Post reiterates the request made in Ref A. Both the FIU and Maybank would like to see on the evidence supporting the alleged link between Tanchon and Maybank so that Bank Negara can confirm whether such a relationship exists. They also requested information on the process for correcting USG records of suspicious transactions. If Bank Negara confirms that there is no relationship between Maybank and Tanchon, they would like to ask that this allegation be expunged from the record. In view of our close working relationship with the FIU, and the importance of this relationship for our counterterrorism finance cooperation with Malaysia, post once again requests Washington guidance for responding to this request. LAFLEUR (June 2006)
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| WIKILEAKS: 2006 UMNO GENERAL ASSEMBLY: ABDULLAH OVER MAHATHIR Posted: 20 Sep 2011 01:00 AM PDT
In what one prominent newspaper editor privately called "the beginning of his own cult of personality," Abdullah orchestrated his entrance into the grand assembly hall as a prophet coming to address his people. As Abdullah entered the hall, the audience began singing a well-known Muslim hymn commemorating the Prophet Mohammed's entrance into Medina. Privately, local journalists and some Middle-eastern diplomats were astonished and somewhat offended that Abdullah would equate himself with the Prophet, though newspapers failed to report his entrance procession. THE CORRIDORS OF POWER Raja Petra Kamarudin
1. (C) Summary: The United Malays National Organization's (UMNO) General Assembly marked Prime Minister's Abdullah consolidation of power within UMNO and the clear political defeat of his predecessor Mahathir Mohamad after months of public attacks by Mahathir. Mahathir did not attend the assembly due to timely health reasons, but he remained the elephant in the room that everyone knew was there but no one wanted to mention. A week prior to the assembly, Mahathir suffered from a "minor heart attack" and later refused to see a visiting Abdullah. Prior to the assembly, Prime Minister Abdullah Badawi declared he would not be a one-term prime minister and threatened the party leadership not to take him for granted. A local editor claimed Abdullah is trying to build a new cult of personality, as Abdullah evoked comparisons to himself and the Prophet Mohammed. Mukhriz Mahathir assumed his father's role as Abdullah's chief critic at the assembly, but faced a political backlash for his disloyalty to the party leader. This is the first in a series of reports covering the 57th UMNO General Assembly which was held in Kuala Lumpur, November 13-17. End Summary. Mahathir avoids the dance 2. (C) Less than a week before the convocation of the UMNO General Assembly, former prime minister Mahathir Mohamed admitted himself to the National Heart Institute with complaints of chest pains. Deemed to have suffered from a "minor heart attack", Mahathir remained hospitalized until November 14, one day prior to Prime Minister Abdullah Badawi's opening of the 2006 UMNO General Assembly. Conveniently, Mahathir's health provided an excellent excuse not to attend the assembly and face a possibly hostile reception with little or no opportunity to present his own criticism of Abdullah. Given Abdullah's control over the party and its rules of order, the Prime Minister was certain to use the the assembly to reaffirm his position of leadership. Mahathir's loss as a party delegate in his long-time constituency of Kubang Paso in September (ref A), in the face of strong machine politics, was evidence enough that he no longer controlled the party he once led for 22 years. 3. (SBU) A survivor of heart bypass surgery in 1989, Mahathir's "faulty ticker" created an unassailable and face-saving excuse not to attend the assembly he fought so hard to crash. However, his hospitalization did not bring any semblance of death-bed forgiveness or reconciliation. The day after his admission to the hospital, Abdullah paid a visit to the hospital to greet his predecessor, only to be shooed away by doctors and advised that Mahathir could not see Abdullah as he was sleeping and was not able to have visitors. Mahathir was not going to attend the assembly, but he was not about to reconcile his differences with Abdullah either. "I am not a one-term prime minister" 4. (SBU) In the run-up to the assembly, Abdullah gave an exclusive interview to an UMNO-linked newspaper, Utusan Malaysia, which headlined Abdullah's declaration: "I am not a one-term prime minister." Dispelling rumors that he would not seek a second term, or conjecture that Mahathir's attacks had weakened his resolve, Abdullah went on to say, "I will not run away. I am here to stay. I have long term plans and I will ensure that these plans are implemented." Abdullah acknowledged that Mahathir's attacks were "no longer about the bridge or his other projects. He has begun a total fight against me and the government." In a closed door meeting with party leaders the following day, Abdullah advised party officials that it was becoming increasingly difficult to be nice, but warned