2023/61 “Malaysia’s 2023 Elections: A Coming Clash of Coalitions in Selangor” by Khairy Jamaluddin
EXECUTIVE SUMMARY
- The upcoming state elections in Malaysia represent a referendum on the first eight months of Prime Minister Anwar Ibrahim’s ‘Unity Government’.
- The industrial state of Selangor will be the first real test whether the pact between Anwar’s Pakatan Harapan (PH) coalition and his Unity Government partner coalition Barisan Nasional (BN), can get support from voters.
- Based on the track record of the incumbent state administration and early polling numbers, Selangor is Pakatan Harapan’s to lose. Nonetheless, political undercurrents in Malaysia show that Perikatan Nasional may have the momentum.
- This Perspective lays out three scenarios for how the Selangor state election could transpire. Although Pakatan Harapan is favoured to retain Selangor, there is a path to power for Perikatan Nasional that hinge on certain levels of voter turnout and vote transferability.
- Only a modest shift in Malay support can sweep Pakatan Harapan from power in Selangor. Much will depend on the campaign swinging undecided voters in a contest that will affect the configuration of Malaysian politics.
*Khairy Jamaluddin is Visiting Senior Fellow at ISEAS – Yusof Ishak Institute. Previously, he served as Minister at Malaysia’s ministries of Youth and Sports, Science and Technology, and Health. He was also the Coordinating Minister for the Covid-19 Immunisation Programme. He was a three-term Member of Parliament and former Leader of UMNO Youth.
ISEAS Perspective 2023/61, 27 July 2023
INTRODUCTION
The campaigning in Malaysia’s six state elections is set to begin with the political temperature at boiling point. Both main coalitions frame the polls as a contest of national significance. For the opposition Perikatan Nasional (PN) coalition, the polls will not just be an opportunity for them to strengthen their grip on the three states in which they are incumbent governments – Kedah, Terengganu and Kelantan – but it also sets the stage for them to potentially capture Selangor. This state, led by Anwar Ibrahim’s Pakatan Harapan (PH) coalition, is Malaysia’s most economically developed and politically significant state.
For Anwar and his large ‘Unity Government’ coalition, these state elections are also being viewed as a national bellwether. They know that while a disastrous outing will not immediately threaten the government, it can inflict a serious blow. What could ensue is a prime minister becoming more cautious, less reformist and constantly questioning the commitment of the 19 parties that ostensibly have given him their support.
They will also be concerned that a rout in the northern and eastern states presently administered by one of PN’s component parties, the Islamist Parti Islam Se-Malaysia (PAS), will signal Anwar’s inability to gain significant support among Malay voters, something PH had already failed to do in the general election. Anwar had then turned to BN’s biggest faction, the United Malays National Organisation (UMNO), which still maintains a strong political base in the rural and suburban Malay-majority seats despite suffering its worst-ever general election result last year.
This formula now faces its biggest test, especially in Selangor. With urban seats encircling the national capital Kuala Lumpur to rural agricultural wards in the north, Selangor presents an ethnically diverse polity, but one with 39 of 56 seats having a majority of Malay voters. What happens in Selangor during these polls could set a voting trend that may continue until the next general election.
NATIONAL REFERENDUM PLAYED OUT IN THE STATES
PN has cast these elections as an early referendum on Anwar and the makeshift government he assembled following a hung parliament after last year’s general election.
The Anwar-led government formed in the wake of the November 2023 general election cobbled together his PH coalition with a raft of coalitions and parties from Sabah and Sarawak, and, most contentiously, PH’s long-time foe Barisan Nasional (BN). Although Anwar has maintained a relatively high approval rating, there is mounting dissatisfaction with the federal government’s economic management for lacking direction and substance.[1] This has been exacerbated by the Malaysian Ringgit being one of the worst-performing currencies[2] in Southeast Asia, contributing to imported inflation and increased outflows from the stock exchange.
In addition to these economic woes, Anwar’s government also finds itself constantly on the defensive dealing with Malaysia’s own ‘culture war’. As written previously by the author, Anwar has resisted betraying his multiracial and progressive base by playing with identity politics, in particular the ‘3Rs’ of race, religion and royalty.[3] This has seen him constantly being outflanked by PN who regularly weave identity politics into their speeches and policy platforms. Anwar’s cause is not helped by his coalition partner, the Chinese-dominated Democratic Action Party (DAP), failing to change the widely held, but rather misplaced, perception in the Malay community that it is anti-Malay and anti-Islam.
With the need for the Unity Government to rally its base and shore up Malay votes, what began as an unlikely union has now developed into, for the state polls at least, a pre-electoral pact in which PH and BN will work together, avoid putting candidates against one another and even campaign on the same manifesto and platform. This could well be a precursor to a similar arrangement between PH and BN for the general election, something UMNO president Zahid Hamidi hinted at during a Unity Government convention in May.[4]
Zahid continues to be a divisive and unpopular figure who could bring Anwar down with him if he falls.[5] With 47 charges of criminal breach of trust, corruption and money laundering hanging over him, Zahid’s status as deputy prime minister makes it easy for opponents to pillory Anwar’s agenda for good governance. Despite this, the prime minister has recently doubled down on Zahid and UMNO as his preferred partner to battle PN for the Malay votes.[6]
What Anwar and Zahid are both basically hoping for is that electorally one plus one equals two. Their ideal scenario is for two things to happen. First, for voters who chose PH or BN in last year’s general election to maintain that choice. Second, for there to be perfect transferability of votes between PH and BN. What that means is that since PH and BN have agreed to a pact for the state polls, they will avoid putting candidates against each other in every seat. They will then hope that where PH fields a candidate, all BN votes will be transferred to PH and vice versa. If there is perfect transferability, one PH vote plus one BN vote will result in two votes for the pact.
If there is perfect transferability, the PH-BN arrangement will be a formidable force and will ensure the PH-administered states of Penang, Selangor and Negeri Sembilan will be retained by comfortable margins.[7]
Of greatest interest and consequence will be the transferability of Malay voters. This is because Malay votes were the most contested during the general election compared to non-Malay votes which overwhelmingly went to PH. If there is no perfect transferability and there is a significant shift of BN voters to PN, there could be scenarios in which Selangor is a highly contested state.
THE CASE OF SELANGOR
The Unity Government’s Assets
Malaysia’s economically most developed state, along with the Federal Territory of Kuala Lumpur contained within it, is Selangor. It has been administered by PH since 2008.[8] That coalition comfortably retained the state in the 2013 and 2018 state elections which were held concurrently with the general elections. Out of 56 seats in the state assembly, PH has 45 seats (Parti Keadilan Rakyat [PKR] – 19, DAP – 15 and AMANAH – 6), commanding a two-thirds majority on its own. Since the formation of the Unity Government, BN now aligns itself with PH in Selangor and has pledged the support of its five seats. PN has five seats made up of Bersatu’s four and PAS’ single seat. The remaining seats are held by Pejuang (3), Parti Bangsa Malaysia (2) and Warisan (1).
Selangor has been led by Amirudin Shari who became the menteri besar in 2018. Although Amirudin is seen as a protegé to his predecessor as Selangor menteri besar Azmin Ali, he has since forged his own political trajectory. He stayed in PKR and did not follow Azmin when the latter defected during the Sheraton Move that brought down the PH government in 2020.
At 43, Amirudin is young, dynamic and enjoys strong approval ratings in Selangor. A recent survey conducted on Malay voters in Selangor (a demographic segment crucial to the outcome of the polls) showed that 71 per cent of respondents approved his performance as head of the state administration and 75 per cent said they want him named as menteri besar should PH emerge with the most seats after the state election.[9] Anwar has also moved quickly to quash any speculation of another candidate for menteri besar by naming Amirudin as his coalition’s candidate for leading the state should they prevail in the election.[10]
The state administration has also released a comprehensive report card of its achievements over the last five years covering a wide range of public services from healthcare to housing, transport and entrepreneurship.[11] Some of these initiatives began before Amirudin’s tenure, but are now seen very much as PH successes regardless of the person heading the state party. This has led to a pervasive feeling among PH supporters in Selangor that the state is now a stronghold in which opposing parties have struggled to make a dent in the last three elections.
Indeed, if the results of the general election are used as a proxy for what could happen during the state election, it will once again mean a comfortable win for PH. Taking the votes cast at the parliamentary level during the general election and simply apportioning it according to the state wards will see PH winning 40, PN getting 14 and BN taking 2 seats.
Therefore, the state election is very much for PH to lose. Selangor is now seen in Malaysian political consciousness as a PH fortress where their leader enjoys strong support for his stewardship of the state. A simple extrapolation of the general election results shows PH in a pole position for the state election.
Countercurrents favouring PN
However, just as we cannot assume perfect transferability of votes between PH and BN, we must not also assume that voters will vote the same way they did during the general election. Much has transpired in Malaysian politics over the last eight months and while surveys may show a high level of support for certain parties and individuals, there are strong undercurrents that may surface over the next two weeks as the campaign heats up.[12]
First, there is the UMNO factor. The state elections will determine if UMNO, led by Zahid, is an asset or a liability for Anwar. As explained above, Anwar wants to use UMNO as a partner to win Malay votes he was unable to get during the general election. Yet, UMNO continues to be seen as a shadow of the grand old party that dominated the Malay political ground for decades. UMNO is likely to get far fewer seats to contest compared to PKR and DAP in Selangor, and presently suffers from weak leadership at the state level. Should there be significant frustration among Malay voters at UMNO’s lack of reform, and should this result in vote transfers, PH-BN’s margin of victory could be affected.
Second, as mentioned above, Selangor voters will not just choose their state government based on the track record of the present menteri besar, but also use the ballot to express their feelings on national issues and the federal government. Anwar has attempted to assuage these fears in recent days by touting high-profile investments through a virtual meeting with the entrepreneur Elon Musk of Tesla, Inc. and by announcing Chinese automaker Geely’s expansion plans in Malaysia.[13]
Although Anwar’s administration has continued and even enhanced pre-existing measures to cushion cost-of-living challenges such as cash transfers and price control, and even subsidised food menus, there is a sense that eight months in, economic management is adrift with Anwar struggling to juggle being both prime minister and finance minister. In order to counteract this, Anwar’s government is preparing both an ‘economic narrative document’ which has been launched today and the tabling the Midterm Review of the 12th Malaysia Plan in October to demonstrate concrete programmes that can correct course for the Malaysian economy.
Third, coming into government after many years in opposition (apart from 22 months during the first PH government), some ministers have had difficulties managing expectations. This is the case especially with regards to positions they took when in opposition and where they now have trouble performing as a result of their populist or political compromises. Videos of former opposition leaders and now ministers promising higher minimum wages and lower petrol prices or abolishing draconian laws are still used as campaign fodder by the opposition. While some voters understand that these promises are now unrealistic, others have chosen to hold these ministers to account.
The fourth issue is how identity politics and the culture war will play out in the state election. Last week saw the arrest and arraignment of PAS’s election director and incumbent Kedah menteri besar, Muhammad Sanusi Md Nor, under the Sedition act for allegedly insulting the Sultan of Selangor. In recent months, Sanusi has emerged as a consequential and controversial figure for PN and PAS. His plain-speaking bravado and, at times, reckless abandon in taking on Anwar politically has significantly enhanced his image and following. It is likely that the action taken against him will boost sympathy for him and support for PAS in their strongholds. What remains to be seen is how it will play out in Selangor whose monarch was the subject of the alleged insult, especially in the Malay community.
Some critics have also pointed out that action against other potentially inflammatory 3R speeches, in particular one made by DAP chairman Lim Guan Eng, raising the spectre of a green wave coming to destroy non-Muslim places of worship have yet to be taken.
Sensing the disquiet in the highly contested Malay ground, DAP has crafted a narrative to ensure a high turnout at the state polls, in particular in Selangor and Penang. Along with Guan Eng’s scaremongering tactics, his father and DAP veteran Lim Kit Siang has even resorted to saying that the country is “teetering on the edge of another May 13, 1969 riot,” a reference to Malaysia’s most deadly communal conflict.[14]
Anwar has also tried to stave off the challenge PN brings to identity politics by allowing authorities to move quickly against Sanusi, therefore demonstrating his commitment to defend the Malay Rulers. He has also declared recently that Malaysia is not a secular state – at least in the laïcité sense – in an attempt to dismiss attacks that he is too liberal on religion. While these moves help in correcting the perception that Anwar is weak on 3R issues, the question is whether it is enough for him to win Malay support, and whether that will be at the expense of his natural support base, which tends to be more liberal on social issues.
With these broader observations and their implications in the battle for Selangor, what emerges are conflicting views rather than a consensus. Two separate surveys conducted by entities aligned to opposing sides show how difficult it is to gauge voter sentiment in Selangor. Institut Darul Ehsan, an independent think tank with links to the incumbent state government, recently released results from their survey of Malay voters in Selangor showing PH-BN commanding 46.7 per cent support compared to 27.2 per cent for PN, a result that would secure victory for PH-BN.[15]
Conversely, a recent paper written by, among others, a former aide of PN chairman, Muhyiddin Yassin, refers to a separate survey that suggests “no significant vote transferability” between PH and BN, a situation that could pave the way for a PN victory in Selangor.[16] With such divergent analyses going into the campaign period, various different scenarios are presented below to forecast likely outcomes in Selangor.
SCENARIOS
These qualitative observations present us with a few scenarios that could unfold, including one that shows a path to power for PN in Selangor. The state assembly has 56 seats, and 29 are therefore needed for any coalition to secure a majority.
Scenario One: This is a best-case scenario for PH-BN where there is a high turnout for both Malay and non-Malay voters of 81 per cent. In this scenario, PH retains its 95 per cent vote share among non-Malays while most of their Malay supporters transfer their support to BN candidates and BN supporters do likewise and transfer most of their votes to PH candidates. PH-BN would secure 52 per cent of Malay votes, which is a realistic assumption based on what PH received during the general election. The result would be PH-BN: 55 and PN: 1 in the state assembly.
Scenario Two: This is an average outcome for PH-BN and one most likely to happen if the campaign momentum turns for PN. The assumption for this scenario is that non-Malay turnout will be 55 per cent, similar to their overall turnout for the state election in Johor over a year ago now. While these elections were held during the pandemic and may represent a low baseline, they nonetheless represent the most recent state polls independent of those conducted concurrently with the general election. PH-BN will nevertheless secure 85 per cent of these votes. Malay voter turnout is modeled at 81 per cent with PH-BN getting 37 per cent due to a significant transferability of Malay votes from BN to PN instead of PH. This scenario will still see PH-BN prevailing in 34 seats compared to PN’s 22 seats.
Scenario Three: This is PN’s path to capturing Selangor. Non-Malay turnout and vote share will be the same as the second scenario above, as will the Malay voter turnout. But in this scenario, the PH-BN vote share among the Malays further drops only slightly to 32 per cent. In this case, PH-BN will win 27 seats and PN will win Selangor with 29 seats. What this suggest is that only a modest shift in Malay support by five per cent compared to the previous scenario is needed to see PH-BN lose Selangor.
CONCLUSION
These scenarios have been chosen to demonstrate that while Selangor appears to be a state where PH-BN should emerge as winners, a PN victory is not entirely impossible. Much will, of course, depend on the campaign to see if non-Malays can be convinced to turn out in large numbers and if Malays continue to give Anwar and his coalition and their partners the overwhelming support he desires.
Should BN fail to win any seats in Selangor and only muster a handful of seats in the other states, UMNO will have to consider some serious changes to both their leadership and strategy. Having suffered their biggest electoral loss during the general election, a poor outcome during these state elections will reinforce the electorate’s message that UMNO, at present, is unelectable. Yet, Zahid’s consolidation of the party through a purge earlier this year and by rewarding loyalists with various appointments suggests that UMNO will likely shrug off a potentially dismal result and pretend that all is well.
Anwar, on the other hand, will be forced to think long and hard about his partnership with UMNO. If UMNO turns out to be a liability during these state elections, will he want to commit himself to future electoral pacts with UMNO and BN? Or will he treat UMNO and BN as a temporary partner to ensure the longevity of his ‘Unity Government’ until the end of this parliamentary term and then decide on alternative potential configurations that will not include UMNO and BN? Much rides on what happens in the next two weeks.
ENDNOTES
For endnotes, please refer to the original pdf document.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
2023/60 “Flexing Censorship Muscles and Leveraging Public Sentiments: How The Vietnamese State Scrambles to Sanitise Its Image Online” by Dien Nguyen An Luong
EXECUTIVE SUMMARY
- Netflix recently found itself having to entertain requests to censor three shows after Vietnamese authorities deemed their content unacceptable and “hurting the feelings of the people.” This raises the question of how much this rhetoric genuinely reflects the views of the general population.
- Vietnam’s ongoing efforts aimed at safeguarding national prestige in the digital sphere have resulted in the introduction of new regulations that could expose the online streaming industry to heightened censorship. Against that backdrop, it appears that Netflix’s future may be at stake if the streaming platform refuses to go along with the Vietnamese government’s censorship demands.
- An examination of three instances of censorship of Netflix shows indicates that the popular public sentiments that Vietnamese authorities cited to justify their censorship decisions were predominantly confined to an echo chamber, consisting mainly of pro-regime Facebook pages and state-controlled news outlets that actively promote government-sanctioned narratives.
- The censorship overreach and the manipulation of public opinion employed to sanitise the regime’s image in the digital sphere risk being counter-productive. These moves could end up casting the Vietnamese government in a bad light, revealing its hypersensitivity, insecurity and double standards.
* Dien Nguyen An Luong is Visiting Fellow of the Media, Technology and Society Programme at the ISEAS – Yusof Ishak Institute. A journalist with significant experience as managing editor at Vietnam’s top newsrooms, his work has also appeared in the New York Times, the Washington Post, the Guardian, South China Morning Post, and other publications.
ISEAS Perspective 2023/60, 26 July 2023
INTRODUCTION
A British docuseries, a South Korean television drama, and an Australian spy drama. Netflix has recently been forced to remove these shows altogether from its programme lineup in Vietnam in response to the authorities flagging them for having content deemed unacceptable. This development highlights the heightened censorship the American streaming giant has faced in Vietnam.
