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WIKILEAKS: GOM Touts "Record" Manufacturing Investment Approvals for 2006; Rampant ...
WIKILEAKS: ELECTORAL REFORM NOT ON THE HORIZON
WIKILEAKS: Ringgit Rises as Proton Flounders: Malaysia Economic Update for May 2007
WIKILEAKS: UMNO QUESTIONS ANWAR IBRAHIM OVER "FOUNDATION FOR FUTURE" ROLE
Ibrahim Ali FINALLY admits that Malaya was colonised for 400 years
WIKILEAKS: PM ABDULLAH'S AIDE ON ANWAR, ELECTIONS AND NAJIB
WIKILEAKS: ABDULLAH MEETS WITH HAMAS, FAILS TO INFORM ABBAS
WIKILEAKS: PROMINENT HUMAN RIGHTS LAWYER FACES DEATH THREAT
The Federation of Malaya Independence Act 1957
WIKILEAKS: GOVERNMENT-LINKED COMPANIES: UNRAVELING THE TANGLED WEB

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

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.

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)

WIKILEAKS: Ringgit Rises as Proton Flounders: Malaysia Economic Update for May 2007

Posted: 17 Sep 2011 01:00 AM PDT

The brainchild of former Prime Minister Mahathir Mohamad, Proton has seen its market share slide to 32% from 60% at the start of the decade and shrinking almost 10% in 2006 alone. This is having a devastating effect on Malaysia's major Proton dealerships, 93% of whom did not break even in the first quarter of 2007, according to Proton Edar Dealers Association Malaysia president Wan Ahmad Sepwan. According to industry insiders here, Proton, which is 43%-owned by the GOM via Khazanah Nasional Bhd, is hamstrung when it comes to major decision making due to lack of direction at the top.

THE CORRIDORS OF POWER

Raja Petra Kamarudin

1. Summary:

- Malaysia's currency continued its gradual rise against the U.S. dollar to reach a near 10 year high.

- The Malaysian cabinet, reacting to loud protests from non-Malays, ordered the country's largest commercial bank to withdraw a requirement that law firms conducting business with the bank have at least one Malay partner with at least a 50% equity interest.

- Malaysia has proposed building a trans-peninsula crude oil pipeline to ease congestion in the Straits of Malacca and to provide an alternative route for getting Middle East oil to buyers in East Asia.

- At the 4th Malaysian International Halal Showcase Prime Minister called on Malaysian producers of halal food to improve their practices in order to boost the country's goal of becoming a "halal hub".

- A GOM official said the government will not bail out Proton, Malaysia's national carmaker, which continues to bleed cash as it searches for a foreign strategic partner. End Summary.

The Ringgit Strengthens to 10-year High

2. The Malaysian ringgit rose to a near 10-year high of 3.388 to the U.S. dollar on May 21, appreciating 0.13% soon after China raised interest rates and widened the yuan trading band to a range of 0.5% from 0.3% previously. The currency also broke the psychological barrier of 3.4 to the dollar. Since early January, the ringgit has gained 4.1% against the U.S. dollar but has depreciated 2% against the yuan and most of other regional currencies.

The Malaysian currency had been pegged at a rate of 3.8 to the dollar from September 1998 (in the wake of the Asian financial crisis) to July 2005, when the GOM announced that it would allow the currency to appreciate by switching to a managed float system.

3. Bank Negara Governor Zeti Akhtar Aziz rushed to clarify that the ringgit was moving in line with the Malaysian economy and not in tandem with the yuan. However, many traders and speculators thought otherwise, saying that as long as the yuan strengthened they would rush to buy ringgit in anticipation of the ringgit's appreciation.

Governor Zeti said on May 29 that the central bank is not targeting the ringgit to appreciate to any specific level but to move in an orderly manner in line with market conditions.

4. Analysts generally expect the ringgit to continue strengthening, possibly to between 3.35 and 3.3 against the U.S. dollar by year-end, and at a pace tempered by Bank Negara's cautious intervention. Many local analysts also believe that the ringgit remains competitive with other regional currencies, though Rating Agency Malaysia's (RAM) chief economist Yeah Kim Leng said the government's current strong ringgit policy encourages speculators to enter the currency market.

For the first two weeks in May alone, Malaysia's foreign reserves rose by nearly USD 3 billion to USD 94.5 billion, equivalent to 8.6 months of retained imports and 9.6 times the short-term external debt.

Largest Local Bank Withdraws Race-Based Lawyer Rule

5. The Malaysian Cabinet has ordered Maybank, the country's largest commercial bank, to withdraw a requirement that law firms conducting business with the bank have at least one bumiputera partner and that bumiputera partners collectively hold at least a 50% equity stake in the firm ("bumiputera", literally "sons of the soil", is a term the GOM uses to describe majority ethnic Malays and Malaysia's minority indigenous tribe people, mainly as means of distinguishing this group from Chinese-Malaysians and Indian-Malaysians).

Following the Cabinet's order, Maybank issued a statement saying that with immediate effect all solicitor firms, whether with bumiputera or non-bumiputera equity ownership, are eligible for consideration to do business with the bank.

6. Maybank had earlier sent letters to lawyers demanding compliance with the bumiputera equity requirement if they wanted to be or remain on its legal panel, generating much controversy and criticism from the non-bumiputera community as being discriminatory.