that he could certainly be otherwise if pushed too far. As one attendee remarked, "Abdullah's main message was 'don't take me for granted.' He showed us he was firmly in control." Najib sets the tone for the assembly 5. (U) Opening the early sessions of the General Assembly for UMNO Wanita (Women), Puteri (Young Women) and Pemuda (Youth), Deputy Prime Minister and Deputy President of UMNO, Najib Tun Razak, declared the policy that would preside throughout the entire assembly: "The tradition in UMNO has been the complete loyalty to our leaders. We must be united behind Dato Seri Abdullah Ahmad Badawi, our party President and Prime Minister." Najib praised Malaysia's past leaders, but warned "there is great apprehension when the leaders we cherish begin to squabble. And the worry increases when the opposition tries to take advantage. . .Quarrels will only lead to disunity." While never mentioning Mahathir by name, Najib made it clear that past leaders would always be honored and revered, but "disunity" would not be tolerated. Four days later his closing remarks Najib reiterated the party's undivided support for Abdullah in a traditional Malay poem: ". . .This is Pak Lah's era . . .our country he has changed; our religion he has honored, our race he has defended. . .We give him our support. . .in the name of religion, race and country." Building a cult of personality 6. (C) In what one prominent newspaper editor privately called "the beginning of his own cult of personality," Abdullah orchestrated his entrance into the grand assembly hall as a prophet coming to address his people. As Abdullah entered the hall, the audience began singing a well-known Muslim hymn commemorating the Prophet Mohammed's entrance into Medina. Privately, local journalists and some Middle-eastern diplomats were astonished and somewhat offended that Abdullah would equate himself with the Prophet, though newspapers failed to report his entrance procession. 7. (C) Equally telling were the verses Abdullah had recited from the Holy Quran before delivering his key-note address. The readings were from Surah 49. Al-Hujurat, verses 6 - 13, and carried a clear message that UMNO attendees should reject Mahathir and embrace Abdullah. "O you who believe! If an evil person comes to you with any news, verify it, lest you should harm people in ignorance. . . And if two parties among the believers fall to fighting, then make peace between them both. But if one of the outrages against the other, then fight you all against the one which outrages till it complies with the command of Allah. . .Let not a group scoff an another group, it may be that the latter are better than the former. . .Nor defame one another, nor insult one another by nicknames. How bad is it to insult one's brother after having faith. And whosoever does not repent, then such are indeed the wrong-doers." The readings from the Holy Quran lasted nearly 20 minutes, and it was commonly heard uttered among visitors and the media that not even PAS (Malaysia's conservative Islamic opposition party) read that many verses at their annual meeting or dared compare their leader with the Prophet. Abdullah wishes Mahathir a speedy recovery 8. (SBU) The subtle use of the Quranic verses aside, press reports all applauded Abdullah for "avoiding any mention" of Mahathir. Many had expected Abdullah to launch a few veiled salvos at Mahathir, but what they heard were the soft words of their Prime Minister urging the attendees to "pray to the Almighty so that Tun Dr. Mahathir has a speedy recovery. Let us also pray that Tun Dr. Siti Hasmah (Mahathir's wife) and members of her family be given the strength and patience to see through this difficult period." The son carries on the fight 9. (C) Just the day before Abdullah's speech, Mahathir had received a long ovation from the UMNO Youth delegates when it was mentioned he had that day returned home from the hospital. Moreover, Mahathir's absence did not ensure the assembly avoided the fracas he had long ago begun. Standing in as his father's proxy, Mukhriz Mahathir was quick to criticize Abdullah's performance. Echoing what many others mumbled but no others dared utter, Mukhriz called Abdullah's key-note address disappointing. "I think it's an address he delivered last year. I was hoping for something new. Perhaps he has other ideas," Mukhriz told reporters. (Abdullah's keynote speech will be reported septel.) 10. (C) Mukhriz's comments brought quick rebukes from UMNO Youth President Hishamuddin Tun Hussein and threats that Mukhriz risked being expelled from the UMNO Youth Executive Committee. However, no one took the threats seriously, and many continue to speculate that the 42 year old Mukhriz will run for one of the 25 positions on the UMNO Executive Committee during the next election cycle, guaranteeing his name will remain in the lime-light, and ensuring his father's issues with Abdullah do not merely fade away. Comment 11. (C) The UMNO General Assembly demonstrated Abdullah's consolidation of his party power base and signified defeat for Mahathir's attempt to bring Abdullah's leadership to an early end. Abdullah made it clear that pretenders would not be welcome if they tried to unseat him before he was ready to step down, and DPM Najib responded dutifully as the head cheerleader. Mahathir's absence from the assembly was convenient, if not well planned, and prevented any rumors or threats of a division within Malaysia's dominant political party. Mahathir's criticisms of the current administration will not quickly fade away, and will still attract tremendous interest from the public at large, but it is apparent they will have less traction after Abdullah's successful defense and consolidation of his own authority as leader of Malaysia's dominant political party. LAFLEUR (November 2006)
