Who would have thought that Dr Mahathir bin Mohamad, at the ripe old age of 92, would be re-installed as the Prime Minister of Malaysia? Even more, that he has defected from the ruling United Malays National Organisation (UMNO), whose iron grip on power he helped solidify during his first tenure.
It is an amazing story, and coupled with the release of Anwar Ibrahim, the opposition darling who fell from grace as Mahathir’s former deputy and has been in and out of prison ever since. Deposed Prime Minister Najib Razak, meanwhile, now almost certainly faces corruption charges. Barred from leaving the country by his former patron Mahathir, it is a dramatic fall from grace for the man touted as the UMNO’s next standard-bearer.
What does this mean for the political development of Malaysia? For so long subordinated to economic progress, particularly the wants of the native Malays (Bumiputera), is true political reform and democratisation on the horizon? Would that even be a good thing in an era where the flaws of the liberal system are being laid out in the open?
It is first worth recounting the transformation of the Malaysian state and economy post-WWII and the unique conditions that have driven its development. Below is a piece I wrote on the subject back in 2009.
Defining development is not a straightforward task and therefore in examining Malaysia’s unique development post-war I will use the following definitions:
The measurable progress in an economy from a primarily agricultural base to an industrial emphasis, accompanied by a general improvement in living standards.
The adaptation of the institutions, attitudes, and values that form the political power system of a society.
These definitions are in line with “modernisation theory” which emphasises that economic development will increase with access to financial capital and advanced technological education and gradually lead to greater political development along more democratic and pluralistic lines of governance. (Im, 1987, p.232)
These processes establish a social transformation from a traditional to a “modern” society. I will argue that, whilst pursuing a development model similar to other East Asian states has led to rapid economic development in Malaysia, it has not been accompanied by the political development forecast by modernisation theory.
In fact, a reverse political development pattern is noticeable, as attempts to create a pro-Malay multi-ethnic state have merely resulted in a highly centralised authoritarian elite.
The catalyst for Malaysia’s rapid economic development from the 1970s onwards was the Kuala Lumpur race riots of 1969. This involved clashes between the indigenous Malays and the Chinese and Indian ethnic minorities (who still make up a substantial proportion of the population). (Esman, 1972, p.42)
The government decided the root cause of the riots was the socio-economic imbalance between the “rich” Chinese and the “poor” Malays, which had led to great resentment amongst Malaysia’s dominant ethnic group. (Wah, 2002, pp.24-5) This diagnosis would contribute to the implementation of the policy that would shape Malaysian development for the next three decades: the New Economic Policy (NEP).
The NEP sought to raise the Malay share in all capital interests from a rate of two per cent in 1970 to thirty per cent by 1990. This would be achieved through economic and social restructuring, giving preference to the Bumiputera (native Malays) in business, education and the professions. (Munro-Kua, 1996, p.63)
This was hugely significant both for Malaysia’s economic and political development. Economically, it helped initiate a move from import-substitution to export oriented growth (Crouch, 1996, p.221). This is a key phase in the East Asian economic development model, and led to rapid growth in Malaysia’s GDP.
Politically, the NEP centralised economic control in the Prime Minister’s department, “signalling a more interventionist approach in the economy,” (Liew, 2003, p.94) and thus setting the framework for authoritarian rule.
Further policy creation in the 1970s, including the Internal Security Act (ISA) to allow detention without trial, strengthened the position of the pro-Malay Barisan Nasional coalition (Yin, 1983, p.190) and had consequences for Malaysia’s future economic development. These policies were specifically aimed at reducing non-Malay dominance in the economic sector and were enacted to quash any resistance towards the pro-Malay NEP.
This was particularly ironic given that the Chinese and Indian ethnic minorities’ business enterprise and corporate taxation had prevented the post-independence Malaysian economy and political system from being an unmitigated disaster. (Bowie & Unger, 1997, p.67) Discriminating against these traditionally key economic players saw Malaysia apparently deviate from modernisation theory, as the government restricted its access to the financial capital necessary to continue its ambitious development programme.