After loud protests from the Malaysian Chinese Association (a component party of the ruling Barisan Nasional, or National Front, party) as well as the Associated Chinese Chamber of Commerce and Industry and the Malaysian Bar Council, the Cabinet decided at its weekly meeting on May 9 to order Maybank to withdraw the policy.

The opposition party Democratic Action Party (DAP) took the opportunity to call for the public's support for a boycott of the bank. Senior government officials from the Central Bank and the Ministry of Finance denied the government had anything to do with the race-based requirement issued by Maybank, a government linked corporation (GLC) that is 2/3rds owned by other GLCs.

Malaysia's Ambitious Oil Pipeline Project

7. Malaysia has proposed building a 320 km trans-peninsula crude oil pipeline from Yan, in Kedah state in northwestern peninsular Malaysia, to Bachok, a town in Kelantan state in northeastern peninsular Malaysia. The project is expected to kick-off with a USD 2.3 billion pipeline with a capacity to transfer two million barrels of oil per day.

The project eventually would include three pipelines with a total cost of USD 7 billion. Syed Izhar Al-Idrus, the director of the project's promoter, Trans Peninsula Petroleum Sdn Bhd (TPP), said the pipeline will provide an alternative route for transporting crude oil from Middle East suppliers to buyers in East Asia.

It is also expected to help ease congestion in the busy Straits of Malacca. Kuala Lumpur-based construction giant Ranhill Berhad announced on May 28 that its subsidiary, Ranhill Engineers and Constructors Sdn Bhd, has entered into an agreement with TPP and Jakarta-based P.T. Tripatra Engineers and Consultants for the design, engineering, procurement, construction and testing of the project, which is expected to begin in 2008 and be completed in 2014.

PM Exhorts Halal Industry to Achieve Best Practices

8. Prime Minister Abdullah has called on Malaysian producers and manufacturers of halal food (i.e., food prepared in accordance with or permitted under Islamic law) to meet the GOM's best practice requirements in safety, health and quality in order for Malaysian halal brands to achieve premium status.

Abdullah, who attended the May 10 opening of the 4th Malaysian International Halal Showcase (MIHAS 2007), said achieving these requirements will boost acceptance and marketability of halal food to non-Muslim markets. Malaysia's commitment to become a "Halal Hub", which was set forth in the Ninth Malaysia plan and the Third Industrial Master Plan, includes engaging local universities to develop and offer academic programs in halal related areas.

9. The organizer of MIHAS 2007 said exhibitors at this year's convention recorded RM 213.9 million (US 63 million) in immediate sales as a result of their participation compared with RM 168 million (US 49.4 million) in sales at last year's convention, prompting many exhibitors to place bookings for next year's event.

The official said MIHAS is planning to pull together resources from the government and private sector to cover a wider span of economic activities related to halal products, from farming, manufacturing, and processing to the importing and exporting of commodities and finance.

Proton Desperately Seeking Savior

10. On May 22 Second Finance Minister Nor Mohamed Yakcop said the Malaysian government will not bail out Proton Holdings Bhd (Proton), creating even more pressure for the ailing carmaker to find a strategic partner. Proton, which has been engaged in talks with a number of potential foreign players including General Motors, Volkswagen and, PSA Peugeot Citroen, saw its cash reserves dwindle from RM 3 billion ringgit ($882 million) at year-end 2004 to an estimated RM 500 million at present with some analysts predicting that the company will be cashless by 2008 if not sooner.

On May 31 Proton announced a loss for the quarter ending March 31, the fourth straight quarterly loss. Also on May 31, Prime Minister Abdullah Badawi announced the effective end of talks between Volkswagen and Proton, reportedly due to Volkswagen's lack of interest in the equity terms Proton was willing to offer.

11. The brainchild of former Prime Minister Mahathir Mohamad, Proton has seen its market share slide to 32% from 60% at the start of the decade and shrinking almost 10% in 2006 alone. This is having a devastating effect on Malaysia's major Proton dealerships, 93% of whom did not break even in the first quarter of 2007, according to Proton Edar Dealers Association Malaysia president Wan Ahmad Sepwan.

According to industry insiders here, Proton, which is 43%-owned by the GOM via Khazanah Nasional Bhd, is hamstrung when it comes to major decision making due to lack of direction at the top. Corporate management does not feel it has government support to make policy changes, while the government appears to be afraid of a political backlash if it pushes for cost reducing layoffs or appears to give too many concessions to potential foreign partners.

12. A manufacturing executive who supplies the industry said Proton purchasing agents cannot even get approval to make major parts buys in a timely fashion. Both executives cited quality control as a pervasive and intractable problem for Proton.

The industry representative told us how he once saw two Proton quality control inspectors wearing full tool belts lean over the hood of a finished vehicle. One inspector subsequently tossed a clipboard across the hood of the vehicle to his partner, thereby scratching the paint. The executives reported that both of their firms have offered quality control training to Proton in the past, but the lessons never seem to make it from the classroom to the factory floor.

LAFLEUR

WIKILEAKS: UMNO QUESTIONS ANWAR IBRAHIM OVER "FOUNDATION FOR FUTURE" ROLE

Posted: 15 Sep 2011 01:00 AM PDT

State news agency Bernama and mainstream press outlets carried stories May 20-21 reporting that Khairy publicly demanded an explanation from former Deputy Prime Minister Anwar Ibrahim over Western press reports that Anwar had close connections to outgoing World Bank President Wolfowitz and played a role in the appointment of Shaha Ali Reza to work at the Foundation for the Future.