In April 2023, Netflix removed the first episode of the docuseries MH370: The Plane That Disappeared from its service in Vietnam.[1] Vietnamese authorities pilloried the three-episode show, stating that it contained “inaccurate and unsubstantiated” information regarding Vietnam’s search-and-rescue efforts for flight MH370, the Malaysia Airlines plane that vanished in 2014 en route from Kuala Lumpur to Beijing with 239 people onboard.[2] In October 2022, Little Women, a K-drama about three sisters living in modern-day South Korea, was pulled from Netflix after the authorities claimed it distorted Vietnam War history.[3] In June 2021, Vietnam demanded the removal of the Australian spy drama Pine Gap for featuring a map depicting Beijing’s unilaterally declared “nine-dash line” that represents its expansive maritime claims in the South China Sea.[4]
Vietnamese authorities have consistently defended their censorship decisions by stating that the content in these programmes provoked public outrage.[5] Using discourse analysis, this paper examines how much that rationale genuinely reflects the sentiments of the public at large. It explores how the Vietnamese government leverages popular public sentiments to justify its censorship of these Netflix shows, with the ultimate aim of safeguarding the regime’s image in the digital space.
PROTECT NATIONAL PRESTIGE ON THE DIGITAL FRONT
Over the past 25 years, the curbing of anti-state content has shaped the way Vietnamese authorities deployed various online censorship strategies, while also dictating how a raft of laws and regulations on Internet controls were formulated and enforced.[6] In Hanoi’s perspective, anti-state content is what potentially can undermine national prestige, besmirch the reputation of the ruling Communist party, and slander and defame Vietnamese leaders.[7] Dangling access to a lucrative market of nearly 100 million people, Vietnamese authorities have become increasingly adept at exploiting their economic leverage to strong-arm big tech companies into erasing content flagged as anti-state.[8] (Facebook boasts nearly 70 million users in Vietnam while YouTube has 63 million users and TikTok around 50 million).[9] On the other side of the spectrum, enticed by the lure of the Vietnamese market, major digital content platforms have exhibited a growing inclination to accommodate the Vietnamese government’s censorship demands,[10] citing the need to adhere to local laws in the countries where they operate. Based on the latest data disclosed by Vietnam’s Ministry of Information and Communications, Facebook complied with government requests and deleted 2,549 posts during the first six months of this year; similarly, YouTube removed 6,101 videos, and TikTok took down 415 links.[11] The ministry has claimed that the compliance rates by Facebook and YouTube both exceed 90% while according to its transparency report, TikTok’s was lower, at 74.4%.[12] Since 2017, the transparency reports of Facebook and YouTube have also revealed that a majority of the restricted or removed items were related to “government criticism”[13] or “oppose the Communist Party and the Government of Vietnam.”[14]
Constant government efforts aimed at safeguarding national prestige in the digital sphere have led to the implementation of new regulations that may subject the online streaming industry to increased censorship. Since January 2023, a Vietnamese government decree has imposed penalties and bans on movies, including those available for online streaming.[15] The offenses – such as undermining national interests, eroding cultural values, or corrupting morality – are vaguely defined, leaving them subject to broad interpretation and arbitrary enforcement. This dynamic portends a bumpy road ahead for Netflix, which is geared up to become the first major American tech firm to set up shop in Vietnam.[16] It appears that Netflix’s future may be at stake if the streaming platform refuses the Vietnamese government’s demands to censor content. But finding a way to accommodate those requests has proven to be challenging in a country where an unpredictable censorship system makes it difficult to determine what content would be considered unacceptable.[17]
DRIVEN BY PUBLIC OPINION – OR DRIVING IT?
This section examines three recent cases of Vietnam’s censorship of Netflix shows by analysing public sentiments on them on Facebook, the country’s most popular social media platform. In all three instances, a strikingly similar pattern emerged: Vietnamese authorities justified their requests for censorship by invoking the notion of “hurting the feelings of the people.” This rationale was either directly mentioned in their statements or conveyed through reports in state-controlled news outlets.[18] The section explores two questions. Firstly, to what extent does this “hurt feelings” rhetoric actually reflect prevailing public opinion? And secondly, to what degree was there government manipulation involved in influencing this narrative?
The section examines the relevant content of 90 public Facebook pages and 10 state-affiliated news outlets and portals. These are divided into three categories:
- Category I – Pro-government pages: 30 self-proclaimed patriotic pages that explicitly adopt a pro-government stance. Amassing a strong base of followers between 21,000 and 236,000, these pro-government Facebook pages have been highly engaged in flagging content deemed detrimental to the reputation of the Vietnamese party-state. They actively shape nationalist storylines and peddle them across the cybersphere.
- Category II – Mainstream media: 10 state-controlled news outlets and portals. They are the mouthpiece of the party-state (the Government News Portal, Vietnam News Agency, Vietnam Television, and Voice of Vietnam), influential news outlets (Tuoi Tre, Thanh Nien, VietNamNet and Lao Dong) and most-read online news sites (VnExpress and Zing News).
- Category III – Neutral pages: 60 Facebook pages that engage in discussions about movies, entertainment, and garden-variety subjects, excluding politics. These groups have also built up a strong base of tens of thousands of followers.
MH370: The Plane That Disappeared
Judging by the official rhetoric, the Vietnamese government’s vehement objection to the MH370: The Plane That Disappeared docuseries was pinned down to a single line in the first episode. In this line, a family member of a missing Chinese passenger desperately pleaded for her country’s intervention: “We hope the Chinese government can quickly send a search-and-rescue team, as the Vietnamese [government] doesn’t seem to have much ability.” The Vietnamese government asserted that the show sparked “public outrage.” But it is hard to comprehend why the Vietnamese public would bristle at just a single line quoting a plea made by an ordinary citizen in a desperate situation.
In fact, an analysis of public sentiments suggests that the online backlash against the MH370 docuseries was largely confined to a bubble of state media outlets and pro-government Facebook groups. As shown in Figure 1, the topic elicited few mentions on Facebook (33) from 1 March to 30 April 2023. The most substantial spikes in discussion aligned with the official narrative and revolved around three key timeframes: First, on 10 March, Tifosi, a vocal pro-government Facebook page, flagged the perceived problematic content of the docuseries.[19] About a month later, on 6 April, Vietnam’s foreign ministry spokesperson officially requested that Netflix rectify and remove “inaccurate information” related to the country’s search efforts in the show. And on 13 April, Netflix gutted the first episode.
FIGURE 1. ONLINE DISCUSSION ON THE MH370 DOCUSERIES
(Source: ISEAS data)
The mainstream media stuck to the official line that panned the docuseries for doing a great disservice to Vietnam’s efforts during the rescue mission. Pro-government Facebook pages not only amplified such criticism but also delved into further discrediting the show by excoriating its promotion of “conspiracy theories” that stand on empirically thin ice. Intriguingly, these pages specifically pointed out that one of such conspiracy theories was floated by Florence de Changy, a French journalist who authored a book on the MH370 incident.[20] According to pro-government Facebook pages, de Changy has speculated that the MH370 plane was deliberately shot down over the South China Sea by the US military to prevent undisclosed cargo from reaching China. These pages accused de Changy of continuing to allude to that theory in episode 2 of the docuseries and of implying that Vietnam had played a role in it.
State media outlets and pro-government Facebook pages played a dominant role in flagging the issue, shaping the narrative and propagating it in cyberspace. In contrast, the neutral Facebook pages analysed for this section did not touch upon this subject at all. The topic also elicited low public engagement online. Out of the 90 Facebook pages and 10 state-controlled news outlets and portals examined for this section, another content analysis was conducted specifically on 10 actors identified as the most active in promoting the relevant narrative. The examination finds that nine of them were pro-regime Facebook pages, while the remaining one was the Facebook page of the Government News Portal. Of a total of 3,589 posts churned out on various topics by those 10 Facebook pages between 1 March and 30 April 2023, the Government News Portal and Tifosi were responsible for producing solely three unique posts related to the MH370 docuseries. The other pages merely picked up, aggregated, and amplified those narratives. No post made it into the list of the top 100 most engaged content, ranked 148th,[21] 224th [22] and 349th.[23] In response to those posts, Internet users were generally supportive. But notably, their opinions closely aligned with, and often mirrored, the main thrust of the propagated narratives.
Little Women
The censorship of Little Women appeared to hinge on several lines in episode eight of the 12-part series, which featured a war veteran bragging about how South Korean troops slaughtered their Vietnamese counterparts. “In our best battles, the kill-to-death ratio for Korean troops was 20:1. That’s 20 Viet Cong killed for one Korean soldier dead,” the veteran said, referring to the communist-led army and guerrilla force supported largely by North Vietnam during the war. He added that the ratio was even higher among his country’s most skilled soldiers. Vietnamese authorities stated that the K-drama “distorted” the events of the war; but it appears that it was axed because the lines, in Hanoi’s perspective, callously reopened the wounds of the conflict.[24]
As Figure 2 shows, the topic garnered a relatively similar level of attention as the MH370 docuseries case, with a dismal number of mentions (40). The most conspicuous peaks in online discussion on the topic also correlated with the government’s official narrative and revolved around two key developments: First, on 4 October, the Vietnamese government officially demanded that Netflix remove the entire show. Two days later, the platform honored the request.
FIGURE 2. ONLINE DISCUSSION ON THE LITTLE WOMEN DRAMA
(Source: ISEAS data)
The mainstream media simply quoted the Vietnamese government’s general statement that Little Women was removed due to its distortion of the history of the Vietnam War, without providing further details. But in picking up and amplifying the narrative initiated by Tifosi, other pro-government Facebook pages went the extra mile to recall the atrocities perpetrated by South Korean soldiers during the Vietnam War, a topic leaders from both countries have shunned in the face of burgeoning bilateral ties.[25] Of note, online discussions on this topic also took place on neutral Facebook pages, where Vietnamese netizens expressed criticism of the show for the lines related to the war in a more moderate manner. But intriguingly, a similar portion of other Internet users opined that the Vietnamese government was making a fuss just over several lines in a show featuring South Korea’s contemporary society.
It is important to note that such discussions only gained momentum after Thanh Nien, an influential state newspaper, flagged the perceived controversial line[26] and Tifosi then fanned the flames.[27] At the end of the day, it was still state-run news outlets and pro-government Facebook groups that were most active in flagging the topic, shaping the narrative and trending it in cyberspace. Another content analysis was carried out on the 10 actors most active in peddling the official narrative. Among them was the Facebook page of the Government News Portal; the other nine were pro-regime Facebook pages. Out of more than 2,020 posts covering various subjects by those 10 Facebook pages from September 1 to October 31, 2022, Tifosi, the Government News Portal, Hoc vien phong chong phan dong (Anti-reactionary Academy), and Don Vi Tac Chien Dien Tu (Comrade Commissar) generated a total of six original posts specifically focused on the topic; the other pages just compiled, adopted and magnified the narratives. Only one of these posts managed to secure a spot among the top 100 most engaged content, ranked 8th.[28] The other posts were ranked 149th [29], 194th [30], 316th [31], 449th [32] and 1059th.[33]
Pine Gap
The move to censor Pine Gap became even more puzzling when considering the circumstances. While Vietnamese authorities claimed that the show “angered and hurt the feelings of the entire people of Vietnam”, there was hardly any discussion about it on social media, even among pro-government Facebook pages, let alone enough to trigger an online backlash. State-run news outlets only started covering the case after Vietnam’s Authority of Broadcasting and Electronic Information requested the removal of the show, with which Netflix ultimately complied.
To be sure, few actions are as sensitive and likely to provoke public discontent in Vietnam as those that validate China’s maritime claims.[34] Case in point: in July 2023, Vietnam banned the release of the highly anticipated Barbie movie, allegedly because of a scene that featured the nine-dash line.[35] There has been no compelling evidence to substantiate this claim by Vietnamese censors, however.[36] On the other hand, the Philippines conducted a “meticulous review” and concluded that the movie does not portray the nine-dash line on the world map, leading them to decide against banning its screening in that country.[37] But still, the ban on Barbie in Vietnam has not triggered any significant public backlash. In fact, a significant portion of Vietnamese netizens threw strong support behind the decision.[38] Seen in such a light, the Vietnamese public would have likely objected to the display of the nine-dash line in Pine Gap had they been given the opportunity to see it. It is more probable, however, that only a limited number of ordinary Vietnamese individuals, much less the “entire population”, had actually watched the show before the authorities intervened and censored it preemptively. In fact, when it was taken down in June 2021, Pine Gap had not even cracked the list of the top 10 most popular shows in Vietnam.[39]
Key takeaways
As shown in those three case studies, what Vietnamese authorities claimed as popular public sentiments to justify their censorship decisions was in fact confined to an echo chamber, primarily comprising of pro-regime Facebook pages and state-controlled news outlets that were highly proactive in propagating government-sanctioned narratives. This means that such sentiments expressed online were unlikely to reflect the prevailing public opinion. As Truong (2022) has argued, there has been a growing reluctance in the Vietnamese public to openly express their political views online, particularly due to the presence of staunch defense-security figures within the Politburo, the country’s supreme decision-making body.[40] Meanwhile, Vietnam’s state-sponsored cyber troops have become more skilled in manipulating public sentiments online.[41] Previous research done by ISEAS also indicated that popular backing for the Vietnamese government’s positions on certain issues may have been artificially inflated through posts from pro-government Facebook pages.[42]
IMAGE SANITISED OR TAINTED?
It is indeed perplexing why Vietnamese censors reacted strongly to just a single line in the MH370 docuseries, as the country was internationally recognised for its efforts in the search and rescue mission for the missing flight.[43] Given that the docuseries has also been released to poor reviews[44], such censorship only revealed the underlying insecurity of Vietnamese authorities when confronted with narratives that were perceived to be tainting the regime’s reputation. The removal of Little Women appears to be a hypocritical action; the Vietnamese government has never formally requested for an official apology or reparations from South Korea for its wartime atrocities.[45] This display of toughness seems to be a mere facade in light of the actual historical context. It was also puzzling as to why Vietnamese authorities resorted to engineering a popular backlash to justify their censorship of Pine Gap. Vietnam has made it crystal clear that companies operating within its borders must adhere to the laws prohibiting content that undermines the nation’s maritime sovereignty in the South China Sea.[46] Foreign companies also know full well that this is a line they must never cross while in Vietnam.[47] In light of this, the manufacturing of public opinion to buttress the Vietnamese government’s censorship request was just unnecessary.
The fixation on sanitising the regime’s image on the digital front has increasingly dictated Vietnam’s Internet controls. But the censorship overreach and the engineering of public opinion employed to achieve this goal, as examined in the three case studies above, are likely to prove counter-productive and only serve to lay bare the regime’s hypersensitivity, insecurity and double standards.
ENDNOTES
For endnotes, please refer to the original pdf document.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
2023/59 “From the Fringes of Defeat: How UMNO President Zahid Hamidi Transformed His Vulnerability into Invincibility” by James Chai
EXECUTIVE SUMMARY
- The UMNO presidency has always been considered a very powerful position. As the Grand Old Party that held power continuously for 61 years, UMNO was regarded as one of the most successful parties in the world, with mass membership, territorial coverage, and a grassroots machinery that was second to none. Its President was always the Prime Minister, and had unrivalled access to state resources, making the presidency the most watched and coveted position in Malaysia.
- Despite never occupying the Prime Minister position like his predecessors, and being forced to take unprecedented garden leave due to internal pressure, Zahid nevertheless successfully bolstered the power of the UMNO presidency further.
- Zahid Hamidi used his presidency to consolidate power within the party by: (1) Changing the constitution to postpone party elections, effectively lengthening the maximum term from 3 years to 5 years permanently; (2) Passing an unprecedented no-contest motion for the top two positions of President and Deputy President; (3) Unceremoniously sacking and suspending high-profile dissenters in the party.
- These three structural decisions undertaken by Zahid Hamidi virtually shut off opportunities for dissent and are likely to disincentivise reforms, rejuvenation and change within UMNO, which may exacerbate its decline in electoral popularity.
- These changes, however, are unlikely to be reversed as they give the UMNO president extensive powers, especially in selecting general and state election candidates, securing a longer tenure, and suppressing internal opposition.
*James Chai is Visiting Fellow at ISEAS – Yusof Ishak Institute and a columnist at MalaysiaKini and Sin Chew Daily.
ISEAS Perspective 2023/59, 25 July 2023
INTRODUCTION
Throughout its unbroken 61-year rule, the United Malays National Organisation (UMNO) was regarded as one of the most successful political parties in the world.[1] The party’s presidency was the most watched position and its sweeping power was the ‘most striking feature of UMNO’s organisational structure’.[2] Much of this was owed to the fact that the presidency and prime ministership were seen as one, where the former was held together ‘through a system of patronage and disguised coercion’.[3]
The first Prime Minister cum UMNO President, Tunku Abdul Rahman Putra, deployed a highly personalised style of leadership; he held meetings of the Supreme Council (“SC”, see Annex A for the full structure today) at his residence, selecting election candidates, state premiers and leaders without resistance. His successor, Tun Abdul Razak Hussein, reorganised the party structure to be even more intimately tied to the government[4] by creating full-time ministry-like bureaus in UMNO and implementing policies following ‘the wishes and desires of UMNO’.[5] The party’s longest-serving President, Mahathir Mohamad, turned the centralisation process up a notch by maximally using the party-state apparatus for packing (placing loyalists in top party and government posts), rigging (manipulating procedures to curb the opposition), and circumventing (channelling government resources to loyalists), thus ensuring UMNO’s dominance against all odds.[6]
On 30 June 2018, Zahid Hamidi became the first UMNO President to run the party without holding the highest executive office of Prime Minister, within what used to be the ‘matrix of autocracy’.[7] Two days earlier, the anti-corruption agency had frozen UMNO headquarters’ bank accounts, regarded as a critical lifeline for the oldest and largest party,[8] after it had just suffered its worst electoral defeat in the 14th general election that year.[9] The party would go on to experience by-election defeats, high-profile defections,[10] external pressures for dissolution, and criminal charges being filed against its top leaders.[11]
Half a decade later, despite his party holding only 26 seats in Parliament—its lowest in history—Zahid Hamidi was able to reverse its party’s fortunes by acquiring executive power through securing the second-highest position, that of Deputy Prime Minister, for himself, besides securing five other ministerial and six deputy ministerial positions for the party. Within UMNO, Zahid Hamidi’s control as President is now the strongest it has ever been; he has entrenched his loyalists widely and deeply, from the highest leadership council to the lowest party branches.