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| WIKILEAKS: GOM Touts "Record" Manufacturing Investment Approvals for 2006; Rampant ... Posted: 19 Sep 2011 01:00 AM PDT
The source said the study, which has not been released to the public, revealed that many Bumi contractors typically sold off their tenders for quick money, often to finance expensive cars and houses. The report also found Bumiputra contractors had misused payments received from the government to pay off creditors and that they often sought additional government tenders prior to completing the ones already awarded to them. THE CORRIDORS OF POWER Raja Petra Kamarudin
SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION 1. (U) Summary: The GOM trumpeted figures showing total manufacturing investment approvals in Malaysia rose 48.1% in 2006 to a record RM 46 billion (USD 13.1 billion), and used this as proof the country remained internationally competitive. However, a closer look at the numbers reveals the investment trend in Malaysia is a lot less rosy. Meanwhile, Prime Minister Abdullah publicly vented his frustration over a recent study showing 85% of government construction tenders awarded to ethnic Malays under the GOM's affirmative action program are being sold to non-Malays, defeating the purpose of the policy. In response, the GOM has vowed to get tough on violators. End summary. We're In the Money! 2. (U) Minister of International Trade and Industry Rafidah Aziz announced February 13 that Malaysia's total manufacturing investments approvals rose 48.1% in 2006 to an unprecedented high of RM 46 billion (USD 13.1 billion), from RM 31 billion projects approved in 2005. Of this amount, foreign manufacturing investment approvals accounted for RM 20.2 billion (USD 5.77 billion), an increase of 13.1% from the RM 17.9 billion (USD 5.11 billion) approved in 2005, while domestic investment approvals accounted for RM 25.8 billion (USD 7.37 billion), almost double the RM 13.2 billion (USD 3.77 billion) approved in 2005, primarily due to fourth quarter approvals for three large petroleum and petrochemical projects (see paragraph 5). 3. (U) The largest share of foreign direct investment approvals continued to be in the electronic and electrical sector, accounting for RM 8.6 billion (USD 2.5 billion) or 42.6% of the total. Japan emerged as the top investor for 2006 with RM 4.4 billion (USD 1.25 billion) in investment approvals, of which RM 1.5 billion (USD 430 million) will be in greenfield industries. [Comment: Japanese embassy economic counselor Takuya Sasayama told the press that the spike in Japanese FDI during the second half of 2006 may be the result of the Japanese-Malaysia Economic Partnership Agreement, which became effective last July. End comment]. The Netherlands came in second place with RM 3.3 billion (USD 943 million) in investment approvals, followed by Australia with RM 2.6 billion (USD 743 million). The U.S. slipped to fourth place with RM 2.5 billion (USD 714 million) in investment approvals, down from its number one position in 2005. About 60% of the U.S. company investment approvals will be re-investments by existing companies for expansion or diversification in the electronic and electrical sector. FTA "Just a Bonus" 4. (U) The surge in investment approvals exceeded the GOM's targeted average investment approvals of RM 27.5 billion (USD 7.8 billion) per year under the 15-year Third Industrial Masterplan. In press reports, Rafidah said "[d]espite the increasing global competition, Malaysia continues to attract global foreign investment outflows, reflecting the country's cost-competitiveness as a manufacturing and export base." She added the figures demonstrated that a failure to reach a free trade agreement (FTA) with the U.S. would not have an adverse impact on foreign direct investment (FDI) into Malaysia. "The FTA is just another bonus", she said. Hey, wait a minute... 