THE CORRIDORS OF POWER

Raja Petra Kamarudin

1. (C) Summary: Prime Ministerial son-in-law and UMNO youth leader Khairy Jamaluddin has publicly called on opposition figure Anwar Ibrahim to explain his role in the Foundation for the Future and his connections with outgoing World Bank President Wolfowitz. Anwar, as Foundation chairman, issued a statement clarifying the Foundation's appointment of Shaha Ali Reza in 2006. With the government's dominance of the mainstream media, UMNO will attempt to use this story to weaken Anwar's reformist and Islamic credentials, and portray Anwar as somehow in America's pocket. End Summary.

2. (U) State news agency Bernama and mainstream press outlets carried stories May 20-21 reporting that Khairy publicly demanded an explanation from former Deputy Prime Minister Anwar Ibrahim over Western press reports that Anwar had close connections to outgoing World Bank President Wolfowitz and played a role in the appointment of Shaha Ali Reza to work at the Foundation for the Future. Khairy told reporters: "Anwar must explain his role in the scandal.... Anwar has to explain because this is an irregularity and abuse of power at the international level."

3. (SBU) Khairy's remarks followed media accounts in late April that attempted to draw connections between Anwar and the World Bank President. The Malaysian media carried the stories on the eve of the highly-charged Ijok by-election, which pitted Anwar's opposition party against a candidate from the ruling National Coalition (ref A). Anwar's campaign strategy focused heavily on criticism of corruption in UMNO and the National Coalition, and in particular focused attacks on Deputy Prime Minister Najib Tun Razak.

4. (U) Anwar Ibrahim, writing as Foundation for the Future chairman, issued a statement on May 20 in reaction to the "incessant propaganda from the UMNO controlled media." Anwar's statement described the Foundation's decision in mid-2006 to "regularize" Shaha Ali Reza's assignment by the World Bank to work at the Foundation. His statement concluded that "the Foundation will not hesitate to institute legal action" should there be no clarification by the media. Malaysian papers carried reports of Anwar's statement on May 21-22.

5. (U) Post has received a number of local media inquiries on this issue. Per instructions, we have referred these journalists to the Department.

6. (C) Comment: After enduring Anwar Ibrahim's sharp criticism over corruption and DPM Najib's alleged links to a murder scandal (reftels), UMNO has seized on Western press accounts of Anwar's role at the Foundation for the Future as a means to hit back.

By implying that Anwar's actions constituted "abuse of power" and by highlighting press reports of Anwar's connections to a former senior U.S. official, UMNO will attempt to undermine the opposition leader's reformist and Islamic credentials.

We expect UMNO also to use the story, at least behind the scenes, to help propagate a belief that Anwar is somehow in America's pocket. With its effective control over the mainstream media, the ruling National Front government will be able to stir this pot if and when it best suits UMNO's purpose.

LAFLEUR (MAY 2007)

Ibrahim Ali FINALLY admits that Malaya was colonised for 400 years

Posted: 14 Sep 2011 05:03 PM PDT

Ibrahim Ali finally admits that Malaya was colonised over a period of 400 years. Actually the Portuguese colonised Melaka exactly 500 years ago in 1511 and the Northern states paid tribute to and were vassals of the Kingdom of Siam while the Southern states were part of the Riau Empire.

THE CORRIDORS OF POWER

Raja Petra Kamarudin

Perkasa: 'Melayu dijajah 400 tahun, tindakan afirmatif dua dekad DEB mana cukup'

(The Malaysian Insider) - Presiden Perkasa, Datuk Ibrahim Ali, menegaskan orang Melayu dan Bumiputera telah dijajah lebih 400 tahun dan, oleh itu, tidak mungkin boleh maju dalam dua dekad sejak Dasar Ekonomi Baru (DEB) dilaksanakan.

Tempoh 20 tahun DEB berakhir 1990 dan matlamat dasar itu diteruskan menerusi dasar-dasar susulan sejak itu.

Sehubungan itu kata beliau, orang Melayu dan Bumiputera sewajarnya diberi masa dengan menganggap bahawa tempoh DEB antara 1970 hingga 1990 sebagai fasa pertama dan era selepas 1990 sebagai "fasa kedua."

"Harus diingat bahawa Melayu dan Bumiputera telah dijajah lebih 400 tahun. DEB hanya dilaksanakan dari 1970 hingga 1990.

"Mana mungkin (kaum yang) dijajah 400 lebih boleh maju, berjaya dalam tempoh 20 tahun dan waktu DEB dilancar dan dilaksanakan, orang Melayu dan Bumiputera belum bersedia dan serba kekurangan," kata Ibrahim dalam satu kenyataan dikeluarkan hari ini.

Ibrahim menggunakan rujukan dijajah dengan tempoh pelaksanaan memajukan orang Melayu dan Bumiputera ketika negara berhadapan dengan polemik sama ada Tanah Melayu benar-benar dijajah oleh British dan kuasa asing.

***********************************

Sovereignty of Malay Rulers a legal fiction

DR CHANDRA MUZAFFAR, The Star

In the midst of the controversy over Mat Sabu and Bukit Kepong certain views have been expressed about British rule which may have the unintended effect of confusing rather than enlightening.

It is true that the Malay states – unlike Penang, Malacca and Singapore – were not British colonies in the formal sense. Nonetheless, they were under British rule. The sovereignty of the Malay Rulers was a legal fiction.

