After years of delays, Cambodia - could soon be ready to pump oil page 16 - James Crabtree
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POLITICS & ECONOMY BUSINESS
Inside South Korea’s
chilly economy
After years of delays, Cambodia
page 30 could soon be ready to pump oil page 16
asia.nikkei.com
Nov. 11-17, 2019
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ISSN: 2188-1413
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ON THE COVER
JAMES CRABTREE Contributing writer
THE LONG
ROAD BACK
Anwar Ibrahim is within touching
distance of Malaysia’s premiership, the
culmination of a decadeslong journey
that took him from rising political star to a
prison cell. But with the country’s politics
as febrile as ever, will he truly be able to
deliver on his radical promises?
The construction site of the Tun
Razak Exchange in Kuala Lumpur,
among the projects of the
scandal-plagued state fund
1Malaysia Development Berhad.
8 9
ON THE COVER
KUALA LUMPUR For a soft-spoken politician, Anwar Ibrahim also a topic on which Anwar has grown adept at deflecting Supporters of Mahathir Mohamad await his swearing-in as prime
angers quickly when talking about corruption. questions. Instead, he wants to talk about his reform ambitions. minister, following the opposition’s shock election victory in May 2018.
“We have tried, for the last half-century, a pro-Bumiputra pol- During decades in opposition, he often pledged radical changes
icy that benefited cronies and elites,” he says, referring to the to clean up politics and heal racial disharmony. Now, as prime for six years, often in solitary confinement, on what many viewed
entrenched, race-based affirmative action system that favors his minister-in-waiting, he may soon be in a position to do some- as trumped-up sodomy charges.
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country’s majority ethnic Malays. “Look at the figures. Poverty thing about it. Over the decades since, he has climbed back to prominence,
has increased! Inequality has increased!” he goes on, his voice ris- Yet his is far from the only vision for Malaysia. Just a few days bit by bit. His admirers still see an unusual talent, combining
ing as he counts the points off on his fingers. “It becomes like a mesmerizing oratory and rare intellect with the potential to turn
clientelist system. And that needs to be rejected!” Malaysia into a genuinely prosperous, multiethnic Islamic democ-
The Nikkei Asian Review met Anwar, 72, in Kuala Lumpur His admirers still see an unusual talent, racy. Last year’s election marked one political watershed with the
during October to discuss Malaysia’s future, more than a year Berhad over which he presided, by many measures the largest defeat of the United Malays National Organization, the party that
combining mesmerizing oratory and
after his opposition Pakatan Harapan -- “Alliance of Hope” -- co- fraud in Asian corporate history. had dominated the country’s political system since independence.
rare intellect with the potential to turn
alition triumphed unexpectedly in national elections. It was a vic- “They say, ‘Oh, the Malays are suffering! We need to do more!’” Anwar’s appointment as leader would mark a second significant
tory he celebrated from inside a prison hospital, however, having
Malaysia into a genuinely prosperous, Anwar says, his eyes flashing. “But none of them articulate the shift. While he himself is Malay, he heads the multiethnic Parti
been imprisoned two years earlier on what many legal observers multiethnic Islamic democracy problems of poor governance and corruption and the squander- Keadilan Rakyat, meaning that as Malaysia’s eighth prime minis-
view as politically motivated charges of sodomy. ing of billions by the Malay elite!” Then he pauses and smiles, as ter he would also be its first not to lead an ethnic pro-Malay party.