5. (U) A closer look at the numbers reveals the sharp rise in Malaysia's investment approvals last year may not be sustainable. Three major domestic petroleum and petrochemical projects (SKS Development's RM 7.7 billion oil refinery in Kedah, Petronas' Methonal RM 2 billion plant in Labuan and Panca Intan's RM 1 billion petrochemical plant in Sabah) accounted for over 23% of the RM 46 billion in total investment approvals. In addition, large domestic bio-diesel projects accounted for RM 6.1 billion, or over 13.2%, of total investment approvals. [Comment. If these volatile energy sector projects are excluded from both the 2005 and 2006 numbers, Malaysia's total investment approvals would have risen only 1.4% for 2006, not the 48% touted by Minister Rafidah. Therefore, unless domestic companies continue to pump money into mega energy projects for 2007, it will be very difficult for Malaysia to sustain the high level of investment approvals seen last year. End Comment] 6. (U) Another dark cloud for Malaysia in last year's numbers is that fact that total investment approvals in the high value-added electrical and electronics industries (which in Malaysia are dominated by American high tech companies such as Intel and Dell), shrank 27.5% decline in 2006 to RM 10 billion from RM 13.8 billion in 2005. This, combined with Intel Corporation's recent decision to triple its investment for a new chip assembly and test facility in nearby Vietnam to USD 1 billion, could point to a gradual decline for investment in, or actual disinvestment from, Malaysia's highly prized ICT sector. Now Show Me the Money 7. (U) The RM 46 billion in investment approvals does not refer to actual investments in Malaysia but rather projects that have been given the green light from the Malaysian Investment Development Authority (MIDA). According to MIDA, actual investments will normally be committed in the coming one to three years following approval. Of the 5,889 foreign projects approved by MIDA during the 2001-2006 period, 72.5% have commenced production while 21.8% are in various stages of planning and implementation and 5.6% have not gone forward at all. "Ali Baba" and the Bumi Thieves 8. (U) Meanwhile, Prime Minister Abdullah Badawi expressed frustration and disappointment over findings from a recently released Ministry of Works report showing 85 percent of government contracts awarded to "Bumiputra" (ethnic Malays and indigenous Malaysian groups) contractors under Malaysia's affirmative action program end up being subcontracted to non-Bumiputra firms, a practice commonly referred to here as "Ali Baba". "They (Bumiputra) do not want to work, do not want to learn, and give little importance to the opportunities provided by the government...This approach will only make us hope and wait for aid and subsidies. Such a mentality thrives among the people, including Bumiputra petty traders and contractors," he said. Abdullah made the comments during a dinner speech on February 13th. 9. (U) In Malaysia, many government construction contracts are open only to Bumiputra owned businesses. Although the rationale for the policy is to bolster the competitiveness of Bumiputra contractors vis-`-vis contractors of other races, in practice many of the Bumiputra firms (the "Ali" in "Ali Baba", typically Malay Muslims) immediately subcontract the work to non-Bumiputra contractors (the "Baba", typically ethnic Chinese - the term comes from "Baba-Nyonya", a reference to descendants of marriages between Straits Chinese men and Malay women), enabling the Bumiputra contractors to quickly pocket profits but preventing them from acquiring the experience and expertise the policy was intended to engender. Abdullah said Ali Baba practices not only frustrated the GOM's policy aim of empowering Bumiputras but also undermined its broader Bumiputra agenda of ensuring Malaysia achieved progress and stability in the long term. You Can't Trust Anyone Anymore 10. (SBU) A source from the Ministry of Works told EconFSN that their report, entitled "Study on Bumiputra Contractor Leakage", was the result of feedback from various industry sources on failed and successful projects. The source said the study, which has not been released to the public, revealed that many Bumi contractors typically sold off their tenders for quick money, often to finance expensive cars and houses. The report also found Bumiputra contractors had misused payments received from the government to pay off creditors and that they often sought additional government tenders prior to completing the ones already awarded to them. The official said contractors were irresponsible and had abused the trust given to them by the government which was meant to help Bumiputras progress. Blacklist the Really Bad Bumis 11. (SBU) Separately, executive chairman Moehamad Izat Emir of the Malay Entrepreneurs and Merchants Association said payment is the main issue facing the contractors. He said that while Abdullah had directed the disbursing agency to pay the contractors within two weeks after completing the work, this often does not happen. He proposed that Bumiputra contractors be trained to upgrade their skills and suggested government-linked companies (GLCs) be required to support these contractors. Roslan Awang Chik of the Malay Contractors Association shared his view that "competency comes from exposure". He is puzzled why many well-known and qualified Bumiputra contractors were not being awarded government contracts while several unknown ones were. He suggested the government blacklist any contractors found to be selling their tenders. "They can be considered traitors", he said. Now Promise to be Good... 12. (U) In response to the controversy over the study, Ministry of Finance Secretary General Izzudin Dali announced on February 16 that under new regulations Bumiputra contractors seeking government tenders will soon be required to sign an official declaration promising not to sell or subcontract their tender to other races. Violators will have their contracts and registrations terminated. Izzudin added that under the new rules contractors undertaking public infrastructure contracts will now be awarded only one project at a time and that projects will be distributed evenly among contractors in the same area or district. 