Regarded as a shrewd political operator,[12] Zahid Hamidi’s ability to ‘snatch victory from the fringes of defeat’ is remarkable.[13] He used his time as the first non-Prime Minister UMNO President to centralise power further in the hands of the presidency. This paper will analyse the three decisions he made as UMNO President that were most consequential to the party structure:
a) Constitutional change to postpone party elections, effectively lengthening the maximum term from 3 years to 5 years permanently;
b) Passing a motion of no-contest for the top 2 posts;
c) High-profile sacking and suspensions of rebel party members.
In each section, this paper will consider the background and implications of the given ‘reform’ before concluding with an overall outlook for UMNO.
Before Zahid Hamidi came to power, UMNO was already a highly centralised organisation. As the party’s supreme leader (“pemimpin utama”), the President carries the prerogatives of selection. An UMNO President can appoint dozens of leaders at the highest decision-making council besides holding the final say on disciplinary matters and choosing candidates for the party to contest in general and state elections.[14] Through the years, such incumbency advantages have also grown. In 1971, the Liaison Committee replaced the State Liaison Committee (and its earlier form, State Executive Committee)[15] to limit state-level power in favour of the President and his council.[16] Mahathir Mohamad (1981-2003) lengthened the presidency by an optional 18 months, and created barriers to challenges to the presidency by modifying rules and procedures.[17] This resulted in the presidency staying unchallenged for decades.
Notwithstanding, Zahid Hamidi’s presidency started at a point of weakness. He was forced to compete and debate against two candidates—the first time since 1988. Although he won by a reasonable margin,[18] substantial opposition within UMNO forced him to take an unprecedented garden leave, amidst an unceasing call for him to step down.[19] To add to his travails, Zahid Hamidi was charged with 87 criminal counts relating to corruption[20]—the highest in the country—adding urgency for him to exercise any leverage he could to avoid final defeat.
Studying Zahid’s comeback from vulnerability to invincibility, therefore, is also a study of the awesome tools at the UMNO President’s disposal. The structural changes that Zahid undertook were merely the final steps of consolidation started long ago by his predecessors.
A. Postponing party elections to 6 months after general elections
Ironically, the most consequential structural decision for UMNO was also the easiest to pass. At the extraordinary general meeting held on 15 May 2022, attended by 2,586 delegates,[21] the party passed a constitutional amendment that allowed party elections to be postponed to six months after general elections.
Before the amendment, party elections had to be held every 3 years, with an option of an 18-month delay. Any postponement beyond this would attract investigations from the Registrar of Societies (RoS),[22] that carry the prerogative of suspension and deregistration.[23]
The main reason for postponement was tactical: for the party to focus its strength on the next general election without a party election for fear that the latter would threaten party unity.[24] There was also a procedural reason, and this regarded UMNO’s future requests for postponement and the fear that these risked being rejected, now that the Home Ministry was no longer controlled by the party.
At that time, UMNO SC members were keen to retain their positions, especially as the window for the next general elections being held was closing. Zahid Hamidi’s faction’s success in painting his opponents as ‘traitors’, or a fifth column, also disincentivised many from objecting to the postponement or challenging for the highest leadership positions.[25]
While a constitutional amendment requires two-thirds approval by eligible attendees of the Special General Assembly,[26] achieving that was not really difficult in practice. In fact, constitutional amendments are occasionally passed in large batches, mixed with substantive and procedural changes, typically reflecting the desires of the President.[27]
The implications of this amendment were severely underestimated. Running out the clock under the amended provision now enables elected officers to stay for a maximum of 66 months—nearly doubling the default term limit of 36 months—as seen in Table 1. The maximum term period under the pre-amended provision was 54 months, which was still a whole year less than the maximum term period post-amendment.
Table 1: Before-and-after comparison of the maximum term period for UMNO office bearers after the passing of the 2021 constitutional amendment [28]
| Default term limit | Optional period of extension | Maximum term period | |
| Pre-2022 amendment | 36 months[29] | 18 months | 54 months |
| Post-2022 amendment | 60 months | 6 months | 66 months |
Significant term period amendments had only happened twice in UMNO’s history. In 1971, UMNO under the presidency of Tun Razak amended the constitution to extend the term period for Supreme Council positions from one year to three years.[30] Mahathir Mohamad, in December 1998, passed an amendment to allow an 18-month extension, a provision that was retained at an extraordinary general assembly in 2000. Be that as it may, Zahid Hamidi’s latest update to the term period stands as one of the most consequential in UMNO history.
The most important effect is that it entrenches incumbency advantage by guaranteeing general and state election candidate selection powers for the President. With the amendment, an UMNO President does not need to prove himself in a party election between general elections like before. In other words, if Zahid Hamidi is the President for the 2023-2028 term, he shall also be guaranteed the candidate selection rights, precluding any possibility for an alternative person to take his place in a party election and subsume that right. This situation now significantly curtails dissent against the President and his team, jeopardising any dissident’s candidacy in the upcoming election.
Chances for a large-scale dissent movement similar to that led by Khairy Jamaluddin in 2021 calling for early party elections to determine the leadership going into the next general election are miniscule now. Dropping local warlords not aligned with the President, like Annuar Musa, Shahidan Kassim, Tajuddin Rahman, and Zahidi Abidin, prior to the 2022 general elections proved that dissent within UMNO can be politically costly.[31] The amendment significantly increases the political cost for dissent.[32] The ‘feelers and soundings’ of grassroots that guided early UMNO Presidents will matter less now.[33]
Even if party dissent happens after the general elections, it is highly unlikely to succeed. The short six-month window between the general election (“GE”) and the party election is insufficient to mobilise dissenters to overthrow the leadership, save for a severe violation on the President’s part. A President who fills the candidacy list with his loyalists in a general election will likely return with more capital if they become part of government or the legislative body, making a post-GE overthrow harder. The pre-GE candidate selection process can be used as an anticipatory tool to stamp out potential future threats in the party long before the party election is held.
To a smaller degree, the amendment also disincentivises reform and performance by elected party officers who enjoy the security of tenure. In a virtually guaranteed 5-year term, elected members are likely to take it easy and only pick up on their work when party election approaches.[34] Rejuvenation, reforms and course correction are less likely now since the party has severed midterm party elections which would have continued to serve as a vital feedback loop.[35]
Although the 60-month term remains optional and the previous default 36-month term remains on paper, the option will likely be exercised. The provision can always be interpreted in line with the President’s desire for maximum time in power.[36] Moreover, ever since the first 18-month delay was allowed under Mahathir, all UMNO Presidents have used it, even reforming Presidents like Abdullah Badawi and Najib Abdul Razak.[37]
On a balance of probabilities, it can be argued that the effective term period for UMNO office bearers have now been extended to 66 months; it is this that will deter performance and reform efforts.
B. No-contest motion for top 2 posts in UMNO
Despite Zahid Hamidi’s apparent willingness to open up the top two posts—President and Deputy President—for contest before 2023,[38] a delegate motion of no-contest for these posts was passed on 14 January 2023. This was the first time a no-contest was passed through a delegate motion at the General Assembly (or “PAU”). Before that, no-contests were secured as an SC advice or resolution, and/or through structural engineering, such as using the innovative bonus and quota system.[39] While the top two posts were rarely contested in the past—the last two presidential contests were 31 years apart, in 1987 and 2018—they were still a technical possibility. This delegate motion shuts that out, creating a ‘disguised autocracy’ by limiting the voters’ freedom of choice.[40]
At that time, Zahid Hamidi did not follow the practice of bringing the no-contest motion to the SC and announcing an advice or resolution after; this was because there was no guarantee he would succeed in barring contests. If he failed, there was no guarantee that he would win the contests since opposition was building up following UMNO’s worst-ever electoral performance two months earlier. Resorting to an unprecedented method of deploying a delegate-led no-contest motion,[41] while ‘sneaky’,[42] was the surest way of closing off contests.
Generally, no-contest at the top gives a ‘false sense of security and popularity’ to the leaders.[43] Leaving open a technical possibility of contests is important in a Malay party because it could be used as a signal to the leaders to step down from their positions if they had overstayed their usefulness.[44]
Former prime minister and UMNO Vice President Ismail Sabri argued that the no-contest motion was invalid because it had violated Article 9.3 of the UMNO Constitution (UC) which states that the top leadership positions ‘shall’ be elected every three years.[45] In other words, even if the motion was tabled as an SC motion at PAU after discussions and debates, it would not be valid since the UC demands that contests must be a technical possibility. Past court cases relating to the interpretation of ‘shall’ and ‘may’ showed that the overall intention and consequences of the interpretation matters more than the exact wording.[46] Since UMNO is set up as a party with a democratic process of elections, it could only be interpreted that an election ‘shall’ be had for the highest posts.
In fact, a leaked official letter showed that the RoS found the no-contest motion in violation of Article 9.3 which necessitates corrective measures.[47] Subsequently, the Home Minister on 7 March 2023 exempted UMNO from the effects of Section 13 of the Societies Act 1966 which governs the cancellation and suspension of societies.[48] Curiously, this decision referenced Section 70 of the same Act, which stipulates the Minister’s discretion to exempt compliance with the same Act. These unusual interventions underscore the case that UMNO’s no-contest motion amounted to a legal infraction.[49]
It is likely that the Home Ministry’s exemption is a one-off matter, and is unlikely to be made a practice in future UMNO party elections. However, the upshot remains the same, that is UMNO as a party has reverted back to its norm of not opening up the top two positions for contests. A delegate motion was a last resort to limit brewing dissent. Now with a loyalist-dominated SC, future no-contest advice or resolutions will likely pass, and the backing of the candidate selection powers from the party election postponement should secure the no-contest by default.
As no-contests persist as a norm, the status quo will likely remain. While contesting lower positions is still possible, the top two no-contest practice creates a chilling effect for members to fall in line.[50]
C. High-profile sacking and suspensions of party members
Almost two weeks after the no-contest motion was passed, UMNO announced that a few high-profile party leaders, including Khairy Jamaluddin, Hishammuddin Hussein and Shahril Hamdan, were being sacked and suspended respectively from the party, shown in Table 2.[51]
Table 2: List of high-profile sackings and suspensions on 27 January 2023.
| No. | Member Name | Last held party leadership position | Disciplinary outcome |
| 1 | Khairy Jamaluddin | UMNO Youth Chief | Sacked |
| 2 | Noh Omar | Supreme Council member | Sacked[52] |
| 3 | Hishammuddin Hussein | Vice President | Suspended for 6 years |
| 4 | Shahril Sufian Hamdan | UMNO Information Chief and Deputy Youth Chief | Suspended for 6 years |
| 5 | Maulizan Bujang | Johor State Executive Committee member and Tebrau Division Chief | Suspended for 6 years |
| 6 | Mohd Salim Mohd Shariff | Jempol Division Chief | Suspended for 6 years |
NB: Other than Khairy and Noh Omar, 42 other members were also sacked.
According to Article 20.4 of the UC, the Disciplinary Board (or Lembaga Disiplin, “LD”) must listen to and be satisfied with the presence of a violation before deciding on the punishment(s) to be meted, if any. Article 20.5 of the UC also states that every layer of the party must report to their respective disciplinary units before submitting the case to the LD. The proper due process requires that the LD then make a recommendation to the management meeting, before the SC ultimately decides. On a balance of probabilities, there was no disciplinary report or investigations on these members before the final decision was made.
The case of Shahril Hamdan’s suspension is instructive of the overall sacking and suspension process during this period. Unlike Khairy Jamaluddin or Hishammuddin Hussein, whose public statements and manoeuvres could be classified as violations of the broad obligations of members (Article 6 of UC), however tenuous, it was much more difficult to penalise Shahril Hamdan for a disciplinary transgression. Shahril was part of Zahid Hamidi’s apparatus prior to his suspension, having served as the party’s Deputy Youth Chief and Information Chief. Indeed, in the letter that was passed indirectly to Shahril via WhatsApp a few days later, there was only a reference to the UC clause being violated,[53] without specifics on which actions were found to violate those clauses. This was a clear violation of due process, an essential component to natural justice, as ‘no man should be condemned unheard’.[54]
Without a clear delineation of the transgressions, it is impossible to assess if the punishments have been proportionate.[55] Proportionality is an emerging natural justice doctrine in Malaysia, whereby its violation would render the punishment ultra vires (beyond legal authority prescribed). Taken in total, it can be argued that the sackings and suspensions were private decisions made by the President without due process, based on an LD report that was not seen by the leaders or the victims involved, and that might not exist at all.
ZAHID HAMIDI’S LASTING LEGACY AND THE OUTLOOK FOR UMNO
Deprived of executive premiership, Zahid Hamidi started his UMNO presidency as the most disadvantaged President in the party’s history. He did not have the state largesse to keep his supporters loyal or the executive apparatus to eliminate enemies like his predecessors had had. However, he maximally deployed this disadvantage to elicit party sympathy, filling his speeches and public statements with commissive and self-victimisation claims.[56] He painted himself as a selfless party-first leader (“I do not want any positions in the Cabinet”),[57] drawing attention to his unique absence of power as UMNO President (“Sorry I am only an UMNO President who doesn’t hold power”),[58] and contrasting his loyalty by demonising opponents as self-centred, power-hungry traitors (calling opponents “Seeking Livelihood Cluster” or Kluster Cari Makan, and “Afraid of Losing Power Cluster” or “Kluster Takut Bos Hilang Kuasa”).[59]
This worked well with sympathetic party members, who remembered him for taking responsibility in leading the party when UMNO was at its lowest point, even though they acknowledged the contrary view outsiders share.[60]
As a non-Prime Minister UMNO President, Zahid Hamidi focused on consolidating power within the party and fully exploited every tool he had, creating far-reaching changes to the structure of the party.
Cumulatively, the three major decisions discussed in this paper virtually shut off any reasonable opportunity for dissent. Hypothetically, even if a popular leader with substantial grassroots backing were to stage a democratic overthrow of Zahid, like Khairy Jamaluddin tried to do in 2018, that option is closed now. This is not only because a no-contest for the top two posts is further entrenched in the norm, but also that dissent, however reasonable, is dramatically less likely now given the guaranteed candidate selection powers held by the UMNO President. Even if a hypothetical rebel succeeds in shaking up the party by mobilising widespread dissent, the arbitrary and personal exercise of sacking and suspension by the UMNO President could immediately uproot any challenge. Save for the President’s goodwill, it is highly unlikely for democratic contests to occur organically in UMNO’s new structure.
At the time of writing, two UMNO members, together with a coalition colleague, have filed for a judicial review against UMNO, the Home Minister, RoS, and the Malaysian government for exempting the no-contest motion from compliance. They seek an order to quash the Home Minister’s exemption, besides seeking a declaration that the posts should be open for contest, among others.[61] However, even if the case has merits, there may be procedural challenges that may defeat such suits.[62] First, Article 20.7 of the UC allows the party to terminate a member’s party membership upon bringing any party decision to court, which may result in the UMNO members losing the necessary locus standi to proceed. Second, the judge may not entertain the challenge, considering it non-justiciable for reasons of the UMNO decision being a private law, laches (period lapsed), or requiring the members to exhaust all domestic party-based remedies.
UMNO is expected to become an increasingly reactionary party, as reforms will be less likely to materialise without internal dissent. Each President and his appointee’s tenure will be longer, which makes reforms less urgent, as party office bearers now have reduced accountability to their members. These structural decisions by Zahid Hamidi are also unlikely to be reversed in the medium-term as every President holding the position will likely want to retain the chief benefit of selecting general election candidates and securing a longer tenure. If there are any reforms at all, these will depend on the personalities holding the presidency, and this necessarily makes UMNO a personality-driven party, where the highest successes and failures are an extension of the President.
Since many Malaysian voters, especially youths, have avoided voting for UMNO because of Zahid Hamidi, it is sensible to assume that the decline in electoral power will continue at an accelerated pace.
In the past, experts argued that the UMNO Presidency was strong because of its merger with the role of the Prime Minister. What Zahid Hamidi has shown, however, is that the UMNO presidency on its own is powerful even without the executive power; he has wielded every tool at his disposal and made his position unchallengeable, even by the best opponents. Zahid has been successful in converting his disadvantage into an advantage, but whether he can reverse UMNO’s decline remains to be seen.
ANNEX A
UMNO Supreme Council Structure[63]
NB: Appointments are the sole prerogative of the President.
ENDNOTES
For endnotes, please refer to the original pdf document.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
2023/58 “Governing the Digital Economy in Thailand: Domestic Regulations and International Agreements” by Antonio Postigo
EXECUTIVE SUMMARY
- Thailand is among the ASEAN countries that have seen the most rapid growth in digital infrastructure and e-commerce since the COVID-19 pandemic.
- In a 2022 study conducted by the Asian Development Bank, Thailand was among just eight countries in the Asia-Pacific region that have implemented comprehensive legislation governing digital trade.
- In the absence of a multilateral agreement, Thailand, like many other countries, is leveraging its participation in FTAs to shape global rules for digital trade; but this approach requires significant administrative resources and can lead to regulatory fragmentation and increased business costs.
- Alternatively, the standalone Digital Economy Partnership Agreement (DEPA) is emerging as a key consensus-building platform towards a multilateral digital economy regime that Thailand may consider joining.
* Antonio Postigo is Associate Fellow at ISEAS – Yusof Ishak Institute, Singapore, Visiting Fellow at the Department of International Development, London School of Economics and Political Science (LSE), London, United Kingdom, and Senior Research Fellow at the Barcelona Institute of International Studies (IBEI), Barcelona, Spain.
ISEAS Perspective 2023/58, 24 July 2023
INTRODUCTION
The world economy is increasingly dependent on the cross-border flow of digital information. Data can serve as inputs to a final product, function as final products themselves, or facilitate the production and/or trade of other goods. Between 2007 and 2017, the flow of data increased by more than 20 times.[1] The COVID-19 pandemic has accelerated the digital transformation of many economies and boosted digital trade. At the same time, the rapid digitalisation of the global economy has prompted national governments to introduce new legislation, often leading to increased regulatory fragmentation and barriers to digital trade.[2]
While there is no single definition of digital trade, the comprehensive definition proposed by the OECD as “digitally enabled or digitally ordered cross-border transactions in goods and services that can be delivered digitally or physically”[3] has gained widespread acceptance. While electronic commerce (e-commerce) is the most commonly reported component of digital trade because it is the easiest to assess, it is just one element on the broader digital trade landscape.[4] Estimates suggest that a 20% increase in the size of the digital sector from the 2020 baseline would result in a 5.4% global output increase and a 6.1% increase in Asia’s gross domestic product by 2025.[5] Similarly, a 10% increase in digital connectivity can boost trade in goods and services by 4% and 3%, respectively.[6]
Since the onset of the COVID-19 pandemic in March 2020, there has been a surge in digitalisation accompanied by an increase in legislation related to digital trade. However, many developing countries either lack entirely or have insufficient digital trade legislation.[7] At the same time, certain domestic regulations can create barriers to digital trade, including:[8] a) Forced data localisation: While data localisation measures can enhance data privacy, consumer protection, and cybersecurity, they can also limit firms’ access to global networks[9]; b) Customs duties on electronic transmissions: In 1998, WTO members agreed to a moratorium on tariffs for electronic transmissions (see below), which requires periodic renewal;[10] and c) Inconsistency and lack of interoperability between national regulations.