While awaiting release, Anwar could only watch as his long- if checking himself. “You are provoking me. I’m getting angry.” Yet, for all his talents, he remains a divisive and mercurial fig-
time rival-turned-ally Mahathir Mohamad took power as prime before our interview the Malay Dignity Congress, an influential Anwar has good cause for anger, having spent more than a de- ure, and one whose policy plans remain hard to pin down. Much
minister. Now, he is waiting once again, this time for the ful- ethnic nationalist group, held a large rally in the capital, rejecting cade incarcerated at the hands of political opponents. His initial ink is spilled over the timing of his succession, but rather less on
fillment of an opaque pact with Mahathir, in which the veteran just the kind of plural democracy Anwar supports. He dismisses spell came during Mahathir’s long first period as prime minister, what he might do in a job for which he has spent half a lifetime
prime minister is supposed to hand over power -- reportedly, the movement’s “Malaysia for the Malays” rhetoric, as well as which ran from 1981 to 2003. A fiercely ambitious leader, Anwar preparing. His constraints are clear. Malaysia’s politics are frac-
within two years. its unwillingness to grapple with the ethical failures of previous served as finance minister while positioning himself as heir ap- tious. Its economy is struggling. Polls tend to show him to be less
The vague details of that agreement -- when exactly will it Prime Minister Najib Razak -- and, in particular, the megascandal parent, until the two men fell out spectacularly around the time popular than the more avuncular Mahathir, too, posing questions
happen? on what terms? -- are staple gossip in Malaysia, and involving state-owned investment fund 1Malaysia Development of the Asian financial crisis in 1998. The result left Anwar in prison about his odds of winning reelection. Given all this, what hopes
Path to a power handover 1998 The 1999 The PKN joins 2003 The PKN merges 2004 BN, now led 2008 BN calls elections for March, before 2013 Anwar leads the 2016 Malaysia’s 2018 The opposition
POLITICS
reformist Parti other opposition groups with the Parti Rakyat by Abdullah Ahmad Anwar’s ban from politics expires. Wan runs PKR and the opposition attorney general coalition, now headed by
Barisan Nasional (BN) Opposition Others Keadilan Nasional to contest a general Malaysia to form the Badawi, wins back in his place at the head of the opposition coalition in the general says no evidence Mahathir Mohamad,
Opposition parties: Democratic Action Party (1982, 1986), People’s (PKN) is formed, election, which BN wins, Parti Keadilan Rakyat many seats in a coalition, which now includes most of the election. The of wrongdoing in storms to a shock victory,
Concept (1990, 1995), Alternative Front (1999, 2004), People’s Pact with Anwar a but with a significantly (PKR), headed by Wan general election major opposition parties. opposition wins the 1MDB case; U.S. unseating BN for the first
(2008, 2013), Alliance of Hope (2018)
Source: Nikkei Asian Review research, Election Commission of Malaysia leading member reduced share of the Azizah, Anwar’s wife For the first time since 1969, popular vote, but not Department of time since Malaysia’s
popular vote BN loses the two-thirds 2009 Abdullah enough seats to unseat Justice opens a independence in 1957
“supermajority” that allows steps down and the BN government separate case
Popular vote is replaced as 2018 Najib is arrested
(in percent) it to amend the constitution on suspicion of
prime minister
by Najib Razak corruption over the
19.6 Parliament seats 21.1 19.9 15.3 24.0 2007 Huge 1MDB scandal
40.2 2015 The Wall 45.7
(in percent) “Bersih” 47.4 2009 Najib’s 50.9
1MDB
pro-democracy government Street Journal
rallies are held establishes 1Malaysia first breaks news
56.5 63.9 in Kuala Lumpur, Development Berhad, of widespread
57.2 53.4 65.2
60.5 calling for clean 51.4 a state-backed 47.4 corruption at 33.8
85.7 5.8 elections investment fund 1MDB 35.6 50.9
1981 ’82 ’86 ’90 ’95 ’99 2000 ’04 ’08 ’13 ’18
ANWAR Minister for Agriculture Minister of Finance
2004-05 Sodomy 2006 Anwar 2008 Fresh allegations of 2012 Anwar 2015 Federal 2018 Anwar is released
TIMELINE
conviction is partially announces sodomy are laid by an aide. is acquitted Court upholds from prison and granted
Minister for Youth, Minister of Education Deputy Prime Minister overturned. Anwar is his intention In August, after his ban of sodomy; the appeal court a royal pardon, allowing
Sports and Culture released from prison, to contest expires, Anwar wins a the decision; Anwar him to return to front-line
1997 Oversees though his corruption the 2008 by-election and is finally prosecution is jailed politics. He returns to
Malaysia’s 1998 Fired from government conviction is upheld by elections returned to parliament lodges an parliament via a
1982 Joins United Malays response to and arrested under the Internal 1999-2000 After two trials widely condemned the Federal Court, barring appeal 2014 The Court of Appeal by-election
National Organization, then the Asian Security Act. Anwar is beaten by human rights groups, Anwar is convicted him from reentering overturns Anwar’s acquittal,
the largest party in Malaysia’s financial crisis by the then-chief of police, of corruption and sodomy, for which he is handed politics for five years. and he is sentenced to five
ruling coalition, BN Rahim Noor, who later served sentences of six and nine years, respectively. For Anwar works in academia years in jail
a short sentence for assault much of his sentence, he is in solitary confinement in the U.S. and U.K.