13. The GOM's practice of giving preferential treatment to Bumiputra contractors began as part of its New Economic Policy, an ambitious and controversial affirmative action program launched in 1971 following the race riots of the late 1960s. Although aimed at reducing the socioeconomic disparity between Malaysia's Chinese minority and its Malay majority, these policies have been only partially effective while often stirring resentment on the part of non-Bumiputra ethnic groups. According to the GOM's last census in 2000, Malaysia ethnic composition is 65.1% Bumiputra, 26.0% Chinese and 7.7% Indian. 14. (SBU) Comment. The current system of awarding lucrative government contracts to bumis provides them with a strong economic incentive to simply act as agents, turning over as many projects as possible and taking a cut before handing each one off to a competent non-bumi implementer. This "bumi agent" system is firmly entrenched in Malaysia. Any effort to make reforms is likely to be resisted not only by well-established bumis, but also by the non-bumi implementers who have built up a network of well-oiled agent partnerships. End comment. SHEAR
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| WIKILEAKS: ELECTORAL REFORM NOT ON THE HORIZON Posted: 18 Sep 2011 01:00 AM PDT
On January 8, in public comments characterized by Kamaruzaman as "utopian," Rashid said the election laws of Malaysia could no longer ensure justice for opposition political parties. Rashid said election laws should be amended to give the EC power to ensure free and fair media reporting, prosecute persons who misuse public funds during their campaigns, institute and enforce limits on political party spending, and prevent corrupt practices such as vote buying during elections. THE CORRIDORS OF POWER Raja Petra Kamarudin
Summary 1. (C) As Malaysia moves closer to its next national elections, electoral reform faces a very steep uphill battle, a conclusion highlighted during our recent meetings with Election Commission (EC) officials, NGO leaders and several academics. The UMNO-led Barisan Nasional (BN) governing coalition retains tight control over virtually all important levers of power, including the EC. Two electoral reform groups formed since the last general election in 2004 - MAFREL and BERSIH - recognize that grass roots engagement of the public will be necessary to effect meaningful changes to an electoral system heavily tilted in the BN's favor. Both groups intend to highlight electoral challenges and push for adoption of electoral reforms in many critical areas such as: election-day use of indelible ink on voters; Election Act changes to ensure balanced media access and limitations on political party spending; and empowerment of the EC to develop and enforce stricter campaigning and election-day rules and regulations. Their best efforts will almost certainly not produce meaningful reforms to the electoral system over at least the medium term. UMNO, in power since independence, faces no effective public, opposition party or internal pressure to reduce its overwhelming powers of incumbency. End Summary. Election Commission - Technocrats, Not Reformers 2. (SBU) The Malaysian Election Commission's (EC) Secretary General, Kamaruzaman bin Mohd Noor, and nine of his subordinates briefed poloffs on March 6 about the EC's operating structure and current activities. Kamaruzaman emphasized that the EC falls under the purview and authority of the Prime Minister's office. He said all changes to electoral rules, regulations and policies suggested by the EC's seven commissioners must therefore be submitted to the PM's office for approval. In describing the role of EC commissioners, led by EC Chairman Abdul Rashid Abdul Rahman, Kamaruzaman said they "are not in a position to enact reforms." He further stated that the EC "does not have the power to investigate election day abuses." He said allegations of fraud or election tampering are referred by the EC to either the police or the GOM's Anti-Corruption Agency for investigation. (Bio Note: Kamaruzaman obtained his undergraduate and graduate degrees from Penn State University. He spoke very warmly of his years in America during the 1980s. End Bio Note.) 3. (C) Kamaruzaman's statements about the feebleness of EC powers were reflected in a series of comments to reporters during early 2007 by EC Chairman Rashid. On January 8, in public comments characterized by Kamaruzaman as "utopian," Rashid said the election laws of Malaysia could no longer ensure justice for opposition political parties. Rashid said election laws should be amended to give the EC power to ensure free and fair media reporting, prosecute persons who misuse public funds during their campaigns, institute and enforce limits on political party spending, and prevent corrupt practices such as vote buying during elections. Rashid later backpedaled from these comments while emphasizing the UMNO party line that the EC cannot initiate electoral reforms under its own authority. 