The Ruler was required in both the Federated and Unfederated Malay States to seek, and act upon, the advice of the British Resident or Adviser "on all questions other than those touching Malay Religion and Custom".

In other words, decision-making powers were effectively in the hands of the British.

Apart from laws and treaties which established the actual locus of authority with the British, every important dimension of the economy was under their control. Issues pertaining to land, resources, labour, capital and market in the Malay states were all determined by British policy and British interests.

This made the situation in the Malay states no different from the three British colonies in their vicinity. Indeed, it was British control over both the internal and external economy of the Malay states that rendered them de facto colonies.

Economic control led to the exploitation of Chinese and Indian workers in the tin mining and plantation sectors and the marginalisation of the Malay masses in the peasant sector.

The creation of a dual economy with the commodity based, exported oriented sector directed towards the colonial metropolis was a common characteristic of most colonial economies. In reality, the Malay states bore all the iniquities and injustices associated with colonial rule.

It is mainly because there was de facto colonialism that Umno in the 50s and Parti Kebangsaan Melayu in the 40s championed the cause of merdeka (independence) from the British.

They were focussed upon the substance – rather than the form – of British rule.

WIKILEAKS: PM ABDULLAH'S AIDE ON ANWAR, ELECTIONS AND NAJIB

Posted: 14 Sep 2011 01:00 AM PDT

Wan Farid told us in January (ref A) that Abdullah had decided not to welcome Anwar back into UMNO, and there was certainly no hint in our May 15 meeting that UMNO views of Anwar had softened following the heated Ijok by-election. On the contrary, UMNO Secretary General Radzi Sheikh Ahmad on April 31 told reporters, "He (Anwar) will not be taken back. Period."

THE CORRIDORS OF POWER

Raja Petra Kamarudin

Summary

1. (S) Wan Farid (protect throughout), a political aide to Prime Minister Abdullah Badawi, argued in a May 15 meeting with polchief that opposition figure Anwar Ibrahim's strategy of addressing national issues in the recent Ijok by-election backfired as voters demonstrated that they care most about local rice bowl matters that only the ruling National Coalition (BN) can address.

Lacking his own party machinery, Anwar remains very dependent on the Islamic Party of Malayia (PAS) for grassroots organization. Two recent by-elections signaled a weakening of ethnic Chinese support for the BN, though in the end Chinese voters would have little alternative but to endorse the ruling Coalition.

Wan Farid and other advisors have recommended PM Abdullah curtail international travel after June and concentrate instead on touring Malaysian states in preparation for the next election. International affairs would not play an important role with voters on election day.

Prime Minister Abdullah concluded that Deputy Prime Minister Najib had no connection to the sensationalistic murder of a Mongolian woman, and the PM continues to support Najib's party position. There remains concern, however, over information the defense counsel could raise in the June murder trial of Najib's former advisor and two policemen. End Summary.

Anwar Miscalculates in Ijok

2. (C) Opposition figure Anwar Ibrahim miscalculated in the April 28 Ijok by-election by focusing on national issues, Wan Farid told polchief May 15, echoing commentary in many Malaysian political circles.

(Comment: The Ijok by-election was seen as the final litmus test of political party support before the next national election; BN defeated Anwar's candidate by 59 to 40 percent. End Comment.)

For example, Anwar tried to attack DPM Najib and BN using the Mongolian murder case (ref B), but most voters remained ignorant of the issue and, Wan Farid joked, thought that Altantuya (the murder victim) was the latest Indonesian pop singer.

In addition, Anwar's People's Justice Party (PKR) had almost no grassroots presence, Wan Farid noted, and had to rely very heavily on the opposition Islamist party, PAS. In the end, PAS members would not go all out to support Anwar and PKR.

Wan Farid noted with satisfaction that television cameras caught Anwar Ibrahim dancing a jig at an Ijok campaign rally and that such "un-Islamic" behavior would not go down well with PAS members.

(Comment: Government-controlled television media gave widespread coverage to Anwar's modest dance along with commentary that such movements were inappropriate for an Islamic leader. End Comment.)

UMNO Machine Dominates

3. (C) BN and the leading United Malays National Organization (UMNO), in contrast to Anwar, knew that voters focused on local rice bowl issues, Wan Farid affirmed. Malaysian voters responded to immediate projects in their neighborhoods, not to abstract national concerns. BN has the resources to deliver the communities' needs and UMNO has the extensive party machinery that can allocate one party worker for every five voters. No other party comes close to UMNO in this regard.

Chinese Support Wanes, but Has No Alternative

4. (C) Wan Farid admitted that ethnic Chinese support for BN had waned based on results in the past two by-elections, Machap and Ijok. A decrease in Chinese support "supposedly" is a result of the heated Malay racial rhetoric and "kris-waving" during UMNO's party conference in November 2006, at least that was the rationale of Chinese leaders within BN.

However, the Chinese were practical people and in the end they would endorse BN as their only realistic alternative, Wan Farid concluded.

(Comment: DPM Najib's political secretary Fatmi Salleh (protect) expressed similar concerns over BN's loss of Chinese voters during an April 16 meeting with polchief. Fatmi's comments followed the previous by-election in Machap, which witnessed a BN win, but also a significant decrease in BN votes in several Chinese sub-districts. End Comment.)