To assess the restrictiveness of domestic regulations on digital trade, several indexes have been developed. The United Nations Economic and Social Commission for Asia and the Pacific (UN-ESCAP) has created the Regional Digital Trade Integration Index (RDTII), which measures regulatory measures affecting digital trade integration.[11] Additionally, the Organisation for Economic Co-operation and Development (OECD) has compiled the Computer Services Trade Restrictiveness (STRI) and Digital Services Trade Restrictiveness (DSTRI) indexes, which quantify regulatory barriers impacting trade in services, including digitally-enabled services.[12]
THE DIGITAL ECONOMY IN THAILAND
In 2021, e-commerce alone in ASEAN was valued at US$170 billion in gross merchandise value and is projected to reach US$360 billion by 2025 and US$1 trillion by 2030.[13] Thailand is one of the countries in ASEAN and Asia that witnessed the fastest growth in digital infrastructure and accessibility, a trend that has been further accelerated by the COVID-19 pandemic (Table 1).
Thailand boasts the second-largest penetration of e-consumers in ASEAN, at 48 million internet users and 9 million new digital consumers since the start of the pandemic until mid-2021. Notably, 67% of these users are located outside the Bangkok area. In 2021, the internet economy in Thailand reached US$30 billion in global merchandise value, marking a 51% increase compared to 2020, and is expected to reach US$57 billion by 2025. Thai e-commerce alone accounted for US$21 billion in 2021, ranking 19th globally in terms of value.[14]
Table 1: Selected digital indicators in Thailand
* Population between 16 and 64 years old.
Abbreviation: The PDPA = Personal Data Protection Act
Sources: Bangkok Post 2 July 2021; 3 September 2021; and 27 August 2022;
Thailand Digital Outlook 2022 (https://tdo.onde.go.th/)
The digitalisation wave has also transformed numerous service sectors in Thailand, with most notable advancements observed in financial services. Foreign investment in digital services has surged, particularly in e-commerce, fintech, e-health, and online education. This growth has been driven by increased Internet and mobile phone penetration, as well as the improvement of logistics and e-payment systems.[15] In terms of e-commerce transactions, 50% are business-to-consumer (B2C), followed by business-to-business (B2B) at 27%, and business-to-government (B2G) at 23%.[16] One-third of B2B e-commerce transactions are in the food and service sector, with manufacturing at 16% and retail and wholesale at 15%.
In 2016, Thailand introduced the Thailand 4.0 Strategy, aiming to transition the country to developed status through an industrial transformation in ten key sectors, including digital industries, and position Thailand as ASEAN’s innovation and knowledge-based digital hub.[17] Similar to traditional industries like automotive, electronics, petrochemicals, and heavy industries, Thailand has prioritised digital transformation in the Eastern Economic Corridor (EEC), which accounted for 60% of total FDI inflows in 2021.[18]
Furthermore, in recent years, Thailand has implemented several projects to promote and strengthen the digital economy and digital transformation across various dimensions.
First, in the e-commerce ecosystem, the Department of International Trade Promotion (DITP) at the Ministry of Commerce established Thaitrade.com in 2011. Thaitrade.com serves as a B2B electronic marketplace connecting over 25,000 Thai exporting firms, particularly small and medium enterprises (SMEs), with international importers.[19]
Second, to bolster digital infrastructure, Thailand initiated the construction within the EEC of the Digital Park Thailand in late 2021.[20]This public-private partnership aims to promote the development of digital infrastructure, enhance digital connectivity and aspires for the Park to become an ASEAN hub for digital innovation by attracting high technology and digital industries. [21]
Third, to facilitate trade, encompassing both digitally enabled and digitally delivered goods as well as traditional goods and services, Thailand launched the pilot stage of the National Digital Trade Platform (NDTP) in September 2022.[22] The NDTP will serve as the centralised point for communication and electronic document delivery between trading partners.[23] The NDTP is linked with Thai facilities such as the National Single Window and will be integrated with similar digital platforms in other countries.[24]
DOMESTIC REGULATIONS ON DIGITAL TRADE
In 2016, Thailand launched the Office of the National Digital Economy and Society Commission to draft national policies for the digital economy and society. A year later, a Digital Economy Promotion Agency was created to facilitate the growth of digital industries and promote the use of digital technologies. Both have been later integrated into the Ministry of Digital Economy and Society, which was established in October 2016 as a replacement for the Ministry of Information and Communication Technology.[25] The Digital Development for Economy and Society Act (2017) established the legal framework for the digital development of both the economy and society in Thailand.[26] It also created a Digital Economy and Society Development Fund to finance future digital economy and social development plans.
In the past five years, Thailand has introduced a substantial number of new regulations concerning the digital economy.[27] According to a recent ADB report,[28] Thailand is one of only eight countries among the 49 surveyed in the Asia-Pacific region which has implemented digital trade legislation. The current Thai regulatory framework on digital trade encompasses various dimensions, including electronic transactions, consumer protection, privacy, data protection, cybercrime, and the adoption of the United Nations Commission on International Trade Law (UNCITRAL) model law on e-commerce.[29].
The Electronic Transactions Act (2019) established the legal equivalence of electronic records and signatures with paper records and handwriting signatures.[30] All digital businesses in Thailand are required to register under the Commercial Registration Act.[31] The Personal Data Protection Act (PDPA) issued in June 2022, outlines the obligations for both overseas and domestic e-commerce businesses regarding the collection and use of personal data.[32] In December 2022, Thailand issued the Decree on Digital Platforms, which establishes the obligations of digital platform providers.[33]
Of note, the PDPA does not require data localisation, and Thailand has lower tariffs and non-tariff barriers on information and communication technology (ICT) goods compared to the Asia-Pacific average.[34] However, Thailand imposes stricter restrictions on foreign investments and the operations of telecommunication businesses, as well as on online sales and transactions. Consequently, Thailand’s score on the UN-ESCAP’s RDTII is higher (indicating more digital trade restricting policies) than the ASEAN and Asia-Pacific averages.[35] Thailand also receives higher scores (more restrictive) in both OECD’s indexes, with the fourth-highest DSTRI and second-highest STRI in ASEAN.
INTERNATIONAL GOVERNANCE OF THE DIGITAL ECONOMY
A plurilateral negotiating platform at the WTO, the Joint Initiative on Electronic Commerce (JIEC), was established in 2017 to build consensus on trade-related aspects of electronic commerce.[36] Progress among the current 86 JIEC members has been most notable in the following areas: online consumer protection, electronic signatures, spam, open government data, electronic contracts, transparency, paperless commerce, and open Internet access.[37]
The Asia-Pacific Economic Cooperation (APEC) has launched discussions among interested members on trade facilitation and data privacy and on making the WTO moratorium on electronic transmissions permanent.[38] Despite these efforts, variations in national regulatory frameworks and the absence of multilateral rules and standards governing digital trade and data-driven markets can create what some authors refer to as a “digital noodle bowl”, which entails additional costs for businesses.[39]
While a multilateral digital trade agreement materialises, countries are relying on regional and bilateral free trade agreements (FTAs) as well as ad hoc digital economy agreements as the main mechanisms to establish international rules on digital trade. As of May 2023, there were 356 free trade agreements (FTAs) in force, with over half of them implemented in the last decade incorporating provisions related to digital trade.[40]
However, analyses of digital trade provisions in FTAs reveal a fragmented landscape, with three primary templates for digital chapters emerging in FTAs: those led by China, the European Union (EU), and the United States (US).[41] Digital trade provisions in Chinese FTAs tend to be less comprehensive and focus on facilitation and e-commerce; provision in the EU’s and the US’ FTAs are broader and deeper, and while the EU’s FTAs emphasise personal data protection, the US’ FTAs stress non-discrimination of digital products provisions. [42]
Although digital trade chapters have been included in many recent FTAs, the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) distinguish themselves through their extensive geographic reach and comprehensive provisions on digital trade rules.[43] RCEP’s liberalisation in traditional goods trade and other trade-related issues is less comprehensive and deep than the CPTPP.[44] The digital trade in the RCEP overlaps with that of the CPTPP in areas such as paperless commerce, electronic signatures, and online consumer protection. However, the RCEP, which is shaped by the digital trade framework of its members, especially ASEAN and China, allows for greater flexibility in restricting data flows if it is deemed necessary to achieve legitimate public policy objectives or protect security interests. In contrast, the CPTPP, building upon the initial membership of the US in its predecessor (the Trans-Pacific Partnership, TPP), incorporates the US model of digital trade provisions in FTAs, including non-discrimination of digital products, prohibition of source code access, prohibition of localisation requirements, and prohibition of cross-border data transfer restrictions, thereby emphasising open data flows.[45]
In December 2021, ASEAN implemented the ASEAN Agreement on E-Commerce, which closely aligns with the digital chapter in the RCEP covering various digital trade rules on cross-border trade facilitation, electronic payments, internet neutrality, personal data, and consumer protection.[46] Also, like the RCEP, the agreement does not include provisions on non-discrimination of digital products or restrictions on source code requirements.
Among the FTAs that ASEAN has already implemented with Australia/New Zealand, China, Hong Kong, India, Japan and South Korea, only the first FTA (AANZFTA) has been upgraded to include a digital chapter.[47] The e-commerce chapter in the AANZFTA, which could serve as a model for other ASEAN’s FTAs, covers various digital trade issues such as transparency, consumer protection, online personal data protection, authentication, certification, electronic signatures, and paperless trade administration. However, it does not include applicability of WTO rules (e.g., digital service supply), non-discriminatory treatment of digital products, or the moratorium on tariffs on digital products.
Thailand participates in the WTO’s JSIEC but, like other countries, has leveraged its engagement in FTAs to shape global rules and standards for digital trade. It has implemented six bilateral FTAs and is a party to eight regional agreements, namely ASEAN, the six ASEAN-centred FTAs, and the RCEP (Table 2).[48]
Among the bilateral FTAs, only the Thailand-Australia (TAFTA) and Thailand-New Zealand (NZTCEP) FTAs contain digital provisions, albeit that they are fairly generic.[49] Both FTAs include provisions on consumer protection, online personal data, paperless trade administration, customs facilitation, applicability of WTO rules to e-commerce, and a pledge to follow UNCITRAL’s model law. Unlike the NZTCEP, TAFTA also includes provisions on authentication, certification, electronic signatures, the applicability of trade rules to digital services, and a moratorium on tariffs on digital products.[50]
All members of ASEAN are part of the RCEP, but only Brunei Darussalam, Malaysia, Singapore, and Vietnam are members of the CPTPP (Table 2). While the Thai government has expressed interest in the CPTPP, it has not yet joined due to strong opposition from civil society organisations.[51]
Table 2: Digital provisions in the FTAs and digital agreements participated by Thailand and other ASEAN countries
Abbreviations: AANZFTA: ASEAN-Australia-New Zealand FTA; EU: The European
Union; GCC: Gulf Cooperation Council; US: The United States of America
Sources: Honey (2021); ADB (2022); Corning (2023); WTO-JIEC (undated)
Beyond FTAs, some countries are negotiating standalone bilateral or plurilateral digital economy agreements. For example, the US and Japan have signed an agreement on digital trade.[52] Singapore has taken a leading role in establishing international rules and standards for the digital economy and has bilateral digital partnerships with Australia (2020), the United Kingdom (2022), the European Union (2023), and South Korea (2023). But it is the Digital Economy Partnership Agreement (DEPA) signed by Singapore with Chile and New Zealand in 2020 that has garnered the greatest attention.
Unlike other digital agreements, DEPA is an “open agreement” that allows for the inclusion of additional countries.[53] South Korea, Canada, and China have initiated negotiations to join DEPA, potentially giving the agreement the necessary critical mass to become a consensus-building platform in the harmonisation or convergence toward a multilateral digital economy regime. In May 2022, Singapore extended an invitation to Thailand to join DEPA, and both countries have signed a memorandum of understanding (MoU) covering several key issues of the digital economy.[54] However, Thailand is still to decide whether it will join DEPA or not.
Another distinctive feature of DEPA is its modular approach. DEPA is organised into 16 modules, each addressing specific aspects of the digital economy. This allows for future revisions as the digital economy evolves and new issues arise. It also offers flexibility, allowing countries to join DEPA in its entirety or incorporate specific modules into their domestic policies or other trade negotiations.[55]
While DEPA and other bilateral digital agreements do not address traditional issues like cross-border services, financial services, and intellectual property included in FTAs, they offer greater coverage in terms of the digital economy.[56] DEPA and Singapore’s bilateral digital partnerships align with the CPTPP digital trade template, encompassing provisions on data flows, data localisation, electronic transactions, and non-discrimination of digital products. However, its scope extends beyond digital trade, aiming to cover the entire value chain and various aspects of the digital economy, like open government data, internet access, competition, fintech and e-invoicing.
EXPLORING THAILAND’S FUTURE CHOICES IN DIGITAL ECONOMY GOVERNANCE
While FTAs and standalone digital agreements have made important strides in building an international digital trade regime, there is still a pressing need for substantial progress at the multilateral level through the JIEC. An agreement facilitated by the WTO offers distinct advantages.
Firstly, it can better accommodate the “special and differential treatment” for developing and least developed countries compared to FTAs. Secondly, it enables the integration of rules for digital trade with those governing traditional goods, services, and intellectual property rights. Most importantly, it ensures interoperability and prevents fragmentation within the digital trade system. However, the institutional gridlock within the WTO hampers negotiations and makes it unlikely for any digital trade agreement to be reached quickly.[57]
In this scenario, Thailand faces the decision of whether to upgrade its existing FTAs to include digital trade rules, join the CPTPP with its more comprehensive digital chapter compared with RCEP, or join DEPA.
Upgrading existing FTAs to include digital trade rules with specific partners allows for the customisation of digital trade provisions based on bilateral or regional needs. This approach will require significant administrative resources and contribute to increased regulatory fragmentation and higher costs of doing business.
Joining the CPTPP would grant Thailand access to a more comprehensive digital chapter, compared to the RCEP. However, it would also require Thailand to meet a broader and more extensive set of requirements in other trade-related areas and could limit the policy space to implement certain developmental strategies.
Finally, and due to the evolving nature of the digital economy, a standalone and adaptable digital agreement such as DEPA can more adequately and rapidly address the barriers encountered by businesses better than FTAs. Although DEPA’s membership is still small, several major economies have expressed interest in joining it.
The existing MoU and the range of cooperative efforts in the digital economy between Singapore and Thailand have the potential to generate momentum for Thailand’s membership in DEPA. Early membership will also provide Thailand with the opportunity to actively participate in shaping the agenda of the agreement.
ENDNOTES
For endnotes, please refer to the original pdf document.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
2023/57 “Indonesia’s Appointed Leaders and the Future of Regional Elections” by Ian Wilson
EXECUTIVE SUMMARY
- By the end of 2023, there will be 271 interim regional heads who are appointed rather than elected, accounting for more than half of the regional leadership posts throughout Indonesia.
- The legal basis of the interim leader appointment process has been contentious and subject to challenge, especially when some of the appointees have a substantial term in office before the next election, or when they execute significant policy changes.
- Critics argue that handpicked interim leaders are beholden to those who have appointed them and would use the advantages of incumbency to promote central government interests, and unfairly favour some stakeholders over others in the 2024 elections.
- The phenomenon of appointed interim leaders has intertwined with renewed questioning by political parties and elites of the legitimacy and future of regional elections with senior government ministers, among others, proposing a return to the political appointment of regional leaders and the ending of democratic elections.
* Ian Wilson is Senior Lecturer, Politics and Security Studies, Co-Director (interim) of the Indo-Pacific Research Centre, at Murdoch University, Australia, and Visiting Fellow at ISEAS – Yusof Ishak Institute.
ISEAS Perspective 2023/57, 19 July 2023
INTRODUCTION
In July 2022, Ahmad Marzuki, recently retired commander of the Iskandar Muda military command, was appointed interim governor of Aceh. Aceh had just emerged in 2005 out of decades of armed conflict, and its post-peace-accord politics had been dominated by Partai Aceh, a local party established by former Free Aceh Movement rebels. The selection of a non-Acehnese military man to that position was therefore surprising. Marzuki was not popularly elected,[1] and was in fact appointed by the Minister of Home Affairs, Tito, from three names proposed by Aceh’s regional parliament. The significance of the Minister’s preferred choice was not lost on many, with one Aceh Party parliamentarian commenting that “Jakarta has chosen a Jakarta person to sort out Aceh; what kind of message do you think that sends?”.[2]
By the end of 2023, there will be as many as 271 interim regional leaders throughout Indonesia, representing over half the total number of provinces, regencies and cities in the country. These interim appointees will be in office until after regional elections in November 2024, and throughout presidential and legislative elections scheduled for February that year.
The legislative basis for the appointment of interim regional leaders is Article 201 of the 2016 Electoral Law (UU No. 10), which stipulates that all regional elections (Pilkada) be held simultaneously in November 2024. This means that elected terms ending prior to 2024 will result in vacant positions. Rather than holding by-elections to fill these vacancies, the law specifies that these be filled by interim appointments.
BORN OF A LEGISLATIVE COUP
To understand the broader implications of the appointment of interim leaders for the 2024 election, it is important to first situate it within the context of the recent history of legislative and political challenges to the status of regional elections.