PRIME MINISTER Mahathir Mohamad (1981-2003) Abdullah Ahmad Badawi (2003-2009) Najib Razak (2009-2018) Mahathir Mohamad (2018-)
10 Nikkei Asian Review Nov. 11-17, 2019 Read more at asia.nikkei.com 11
ON THE COVER
might stay for three more years, fueling rumors that he is not keen A controversial policy
to hand over to his one-time protege. Anwar demurs. “As far as Malaysia’s “Bumiputra” policy was designed to address economic
I’m concerned, the transition is on schedule,” he says. “There is inequality between the Bumiputra ethnic group, comprised
a little bit of nitty-gritty about a specific date, which is yet to be of Malays and other indigenous people, and other groups, notably
Chinese Malaysians.
discussed. But there is a general consensus among the leadership.
What is more important is what I will do.” Malaysia’s ethnic breakdown Other 0.7
In this, Anwar faces an awkward balancing act, pledging loy- Share of population (in percent)
Indian
alty to the government while also gently hinting he could do
better. “It has been a positive beginning which makes things
Bumiputra Chinese
easier -- inshallah! -- for me,” he says of the coalition’s prog- 7.3
67.4 24.6
ress. After a brief period of postelection euphoria, polls suggest
The district of Little India in George Pakatan Harapan’s support has ebbed. Mahathir is struggling
Town, Malaysia: Anwar Ibrahim heads to implement a manifesto stuffed with promises written in op- Examples of the policy
the multiethnic Parti Keadilan Rakyat, position that its authors never actually expected to have to im- •Bumiputra receive a minimum 7% discount on property
Peter Guest
meaning he would be the country’s first
plement in government. Big ticket reforms have been limited, in new housing developments
prime minister not to lead an ethnic
pro-Malay party. too, beyond replacing the country’s goods and services tax -- a •They also gain preferential access to government tenders,
decision many economists already view as a mistake. share offerings, automobile import permits and
high-interest mutual funds
Anwar says his “big priorities” when he takes over will be eco-
•Under the New Economic Policy of 1971, Bumiputra were supposed
nomic reform and curbing inequality. But the heart of his agenda, to own 30% equity in Malaysian companies by 1990. At the time,
does Anwar have of not just talking elegantly about change, but One display case holds the meager contents of his cell on his day as well as its most combustible element, remains building a they owned 2%; by 2015, they still only owned 16%
actually delivering it? of release, including a pair of sandals, a wooden back scratcher, “needs-based” welfare system. Beginning in the 1970s, Malaysia Source: Malaysian government data
and a string of misbahah prayer beads. More than a dozen well- began handing out jobs, university places and loans to Bumiputra
UNCERTAIN TERM In person, Anwar seems relaxed about the thumbed books came home too: biographies of Barack Obama and -- “sons of the soil” -- Malays and indigenous people, aiming to
task ahead, with a graying goatee and rimless wire glasses that give the Prophet Muhammad; essay collections by Isaiah Berlin and the narrow the gap with the more prosperous ethnic Chinese mi-
the air of a gracefully aging professor. We meet in a rented mansion conservative British philosopher Roger Scruton; and, as if all those nority, in particular. Bumiputras make up two-thirds of the pop- proper governance. You have to tackle the issue of corruption and
in a plush Kuala Lumpur suburb, which aides describe grandly as were not high-minded enough, the complete works of Montaigne. ulation, making the system popular, even while it is widely criti- leakages in a very serious manner.”