PM Advised to Curtail Foreign Travel, Focus on Pre-Campaign

5. (C) Wan Farid said that he and other advisors had asked PM Abdullah to curtail his overseas travel after planned trips in June to Afghanistan, the Middle East and Russia. Instead, beginning in July the Prime Minister should begin touring all Malaysian states in preparation for the national election (the date for which has yet to be set).

The Prime Minister still might travel abroad for "must do" events, such as the UN General Assembly. Otherwise, Abdullah should spend his time within Malaysia. In response to our question, Wan Farid said international affairs would play little or no role with voters come election day.

Although advisors wanted the PM to begin pre-campaign activities in July, they also were weighing the "feel good" factor among voters. This would depend somewhat on money from government contracts under the Ninth Malaysia Plan reaching medium-scale businesses, a consideration that would support holding elections in a year's time, Wan Farid noted.

Najib Retains Abdullah's Confidence

6. (S) Wan Farid said Prime Minister Abdullah had concluded his deputy Najib Tun Razak was not involved in the 2006 murder of a Mongolian woman, Altantuya Shaariibuu (ref B).

(Comment: In late 2006, Wan Farid reportedly carried out an inquiry at Abdullah's behest that supported this conclusion, ref A.)

Najib's former advisor Razak Baginda and two police officers from Najib's security detail will stand trial in June for the murder of the Mongolian national. Wan Farid said Razak Baginda initially had asked for Najib's intervention.

Najib might have agreed, Wan Farid said, if this had been "only a case of corruption," but Najib did not wish to get involved in a murder cover-up. As a result of Abdullah's continued support, Najib's government and party positions were not in jeopardy.

7. (C) Wan Farid was certain that government prosecutors would limit their trial activities to the murder itself and the three defendants; prosecutors would not follow up on allegations of related corruption or other suspects. Wan Farid admitted, however, that there remains concern that the defense counsel would bring up extraneous information that could embarrass Najib or the government: "You can't predict or control what the defense will say in open court."

Future Foreign Minister?

8. (C) Wan Farid stated that Foreign Ministry Parliamentary Secretary Ahmad Shabery Cheek was UMNO's choice to succeed Syed Hamid Albar as Foreign Minister at some point in the future. Ahmad Shabery Cheek "is being groomed for the role," Wan Farid claimed, while noting Shabery's qualities as an effective UMNO politician.

(Comment: We do not have other indications that the relatively young Shabery, who is not known as an UMNO heavyweight, will be the next Foreign Minister. End Comment.)

Comment

9. (C) Wan Farid speaks as an insider and loyalist to PM Abdullah. Although he argued that Anwar Ibrahim posed no real political challenge, Wan Farid nevertheless focused much of our discussion and his criticism on the former Deputy Prime Minister and far less on the leading opposition party PAS.

10. (C) Guessing the timing of the next national election remains a popular pastime for Malaysian elites and Kuala Lumpur's diplomats. Despite reference to the time needed for public funds to trickle down, Wan Farid left us with a clear impression he expected the elections to take place this year.

Election Commission officials quietly have begun training public school administrators on managing polling stations, one sign that the election might take place in the near term.

An unsubstantiated rumor among school officials pegs the election in the August/September 2007 timeframe. Malaysia has never held a national election during the Muslim fasting month, which this year falls mid-September to mid-October.

If Abdullah is looking to capitalize on a "feel good" factor, scheduling elections in proximity to the 50th Independence Day celebrations on August 31 might provide an opportunity.

LAFLEUR (MAY 2007)

WIKILEAKS: ABDULLAH MEETS WITH HAMAS, FAILS TO INFORM ABBAS

Posted: 13 Sep 2011 01:00 AM PDT

According to local contacts, President Abbas and the Palestinian Authority were unaware of Khalid's visit until after the delegation had arrived in Kuala Lumpur. Palestinian Ambassador to Malaysia, Abdel Aziz Abou Gouche, reportedly only learned of the visit because he had a staff member on the same flight.

THE CORRIDORS OF POWER

Raja Petra Kamarudin

1. (U) Summary: Malaysian Prime Minister Abdullah received a senior Hamas delegation on March 3, apparently without President Abbas' prior knowledge. Abdullah used the occasion to call for lifting of international sanctions and to reiterate that Malaysian support for the Palestinian government would continue. This is not the first time Malaysia has fallen afoul of the Fatah-Hamas divide. End Summary.

2. (U) Khalid Meshaal, leader of the political bureau of the Palestinian party Hamas, and a group of four other Hamas party delegates arrived in Kuala Lumpur on Saturday, March 3, for unannounced meetings with Prime Minister Abdullah Badawi and Foreign Minister Syed Hamid Albar. A press statement from the Malaysian Foreign Ministry announced that the parties discussed the current situation in Palestine, the recent meeting of Palestinians in Mecca and the formation of a unity government. The statement noted that PM Abdullah called for international support for the unity government and the lifting of sanctions on the Palestinian National Authority, while reiterating that Malaysia "would continue to provide whatever assistance, within its means, to the Palestinian unity government."

3. (U) In a separate statement to the press from his office in the southern state of Johor, FM Hamid Albar opined that the Palestinian unity government would most likely be fully established "in a week's time." Hamid stated that Khalid's visit was intended to convey to Malaysia the latest developments in the efforts to form a unity government.