4. (C) Opposition figures, including Anwar Ibrahim, told us they welcomed Rashid's short-lived calls for reform, but did not expect them to go anywhere. Some viewed Rashid's remarks as a way for him to maintain personal credibility, though he knew the government would not take up his recommendations. 5. (SBU) During the five decades of UMNO's rule, opposition parties have routinely criticized EC commissioners as beholden to UMNO. All EC commissioners, including the Chairman, are appointed by the King based on the advice of the PM. They may not be removed from office prior to age 65, except on similar grounds and in a similar manner as pertains to the removal of a justice from the Federal Court (Malaysia's apex court). 6. (C) Under heavy influence from UMNO, the EC has used its power under the constitution to gerrymander voter districts every eight years in BN-controlled states. In addition, UMNO keeps election campaign cycles very short (8 days for the last general election in 2004). Opposition parties are effectively precluded from access to mainstream media outlets during campaign days, while advertisements and positive stories about BN candidates and parties flood the newspapers and airwaves. And while individual candidates for state assemblies and the federal parliament may not spend more than $28,500 (RM100,000) and $57,000 (RM200,000) on their respective campaigns, their political party machines may legally spend unlimited amounts of money on any individual race. Therefore, the wealth imbalance between the BN and opposition parties also contributes heavily toward the BN's election dominance. The EC currently has no legal means to challenge any of these practices were it so inclined. MAFREL Educates with U.S. Funding 7. (C) On February 13 the President of Malaysians for Free and Fair Elections (MAFREL), Abd Malek Hussin, described MAFREL's electoral reform efforts to us. MAFREL is not affiliated with any political party and is 100% funded by the USG through the International Republican Institute (IRI). Hussin said MAFREL's primary goals are educating the public about the election process and reporting on election corruption and electoral abuses, in an effort to "narrow the ability of the BN to engage in obviously fraudulent election practices." He said, "We want to prod (UMNO) toward reform and, if necessary, embarrass them into taking action to improve the fairness and honesty of elections." 8. (C) Building upon MAFREL's successful monitoring of the Sarawak state assembly election on May 20, 2006 (ref A), Hussin has established a personal relationship with EC Chairman Rashid. Hussin visited Rashid's home on October 25 and spoke privately with him for three hours about electoral issues. According to Hussin, Rashid said MAFREL "is in danger of being viewed as a US puppet" and must diversify its funding away from the IRI. Hussin was initially reluctant to meet with us in public; we ultimately met him at a small suburban restaurant. To demonstrate the extent of their personal relationship, Hussin showed us an SMS from Rashid inviting Hussin to join an EC fact-finding trip to South Africa to examine their electoral process. Hussin has not yet accepted the invitation. He is concerned that MAFREL's image as an independent actor could be tarnished. 9. (C) During their discussion, Hussin claimed Rashid admitted his direct involvement in UMNO's shadowy 1990s push to assume political control of the East Malaysia state of Sabah. During that decade, UMNO granted citizenship and Malaysian Identity Cards (ICs) to over 600,000 foreign migrant workers (predominantly Muslims from Indonesia and Mindanao) in Sabah, in exchange for their votes in state assembly elections (ref B). UMNO-affiliated parties subsequently took over all of Sabah's state assembly seats. According to Hussin, Rashid "admitted to personally issuing over 60,000 fraudulent Malaysian ICs in Sabah," to help UMNO assume political control there. 10. (C) Hussin told us Rashid characterized his Deputy EC Chairman, Wan Omar, as "an UMNO member who is anti-reform." Rashid said he wishes to remain as Chairman of the EC until "the number two is gone" and Rashid can pass the EC leadership mantle to the EC's Secretary General Kamaruzaman. BERSIH's Long and Winding Road Ahead 11. (C) While MAFREL has attempted to maintain a non-partisan stance during its push for electoral reform, the Coalition for Clean and Fair Elections (Malay acronym: BERSIH, meaning "clean") represents the interests of Malaysia's largest opposition parties, namely the Islamic Party of Malaysia (PAS), the Democratic Action Party (DAP) and the People's Justice Party (PKR). These three parties formed BERSIH in 2006 and BERSIH has since gained the endorsement of over 50 civil society NGOs. The National Democratic Institute (NDI) indirectly provided BERSIH with a $40,000 grant to be expended during February-May 2007 on regional meetings, leaflets and development of BERSIH's website (www.bersih.org). 