a “transition office.” Images from his career dot the walls: skinny Prison was arduous, he says, although his health has since cized as inefficient and wasteful. Anti-corruption promises lay at the heart of Pakatan Harapan’s
1970s student radical; firebrand government minister; global recovered, with few aftereffects from spinal and shoulder surgery Attempts to change this will be fiercely opposed. “There are se- 2018 win, notably its pledge to get to the bottom of the 1MDB
Muslim statesman, and now member of parliament for the coastal undertaken last year. Learning to work closely with Mahathir was rious anxieties among the Malays, because for the first time since scandal, where as much as $4.5 billion went missing. Jho Low,
seat of Port Dickson, which he won in a by-election last October. tricky too. “It was difficult, initially, of course,” he admits of their independence [in 1957] they see this wave of non-Malay promi- a financier accused of orchestrating the theft, remains at large,
nence and more assertiveness,” Anwar admits. Any reforms are, although in October the U.S. Department of Justice announced
therefore, likely to be gradual; for instance, extending subsidies that he had agreed to forfeit nearly $1 billion in assets allegedly
Malaysia’s economy “There is an obsession with Najib as the to poorer non-Malays, or opening school placements and govern- bought with the fund’s money. Instead, attention has shifted to
is expected to have grown from highs of source of all evil. I don’t share that view. ment tenders. He hopes to make welfare more targeted and effec- former Prime Minister Najib, who has pleaded not guilty to doz-
… The judiciary was compromised. The tive too, reducing cash “gifts” and focusing instead on providing ens of charges ranging from money laundering to abuse of power.
around
things like cheap credit to help start small businesses.
4.5% 10%
media was compliant. The enforcement
agency, too” In prison, Anwar read up on economists like Thomas Piketty
and Joseph Stiglitz, both of whom back higher taxes on the rich “It requires a strong political will
Anwar Ibrahim on the long-running 1MDB scandal to support spending on basic state services. Such measures to re- to act, because helping the poor
in 2019 in the late ’80s and early ’90s will not enrich you,” says Anwar.
duce inequality in general can, he hopes, persuade poorer Malay
Source: IMF, World Bank voters to support his specific reforms, even if they mean ending
rapprochement, which began gingerly in 2016. The duo now hold their racial privileges. “The narrative is not just about growth,”
Malaysia’s poverty rate
weekly meetings in private, swapping notes and managing their he says. “The concern is that you talk about growth and the elites
According to government figures According fragile four-party coalition, of which Anwar’s PKR is the largest and the rich keep on growing and inequality widens.”
to the U.N. member. Although his wife is deputy prime minister, Anwar him- Transparent welfare policies will create complexities for dif-
self holds no government role, a partly tactical decision which al- ferent reasons, he admits. Race-based programs became a major
In 1979: In 2019: around lows him to avoid public disagreements with Mahathir. “We are, source of graft, leading to what Malaysians call “leakages,” as
49% 1% 15% I should say, cordial. Friendly. Very proper.” money moved from public coffers to well-connected Malay busi-
Akira Kodaka
Anwar says he still expects to take power next May, two ness leaders and cronies of the old regime. “It requires a strong
years after the election, although many doubt his confidence. In political will to act, because helping the poor will not enrich you,”
Source: Malaysian government figures, U.N. September, a few months after his 94th birthday, Mahathir said he he says of his alternative approach. “It boils down to the issue of
12 Nikkei Asian Review Nov. 11-17, 2019 Read more at asia.nikkei.com 13
ON THE COVER
The details emerging from these trials are “shocking,” Anwar Malaysia’s flagging FDI China-funded East Coast Rail Link such as Malaysia’s burgeoning technology and startup scene.
says, although he suggests Malaysia’s problems run deeper. Foreign direct investment canceled by PM Mahathir; “Don’t compete with the private sector,” he says. “There are effi-
to Malaysia (current prices, restarted mid-2019, after China
“There is an obsession with Najib as the source of all evil,” he agreed to slash costs by over 30%
ciently run private hospitals. Let them run them.”