4. (C) According to local contacts, President Abbas and the Palestinian Authority were unaware of Khalid's visit until after the delegation had arrived in Kuala Lumpur. Palestinian Ambassador to Malaysia, Abdel Aziz Abou Gouche, reportedly only learned of the visit because he had a staff member on the same flight. Foreign diplomats noted Gouche was not invited to attend the meeting and protested to the Malaysian Foreign Ministry concerning the visit. Apparently no one from the Palestinian Liberation Organization / Fatah was invited to participate in the meetings with the Malaysian PM and FM, and the Malaysian Foreign Ministry claimed it did not know that President Abbas was unaware of the meeting. Our sources indicate the Hamas visit was arranged during Abdullah's visit to Syria on February 25-27.

5. (C) Comment: Malaysia made a similar faux pas in May 2006 when delegates from both Hamas and Fatah were invited to represent Palestine at the Non-Aligned Movement conference held in Kuala Lumpur (reftel). Both factions claimed to represent the foreign policy objectives of the Palestinian state, and both parties left in anger. Months later, Foreign Ministry officials still spoke bitterly about the ordeal, particularly the disruptive antics of the Hamas delegate. We will seek opportunities to learn more about the Hamas visit to Malaysia.

LAFLEUR (MAY 2007)

WIKILEAKS: PROMINENT HUMAN RIGHTS LAWYER FACES DEATH THREAT

Posted: 12 Sep 2011 01:00 AM PDT

Zainur Zakaria, former Bar Council President and current President of Lawyers in Defense of Islam (a new NGO created in July 2006), asked the approximately 10,000 audience members, "Are we willing to allow non-Muslims and those who are not well versed in Islam to interpret our religion for us?" The audience members replied "Never!" Clearly audible at that point is at least one audience member who shouted "Kill them!"

THE CORRIDORS OF POWER

Raja Petra Kamarudin

Summary

1. (C) Prominent Muslim lawyer and human rights activist Malik Imtiaz has become the target of a death threat printed on a leaflet and distributed via email beginning in mid-August.

On August 24 Imtiaz privately told us he believes the death threat was orchestrated by several newly established Muslim NGOs that intend to silence him due to his leading role in the Lina Joy apostasy case (ref A) and his participation as a panel member at recent public fora meant to defend constitutional protection of non-Muslims' religious freedom.

Both Muslim and non-Muslim leaders have condemned the death threat against Imtiaz, even as opposition MPs lament the lack of a response by Malaysia's ruling coalition. The Prime Minister's policy of stopping public discussion of controversial religious freedom issues will not resolve matters. End Summary.

Religious Tensions Culminate in Death Threat

2. (SBU) The death threat against Imtiaz came to light after the Muslim Youth Movement (ABIM) exposed the threatening leaflet to the press on August 19. The President of ABIM, Muhammad Yusri, denounced the Malaysian language leaflet, saying, "Differing views on Islam must be resolved through Islamic morals and ethics and not by force." The leaflet contains the words "Wanted: Dead" in large typeface above a photograph of Imtiaz.

Beneath the photo and Imtiaz' full name, the leaflet text reads: "This is the face of the traitor lawyer against Islam who is supporting the apostasy case of Lina Joy. Spread this to our brothers so that they recognize this traitor. If he is found dead on the roadside, let him be. Do not help!"

3. (SBU) As a prominent human rights lawyer, President of the Human Rights Society of Malaysia (HAKAM), and protem Secretary of the Malaysian Civil Liberties Society, Imtiaz has long been at the forefront of defending human rights and religious freedom in Malaysia.

Most recently, he represented the Bar Council during Federal Court arguments in the Lina Joy apostasy case. Imtiaz supports Joy's efforts to legally apostatize from the Muslim faith. The Federal Court is expected to rule at any time in that case.

The case will likely determine the degree to which Shari'a courts have authority over apostasy applications (they have virtually always declined such applications), setting a clear precedent for future cases and symbolically hitting at the core constitutional issue of the definition of ethnic Malays as Muslims.

Imtiaz also served as a panel member at recent public forums organized by "Article 11," a group of 13 local NGOs that support enforcement of constitutional protections that guarantee religious freedom for non-Muslims.

4. (C) Imtiaz told us that he believes several newly established Muslim activist groups orchestrated the death threat, but he did not provide us with specific information to support his statements. He told us that he takes the threat seriously, but remained "undeterred" in his efforts related to religious freedom.

Mosques Used to "Defend Islam" Against Apostasy

5. (C) While Imtiaz has faced the opprobrium of many Muslims for his outspoken stances on religious freedom issues, recent criticism by some Muslim leaders has become much more pointed and personal.

We recently viewed video footage taken on July 23 at the Federal Territories Mosque in Kuala Lumpur. The video contains strong criticism of Imtiaz by several Muslim speakers who attacked Imtiaz' ethnicity (he is a child of Pakistani immigrants to Malaysia) and accused him and other Article 11 leaders of being ignorant on Islamic issues.

Later at the event, well-known lawyer Kamar Ainah concluded her speech by saying, "I'm concerned about the current government. We cannot depend on them. We need to continue our struggle ourselves to protect and defend our religion." Imtiaz told us other mosques were also used during July and August to spread similar messages intended to motivate audience members to "defend Islam."

6. (C) At these mosque-based events in Kuala Lumpur, organizers handed out two pamphlets to tens of thousands of Muslim faithful that urged them to support their faith.

