Razak's Ghosts Come Home to Roost and an Explosive New Year in Burma

Malaysia: PM Najib Razak has launched an economic reform initiative, the New Economic Model (NEM),  which is geared to transform Malaysia into a developed nation by 2020.    The problem with this lofty goal is that Malaysia is currently facing ascending competition, a marked decrease in foreign direct investment (FDI), and  the fact that this reform is being proposed by a politically weak PM.  How Razak plans to implement major reforms  and deal with  structural issues, while increasing popularity for his coalition with his core constituents, ethnic Malays,  is anyone’s guess.  It all sounds good on paper though:

The NEM pledges to boost Malaysia’s per capita annual income from the present $7,000 to $15,000 through a raft of measures, including enhancing the role of the private sector, improving worker skills and productivity, and reducing the dependence on foreign labor. It also promises to make the government’s decades-old affirmative action policy, the New Economic Policy, more inclusive and market-friendly. As it now stands, the policy gives preference to ethnic Malays (who make up almost 60 percent of the country’s population) over minority Chinese and Indians. Najib’s plan will shift the focus to supporting the poorest 40 percent of all families, regardless of race.

The proposed reforms come not a minute too soon for Malaysia. Economic growth rates have declined from 7 percent in the late 1980s to 5.5 percent today, as the country’s labor-intensive exports have lost out to growing competition from newly emerging low-wage economies like China and Vietnam. The country’s ruling Barisan Nasional (BN) coalition also saw a soaring budget deficit hit an alarming 7.4 percent of GDP, with foreign direct investment reduced to a trickle of just $7 billion last year…

Foreign investors are also growing discontented. In an April 8 research note, Citigroup warned that Malaysia “cannot afford too many execution delays and policy flip-flops. The country needs to understand that too many U-turns make a roundabout.”

Malaysia:  One issue that is sure to not boost Razak’s popularity:

A potentially explosive scandal in Malaysia over the billion-dollar purchase of French submarines, a deal engineered by then-Defense Minister Najib Tun Razak, has broken out of the domestic arena with the filing of a request to investigate bribery and kickbacks from the deal in a Paris court…

Judges in the Paris Prosecution Office have been probing a wide range of corruption charges involving similar submarine sales and the possibility of bribery and kickbacks to top officials in France, Pakistan and other countries. The Malaysian piece of the puzzle was added in two filings, on Dec. 4, 2009 and Feb. 23 this year…

The source said police have confined their inquiry to bribery allegations so far and have not looked into the 2006 murder of a Mongolian woman [Shaariibuugiin Altantuyaa, Razak’s reported mistress] in Malaysia who was a translator on the deal for Najib and his friend, Abdul Razak Baginda, during a visit to Paris.

PM Razak’s attempts to drown the issue in the Malaysian courts and parliament might be coming to a head.

Myanmar:   As an update to previous reports, Myanmar has been hit with a string of bombings over the last few months.  Mostly recently, on April 15th, during the Burmese New Year, a bomb went off in Rangoon.   The ruling junta has blamed “terrorists” and “destructive elements”, which typically refers to the ethnic separatist who have long been at odds with the ethnically Burmese regime over sovereignty for decades.  This time, the Kachin militias are blamed by the junta, though they have denied responsibility.    The junta believe that the Kachin are agitated over plans to build 7 hydroelectric dams in their state.  Further, the dams will produce electricity that will be sold to neighboring China, with no benefit to Kachin State.  In fact, the dams will flood thousand of  homes and a local holy place.  One dam construction site has been repeatedly bombed.

Many Kachins believe the junta will use the terrorist attacks as a pretense to invade the area in order to  crush the militias.  Over the last year, the junta has been attempting to unify the nation by force, ahead of this years elections. The idea being to force the ethnic militia’s to integrate into the national military.  The national government has already demonstrated its will to fight the militias, most recently during a largest offensives in August of 2009. The junta attacked the Kokang state, which resulted in thousands of refugees fleeing across the border to China.

For those interested, a list of Burmese minority groups can be found here.