The 2016 Pilkada law, upon which interim appointments are based, emerged out of a tumultuous period during which regional elections were momentarily ended via what amounted to a legislative coup. In September 2014, five months after presidential and legislative elections were won by Jokowi and the PDI-P, the Koalisi Merah Putih, the six-party coalition known to have backed the losing presidential candidate Prabowo Subianto, used the final moments of its parliamentary majority to pass the Regional Elections law (UU Pilkada).[3] Central to the legislation was the replacement of direct elections with the appointment of regional leaders by parliament. It coalesced the antipathy held by many parties to the unpredictability and the attendant costs and risks of popular elections, together with entrenched ideological opposition towards liberal and participatory democracy.[4]
The argument against popular elections was that they created ‘division’, sowed discord, encouraged corruption and conflicted with the Pancasila, echoing New Order era characterisations of the unsuitability of electoral democracy in the Indonesian context. Outside of the party coalition, support for the change also came from Nahdlatul Ulama, whose leadership stated that regional and legislative elections “wrecked the spirit of Indonesia”.[5]
The 2014 legislation was short-lived, however. Responding to public outcry, outgoing president Yudhoyono overturned it via two presidential decrees in his last weeks in office, and reinstated direct regional elections.[6] This reversal was passed in early 2015 by a DPR now dominated by the PDI-P after the 2015 regional elections; this was however recognised to be insufficient in the long term. The law underwent further revisions in 2016, and again in 2020. Through this process, a majority consensus developed among parliamentary factions that Pilkada should be held in 2024, cancelling all other elections scheduled for 2022 and 2023, and thus producing the need for interim regional leaders.[7]
NOT JUST ANOTHER CARETAKER
Caretaker administrations are a common and largely uncontentious part of many electoral systems. Generally, interim administrations operate with limited executive authority and mandate during short periods before elections or post-election, or in moments of political crisis. Indonesia’s interim leaders, however, differ in several ways.
One is the length of the appointment. The first interim leaders took office in early 2022, over 34 months prior to regional elections scheduled for November 2024. This constitutes over half of a full elected term. Regional Government Law 23, 2014, stipulates, however that interim leaders should not be in office longer than one year.[8] Subsequently, interim leaders are subject to performance reviews after 12-months with the possibility of a further extension. The review process for governors has been conducted by the Home Affairs Ministry with performance ostensibly assessed against three sets of criteria: evidence of improvements to public services; achieving progress on development indicators via the use of regional budgets; and maintaining public order.[9] Others include facilitating ease of investment, and tackling inflation and unemployment.[10] There is a clear expectation that interim leaders will use their time in office to actively govern and make significant changes in line with national government priorities ‘unburdened by political interest’, rather than operate in a caretaker mode or continue the policies of their predecessors.[11]
To do so, and in contrast to many caretaker administrations, Indonesia’s interim regional leaders enjoy wide-ranging executive power. Governmental regulations from 2008 suggest some significant limits, such as prohibiting the replacing of government officials, retracting of permits, and instigating of policies that conflict with those of the central government or the previous administration.[12] There was, however, an important caveat, i.e. “except with the permission of the Minister of Home Affairs”.[13] In late 2022 the Home Affairs Minister issued a ministerial circular effectively granting interim leaders the authority to remove and replace government officials. In practice, new policy directions have also not faced censure as long as these have been assessed by the Ministry to be in keeping with national government priorities.[14] This Ministry-mandated authority has to date been variably deployed, from replacement of officials appointed by previous administrations and significant policy shifts. Be that as it may, without a political mandate granted by a constituency, interim leaders are highly susceptible to pressure from regional parliaments, but even more so the Ministry of Home Affairs, which remains their appointer, performance assessor and, in effect, political master.[15]
This has been evident in Jakarta, where the interim governor is Heru Budi Hartono, a former mayor of North Jakarta and head of the Presidential Secretariat, who was handpicked for the role by President Jokowi.[16] Since coming to office in October 2022, Heru has disbanded the Accelerated Development Team (TGUPP) that advised the governor, overhauled the directorship of the Jakarta-government owned property, infrastructure and utilities company Jakarta Property (Jakpro), replaced the Regional Secretary, and appointed a long-term critic of the previous administration of Anies Baswedan as commissioner of the government-owned Light Rail Transit Corporation (PT LRT).[17] Several signature policies carried out by Baswedan, such as widening pedestrian sidewalks, have also been reversed.[18] Also, the close consultation with urban poor groups and their advocates which characterised the previous administration has come to an abrupt halt.[19]
With Baswedan now a 2024 presidential candidate seeking to campaign on his policy achievements as governor of Jakarta, Heru, and by extension the Minister of Home Affairs, have been accused of politically weaponising his time in office.[20] Praised by the PDI-P for continuing the policies of Jokowi and Ahok, he has now been touted as one of the party’s preferred candidates for governor in 2024.[21] There is currently no legal impediment to interim leaders running in the 2024 elections. Handpicked by the national government, interim leaders who run will enjoy the significant strategic and resource advantages stemming from incumbency.
APPOINTMENT PROBLEMS
Perhaps unsurprisingly, the process of interim leader appointment has been highly contentious. The 2016 election law upon which interim leadership is based is scant on substantive details. It was not until April 2023, after the appointment of over 150 interim leaders and significant sustained pressure, that the Ministry of Home Affairs issued a Ministerial Regulation that nominally outlined an appointment procedure.[22]
The earlier absence of a clear or transparent process and opportunities for public input has resulted in accusations of political manipulation, with the legislative basis of interim appointments being subjected to repeated legal challenges.[23] In February 2022, five citizens requested a judicial review of Article 201 of the 2016 Electoral Law (UU Pilkada). In May of the same year, the Urban Poor Network (Jaringan Rakyat Miskin Kota, or JRMK) launched a constitutional challenge arguing that the appointment of interim leaders amounted to a “coup d’etat” that denied members of the network their constitutional right to representation, while the Regent of Mandailing Natal, North Sumatera, contested the constitutionality of the 2016 legislation on the grounds that it reduced his elected term from five to four years.[24] In all three cases, the constitutional court concluded that interim appointments are constitutionally valid. In its judicial review ruling, however, the court did request that the government legislate a technical process of appointment broadly guided by principles that were “democratic’, transparent, and accountable”.[25]
Despite this, and despite a damning report by the National Ombudsman that labelled the appointment process as marred by maladministration, the Ministry of Home Affairs remained steadfastly recalcitrant.[26] Minister Karnavian has instead engaged in a counter-polemic insisting that an appointment process involving any kind of voting process or public participation was ‘impractical’, and that a more pragmatic “filtering of aspirations” which was, according to the Minister, fundamentally “democratic in nature” was used instead.[27]
This ‘filtering’ has required regional parliaments forwarding the names of three potential candidates to the Home Affairs Ministry for consideration.[28] These are then evaluated by the Home Affairs Minister in coordination with other Ministries, and with the approval of the President.[29] Even here, however, the role of the DPRD has been routinely sidelined, and numerous appointments have been made by the Ministry outside of DPRD recommendations.[30] In other instances, Ministry-appointed governors have forwarded names of candidates for Bupati without consulting the DPRD.[31] This has generated some disquiet. In the case of Jayapura, the DPRD responded to the imposition of interim-Bupati by questioning the central government’s commitment to Papua’s special autonomy.[32]
Indonesia Corruption Watch (ICW) has argued that the wider pattern of interim appointments indicates that a key criterion in the process is “closeness” to the central government.[33] As can been seen in Table 1, most governors appointed in 2022 came from state ministries. The structural relationship is one of deference to the priorities and interests of central government, rather than those of the local and regional constituencies, be it the economic importance of mining and sand exports in the case of Bangka Belitung, or political security in the case of West Papua and Aceh.[34]
Table 1: Interim governors appointed in 2022
| Province | Name | Position | Institution |
| Aceh | Achmad Marzuki | Special Staff | Ministry of Home Affairs |
| South Papua | Apolo Safanpo | Special Staff | Ministry of Home Affairs |
| Central Papua | Ribka Haluk | Special Staff | Ministry of Home Affairs |
| West Sulawesi | Akmal Malik | Director-General of Regional Autonomy | Ministry of Home Affairs |
| Banten | Al Muktabar | Banten Regional Secretary | Regional Secretariat |
| Jakarta | Heru Budi Hartono | Head of Presidential Secretariat | State Secretariat |
| Bangka Belitung | Ridwan Djamaluddin | Director-General of Minerals and Coal | Ministry of Energy and Mineral Resources |
| Gorontalo | Hamka Hendra Noer | Special Staff | Ministry of Youth and Sport |
| West Papua | Paulus Waterpauw | Lieutenant-General | Police |
| Highland Papua | Nikolaus Kondomo | Special Staff | Attorney General |
IMPLICATIONS FOR THE 2024 ELECTIONS
There are two broad sets of implications that the phenomenon of interim regional leaders has for the 2024 elections.
The first is that interim leaders will go into election campaign periods with a national government-backed incumbency that will likely influence policy decisions and resource allocations. With close structural, if not personal, relationships to state ministries and the president, interim leaders can ‘campaign by stealth’ for or against presidential, legislative, or regional candidates, such as in the case of Jakarta.
Sustained resistance to the establishing of clear and transparent appointment processes on the part of the Ministry of Home Affairs and reliance on the Ministry’s own executive authority have however undermined its rhetoric about these being bastions of political neutrality. This has been further evidenced by patterns of appointment and by the prevalence of close ties to central government, together with the likelihood that some interim leaders will run for elected office in 2024. The latter challenges the idea that these are in fact caretaker administrations. This bullish approach is not without risks; it strains the relationship between some regional parliaments and the central government, resulting in questions about the fragile future of regional autonomy, together with public backlash over the imposition of non-local unelected candidates and policy change enacted without a public mandate.[35]
The second regards the broader implications for the long-term future of regional elections.[36]Despite the failure of Prabowo’s Koalisi Merah Putih in 2014, more political parties have since come to the table to question one of the most significant democratic reforms of the post-1998 period.
In February 2023, for example, Muhaimin Iskandar, the Chair of PKB and Deputy Chair of the DPR and a touted vice-presidential candidate, proposed ending elections for governor.[37] The Chair of the People’s Consultative Assembly (MPR), Bambang Soesatyo, reiterated the view that governors were “representatives of central government in the regions”, and as such should not be popularly elected, reigniting older debates over the status of provinces either as administrative units or as representative entities.[38]
The Indonesian Solidarity Party (PSI), a self-defined ‘youth’ party and a vocal supporter of President Jokowi, went even further, calling for a return to the New Order practice of direct presidential appointment of governors, arguably already in partial effect, given the interim governors, and the governance of Indonesia’s new capital, Nusantara.[39] Heralded by President Jokowi as a model for ‘a new Indonesia’, Nusantara will not have an elected leader, the equivalent of the current capital’s governor will be replaced by a chairman appointed directly by the president.[40]
The PDI-P, who opposed the 2014 legislative coup, has since developed a preference for more party and parliamentary power to be exercised over the appointment processes. Party leaders have been labelling direct regional head elections as “transactional” and “mired in nepotism and money politics”.[41] This shift is undoubtedly intertwined with their own political consolidation as the largest parliamentary faction, and with them holding the presidency.[42] This view was recently reiterated in an unsuccessful party-led Constitutional Court challenge of the 2017 electoral law, during which it was requested that the court impose a return to a closed-list voting-system, away from the current open-list approach. A key argument presented for this is that it is the party, and not the voting public, that was best suited to choose capable and appropriate leaders.[43]
CONCLUSION
In the face of this, perhaps the main defence for the continuation of direct regional elections is its public popularity, which has remained consistently high since its introduction in 2005. A survey conducted by Political Weather Station (PWS) in January 2023, for example, found that 80.9% were opposed to ending elections for regional leaders, including those for governor. This mirrors results from a survey done by Lingkaran Survei Indonesia (LSI) eight years earlier of supporters of the Koalisi Merah Putih Coalition, which found that 81.5% of these were in favour of direct elections.[44] Despite its well-known weaknesses and limitations, many Indonesians still consider direct elections an important vehicle for popular agency.
With the 2024 presidential and legislative elections only months away, the spectre of political interference in the process together with a significantly weakened capacity for civil oversight is looming large in public discourse.[45] This was highlighted in June following comments by President Jokowi that he was actively cawe-cawe or ‘meddling’ in the 2024 elections, to “ensure a smooth transition of power”.[46] The politics involved in the appointment of interim leaders has arguably been a case of systemic cawe-cawe.
It establishes a non-democratic norm for executive leadership appointment that is rationalised via appeals to efficiency, anti-corruption, and the ‘depoliticising’ of political power, and provides opportunities for the use of unelected incumbency to thwart electoral rivals. Interim leaders, in this respect, look something akin to a trial run for possible post-2024 scenarios in which there may be renewed legislative efforts to end elections for regional leadership positions.
ENDNOTES
For endnotes, please refer to the original pdf document.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
2023/56 “Backing Startups and Believing in Unicorns: Policy Implications and Challenges for Malaysia” by Tham Siew Yean
EXECUTIVE SUMMARY
- The Malaysian government’s aspirations to nurture startups and unicorns can be traced back to the establishment of its Multimedia Super Corridor (MSC) in 1996.
- This was to be accomplished through the establishment of incubators and accelerators and the provision of early-phase funding in a decentralised manner to meet the needs of startups from the inception of ideas to their development and subsequent commercialisation and expansion.
- There is uncertainty whether the government funding of startups has been effective, given the lack of proper assessment of incubator and accelerator performance. It is also far from clear whether the progress and current status of the startups are commensurate with the money spent.
- Assessments of incubator and accelerator performance in other countries have shown a critical reliance on good data. The UK’s experience, for example, points to the need to make data sharing obligatory for incubators and accelerators that have received or are receiving public funding.
- Designing an assessment framework which can be applied across different incubators and accelerators, however, requires the identification of appropriate performance metrics that should be used.
- While it may be expected that incubators, accelerators and funders should assess their own impact, in reality they often do not have the time nor the resources to do so. Hence there is scope for independent researchers to play a vital role in this regard, but this can only be done if data is shared with them. The data-driven insights gained from such assessments would be invaluable for the improvement of future programmes and funding processes.
* Tham Siew Yean is Visiting Senior Fellow at the ISEAS – Yusof Ishak Institute and Professor Emeritus, Universiti Kebangsaan Malaysia.
ISEAS Perspective 2023/56, 18 July 2023
INTRODUCTION
Startups are pursued as potential new drivers of growth through their innovativeness and use of new technologies, in the belief that these can open new markets for new products and services and generate new employment for the country. For these reasons, Malaysia has been pursuing startup development since the inception of the Multimedia Super Corridor (MSC). MSC was established in 1996 as a testbed to spur the country’s information, communication, and technology (ICT) development. The MSC programme accorded tax advantages for MSC-designated firms which were initially to be located within Cyberjaya in the hope that it would grow into an ICT cluster.
To spur innovation, three incubators have been established. They are: MSC Central Incubator (MCI), which is in Cyberjaya itself; Technology Park Malaysia (TPM) Incubator, which is situated within the TPM Science Park vicinity, and Universiti Putra Malaysia-Malaysian Technology Development Corporation (UPM-MTDC) Incubator, which is operated within the UPM main campus in Serdang.[1] These incubators provide physical space and some resources for early-phase startups that are in the product development phase and do not have a developed business model. Funding was subsequently provided when Cradle was incorporated under the Ministry of Finance Malaysia (MOF) in 2003 to fund potential and high-calibre tech start-ups. via its investment programs, which includes commercialisation support, coaching and other value-added services for entrepreneurial development. Over time, more incubator and accelerator programmes were added alongside greater funding from the government, as more ministries and agencies joined in the race to produce startups.
Startup ambitions were later consolidated into Malaysia’s Digital Economy Blueprint, which was launched in February 2021. The Blueprint targeted 5000 startups and two unicorns by 2025, subsequently raised to five unicorns.[2] A Roadmap (or Malaysian Startup Ecosystem Roadmap (SUPER), 2021-2030) to achieve this was launched in November 2021.[3] SUPER is housed with the Ministry of Science, Technology, and Innovation (MOSTI). MOSTI defines a startup as “a technology or innovation enabled business at an early stage, with a scalable business model and a high growth strategy.” In 2022, Malaysia had 3,363 start-ups and one unicorn, namely Carsome, which is an integrated used-car platform. But there are no historical data as to how much this number has grown since the inception of the MSC in 1996.
Over time, other incubator programmes were introduced, including in public universities. Accelerator programmes for speeding up the growth of existing companies that already had a minimum viable product (MVP) via dedicated mentoring, networking, and financial support, were also added. There is also funding outside of these programmes. This is to meet the desired exponential growth in untested ideas and products. This paper traces the development of government-funded incubators and accelerator programmes and startup funding in the country. It also identifies the key challenges these government-supported programmes and funding structure face.
PROFILING INCUBATORS AND ACCELERATORS
According to SUPER, there are 28 accelerators/incubators backed either by the government or the private sector. At the federal level, the three key ministries running accelerator programmes are the Ministry of Science, Technology, and Innovation (MOSTI), the Ministry of Communications and Digital (MCD) and the Ministry of Entrepreneurship Development and Co-operatives (MEDAC), with funding from the Ministry of Finance (MOF) (Figure 1 and Appendix 1 for details).
Figure 1. Key Ministries, Programmes and Funding for Startups in Malaysia, 2023.
Note: Figure does not represent size of programmes or funding.
Source: Author
These programmes share several key features. They have specific objectives, albeit these tend to evolve over time due to changing policy priorities. For example, the pivot from ICT to all-things-digital took place when Multimedia Development Corporation (MDC), which was established to oversee the development of the MSC, was rebranded to Malaysia Digital Economy Corporation (MDEC) in 2016. MDEC’s accelerator programmes thereafter started to focus on digital startups.[4]
While the programmes may differ in sectoral focus, there can be overlaps. The bioeconomy accelerator programme,[5] for example, focuses on bio-based startups in the agriculture, industrial and health sectors. Likewise, MRANTI Park also focuses on agriculture, health and bioscience, in addition to drone technology and IR4.0.[6]
The programmes cover startup development from pre-seed to seed, and from early-stage to commercialisation stages. However, World Bank’s identification of funding gaps has spurred a reorientation towards early-stage startups, leading MOSTI to launch MYStartup Pre-Accelerator programme in 2022.[7] MYStartup Pre-Accelerator focuses on pre-seed and early-stage start-ups, providing guidance and coaching to help them unlock their value and potential.
Collaborations are common across institutions while public-private partnerships in accelerator programmes have also increased over time. This can be observed in many MDEC programmes, which have included partnering state level programmes and with private accelerators as well.