One pamphlet, entitled "Islam Humiliated; Muslims Challenged," claimed that the Bar Council supported apostasy among Muslims. It described Koranic and Hadith traditions that claim those who renounce Islam must be executed, and it urged all of Malaysia's Muslims to sign a petition in defense of Islamic values and principles.

As of August 22, according to PEMBELA (translated as "Defenders;" another recently created Muslim NGO), the pamphlet distributors had collected 500,050 signatures on the petition. The second pamphlet, entitled "Efforts to Bring Down the Dignity of Islam and Threaten the Identity of the (Malay) Race," focused on the potential impact of the Lina Joy case and called on all Muslims "to defend the honor of Islam."

Silence from the Governing Coalition

7. (C) While the death threat against Imtiaz was immediately criticized by many Muslim and non-Muslim leaders, we are not aware of senior public GOM condemnation of the threat and we do not know if the GOM has taken action behind the scenes. During debate in parliament, opposition leader Lim Kit Siang expressed his "grave disappointment" at the ruling National Front's silence on the issue. He described the situation as "most ominous for Malaysia."

Ivy Josiah, President of the Women's Action Organization and an organizer of Article 11 fora, in commenting on the GOM's silence concerning the death threat, described GOM officials as "cowards," and asked, "How can they remain silent on something like this?"

8. (C) Comment: The death threat against Imtiaz followed a series of emotional clashes in recent months that pitted self-described "defenders of Islam" against "defenders of the constitution." The two groups represent significant portions of Malaysia's population that have found little common ground on religious issues.

The PM's recent calls to stop public discussion of these issues may temporarily dampen tensions, but a policy of stifling debate will not make such fundamental differences go away.

With local observers pointing to widening gaps between the views of Malaysia's Muslim and non-Muslim populations, the Malaysian Government will need to exhibit stronger leadership in order to safeguard religious freedom and tolerance, and to reject clearly any calls for religiously-motivated violence such as the threats against Imtiaz.

SHEAR (August 2006)

The Federation of Malaya Independence Act 1957

Posted: 11 Sep 2011 04:59 PM PDT

Any such agreement as aforesaid may make provision for the termination of Her Majesty's sovereignty and jurisdiction in respect of the said Settlements, and of all other Her power and jurisdiction in and in respect of the Malay States or the Federation as a whole, and the revocation or modification of all or any of the provisions of the Federation of Malaya Agreement, 1948, and of any other agreements in force between Her Majesty and the Rulers of the Malay States.

THE CORRIDORS OF POWER

Raja Petra Kamarudin

WIKILEAKS: GOVERNMENT-LINKED COMPANIES: UNRAVELING THE TANGLED WEB

Posted: 11 Sep 2011 01:00 AM PDT

High tariffs and bureaucratic impediments to importing a car -- including limits on the number of approvals and required signatures from three separate government ministries -- clearly were designed to benefit the government-owned automobile manufacturer Proton. On the other hand, Khazanah, the largest GLIC, recently bought back from Singapore a controlling share in Pantai, the company granted sole authority to issue Malaysian medical clearances for foreign workers.

THE CORRIDORS OF POWER

Raja Petra Kamarudin

1. (SBU) Summary: The Malaysian government's ability to control market access through its holdings in government-linked companies (GLCs) is an important consideration in our ongoing FTA negotiations.

Unraveling the tangled web of government holdings is difficult. Much information is publicly available, but tracing through the linkages between government and commercial entities requires close familiarity with the local market and major players. Even then the results can be controversial, as demonstrated by a recent report that leaked from a local think tank.

One of our objectives in the FTA negotiations is for the Malaysian government to compile an annual report on GLCs -- as was done in the U.S.-Singapore FTA. Even knowledgeable Malaysian officials will find this a daunting task, but they could be persuaded that it fits with the government's program for improved GLC performance. End summary.

Big Players, Thin Skins

2. (U) According to a Malaysian Government website, Government- Linked Companies (GLCs) -- commercial companies in which the GoM has a direct controlling stake) employ 5 per cent of the national workforce, account for approximately 36 per cent of the market capitalization of the Bursa Malaysia (the local stock exchange), and comprise 54 per cent of the benchmark Kuala Lumpur Composite Index.

The Government of Malaysia manages its holdings in the GLCs through seven investment holding companies, or Government-Linked Investment Corporations (GLICs). The GLICs have differing mandates with varying roles and degrees of responsibility with regard to executing Government policies and initiatives, particularly regarding industrial policy and development initiatives.

While a number of Malaysia's GLCs have been loss makers for decades, some efforts are being made to improve their accountability and profitability (see reftel).

3. (U) The role of the GLCs in the Malaysian economy is a sensitive matter, as they are inextricably linked with the government's effort to advance the economic standing of Bumiputeras (ethnic Malays).

Recently, a respected local think tank produced a report for the government that, i.a., included recommendations on the management of GLCs and their use as agents of the government's socioeconomic policy. The report asserted that through the GLCs, Bumiputeras already hold sufficient corporate shares to have surpassed the government's headline goal of owning 30% of Malaysia's wealth (government statistics say Bumis only own 18.9%). This claim caused such a stir that the president of the think tank publicly repudiated the study. The chief researcher resigned in protest.

(Comment: We will report on this controversial study in more detail in a separate message.)

One Hand Washes the Other

4. (U) Sometimes the government exerts itself to protect the GLCs, and sometimes it's the GLCs that serve the government.