in billions of dollars)
says. “I don’t share that view. What is pertinent here is the total As he searches for investment, many believe Anwar will have
15 150
abdication of responsibility by the institutions of governance. The few options but to turn back to China. Under Najib, Malaysia was
Reuters
judiciary was compromised. The media was compliant. The en- an enthusiastic recipient of infrastructure funding from Beijing’s
forcement agency, too.” He saves his most stinging criticisms for 10 Stock 100 Belt and Road Initiative. The results were controversial, leading
the elites that backed Najib in power. “Of course, there is the hy- (right) to graft accusations and project renegotiations, including the con-
Flow
pocrisy of the intellectuals -- the so-called intellectuals! They were (left) troversial rail link. China is a complex subject for Anwar, given Old ties: Anwar, left, as deputy prime minister in 1996,
muted. Some of them, the leadings ones, are virtually lackeys of 5 50 his record of speaking up about Xinjiang, where more than a speaks with Prime Minister Mahathir Mohamad at that
the old corrupt order.” million ethnic Uighurs, almost all of them Muslim, are held in year’s party conference.
Anwar’s specifics on governance improvements are harder to “re-education” camps -- a point he says he’d make again as prime
0 0
pin down. Bodies like the Malaysian Anti-Corruption Commission 1990 ‘95 2000 ‘05 ‘10 ’15 ’18 minister. “You can’t expect me, having stayed in prison for 10 wider. “But I have a slight advantage. I can still give a sermon.”
must be strengthened, he suggests. Technology can increase trans- Source: UNCTAD, official announcements, media reports years and been denied justice, to completely ignore this,” he says. This unshakable faith in his persuasive abilities lies at the core
parency. Ultimately, though, any cleanup begins by example: “We Ties with the U.S. are no less tricky. “With [U.S. President of why Anwar is upbeat about his odds as prime minister. Even
must produce leaders who are more accountable, and who don’t Donald] Trump, of course, we have a problem. We tend to dis- so, the political arithmetic is tough, according to Ibrahim Suffian,
display their wealth and ostentatious living style,” he says. “They agree with him on most issues of life and death.” Anwar enjoys a pollster. Pakatan Harapan was Malaysia’s first government to
must not go on shopping sprees every time they go on overseas only has Malaysia’s economy stagnated, but it now risks being deep links in Washington, having taught at Georgetown and be elected without backing from a majority of Malay Muslim vot-
official visits. These things need to be instilled.” eclipsed by economies like Vietnam as manufacturers shift away Johns Hopkins universities. But he has not met the current presi- ers. Now Anwar must keep at least some of this group on board,
from China, Anwar suggests. “It is problematic, no question,” he dent, and doesn’t seem to be relishing the prospect either. “I don’t or risk an UMNO resurgence. “His coalition would face a tough
GROWING PAINS However quickly Anwar might try to push says. “It’s not going to be as easy as it was when I was finance know what I can discuss?” he says jokingly. “I don’t play golf.” battle to win reelection in 2023,” Suffian says.
through his reforms, the economic challenges he faces will be im- minister in the 1990s. Having said that, we need to find a niche. At base, Anwar is likely to aim to keep friendly ties with both Then there is the more immediate problem: taking power in the
mediate. The International Monetary Fund recently cut Malaysia’s We have to ask: What can be done?” China and the U.S., avoiding significant swings in foreign pol- first place. In public, he jokes that, having waited decades to be
growth projections for this year to just 4.5%, well below the level During that earlier period, international investors tended to icy. But he says he still hopes to craft a role for himself as an in- prime minister, he is content to wait a few more months. Resilient
expected from a one-time Asian Tiger. Prices have risen too, driv- view Anwar as a more economically liberal foil to the autocratic ternational spokesman for progressive Islamic ideas. “There is a though he is, Mahathir cannot continue indefinitely. His unwill-
ing dissatisfaction among Malay voters in particular, while the Mahathir, an image he seems keen to recover. “I was in New York sad and tragic state of affairs in many Muslim countries, most of ingness to confirm a date likely stems from an unwillingness to be
government is struggling to meet its budget targets. with JPMorgan and Bank of America, and all they hear about which are authoritarian, dictatorial, oppressive,” he says, while viewed as a lame-duck leader.