In view of the looming 2025 deadline, targeted programmes have been launched to stimulate the birth of unicorns. This includes the launch of the 100 Soonicorns programme in 2022, where soonicorns are defined to be unicorns in the making.[8] The programme aims to identify 100 soonicorns, out of which 20 will be selected for tailored learning, mentoring, regulatory assistance, and funding from investors which include government agencies as well. In 2023, MDEC launched another new mentoring programme, called the Founders Center of Excellence’ (FOX) Program, which targets high growth tech companies with potential to become unicorns or achieve an IPO by 2025.[9]
Research universities and government research institutes also host incubator programmes in collaboration with Malaysian Technology Development Corporation (MTDC), although two of the oldest research universities, namely University Malaya and Universiti Sains Malaysia have opted to do so independently or with different collaborators. There are also private incubators such as MAD (Make-a-Difference) incubator,[10] which aims to work with bigger private universities like Help University. Unfortunately, there is no list of private incubators available and start-ups may encounter difficulties seeking out these incubators.
There are also special channels for Bumiputeras such as Teraju’s programme to support Bumiputera startups, which ran from 2014 to 2021.[11] SME Corp also has several programmes for Bumiputeras. Since these programmes are also dependent on government funding, some of them have been terminated when their funds dried up or when new allocations have new priorities. For example, the Business Accelerator Program of SME Corp is currently closed.
At least three states have publicly announced their respective accelerator programmes, with the Selangor programme being the oldest. The Penang state government is collaborating with private players, while Sarawak’s is driven by Digital Sarawak.
Petronas, a government-linked company, has also launched an accelerator programme which has five focus areas related to the interests of the company. These are naturally tied to future areas that can impact the direction of the company, such as sustainability concerns, the future of chemicals and materials, and the future of energy and mobility.
Private accelerators also exist but the exact number is not known. Six of the best-known work collaboratively with MDEC, namely WatchTower and Friends, Scaleup Malaysia, 1337 Venture Accelerator, PwC, Nexea and Sunway ILabs Super Accelerator. Global Accelerator Programs such as the one hosted by Alibaba are also available in Malaysia.[12] Notable among the private accelerators is the collaboration between Carsome, Malaysia’s first unicorn that was minted in 2021, and SunwayiLabs, a private accelerator, to run a programme that focuses on funding, supporting and scaling up startups that potentially disrupt the automobile ecosystem.[13]
KEY CHALLENGES
Programme Assessment
The outcome of all these government incubators and accelerator programmes, when reported publicly, is usually in the form of the number of participants of an event or the number of startups who completed the programme. Cradle, which has been running incubator and accelerator programmes since its inception, was reported to have approved 486 projects totalling RM191.94 million, from 2011 to 2020.[14] Cradle commissioned a study in collaboration with Help University in 2017 to study the impact of Cradle programmes on the economy.[15] The study, which has not been released to the public, reported that in 2018, Cradle’s initiatives had contributed US$838 million (RM3.4 billion) to the country’s Gross Domestic Product (GDP) and created 80,600 full-time jobs. A total of US$321 million (RM1.3 billion) in private and foreign funding was attracted into the Malaysian technology ecosystem during the eight-year period. The number of startups that dropped out or continued to grow after participating in the programme was, however, not reported.
Data are sparse if available at all, on the subsequent development of the startups that have participated in any of these programmes. In particular, university incubators are usually assessed for publication purposes. For example, Ng et.al. (2019)[16] compared Malaysia’s University Incubators (UI) with Taiwan’s and found that Malaysia’s UI are not only younger but also lacking in institutional culture, socio-technical networks, and financial and human capital, making them less effective than Taiwan’s. Importantly, since the promotion of academic staff is tied to publication, they are much less ncentivized to search for startup opportunities through these incubation programmes; efforts to commercialise university research therefore remain elusive.[17]
MOSTI’s MyStartup first Annual Report 2022 may pave the way for a new way of reporting as it provides some details on the programmes conducted under this platform.[18] These programmes are outlined with some data on participation in terms of the number of applicants and the number selected, and some testimonials and illustrative success stories. Testimonies, while valuable, cannot substitute for a survey on user perception of the value of the programmes or an appraisal on whether the support provided has indeed enhanced the longer-term survival and growth prospects of startups. Such an appraisal can provide invaluable feedback for improving programmes. There is, however, scarce information on whether the numerous programmes have been assessed for improvements, not to mention that on the metrics used.
In particular, there is no comparison between government-supported startup survival and the long-term development of private incubator and accelerator-supported startups, based on specific outcome measures. Further comparison with non-supported startup development is essential if one is to understand the value and influence of government incubator and accelerator programmes.
Funding beyond incubator and accelerator programs
Besides funding incubator and accelerator programmes, there is also funding available that is not tied to these programmes (Figure 1). This is because mega-size funding is critical for scaling up the development and success of startups. Grab, for example, was founded in Malaysia by Malaysians and received initial funding support from Cradle. But when it grew bigger, much more funding was needed for it to grow exponentially and Grab was apparently unable to access this funding in Malaysia. It was subsequently persuaded by a Singapore venture capitalist to move its headquarters to Singapore in 2014 and it was later listed on NASDAQ in 2021.[19] In contrast, Carsome, Malaysia’s unicorn, stayed on in Malaysia and could grow to its present scale after managing to obtain funding from a partnership between Gobi, a private venture capital company, and Malaysia Venture Capital Management (MAVCAP), in 2016.[20]
Hence, beyond the funding provided through incubation and acceleration programmes, additional funding is available. This is also not centralised and is instead distributed across different ministries and agencies, which diffuses the amount available for each startup. The funds are mainly in the form of grants, loans, and incentives. There is also peer-to-peer funding (P2P) funding (or borrowing directly from individuals) and equity crowdfunding, which is the collecting of smaller sums of money from a larger number of investors, organised by one of these agencies. In particular, there are also several government-owned firms that aim to provide venture capital. MAVCAP was established in 2001 under the MOF, with the mandate of developing the venture capital sector, and it is one of the largest VC firms in Malaysia. It operates under the purview of MOSTI. The government has also increased its efforts to bring in private venture capital through partnership with the government, for high risks investments. Specifically, the Ministry of Finance (MOF), apart from providing funding for programmes and other funding agencies, established Penjana Kapital in 2020 with a RM600 million investment fund to promote public-private partnership; it is a matching fund-of-funds programme wherein funds raised by foreign and private local investors are matched 1:1.
In 2022, Securities Commission Malaysia showed that government agencies contributed 36.01% of the country’s venture capital, followed by sovereign wealth funds (27.7%), while corporate investors contributed 22.68%,[21] indicating a continued dependency on government and government-linked funding. The private venture capital market is still considered underdeveloped. In part, Malaysia is relatively less attractive because its domestic market is relatively small and scaling up requires firms to have a global mindset from the start and to be able to tap on the regional market, which in turn depends on their access to funding. Carsome for example, relied on several rounds of funding to expand from Malaysia to Indonesia, Thailand, and Singapore. The regional market, on the other hand, is difficult to penetrate due to the prevalence of non-tariff measures, especially in terms of standards used, imposed in each country.[22]
The availability of numerous funds does not necessarily imply that they are easily accessed as there is little accountability on the use of these funds or their effectiveness. Instead, Malaysia startups continue to face funding problems; World Bank (2022)[23] found that in proportion to its GDP share, Malaysia’s VC activity is relatively low, indicating that it is performing below its potential in this respect. In addition, Malaysia’s average deal size for seed funding is comparatively low as compared to its regional peers, indicative of a lack of high-quality investment opportunities.
CONCLUSION
Malaysia’s aspirations to nurture startups and unicorns can be traced as far back as to the establishment of the MSC in 1996. The government has since established numerous incubators and accelerators to facilitate the growth of these firms, with the participation of different ministries, agencies, and government-linked companies. Funds have likewise been provided each year in a similarly decentralised manner to meet the funding needs of startups from inception of ideas to growth and subsequent commercialisation and expansion. However, the lack of proper assessment of incubator and accelerator performance and of the effectiveness of government funding lends uncertainty as to whether the current stage of development of startups is commensurate with the money spent.
Assessments of incubator and accelerator performance in other countries have shown good data is needed. The databank on startups in Malaysia is poor and spread across several Ministries and agencies. It is important to take a leaf from the UK study[24] where it is suggested that data sharing should be made obligatory for incubators and accelerators that have received or are receiving public fundings.[25]
Designing an assessment framework and working across different incubators and accelerators require identifying a set of appropriate performance metrics to be used. It is crucial that Malaysia moves away from simplistic performance metrics such as number of participants, number who selected for attending the programmes and number who graduated from programmes.
The performance measures must be meaningful in the short-term as benchmarked against the activities and results of the programmes. It should also measure the sustainability of the startup. Likewise, assessing the impact of funding should focus on meaningful metrics that can measure performance outcomes attributable to funding received. Identifying the appropriate performance measures and collecting the relevant data are a crucial step forward.
It may be that incubators, accelerators and funders should assess their own impact, but more often than not, they do not have the time or the resources to do so. It is important therefore for data to be shared with independent researchers. Data-driven insights can be gained from this for the improvement of future programmes and funding processes.
Appendix 1. Federal and State Incubators and Accelerators, 2023
| Ministry and agency | Programs |
| MOSTI | |
| CRADLE | MyStartup (pre-accelerator program) https://www.mystartup.gov.my/accelerator |
| MRANTI | Global Accelerator Program https://mranti.my/global-accelerator-programme MRANTI Impact Challenge Accelerator Program https://mranti.my/solutions/scaling-up-market-ready/mranti-impact-challenge-accelerator-mica |
| Bioeconomy Corporation | Bio-Based Accelerator Program https://www.bioeconomycorporation.my/industry-development/bio-based-accelerator-programme/overview/ |
| MCD | |
| MDEC | SME Digital Accelerator Program https://mdec.my/digital-economy-initiatives/for-the-industry/sme-digital-accelerator GAIN (seven accelerator partners, which are either state or private programs) https://mdec.my/gain/accelerator-programs Malaysia Tech Entrepreneur Program (MTEP), https://mdec.my/about-mdec/digital-economy 100 Soonicorns Program https://www.kkd.gov.my/en/public/news/23065-100-soonicorns-launched-to-expand-unicorn-club-in-malaysia FOX program https://www.digitalnewsasia.com/startups/malaysias-unicorn-target-centres-around-mdecs-fox |
| MEDAC | |
| SMECorp | PRESTIGE https://www.smecorp.gov.my/index.php/en/programmes1/2015-12-21-09-53-14/prestige |
| Teraju (for Bumiputeras only) | SUPERB (2014 -2021) https://superb.teraju.gov.my/home https://vulcanpost.com/766347/teraju-superb-2021-bumiputera-startup-accelerator/ |
| With Malaysian Technology Development Corporation (MTDC) | I4.0 Accelerator Programs https://mytap.com.my/program_TAP-SME.php |
| Seven Public Universities; four with MTDC | https://www.mtdc.com.my/technology-centre/ USM: Centre for Innovation and Consultation (CIA) in collaboration with Western Digital https://innovations.usm.my/ https://www.nst.com.my/news/nation/2021/01/657929/western-digital-usm-unveil-centre-innovation-and-automation University of Malaya Centre of Innovation & Enterprise (UMCIE) https://umcie.um.edu.my/our-location |
| Selangor state | Selangor Accelerator Program (5th cohort) https://www.sidec.com.my/sap2022/ |
| Penang state | Penang Startup Accelerator Program (together with private) https://pydc.com.my/en/psap/ |
| Sarawak | |
| Sarawak Digital Economy Corporation (SDEC)) | Digital Village Accelerator https://diva.sarawak.digital/ |
| Tabung Ekonomi Gagasan Anak Sarawak (TEGAS) | https://dayakdaily.com/tegas-to-groom-5-startups-in-its-startup-lab-accelerator-programme/ |
| Petronas | Future Tech Accelerator Program https://www.petronas.com/ventures/futuretech-accelerator/ |
Source: Compiled by author
ENDNOTES
For endnotes, please refer to the original pdf document.
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2023/55 “Changing Perceptions in Laos Toward China” by Joanne Lin
EXECUTIVE SUMMARY
- China is ASEAN’s largest trading partner and is viewed as the most influential economic power in Southeast Asia, according to recent State of Southeast Asia Survey reports. Especially for Laos, China’s investments through the Belt and Road Initiative have been significant.
- The large scale of China’s investments in Laos, especially in infrastructure projects such as the China-Laos railway, hydropower dams, and special economic zones (SEZ), have not only increased China’s influence in Laos but also fed Laotian dependence on China.
- However, a closer examination of Laos’ foreign policy, political priorities, and trade reveals that Laos can be “even-handed” or independent when it comes to international relations and is, in fact, able to strike a balance between its neighbours (particularly Vietnam and Thailand) and other major powers.
- The State of Southeast Asia 2023 Survey Report has indicated that China’s influence in Laos may be significant, but it is, in fact, slowly waning. The Lowy Institute Asia Power Index has also indicated that China’s influence in Laos does not exceed that of other neighbouring countries. An increasingly assertive China and the deepening of US-China rivalry have placed greater pressure on Laos to move towards neutrality and to increase its reliance on ASEAN member states and other middle powers.
* Joanne Lin is Co-coordinator of the ASEAN Studies Centre at ISEAS – Yusof Ishak Institute, and Lead Researcher (Political-Security) at the Centre.
ISEAS Perspective 2023/55, 17 July 2023
INTRODUCTION
Since the revival of its influence in Southeast Asia in the early 1990s,[1] China has become an important economic investor and development partner for the region, especially for Laos and Cambodia.[2] China has retained its position as ASEAN’s largest trading partner[3] since 2009, and ASEAN has become China’s largest trading partner since 2021.[4] For Cambodia and Laos, China constitutes the largest source of foreign direct investment outside of ASEAN.[5] As such, China has been viewed as the most influential economic power in Southeast Asia, according to recent State of Southeast Asia Survey reports.[6]
Due to Laos’ limited developmental options,[7] it has benefited significantly from China’s investment. This is particularly through the Belt and Road Initiative (BRI) which is perceived to help regional countries achieve faster development.[8]
The scale of China’s investment in Laos, especially in infrastructure such as the China-Laos railway, hydropower dams, and special economic zones (SEZ), has resulted in an increase in China’s influence in both tangible and intangible ways.[9] The growing dependence of Laos on China has led academics and media to sometimes frame Laos as a “vassal” or “satellite” state to China, unable to think and act independently.
However, a closer examination of Laos’ foreign policy, political priorities, and trade (away from the lenses of major power rivalries) reveals that Laos can be “even-handed” or independent when it comes to international relations, and is able to strike a balance between its neighbours (particularly Vietnam and Thailand) and other major powers.[10] There are also indications that Laos has sought to diversify its foreign relationships (including in development assistance) beyond China.
The State of Southeast Asia 2023 Survey Report [11] has shown that China’s influence in Laos may be significant but it is nevertheless slowly waning. An increasingly assertive China and the deepening of US-China rivalry have placed greater pressure upon Laos to move towards neutrality and to increase its reliance on ASEAN member states, or middle powers such as the European Union (EU), Australia, Japan, and South Korea.
The Lowy Institute Asia Power Index[12] has also indicated that China’s influence on Laos is not the greatest where trade, investment, diplomacy, media (and social media), defence, and even UN voting alignments are concerned.
This Perspective will examine the changing perception of Laotians about China, and how Laos is more neutral than media reports and academic analyses generally claim.
THE STATE OF SOUTHEAST ASIA SURVEY FINDINGS[13]
(Note: The survey’s methodology has not changed across the four to five years of analysis. Starting in 2022, the survey was conducted both online and offline (CAPI method) in order to reach more respondents. The CAPI method for Laos started in 2023. The number of Laos respondents increased from 43 in 2022 to 107 in 2023. In terms of affiliation, Laos respondents from across four categories namely the academic/think-tanks/research institutions; the business/finance sector; civil society/NGOs/media; and the regional /internationals have increased in 2023 as compared to 2022, while respondents from the government sector decreased[14] in the same period.)
Major Powers’ Economic, Political and Strategic Influence in Laos
A five-year analysis of the State of Southeast Asia Survey reports from 2019 to 2023 shows that while China continues to enjoy a certain degree of influence in Laos, its economic power has been perceived to be declining, with the exception of 2020-2021 (Chart 1). The most significant decline was recorded for 2022-2023; China’s economic influence in Laos plunged from 86.4% to 20.6% (Chart 1), while China’s political-strategic influence in Laos decreased from 75% to 30.8% in the same period (Chart 2).
A growing number of Laos’ respondents have also indicated worry about China’s growing economic influence (an increase from 65.8% to 72.7%) while an increasing number of respondents welcome the US’ growing economic influence (from 0% to 50%) from 2022-2023.
In the same period, ASEAN’s economic influence among Laos respondents increased from 2.3% to 29.9%; Australia’s influence increased from 0% to 16.8%; and the EU’s influence increased from 6.8% to 16.8%. Japan, South Korea, the UK, and the US all registered an increase in economic influence among Laos respondents.
Similarly, Australia (0 – 14%) and the EU (0 – 17.8%) recorded the largest increase in political and strategic influence, while ASEAN, India, South Korea, the UK, and the US registered a smaller degree of increase among Laos’ respondents in the period 2022-2023.
Chart 1: In your view, which country / regional organisation is the most influential economic power in Southeast Asia? (Laos’ Respondents)
Chart 2: In your view, which country/regional organisation has the most influence politically and strategically in Southeast Asia? (Laos’ Respondents)
State of Southeast Asia Survey reports from 2019-2023
Laos’ Perceptions of Major Power Leadership
A four-year analysis has shown that Laos’ respondents generally favour China with regards to leadership in championing global free trade (Chart 3). However, while China’s popularity soared in the period 2021-2022, it plunged from 61.4% in 2022 to only 14% in 2023 (lower than ASEAN’s and the EU’s). On the flip side, confidence in ASEAN increased from 6.8% to 26.2%; Australia from 0 to 10.3%; and the EU from 6.8% to 25.2%. Perceptions about the US have remained rather constant in the last three years (between 14% and 15.9%).