One Khazanah employee commented to Econoff that the driving reason for the re-acquisition was not good business but rather, "national pride." There was an understanding that Khazanah would have a majority stake but decision-making would remain in the hands of the company.

Through a Glass Darkly

5. (U) The level of publicly available information about Malaysia's seven GLICs varies considerably. Khazanah, the largest GLIC (owned by the Ministry of Finance), publishes its holdings in a flow chart posted on its website, www.khazanah.com.my.

Permodalan Nasional Berhad (PNB), a GLIC established specifically to promote the economic advancement of ethnic Malays (Bumiputeras), publishes financial data in its annual report available on its website, www.pnb.com.my.

Some of the other GLICs have websites, but offer differing amounts of information on their holdings and strategies. In addition, these figures continually change as fund managers buy and sell on an ongoing basis.

6. (U) Information on the ownership of publicly-traded GLCs can be found in their annual reports. The Malaysian Securities Commission enforces requirements regarding publication of financial data on publicly-traded firms. Most listed companies disclose their top 30 shareholders, listing the percentage ownership of each.

Summing up the percentages of shares held by the various GLICs among the top 30 is the first step to determining the share of government control. However, it also is important to note which GLICs are major shareholders, as the different GLICs are charged with different objectives) some more politically driven than others.

For example, the Employee Provident Fund (EPF) is charged with investing the retirement savings of Malaysian workers) a responsibility not as politically charged as Permodalan Nasional Berhad's (PNB) mandate to advance the economic interests of ethnic Malays. However, almost all the GLICs have at some point made sales or purchases of corporate shares in support of government objectives.

You Can't Know the Players without a Score Card

7. (U) When tallying up GLIC holdings familiarity with the local players, including the multiple layers of subsidiaries of the GLCs, is essential. For example, Cement Industries of Malaysia (CIMA) lists only two GLICs in its top 30 shareholders with a combined holding of about 13%. However, CIMA's top non-GLIC shareholder is UEM World, in which Khazanah holds a controlling interest.

UEM World holds nearly 54% of CIMA. At first glance, the government share appears to be 13 per cent, but tracing the linkages among GLIC subsidiaries it becomes clear that CIMA is effectively government controlled.

8. (U) Some other companies provide this information more clearly. For example, Pharmaniaga Berhad, a pharmaceuticals manufacturer, includes in its annual report a list of indirect holdings following its list of direct holdings. The list of the company's top thirty shareholders does not indicate a majority government stake, but the indirect holdings present quite a different picture: non-GLIC shareholder Trinity Saga is held by UEM World, which is controlled by Khazanah.

Add up all the pieces and in fact the government has a controlling interest in Pharmaniaga. Without being familiar with the multiple layers of ownership, Trinity Saga's GLIC connections would be easy to miss.

9. (U) Another example is Malaysian Airline System Berhad (MAS), which lists Penerbangan Malaysia Berhad with a 69.34 per cent holding. The government created this company solely to purchase MAS planes and lease them back to the airline. It is wholly owned by Khazanah. Another 11 per cent of MAS is held by the Employees Provident Fund (EPF). The third-largest shareholder is Amanah Raya Nominees. This is a government-managed trust fund for ethnic Malays.

10. (U) Publicly listed companies include the names of their Boards of Directors in their annual reports, often including bios and photos as well. Sometimes the annual report lists Board Members as Independent or Non-Independent as well as Executive or Non-Executive. Again, knowing the local players is essential to determining who has real decision making authority.

Islamic Banks behind the Veil

11. (U) Fundamental concepts underlying Islamic finance preclude Islamic banks from publishing lists of their shareholders. All depositors are considered shareholders and banks are reluctant to make available to the public a list of top depositors, complete with the size of their accounts. Khazanah's website reports that Khazanah owns 30% of Bank Muamalat, a local Islamic Bank, but Bank Muamalat's annual report does not list its shareholders.

Non-Traded Companies Face Some Disclosure

12. (U) Non-listed companies are not regulated by the Securities Commission, but by the Commission of Companies in Malaysia (CCM). Regulations require non-listed companies to send annual financial statements to the CCM, which will release the information for a nominal fee (currently less than USD 3.00). Most of the larger companies submit financial data regularly; however, enforcement for some smaller companies has been inconsistent. A proposed merger of the SC and the CCM could lead to tighter scrutiny.

Two Golden Shares

13. (U) The government retains a Golden Share in two companies, MAS and Telecom Malaysia, dating from the time when these companies were 100 per cent government-owned. The Golden Share effectively gives the Government veto power on Board decisions. Other corporations offer regular shares with one vote per share. We are not aware of any companies besides these two with special voting rights.

Untangling the Web

14. (SBU) Comment: In view of the role GLCs play in Malaysia's economy and the government's use of GLCs as policy agents, increasing the transparency of GLIC and GLC activities is an important goal in our FTA negotiations. But compiling the sort of annual report that Singapore is obliged to produce by our FTA with that country will be a major challenge for Malaysian officials. Not only are the relationships between government and commercial entities more complex in Malaysia than they are in Singapore; the political sensitivities are far, far higher.

Malaysian officials will find reporting on GLCs a daunting task, but could be persuaded that this would support the government's agenda for improved GLC performance (reftel). End comment.

SHEAR (October 2006)

Kredit: www.malaysia-today.net

Isnin, 19 September 2011

Malaysia Today - Your Source of Independent News

Malaysia Today - Your Source of Independent News

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