Modernisation necessarily requires substantial capital for a sustained period and as the Malaysian government marginalised the ethnic Chinese, they had to seek foreign investment as an alternative provider of finance. (Alatas, 1997, p.119) Not only does foreign capital allow infrastructural improvements to traditional societies, but it aids the transfer of technology that can intensify economic development.
The authoritarian nature of the Malaysian state facilitated the arrival of foreign investment, as industrial legislation banning trade unions, along with the draconian measures of the ISA, ensured wages for labour remained artificially low. (Crouch, 1996, p.231) This also persuaded multinational corporations to establish manufacturing bases in Malaysia, encouraging a move away from predominantly agricultural employment.
Indeed, in the initial phases of development, “modernisation theorists argue that developing countries need an authoritarian political system…where power is concentrated to ensure rapid economic growth.” (Gomez, 2004, p.4) Here Malaysia fits the model perfectly and whilst the NEP appeared contradictory to the modernisation model, it inadvertently made some provisions for economic modernising.
The Malay bias in education policy meant less ethnic non-Malays could enter tertiary education domestically, leading many to getting more advanced training abroad, enabling the transfer of technology from already modernised nations back to Malaysia. (Liew, 2003, p.95) In addition to this, a substantial number of non-Malay businesses used their corporate expertise to develop close patronage relationships with burgeoning Malay groups, taking advantage of the preferential legislation given to these groups to maintain their own economic prowess. (Gomez, 1999, p.5) This meant domestic non-Malay investment didn’t completely vanish and also encouraged the Chinese diaspora in Malaysia to continue attracting investment from other Chinese businesses in Hong Kong and Taiwan (Hing, 2001, p.173), further stimulating economic development.
Therefore, despite the ethnically discriminatory NEP Malaysia was able to accrue the necessary amount of domestic and foreign investment and technological advancement to fuel the early stages of the modernisation model. Aside from the ethnic ambiguities, this modernisation took a similar form to what had been, or was being, employed throughout states in East Asia. Whilst some authors are loathe to include Malaysia as one of East Asia’s “developmental states”, (Doner et al., 2005, pp.334-36) similarities can be drawn between the economic development of these states and Malaysia. Aside from the move towards export-oriented growth, the most significant similarity sees state authority over the economic development process, with curtailments in political liberties. (Beeson, 2007, p.170)
The authoritarian nature of the Malaysian state enabled the government to pursue an export-led growth policy coupled with heavy industrialisation, which was funded by the foreign and domestic investment that resulted from the NEP. (Crouch, 1996, p.228)
This allowed Malaysia to achieve levels of economic growth second only to China in the region in the late 1980s and 1990s. (Athukorala, 2001, pp.13-14) In fact, Malaysia actively pursued a “Look East” policy under the stewardship of Prime Minister Mahathir Mohamad, whereby the government sought to imitate the development model exemplified by the modernisation of Japan and the Newly Industrialised Countries. (NICs) (Milne & Mauzy, 1999, p.55) The success of adopting this model on economic development is highlighted by the general improvement in living standards in Malaysia with poverty levels dropping from 43 to 11.5 per cent between 1970 and 1995. (Wah, 1999, p.41)
It cannot be doubted that Malaysia had several characteristics consistent with the East Asian development model and a further result of this was the emergence of an enlarged middle-class, an essential stage in modernisation theory. (Fukuyama in Wah, 1999, p.49)
Vidhu Verma argues that the transition of a large number of rural poor into a more affluent, urban middle-class “can be seen as an impetus to liberalisation and democratisation in Malaysia.” (2002, p.72) Under modernisation theory Verma should be right. Nevertheless, the reality of Malaysian development is somewhat different and the rise of a middle-class is actually the point where it departs from modernisation theory. Despite the prerequisite economic development being attained by Malaysia to fit the modernisation model, the political development that is supposed to coincide with it has not emerged and is once more a result of the ethnic complexities in the country.