With regard to leadership in maintaining the rules-based order and upholding international law, Laos’ respondents’ confidence in China has consistently decreased over the past four years from 26.1% in 2020 to 5.6% in 2023 (Chart 4). In the period 2022-2023, the EU became Laos’ top option at 29%, an increase from 13.6% in 2022, while confidence in Australia increased from 0% to 17.8% following Russia’s invasion of Ukraine. Greater confidence is also recorded for New Zealand and the UK. China’s “no-limit” partnership with Russia, along with ASEAN countries’ (including Vietnam) concern about China’s more aggressive stance in the South China Sea may have contributed to the declining confidence.
Chart 3: Who do you have the most confidence in to champion the global free trade agenda (Laos’ respondents)
State of Southeast Asia Survey reports from 2020-2023
Chart 4: Who do you have the most confidence in to provide leadership to maintain the rules-based order and uphold international law (Laos’ respondents)
State of Southeast Asia Survey reports from 2020-2023
Impact of China-US Rivalry on Laos
If ASEAN were to align itself with one of the two strategic rivals (the US or China), an overwhelming majority of Laos respondents, from 2020-2022, chose China over the US (Chart 5). However, in 2023, 58.1% of respondents chose the US, while only 41.1% of respondents chose China.
In the survey done in 2023, when asked about seeking out “third parties” to hedge against the uncertainties of the US-China strategic rivalry, the biggest group of Laos’ respondents (42.1%) chose the EU while Japan (18.7%) and Australia (16.8%) were in the second and third places respectively.
Chart 5: If ASEAN were forced to align itself with one of the two strategic rivals, which should it choose? (By Laos’ respondents)
State of Southeast Asia Survey reports from 2021-2023
Summary of Findings
The findings have revealed that while China continues to have some degree of influence over Laos politically and economically, its influence has declined, particularly between 2022 and 2023. Confidence in China as a global leader to promote free trade or to uphold a rules-based order has also declined among Laos’ respondents. China’s COVID restrictions on borders and suspension of Laos’ exports have affected Laos’ businesses and farmers.[15] As such, there is a growing sentiment in the preference among respondents for middle powers, particularly the EU and Australia, to play a greater leadership role. Confidence in ASEAN has also increased with regard to its economic role in the region following the entry into force of the Regional Comprehensive Economic Partnership (RCEP) in January 2022 and the diversification of production sites from China to Southeast Asia as a result of the intensifying US-China rivalry. Economic growth in neighbouring countries including Thailand and Vietnam has resulted in an increase in their trade and investment with Laos.[16]
In the 2023 survey, when asked what could potentially worsen Laos respondents’ positive impression of China, the majority chose “China’s interference in my country’s domestic affairs (including influence over the ethnic Chinese citizens of my country)” at 56.7% and “China’s use of economic tools and tourism to punish my country’s foreign policy choices” (43.3%). This demonstrates that the growing presence of China in Laos may inevitably lead to concerns over domestic interference.
Apart from the trends in major powers’ influence and rivalry, Laos’ respondents have generally displayed neutrality (significantly above the regional average) in their outlook toward regional and international developments. This includes indicating the “neutral”, “not sure” or “no comment” options in questions relating to the Myanmar crisis, tensions in the Taiwan Strait, the Quadrilateral Security Dialogue (QUAD), the Indo-Pacific Economic Framework for Prosperity (IPEF), and China’s Global Security Initiative (GSI). This could possibly indicate a passive or neutral stance of Laotians toward global developments or a preoccupation with economic developments rather than political-strategic affairs.
LAOS’ MIXED VIEWS OF CHINA
It is without doubt that trade and investment relations between Laos and China have been growing. The two-way trade volume between the two countries was estimated to be US$4.15 billion in 2021, and increasing by approximately 20% yearly.[17] China accounts for more than 80% of Laos’ agricultural exports,[18] resulting in a trade surplus for Laos. China is also the main source of infrastructure financing in Laos. There are at least 815 projects funded by China (mostly under the BRI) to an amount of over US$16 billion since 1989.[19]
Among China’s infrastructure investments in Laos, the China-Laos railway is one of the most significant and controversial projects, considering its hefty price tag of US$6 billion.[20],[21] As a result of Laos’ significant reliance on China’s infrastructure financing, its total debt exposure to China (the largest single bilateral lender) is estimated to be approximately US$12.2 billion or 64.8% of its GDP,[22] resulting in some observers accusing China of ‘debt trap’ diplomacy.
In the past two years, rising debt is further exacerbated by the impact of the COVID-19 pandemic, inflation, and the rapid depreciation of the local currency the Lao Kip (more than 45% against the US dollar) making Laos’ debt repayment more expensive and putting the country at risk of defaulting. As a result, the public has expressed concerns[23] for fear that its sovereignty could be implicated in the case of compromising lands or national assets for debt repayment.
However, despite the growing debt, these infrastructure loans are generally viewed as necessary to expedite Laos’ economic development and trade. The China-Laos railway for example could be Laos’ best bet to boost its connectivity to turn its unfavourable land-locked status into a land-linked status with the second largest economy in the world. It is expected to boost the country’s GDP by US$81.63 million[24] (cost of freight to reduce by more than 30%) and tourism from China by at least 20%.[25] Apart from enhancing its connectivity with China, the railway with its ‘dry port’ is expected to be linked to the Greater Mekong Subregion[26] so that Laos can be an important logistics hub within continental Southeast Asia. This will not just boost its economic performance but also increase the people’s confidence in the Lao People’s Revolutionary Party.[27]
Another controversial development in Laos is the growing number of hydropower dams[28] built under the BRI which have the potential to turn Laos into the “battery of Southeast Asia”. While sustainable energy is sought after by the region, there are concerns over safety,[29] environmental damage[30] and livelihoods, including the potential effects on downstream states (Cambodia, Thailand and Vietnam), as well as worries about China’s increasing control over Laos’ energy resources. The China Southern Power Grid Company has a majority share under the Électricité du Laos Transmission Company Ltd and can effectively control the electricity export of Laos under a 25-year concession agreement.[31] Other concerns include the erosion of Laos’ social fabric due to these developments as well as local businesses being taken over by Chinese nationals who are not able to converse in the Laotian language.[32]
As such, while there are clear economic benefits brought about by China, there are also rising concerns and pushback against China’s growing presence and influence in Laos. Some scholars have noted that if Laos’ dependence on China increases, it could lead to China’s interference in the domestic affairs of Laos.[33] This has also been indicated as Laos’ top concern in the State of Southeast Asia Survey.
There are however views that Laos’ interest in China goes beyond economic interest. Danielle Tan[34] has noted that Laos’ reliance on its external environment, especially China, could be a deliberate strategy to put regional powers in competition with one another in order for the country to avoid being drawn into the orbit of just one of them (China, Vietnam or Thailand), and to enhance its bargaining powers with investors. As such, playing Vietnam against China helps promote Laos’ autonomy and independence.
BEYOND CHINA’S INFLUENCE IN LAOS
While China is an important partner for Laos, it is certainly not its only partner. Political, economic and cultural ties with several countries shape Laos’ foreign relations. It has been observed that Laos has an impressive track record when it comes to balancing the interests of competing diplomatic partners.[35]
According to the Lowy Institute Asia Power Index 2023 Edition (Chart 6),[36] China’s influence in Laos may be significant but it is not the top influencer in particular categories including trade and investment, diplomatic and defence dialogues, arms trade, online search interest, foreign media flows, and travel destinations. Thailand comes out tops in trade and investment as well as other aspects of soft power influence including online search interest and travel destination. Where arms trade is concerned, Russia overtakes China as the leading arms exporter to Laos.
Vietnam, on the other hand, has the greatest influence in diplomatic and defence dialogues as well as foreign media flows. Laos’ relations with Vietnam continue to enjoy primacy at the political level and the Lao Peoples’ Revolutionary Party (LPRP) maintains high level relations with the Vietnamese Communist Party (VCP).[37] The two countries have practised “twinning” or “sister province” arrangements since the beginning of their diplomatic ties (a socialist form of para-diplomacy between local authorities),[38] including increasing transport connectivity between cities. Such efforts to interweave Vietnam[39] and Laos beyond any prospect of delinking cannot be replicated or diminished by China’s rise.[40],[41] An interview by the author with Laotian government officials also noted that the government and the LPRP conduct monthly visits to Vietnam, a practice that is not carried out with any other countries including China.
Chart 6:
Source: Lowy Institute Asia Power Index 2023 Edition[42] (data selected and arranged by author)
CONCLUSION
China’s relations with Laos are expected to expand because of the growing economic linkages between the two countries. However, an increasingly assertive China and the deepening of US-China rivalry will place greater pressure upon Laos to move towards neutrality or to increase its reliance on ASEAN and its member states, or middle powers such as the EU, Australia, Japan and South Korea.
Statistics have shown that although China has some degree of influence over Laos, it is not controlling the country. State of Southeast Asia survey findings have also revealed that the prevailing attitude in Laos with regard to major powers’ regional influence is shifting away from China, particularly in the past year.
Greater autonomy will certainly bode well as Laos assumes the ASEAN Chairmanship next year. It will then have a chance to play a leadership role in the region, deepen relations with all major powers and further diversify its relations.
ENDNOTES
For endnotes, please refer to the original pdf document.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
2023/54 “Singapore – Malaysia Economic Ties: Recovering from COVID-19” by Pritish Bhattacharya and Francis E. Hutchinson
EXECUTIVE SUMMARY
- Geographical proximity, historic links and comparable outward orientation make Singapore and Malaysia natural trading partners. As seen from a number of matrices, the two nations depend on each other for a range of key goods and services.
- However, this complementarity is easy to take for granted and really only dates from the mid-1980s, when the two countries adopted similar economic policy frameworks. The relative importance of each country to the other has since remained very significant – in the midst of a structural shift to China as Southeast Asia’s foremost trading partner.
- While the COVID-19 pandemic struck both nations in similar ways, it affected different aspects of their relationship differently. Recent data indicate, however, that the various components underpinning the economic alliance are recovering at varying speeds.
- The imposition of cross-border restrictions nearly eliminated the movement of people between the countries. This had very severe consequences for a range of businesses that depend on travellers and tourists. But, statistics from late 2022 indicate a strong recovery which, while not yet at pre-pandemic levels, is trending upwards.
- Conversely, the movement of goods between the two nations remained completely unaffected during the outbreak. Prompt and dynamic measures by the authorities on both sides ensured that the flow of goods, from semiconductor components and machine parts to cut flowers and ornamental fish, continued unabated.
- Bilateral trade in services suffered a temporary setback, with the trade value stagnating throughout 2020. However, in 2021, growth continued in a positive direction, given notable improvement in selected services that could be offered virtually.
- Cross-border investments present a more mixed picture. Even though investment flows were largely immune to the vagaries of the crisis, Malaysia’s FDI to Singapore has plateaued. In contrast, Singapore’s investment into Malaysia is on an upward trajectory.
- With COVID-19 behind us, the Singapore – Malaysia trade relationship appears encouraging. Recent agreements in areas such as digital economy and green technology have been signed by the leaders of the two countries. Progress towards the Rapid Transit Service between downtown Johor Bahru and Woodlands will further add impetus to trade and travel between the two neighbours.
* Pritish Bhattacharya is Senior Research Officer in the Regional Economic Studies Programme, and Francis E. Hutchinson is Senior Fellow and Coordinator of the Malaysia Studies Programme, both at the ISEAS – Yusof Ishak Institute.
ISEAS Perspective 2023/54, 14 July 2023
INTRODUCTION
The depth of the economic intertwining between Singapore and Malaysia remains unrivalled in ASEAN. Forged by proximity and strengthened by historical, cultural and familial ties, such linkages have been crucial to the development of both countries.
These multi-layered interconnections are easy to take for granted. Following the separation of Singapore and Malaysia, the adoption of fundamentally different economic models and relatively low levels of interchange meant limited compatibility during the subsequent two decades. This changed in the mid-1980s, when Malaysia began focussing more on manufacturing and lowered its trade barriers. Ensuing negotiations on bilateral issues and certain joint projects, such as the SIJORI Growth Triangle, not only led to the creation of supply chains across both countries, but also helped overcome their historical misgivings.1
Today, the two countries operate symbiotically. Not only is Singapore now home to over a million Malaysians, hundreds of thousands of people cross the Johor – Singapore Causeway every day for work or for leisure. Singaporeans consume fresh produce from Malaysia, and many businesses in the southern part of Malaysia depend on tourists from the other side of the border. Both countries trade in highly specialised services and enjoy a steady and sustainable investment partnership.2
The COVID-19 pandemic was an unprecedented systemic shock to the economic relations between the neighbouring nations. The imposition of expansive restrictions on the movement of people across the border to stop the spread of the virus was the first jolt. Binational families, daily Causeway commuters and firms unable to switch to remote operations were the first victims of the stay-at-home orders. COVID-related measures also inflicted massive costs on transport and logistics services that underpin cross-border production. Tourism and recreational sectors in both countries underwent deep contractions.
A brief timeline of the border restrictions elucidates the pandemic-induced tumult. In March 2020, Malaysia announced a sweeping Restricted Movement Order (RMO). Three weeks later, Singapore’s circuit breaker measures were enforced. In June, both countries set up reciprocal travel lanes for essential business. This continued until November 2021, when vaccinated travel lanes were agreed upon. But it was only in April 2022 that all travel-related COVID-19 testing requirements were lifted. Dynamism is now, finally, returning to many of the sectors that depend on greater cross-border activities.
The recovery process, however, has been hampered by the ongoing Russia – Ukraine war. Although ASEAN’s exposure to either country remains limited, the spillover effects of a pan-European downturn cannot be ignored. Increasing energy prices, food and fertiliser inflation, and supply disruptions, among other externalities of the continued conflict, add to the cost of doing business for all Asian economies, including Singapore and Malaysia.
This Perspective seeks to understand the impact of the COVID crisis on the economic ties between Singapore and Malaysia. It analyses historical trends as well as recent data to see how the different aspects of the relationship were affected and what the near-term outlook is likely to be. The next section looks at the cross-border movement of people, while the subsequent sections examine the movement of goods, trade in services, and direct investment between the two countries. We end with a short- to medium-term outlook.
MOVEMENT OF PEOPLE: GRADUAL RECOVERY
Singapore and Malaysia’s proximity, shared history and overlapping socio-cultural relations have led to robust and enduring people-to-people ties between them. This is corroborated by statistics related to their citizens’ residential status and employment opportunities. In 1980, for instance, 120,104 Malaysians lived in Singapore. Exactly three decades later, this figure had tripled to around 385,979.3 According to Malaysia’s Human Resources Minister, in 2022, the number of Malaysians residing in their neighbouring city-state had reached 1.13 million.4
Malaysians also make up a significant portion of Singapore’s workforce. According to the Malaysian Employers Federation (MEF), close to 900,000 have secured full-time employment opportunities in Singapore, and a third of them cross the Causeway every day.5
The territorial adjacency of the two nations also presents myriad tourism opportunities. In fact, Singapore is the largest source of tourists going to Malaysia. In 2019, Malaysia recorded close to 10.16 million tourist arrivals from the island republic – more than the combined arrivals from China, Hong Kong, Japan, the US and all of Europe (Figure 1).6
However, the scenario changed dramatically once the pandemic hit. The COVID-transmission pattern was similar in Singapore and Malaysia. After several weeks of single digit rises, the number of active infection cases began climbing exponentially in early 2020. To stem the spread of the outbreak, on 16 March, Malaysia’s then Prime Minister Muhyiddin Yassin announced an extensive RMO, which barred citizens from travelling overseas and foreign visitors from entering the country. On 7 April, Singapore initiated its own cordon sanitaire phase in the form of the circuit breaker measures. Almost overnight, the daily passage of commuters across the Causeway – the world’s busiest land border crossing – plummeted from over 300,000 to virtually zero.7
Besides land travel, the scale of the economic turmoil was also evident in the aviation sector. In 2018, the air route linking Singapore and Kuala Lumpur was declared the busiest in the world, with a capacity of 4 million seats served by an average of 84 daily flights.8 At the height of the pandemic, in 2021, the number of flight services dropped to just six per day.9
The dual nation-wide lockdowns wreaked havoc on Malaysia’s tourism sector. Leisure-related operators in Peninsular Malaysia’s southernmost state of Johor were hit the hardest, given their heavy reliance on cross-border activity and visitors from Singapore. These included carwash outlets, money exchange shops and hair salons, many of which did not survive COVID. According to the Johor Bahru Chinese Chamber of Commerce and Industry, the local food and beverage and entertainment sectors suffered grave losses, with an estimated 40 per cent of bars and nightclubs shutting down.10 By late 2020, several landmark hotels in Johor had closed for good, as the average occupancy rate reached a record low of 27 per cent.11 As a result, over 15,000 Malaysians – mostly residents of Johor – were laid off.12
In 2021, when only essential travel was permitted, a mere 16,308 visitors from Singapore landed in Malaysia, or 1.6 per cent the figure recorded two years earlier. Although large-scale vaccination efforts and diplomatic travel channels helped raise the tally to 5.22 million in 2022, this was close to the number of tourist arrivals from the city-state in the year 2000.13 At this rate, it may take up to four years for Malaysia to reach pre-COVID levels of visitors. The situation is exacerbated by the economic slowdown in China, the country’s second largest source of tourists.