This slowdown is partly a byproduct of the government’s Malaysia is 1MDB,” he says of a recent visit. “Now I want to make admitting that ability to do much about this will remain limited. Even were Mahathir to favor another successor, there are few
anti-corruption drive, suggests Donald Hanna, chief economist sure Malaysia returns as an attractive destination for domestic Anwar’s Islamic credentials remain a source of domestic po- suitable candidates. The coalition the two men manage is fractious
at CIMB, a Malaysian bank. Postelection investigations delayed and foreign investments.” litical strength, allowing him to deploy his formidable oratory to and divided, too, as is Anwar’s own political party, notes Francis
or scrapped major projects agreed under the last government, in- Developing tourism and digital technology will be two pri- argue for reforms in theological terms. He rejects the fear that a Hutchinson, head of the Malaysia program at the ISEAS-Yusof
cluding the controversial multibillion dollar Chinese-funded East orities, he says. More carefully targeted incentives can per- more conservative and strident form of “political Islam” is on the Ishak Institute in Singapore. Were Anwar’s patience to fray, it is
Coast Rail Link, hitting investment growth. suade global companies to relocate, as can streamlining bureau- rise in Malaysia, viewing religion instead as a progressive force. all too easy to imagine he and Mahathir falling back into the acri-
But there are broader problems, from the need to break out of cracy. Mature assets in areas like health care held by Khazanah “Without the issue of peace, justice, compassion as part of mony that marked so much of their history.
the country’s persistent middle-income status to addressing the Nasional, a sovereign wealth fund, should be sold off, with the [Islamic] religious ethics, ‘Malayness’ becomes chauvinistic,” he Anwar is more positive, suggesting the two men finally have a
vulnerability of its exporters to the ongoing global trade war. Not proceeds channeled into areas with greater growth potential, says, nodding again to the risks posed by divisive nationalist shared cause. “It is in his interest that his tenure is peaceful. And it
groups like the Malay Dignity Congress. “I’m a Malay. I love my is my interest to ensure the transition is peaceful, so I’m given sim-
language, my culture. But I’m also a Malaysian. And I want to talk ilar support,” he says. That said, with tough reforms to deliver and
about justice and the rule of law and ethical governance.” the electoral clock ticking, he wants the handover sooner, not later.
Peter Guest
“I need at least two, two and a half years [until the next election].
TICKING ELECTORAL CLOCK Anwar’s intellectual powers So I think it’s fair to keep this date. And if I am able to do the right
seem undimmed, at least judged by the references that tumble things in two and a half years, yes, I’m confident I can get back.”
out of him, from Avicenna and George Bernard Shaw to Egyptian Ultimately, he says, Malaysia needs to have the confidence to
economist Samir Amin. Yet for all the breadth of his learning, crit- reform itself. “After 60 years of independence, we have to look at
ics still see an ideological chameleon, a charge he brushes off. ourselves. That is my dream,” he says. “If the government is dem-
“They say: ‘You come to [Kuala Lumpur] and talk about ocratic, if it is accountable, if we can rid the country of excesses of
Shakespeare. And then you go to the village and talk about the corruption and leakages, then a lot can be done.”
Quran,” he says with a mischievous grin. “But I say: ‘On the con-
A station in the Malaysian town
of Gemas, on the route of the
trary, I can go to the village and talk about Shakespeare and then to James Crabtree is an associate professor in practice at the Lee Kuan
now-postponed Singapore-Kuala KL to talk about the Quran!’” Does he have more work to do to win Yew School of Public Policy at the National University of Singapore.
Lumpur high-speed rail line. over heartland Malays? “Yes, yes, I do,” he says. The grin grows He is author of “The Billionaire Raj.”
14 Read more at asia.nikkei.com 15
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