For political development to emerge as a democratic process with equal representation for the whole population, the presence of an active middle-class is a precondition. (Johnson in Snodgrass, 1980, p.285) Modernisation theory argues that economic development leads to an “economically independent middle class whose threshold for autocratic rule would diminish.” (Gomez, 2004, pp.4-5) This political socialisation encourages the formation of more unified civil society groups that campaign for democratic reform and the government accepts it to ensure social stability and economic productivity remain high. This process is evident in the democratisation of the NICs of Taiwan and South Korea. (Ibid, pp.4-5)
According to this theory Malaysia should have experienced democratic political development as its economic growth continued apace in the late 1980s and ‘90s. Some authors, like Alatas, argue that this is the case, and point to the democratic institutions and procedures that exist in Malaysia, such as universal suffrage and a range of political party choice. (1997, p.2, 120)
However, these institutions have existed since independence in 1957 and it is widely agreed they are manipulated by the UMNO-led Barisan Nasional to ensure re-election, rather than encourage civilian participation in politics, a crucial feature of democracy. (Gomez & Jomo, 1999, p.2) Whilst it is unquestionable that the middle-class has come to make up a large proportion of the population, Derichs is right to point out that it “is not a coherent social stratum,” in Malaysia. She argues that rather than fitting the modernisation model, Malaysia’s middle-class remain divided along ethnic lines in particular, with pro-Malay government policy a barrier to class unity, preventing concerted pressure for political development. (2004, p.125)
This lack of class unity is hardly surprising as the NEP, whilst not completely detrimental to non-Malays, led to great resentment amongst Malaysia’s ethnic minorities who saw the Bumiputera benefiting from what they considered a racist policy. (Cho, 1990, p.82) This resentment was only exacerbated by the National Development Policy of 1991, which replaced the NEP but reaffirmed its key policies of increasing Malay economic development in relation to non-Malays. (Athukorala, 1997, pp.22-3) This division of the middle-class as a result of ethnic policy has limited the explicit calls for democratic reform from civil society, allowing the government to pursue a reverse political development pattern from that predicted by modernisation theory.
The paternalistic nature of the state through Malaysia’s economic development, combined with the lack of middle-class political socialisation, has led to what Bell and Jayasuria call a “culture of dependence” amongst the Malaysian population. (In Gomez, 2004, p.5)
As a result, there is a greater acceptance for solely economic development driven by the state at the expense of political development, contrary to modernisation theory. This has allowed the Malaysian government to tighten its authoritarian grip by engaging in corrupt practices, such as “cronyism”, which further centralises executive power in the hands of what is effectively a power elite. (Gomez & Jomo, 1999, p.25)
The lack of political development amongst the population allows such practices to be conducted quite openly even though they are potentially detrimental to future economic development. Corrupt practices and favouritism are completely contrary to modernisation theory, as they repress productivity and can lead to crucial resource outflow to more politically transparent countries. But whilst Malaysia may be blocking its own path to modernised status, the government continually decries such theories as relativist and not appropriate for Malaysia’s unique development.
Malaysian leaders, particularly Mahathir, have promoted the notion of “Asian values” to account for their “different sort of political development” based on collective rather than individual rights. (Verma, 2002, p.167) As the population give greater political obedience and respect to state authority, it is argued the Malaysian government has fostered communal economic development that improves living standards. (Wah, 1999, p.49)
Whilst it is hard to argue with Malaysia’s economic progress over the last few decades and contestable to implement universal models of development, it appears the “Asian values” argument is merely a tool to legitimate authoritarian rule and restrict calls for democratisation. Nevertheless, this argument, as well as the government’s ethnic policy, suitably divided the Malaysian population and satisfied them with almost continuous economic development up to 1998 without the government having to resort to gross levels of authoritarianism. (Case, 2009a, p.312) However, the government willingness to use the ISA as a means of silencing agitators for political reform if necessary, as highlighted by the mass arrests of political opposition under “Operation Lalang” in 1987 on security grounds, limits further the chances of political development predicted by modernisation theory. (Milne & Mauzy, 1999, pp.107-9)
Whilst Malaysia’s political system had developed into an effectively authoritarian regime, the Asian financial crisis of 1997-98 and its aftermath created the conditions whereby modernisation theory could possibly become applicable to Malaysia’s development once again. The slump in the East Asian economies created doubt over the sustainability of their specific development model and the positive effects of “Asian values.” (Haggard, 2000, p.10) This was particularly significant for the Malaysian population whose government was being legitimised solely by its ability to ensure economic development continued.
