Malaysia in 2016: Persistent Crises, Rapid Response, and Resilience

Summary

Malaysia entered 2016 with the baggage of many unresolved political, economic, social, and foreign policy issues from 2015. Especially notable has been the 1Malaysia Development Berhad (1MDB) political saga that spilled over to economic, social, and foreign policy domains. In response, Malaysian civil society continues to build momentum and confidence, despite various crackdown efforts. All this amidst continued economic slowdown and a sustained currency slide, made worse by the post-U.S. General Election “Trump Tantrum”. Quite drastic foreign policy adjustments were employed, especially towards the end of the year, to attempt to counter these negative developments. Despite the sustained challenges, Malaysia has displayed surprising resilience through it all.

Political Distractions and Divisions

The 1MDB debacle that consumed much of Malaysia's political attention and energies in the previous year continued to do so well into 2016. 1MDB is a strategic development company owned by the government of Malaysia which aims to promote foreign direct investment and establish strategic global partnerships to drive the country's long-term economic development. The company was thrust into the limelight in 2015 when Sarawak Report, an investigative news portal, started releasing information on the misappropriation of 1MDB funds by prominent members of the ruling government.

Early in the year, Malaysia's new Attorney General (AG), Mohamed Apandi Ali, who abruptly took over from the previous AG in mid-2015, announced that $681 million of funds transferred into Malaysian Prime Minister Najib Razak's personal account was a donation from the Saudi royal family, and was not linked to 1MDB. It was further announced that $620 million of that sum was returned to the royal family because it was unutilized. With this, the AG closed Malaysian Anti-Corruption Commission (MACC) investigations into 1MDB and cleared Najib of corruption, as “no crime was committed”. Najib also set about removing members of his party — the United Malays National Organisation (UMNO) — who had expressed dissent over official explanations on 1MDB. This included former Deputy Prime Minister Muhyiddin Yassin (who was dropped from the DPM position during a surprise cabinet reshuffle in 2015) and Mukhriz Mahathir, the son of Malaysia's former Prime Minister and Najib's adversary Mahathir Mohamed. This strategy of removing dissenting individuals seemed to have successfully stemmed much of the criticism over the issue from within the party.