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Malaysia Defence and Security Report Q4 2009Published by: Business Monitor International Published: Oct. 22, 2009 - 58 Pages Table of Contents
AbstractThe Malaysian political scene is entering a new era of possibilities, given that neither the ruling BarisanNasional coalition nor the opposition Pakatan Rakyat alliance are in the best of health, with both sidessuffering from a host of unsolved problems. In all, many of the risks still centre on the delicate racerelations within the country, although we highlight that other factors such as the potential depletion of oilreserves will also weigh on long-term political stability.Minority groups, namely the Chinese and Indians, have been increasingly vocal in recent years over thegovernment's perceived favouritism towards the Malays. Indeed, much of the dissatisfaction has beenattributed to the inability of some Chinese and Indian citizens to secure government-sponsored tertiaryscholarships or university places, relative to their Malay counterparts due to the NEW Economic Policy(NEP)-linked ethnic quotas. We are concerned that such perceptions of unfairness among the youngergeneration will only serve to further polarise the different racial groups within the country. Furthermore,it has been reported that certain quarters of the ruling United Malays National Organisation (UMNO) andopposition Islamic Party of Malaysia (PAS) - both Malay-based parties - are considering further cooperation,which could lead to greater concentration of power, potentially flaming more discontent amongthe minority races. Having announced two fiscal stimulus packages amounting to MYR67bn (US$19bn) or roughly 10% ofGDP, government finances are in poor shape and we are not expecting the administration to be able tobalance its budget over the next five years. Although there are indications that the government isconsidering the implementation of a goods and services tax (GST, also recommended by the IMF tohasten the country's fiscal consolidation), the tax is unlikely to be in place within the next couple of years,pending more groundwork. According to Minister of Defence Dato Seri Dr Ahmad Zahid bin Hamidi,who assumed his post in March 2009, the defence ministry can help the country's economy should theindustry be developed with the right marketing strategy. It is able to market local products such asunmanned aerial vehicles (UAV), bullets for various types of firearms, military vehicles and specialistservices such as repairing planes. Ahmad Zahid added the government is ready to form a special purposevehicle (SPV) to offer financial packages to local companies to expand their businesses from servicecentres to products manufacturers. Despite its status as a Muslim-majority country, Malaysia is still at risk of being targeted for terroriststrikes by Islamic radicals, which would most likely have a particularly destabilising effect, given the lackof precedence for such attacks, unlike neighbouring Indonesia. Indeed, a number of regional bombingshave been linked to terrorists born and trained in Malaysia, including the Johor-born Noordin Top, whowas killed by Indonesian police in September 2009. If such a scenario should occur, we would expect thatkey landmarks, such as the Petronas Twin Towers, would be prime targets. In addition, there is also a possibility of increased ‘Islamisation’ of the country, especially if the MalayUMNO and PAS parties forge closer ties in the future. In such a scenario, we foresee greater proliferationof religious practices such as gender segregation in public places nationwide - which includes separatequeues for men and women in shopping centres - as is currently enforced in the PAS-dominated state ofKelantan. If that happens, we would expect racial ties between the Muslim Malays and non-Muslimethnic minorities to be further strained. Get Full Details About This Report >> |
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