Suddenly there was an increase in questioning the lack of political development in Malaysia, as economic growth was no longer guaranteed, and these questions were answered by the pro-reform Deputy Prime Minister Anwar Ibrahim, in stark contrast to the desires of PM Mahathir. (Beeson, 2007, p.127) As a result, Anwar’s sacking and subsequent imprisonment on corruption and sodomy charges “led to considerable overt demand for political change in Malaysia.” (Derichs, 2004, pp.109-110) If people within the country had been unaware of their state’s authoritarian nature they weren’t anymore and these two events strengthened the possibility of fostering the political socialisation needed for the modernisation model to be revived in Malaysia.
Since the Anwar affair one development has been significant in showing the potential increase in political socialisation. The formation of a new, multi-ethnic coalition (Barisan Alternatif) to challenge the dominant status of the Barisan Nasional has seen the collaboration of Malay and non-Malay parties to campaign for democratic reforms and greater social justice. (Hussein, 1999, p.100) Weiss identifies the increasing educative role played by Malaysian civil society post-1997 in encouraging the public to challenge the unrepresentative political system by voting for the new coalition. (In Case, 2003, p.52)
This is more in line with modernisation theory whereby a unified campaign for political development follows economic development. However, the fairly quick return to growth after the financial crisis in Malaysia and suspicions relating to the Barisan Alterantif’s political motives, both within and outside the coalition, has resulted in a lack of “determinative force” in the political reform movement. (Case, 2009b, p.261) It appears that manipulative government propaganda (Andaya & Andaya, 2001, p.329) combined with the public preference for economic development suggested by opinion polls (Samad, 2008, p.248) and the divide created by Malaysia’s ethnic policy, are all significant factors in why Malaysia has not followed the pattern of development suggested by modernisation theory.
Malaysia pursued a course of economic development consistent with modernisation theory, whereby financial capital was courted from domestic and foreign sources, often as an indirect result of the NEP, to power an export economy. The alleviation of poverty, increased urbanisation and a move away from agricultural employment are all testimony to the effectiveness of Malaysia’s economic development, based largely on the East Asian development model. Whilst a strong, interventionist state is a necessary precursor for development according to modernisation theory, democratic political development will emerge as a result of sustained economic growth, as highlighted by other East Asian states.
Yet Malaysia’s unique development has ensured that democratic political change has not accompanied economic development as is predicted. The crucial determinant in why this is the case is the ethnic underpinnings of Malaysian society, which resulted in the NEP creating an ethnic divide within Malaysia, fostering an unchallenged authoritarian power elite masquerading as a democracy. This divide and the public preference for economic development go a long way to explaining why Malaysia has displayed a reverse political development pattern according to modernisation theory, as authoritarianism has increased.
With increasing competition and a lack of industrial diversity likely to slow Malaysia’s economic development in the future, calls for political reform may swell as with after the Asian financial crisis. However, until the issue of ethnicity is put to one side and a concerted reform movement is generated, the state’s repressive response to any domestic challenge will continue to ensure that Malaysia fails to achieve the levels of political development that modernisation theory suggests it should already have attained.
So, returning to the present, has political development in Malaysia just taken a little longer than the model suggests? Is the clamour for change a symptom of the ‘information revolution’, whereby the public are more inspired by trends and movements on social media than a sense of entitlement based on their improved economic status?
Whatever the case, Mahathir is promising reform and he has, for now, the backing of the masses. But is this merely a cynical ploy to ensure that he spends his final few years on this earth wielding ultimate power? Heady days these may be but the seeds of true democracy are still nascent. And what of the ethnic minorities? Will they continue to endure discrimination at the hands of the Bumiputera?
Mahathir won’t be particularly concerned at this moment in time. He has demonstrated an astuteness and political cunning that his predecessors were unable to exercise. He has read the public mood and surged back to the summit. How long he remains there, and what it means for Anwar Ibrahim and his millions of followers, is a mystery worth waiting to unravel.
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