12. (C) BERSIH's spokesman and steering committee member, Sivarasa Rasiah, told us on February 23 that BERSIH intends to pursue three main goals: use of indelible ink on the fingers of all election-day voters, clean-up of the electoral rolls, and abolishment of postal votes except for diplomats and other overseas voters. Both the PM's office and the EC have already rejected the use of indelible ink as "primitive and unnecessary," but BERSIH has challenged the EC to either adopt the system or provide an alternative that would prevent individuals from casting multiple votes. 13. (C) Sivarasa independently confirmed EC Chairman Rashid's statements to MAFREL's Hussin about EC succession planning. Sivarasa told us Omar "would be a disaster for the opposition parties." Like Rashid, BERSIH would prefer Kamaruzaman to take the EC Chairmanship, following Rashid's retirement. Sivarasa commented that UMNO will likely keep Rashid as EC Chairman "at least until the next general election, as he lends a veneer of legitimacy to the election process." Rashid has thus far rebuffed BERSIH's requests for a meeting. Kamaruzaman told us he would meet with BERSIH if the meeting remained limited to discussing the EC's implementation of existing laws and regulations. 14. (C) BERSIH intends to inaugurate its grass-roots electoral reform initiative in April 2007 at a large rally in Kuala Lumpur. Anwar Ibrahim is expected to be the keynote speaker. As with other large events organized by opposition parties and NGOs here, the rally will be held in a hotel ballroom, as a police permit for an open-air public rally of this sort would almost certainly be denied. BERSIH is currently registered as a corporation, as the GOM's Registrar of Societies rejected its application for recognition as an NGO. Comment 15. (C) UMNO and its coalition partners have held power since Malaysia's independence in 1957. Only the ruling parties of North Korea, China and Paraguay have outlasted UMNO's 50-year tenure. Malaysia's controlled style of democracy is not too dissimilar from other Asian countries which have or had dominant one-party or coalition governments. UMNO party leaders acknowledge that reform will eventually be necessary to appease the voting public, but for now UMNO enjoys sufficiently wide support from its Malay base. Race-based politics ensures for the foreseeable future that the majority Malays will continue to support UMNO initiatives and leadership. Nevertheless, as education levels of the country rise, reform will gain an ever louder voice. Some young UMNO politicians see reform coming, but freely admit that power is never easily surrendered. Current laws restrict media freedom, free association, political activities on campuses, public assemblies, and transparency in government procurement contracts and policy-making. The government effectively employs its security services, particularly the police, for political ends. These factors, when coupled with the executive branch's control over the EC, will ensure UMNO's continued dominance over the political scene. 16. (C) PM Abdullah's promises to develop transparent and accountable political institutions do not extend to electoral reforms that could weaken UMNO's power base. As Abdullah approaches the end of his first term, Malaysian politics remain more about autocratic continuity than change. Abdullah has exercised more restraint than his predecessor, Mahathir, in using the restrictive governmental controls at his disposal. Opposition leaders admit there is more democratic space under Abdullah, but they attribute this to Abdullah's weak leadership rather than his efforts to institute real reforms. Nevertheless, we believe neither Abdullah nor his party would hesitate to invoke the strict autocratic measures at their disposal, if seriously challenged. 17. (C) A strong challenge to UMNO's dominance seems unlikely to materialize any time soon. The primary Malay-based opposition party, PAS, cannot create an effective coalition with non-Malays due to PAS' Islamist agenda. Other opposition parties suffer from a paucity of capable and charismatic leaders - with the possible exception of Anwar Ibrahim - who could mobilize enough public support for meaningful changes to the electoral system. Moreover, the opposition generally cannot access the mainstream media to effectively get its message across. Absent a major crisis, pressure for changes to the system would need to come from within UMNO, and we have yet to see any indication factions within the ruling party support a reduction in their overwhelming powers of incumbency. LAFLEUR (March 2007)
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