Although the flow of tourist arrivals in Singapore is structured differently from that observed in Malaysia (the former enjoys a more even distribution of tourist source countries), its tourism industry could not escape the devastating impact of COVID-19 either. As many as 1.22 million travellers from Malaysia reached Singapore in 2019, but in 2021, this nosedived to 24,217, or 2 per cent of the 2019 statistic. But thanks to dynamic public health interventions, this number jumped to 590,958 last year (Figure 2).14 Additional efforts to ramp up Singapore’s recreation industry and prop up its hospitality industry are expected to facilitate total recovery of the tourism sector by 2024, according to the Singapore Tourism Board (STB).15
Another major, although indirect, casualty of the prolonged disruption to the movement of people between Singapore and Malaysia has been the latter’s real estate sector. The impact was felt most acutely in Iskandar Malaysia, Johor’s flagship development corridor. Established in 2006 and backed by Khazanah Nasional, the region was supposed to transform into a special economic zone focussed on specialised sectors by 2025. Along with massive inflow of foreign investment, Iskandar Malaysia also witnessed rapid growth in the residential and commercial property market. But the overwhelming magnitude and duration of the pandemic resulted in the state being left with a huge stock of unsold homes. Indeed, in September 2022, when the value and volume of transactions in the real estate segment dipped by as much as 30 to 50 per cent, Johor accounted for 17 per cent of the national property overhang. Be that as it may, recent projections indicate a rental rebound to pre-pandemic levels in 2023.16
The COVID-inflicted decline in Malaysia’s property segment was matched by a parallel upswing in Singapore’s rental market. As more Malaysian workers, especially those employed in the city-state’s construction sector, decided to temporarily shift base to Singapore, reports of landlords quoting excessively heavy prices for accommodation close to industrial areas began appearing on various news outlets.17 This had a detrimental impact on not only the workers but also the construction firms. But unlike Malaysia’s case, the republic’s overall trend of increase in rents – of up to 70 per cent – has yet to reverse.18
TRADE IN GOODS: ONWARDS AND UPWARDS
Although both countries pursued distinct modes of economic development during the early years following their independence and separation (Singapore relied on exports and FDI to generate growth, and Malaysia opted for import substitution), they became more integrated during the mid-1980s, when their strategies converged. Over the course of four decades, the scale and scope of goods trade between the adjoining nations has increased manifold, and each has emerged as the other’s second largest trade partner since the turn of the century.19
The steadfastness of the trade ties was clearly demonstrated during the three COVID-19 years. Defying expectations, the tight restriction on the movement of people across the Causeway and the Second Link at Tuas did not perturb trade in goods. As a matter of fact, within days of the RMO announcement, policymakers from both countries released statements assuring sustained cooperation throughout the outbreak. The first pronouncement came from Singapore Prime Minister Lee Hsien Loong in March 2020, who posted on Facebook that he had received confirmation from his Malaysian counterpart on the continued flow of goods, farm produce, pharmaceuticals and industrial supplies between the neighbouring nations.20
As the pandemic protracted, more such declarations followed. For example, the Singapore – Malaysia Special Working Committee on COVID-19 was announced in March 2020.21 In May 2021, the commitment to maintain the exchange of goods and supplies across the border was reiterated during Malaysia’s imposition of full movement control order (FMCO).22 Then, in April 2022, leaders from Singapore and Johor announced extended bilateral cooperation in the areas of transport, food safety and security, logistics and economic collaboration.23
This absence of any discernible effect on trade in goods between the two countries can be attributed to two principal factors. First, Singapore and Malaysia have, over the years, invested significant resources to build sophisticated and resilient logistics networks, ensuring local businesses speedy fulfilment and shorter response times to cater to cross-border demand despite disruptions. And second, by and large, both countries act as regional distribution centres for major electronic products, and their ultimate end markets for such goods are mostly overseas.
This brings us to an often-ignored facet of the goods exchanged between Singapore and Malaysia. In sharp contrast to popular perceptions that trade between the two countries is composed largely of fresh vegetables, fruit, chicken, food items and clothing, Singapore exports a diverse range of highly specialised goods to Malaysia. These include refined petroleum and related by-products; integrated electronic microcircuits and components of electrical and electronic consumer goods; and chemical products and polymers. Its imports from Malaysia are made up of similar items, given the island’s hard-earned re-export economy status.24
In other words, the trade between the two countries is essentially part of regional production networks in electrical and electronic goods. And, as Malaysia’s manufacturing capabilities improve, demand for intermediate goods from Singapore will continue to rise. In fact, the relative importance of the various categories of goods traded between the countries has barely changed even after the pandemic (Tables 1A and 1B).
The robustness of this trade relationship is underlined by the fact that the overall quantum of their bilateral trade during the pandemic was higher than that achieved before COVID-19 (Tables 2 and 3). Electronic exports from Singapore to Malaysia rose sharply on account of the burgeoning demand for semiconductors (for integrated circuits, telecommunications equipment, and diodes and transistors).25 And, since Malaysia routes a fifth of its global export of integrated circuit products via Singapore, this exchange was largely reciprocal.26
Cross-border trade in medical goods was also a key contributor. While the city-state supplied Malaysia with key biomedical products (including instruments and appliances used for medical and surgical purposes), its import of protective garments and vulcanised rubber gloves manufactured in Malaysia increased two to three times between 2019 and 2021.27
Another noteworthy trend that persisted throughout the health crisis was the increasing importance of China as the main trading partner for both countries. Since the new millennium, the People’s Republic has managed to supplant Singapore’s as well as Malaysia’s traditional trade markets such as the US, Japan and the EU. Apart from the locational advantage, China’s growing trade dominance can be ascribed primarily to its highly integrated global value chains and, to a lesser degree, to its strong desire to maintain an indispensable presence in ASEAN.
TRADE IN SERVICES: GROWING AGAIN
The modern conception of services is derived largely from the General Agreement on Trade in Services (GATS), a key treaty of the World Trade Organization (WTO). As members of the WTO, both Singapore and Malaysia extend the principle of most favoured nation (MFN) to the other country. However, unlike for goods trade, data on trade in services cannot be compiled easily. Services are not only intangible but also heterogeneous, thanks to the rapid advances in information and communications technology (ICT).
Prior to the pandemic, Singapore’s services trade saw healthy growth that outpaced that observed in merchandise trade. In 2019, for example, Singapore exported around US$5.67 billion worth of services to Malaysia, while imports were valued at US$2.8 billion.28 Notable services transacted between the two countries included travel, transportation, construction, insurance finance, and royalties and license fees.
These values stagnated in 2020 with the onset of COVID. While the exchange of travel services plunged because of the stringent border closures, certain services such as telecommunications, computer and information services and financial services recorded gains, as these could be delivered by virtual means to clients. Collectively, the trade volume plateaued for the year (Figure 3).
In 2021, Singapore’s services exports to and imports from Malaysia rebounded to US$6.6 billion and US$3.6 billion, respectively.29 The recovery was driven by the continued growth of the business services, charges for the use of intellectual property, as well as financial services. Travel services, though still subdued, managed to make reasonable gains, thanks to travel bubbles and strong cargo demand in key segments such as e-commerce, pharmaceuticals and electronics.
Recent examples of services trade between Singapore and Malaysia are included in the Appendix (AP1).
CROSS-BORDER INVESTMENT: MIXED MESSAGES
Singapore consistently features among Malaysia’s primary sources of foreign direct investment (FDI) as well as its prominent destinations of direct investment abroad (DIA).
The innate compatibility between both economies is credited with the upward trend of inward FDI from Singapore to Malaysia, even when COVID peaked in the region (Figure 4). Specifically, firms in the city-state consider their immediate neighbour a reliable destination for investments because of several favourable factors. These include Malaysia’s robust financial regulation mechanisms that permit repatriation of capital, interest, dividends and profits; the availability of affordable and trainable workforce; a sizeable domestic market; and the country’s key position in regional and global supply chains. As a result, FDI from Singapore to Malaysia rose from US$6.9 billion in 2019 to US$9.8 billion in 2022.30
Malaysia’s unique value proposition has also attracted significant investments from the US and from European countries, which collectively account for the largest regional share of inward FDI. Lately, China has also emerged as an important source of FDI, but its investments, like those from Japan, have displayed significant volatility over the past decade.31
Outward FDI from Malaysia to Singapore, on the other hand, has remained relatively low but steady for around a decade, rising from US$25.1 billion in 2012 to US$34.3 billion in 2022 (Figure 5).32 The key reason behind the more measured annual increments may lie in the long-held preference among Malaysian government-linked companies (GLCs) for investments in the primary sector, especially the oil palm segment, and in mining and quarrying activities, including offshore oil and gas operations.
However, the recent rise of private players, coupled with the country’s overall international competitiveness, has led to noticeable diversification of the investment portfolio, with greater capital infusion in the financial services, banking and telecommunications sectors.33 This points to optimistic prospects for more Singapore-bound FDI from Malaysia in the future.
Upon analysing Singapore’s chief FDI sources, another interesting pattern comes to the fore. Even though the country has witnessed a gradual shift in goods trade away from Europe, Japan and the US, the volume of investments from these countries outstrips that from China. In 2021, the US was Singapore’s largest investor, having cumulatively injected some US$445 billion into the island. This was almost double the investments received from the EU sans the UK (US$231 billion). While historically very significant, Japan’s investments in Singapore are now close in value to those from China and Hong Kong.34
Several recent instances of major investment flows between Singapore and Malaysia are mentioned in the Appendix (AP2).
OUTLOOK
Singapore and Malaysia share a complementary and reciprocal economic relationship. Even though the initial fallout of the coronavirus outbreak appeared more or less identical in both countries, the various components underpinning their partnership were affected differently.
Despite the underlying commonalities in geography, history and culture, the Singapore – Malaysia connection began blossoming only during the 1980s. The analysis conducted in this Perspective suggests that their ties have strengthened considerably over the past 40 years. This has been frequently echoed by the leaders of the two countries, the latest being in January 2023, when Anwar Ibrahim made his first official visit to Singapore as Malaysia’s Prime Minister. Aside from highlighting the significance of the open supply chains for goods, services and later vaccines during the COVID years, he and Singapore Prime Minister Lee signed agreements on the digital and green economies, and a memorandum of understanding on cooperation in areas of personal data protection, cybersecurity and digital economy.35
The visit was subsequently followed by a bilateral meeting of the Malaysian and Singaporean transport ministers, immediately generating news of a possible revival of the Kuala Lumpur – Singapore High Speed Rail (HSR) project. However, the current consensus is that neither government is ready to invest in the project at the moment. Conversely, the Johor Bahru – Singapore Rapid Transit System (RTS) Link project is on track to be completed by end 2026. The joint venture cross-border metro system will link to public transport networks on either side and will enable 10,000 commuters to travel in each direction every hour. Through providing an alternative means of crossing the border, the RTS can alleviate peak hour congestion on the Causeway, as well as enable factories to schedule their shifts more adaptively.
A related joint development proposal in the pipeline is the Johor – Singapore Economic Region (JSER). Informally announced in May 2023 and still at the ideation stage, the initiative is aimed at utilising the Malaysian state’s proximity to the republic to set up a corridor to facilitate not just movement of human resources and commodities but also substantial cooperation in niche areas of mutual interest such as semiconductors, renewable energy and telecommunications.36
With COVID-19 essentially behind us, Singapore – Malaysia economic ties are returning to their natural state. The proximity, trust and compatible economic frameworks make the partnership between the two countries very fruitful. The pandemic was a critical juncture that shook the foundations of this relationship, but the natural complementarities, as well as consistent work by the authorities on both sides enabled trade in goods and services to proceed uninterruptedly, and the movement of people to resume as quickly as possible. Looking forward, we can expect further progress on the various aspects of this relationship.
APPENDIX
AP1: Trade in Services (Recent Examples)
AP2: Cross-Border Investment (Recent Examples)
ENDNOTES
For endnotes, please refer to the original pdf document.
| ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute 30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735 Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ | ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed. Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission. © Copyright is held by the author or authors of each article. | Editorial Chairman: Choi Shing Kwok Editorial Advisor: Tan Chin Tiong Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha Managing Editor: Ooi Kee Beng Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng Comments are welcome and may be sent to the author(s). |
2023/53 “Rice Production and Food Security in Southeast Asia under Threat from El Niño” by Elyssa Ludher and Paul Teng
EXECUTIVE SUMMARY
- 2023-2024 is now officially an El Niño year. This typically brings drought and warmer temperatures to Southeast Asia, just as the region is in the process of recovering from record-breaking heat waves. The last two “very strong” El Niño events – in 1997-98 and 2015-16 – impacted food crops and livestock in Southeast Asia and caused a notable decline in rice production. This contributed to global inflation in the price of rice of up to 16 per cent.
- Experts are projecting that El Niño will strengthen towards the end of 2023 and early 2024, affecting winter and spring rice production. Rice losses may also be exacerbated by suboptimal harvests due to harsh weather conditions and spoilage due to poor storage infrastructure.
- Countries are already responding by updating policies and interventions: Thailand and Vietnam – both major rice exporters – are projected to reduce rice production in the 2023-24 season, even as major producers (and consumers) China and India experience production losses due to extreme weather conditions.
- Rice is key to the region’s food security, and a decline in supply will affect domestic food security in numerous countries, leading to malnutrition and health impairment.
- The region has already adopted early warning systems, irrigation plans, and disaster preparedness plans. More can be done, including educating consumers on staple diversification to drought-resilient crops, increasing rice reserves, strengthening community-based food security, maintaining open rice trade, and facilitating inter- and intra-regional exchange and collaboration on effective action and rice research. The impacts of El Niño have been proven to persist beyond the El Niño year, and authorities and communities should prepare for a prolonged recovery, particularly in agriculture.
* Elyssa Ludher is Visiting Fellow and Professor Paul Teng is Associate Senior Fellow at the Climate Change in Southeast Asia Programme at ISEAS – Yusof Ishak Institute, Singapore. Professor Teng is also Dean and Managing Director of NIE International, Nanyang Technological University Singapore.[1]
ISEAS Perspective 2023/53, 12 July 2023
INTRODUCTION
The climate phenomenon of El Niño is typically associated with drought and warmer temperatures in Southeast Asia, but also with floods and typhoons globally. It has had an outsized impact on agriculture, particularly rice.
On 8 June 2023, the National Oceanic and Atmospheric Administration (NOAA) officially declared that El Niño conditions had been observed, indicating that 2023-24 will again be an El Niño year.[2]
The last El Niño event, 2015-2016, recorded the hottest year on record and affected 60 million people globally;[3] in Southeast Asia, the warmer temperatures and prolonged drought resulted in an output decline of 15 million tonnes of rice compared to the preceding two years.[4] In Vietnam, the drought, excessive groundwater withdrawals, and subsequent saltwater intrusion up to 90 kilometres into the Mekong Delta and its rice fields resulted in an estimated loss of US$674 million, or 0.35 per cent of its GDP. [5] [6] In the Philippines, close to 200,000 rice and corn farmers were affected, sparking riots[7] and resulting in an 11 per cent drop in production compared to 2014.[8] These disruptions resulted in the global price of rice increasing by 16 per cent.[9] Elsewhere in Southeast Asia, El Niño resulted in reservoirs drying up, forest and peatland fires, and widespread haze.
While the strength of the 2023-24 El Niño event is yet unknown, the unprecedented ocean warming since the early months of 2023 could result in record-breaking temperatures in 2024.[10] Analysts are predicting a shortfall in rice production; one foretelling the worst shortfall in 20 years, surpassing the shortfall in 2015-2016.[11] This shortfall affects the amount of rice available for domestic consumption. The reduction in surpluses for export will affect all major rice importers in Southeast Asia, which includes Indonesia, the Philippines, Malaysia, and Singapore.
Rice is key to food security as Southeast Asians receive more than 76 per cent of their caloric intake from rice.[12] As the saying in many parts of Southeast Asia goes: “it’s not a meal without rice”. Loss of rice will thus impact food security, specifically causing malnutrition and health impairment. Action is needed to prepare for this probability.
This Perspective provides some insights into the potential impact of El Niño on rice production and food security in Southeast Asia, and suggests actions that can be taken to enhance agri-food resilience in the short and long term.
EL NIÑO’S IMPACT ON RICE PRODUCTION IN SOUTHEAST ASIA
What is El Niño?
El Niño is a climate phenomenon that naturally occurs every two to seven years. [13] It is caused by the warming of sea surface temperatures in the Pacific Ocean, which alters rainfall and surface winds, that in turn change ocean currents and sea surface temperatures. El Niño typically lasts a year, though every El Niño event is different. An El Niño event is declared when sea surface temperatures in the tropical eastern Pacific are above the long-term average. El Niño conditions are monitored using the Nino3.4 index, and the event is determined when the threshold value for Nino3.4 index (average of SST anomalies over the region 5N-5S, 120W-170W) is above 0.65 °C, based on the 3-month average value for 5 or more consecutive months.[14]
During El Niño, surface air pressures are higher than normal over Southeast Asia, creating drier conditions that increase the risk of smoke haze from land and forest fires in the region. With warmer temperatures typically following drier periods, droughts and heatwaves may become more common, depending on the intensity of El Niño event. While El Niño is not a result of climate change, climate change is believed to amplify its impacts.[15]
El Niño and its impact on rice production
Rice production, like most of agriculture, is highly dependent on favourable climate. The recent heat wave from March to May 2023 – when temperatures rose above 45 degrees Celsius in Thailand, Myanmar, and Laos, and above 40 oC in Cambodia, Vietnam, and Malaysia[16] – delayed the rice planting season. El Niño is expected to prolong the warm, dry weather in mid-2023 into mid-2024, causing plants to experience heat stress, which impacts growth and ultimately, yield.
Just as humans can experience heat cramps, dehydration or heat stroke, plants too experience debilitating effects.[17] Heat stress causes water loss, delayed growth, reduced pollination, impaired seedling or root growth, withered or yellow leaves, reduced tiller (grain bearing branch) number, and seedling death in plants.
Generally, temperatures above 33 ᵒC have commonly resulted in rice yield reductions.[18] One study by the International Rice Research Institute (IRRI) in the Philippines has found that for every 1 oC increase in average night-time temperatures during the dry season, there has been a corresponding 10% yield loss on average.[19] With El Niño likely bringing record-breaking temperatures, yields are expected to be reduced.
Much research has been dedicated to developing thermoresistant and drought resistant strains. Key research centres in Southeast Asia include the IRRI, the Indonesian Centre for Rice Research (ICRR), Vietnam Academy of Agricultural Sciences (VAAS), and the Thai Rice Department’s 28 rice centres. Research to develop climate-resilient varieties is important as heat stress’s effects on rice yields are dependent on the timing (when it happens), severity (how high the temperature and humidity levels are) and duration (how long it lasts) of the heating event during the growth and developmental stages of the crop.[20] For example, the optimum temperature for rice at seedling stage and germination is 25-28°C[21] and 28-30°C[22] respectively, and temperatures above that reduces yield—for example by increasing sterility, delaying flowering, and shortening fertilisation periods.[23] Heat stress at later (grain filling) stages reduces starch accumulation and may increase chalkiness in grains (presents as reduced translucence of rice and milling quality).[24] [25] The impact is not only on quantity of rice produced, but also the quality of rice – lower grade rice attracts lower commercial values – resulting in economic losses for farmers. Any genetic improvement in rice varieties therefore needs to address all stages of the plant’s development.
The various eco-geological race of rice also responds to heat stress differently. As compared to Japonica rice, Indica rice is more heat-tolerant and suitable for high-temperature environments.[26] Indica rice is the dominant rice grown in Southeast Asia (Jasmine, Phka Rumduol and other fragrant and non-fragrant varieties), while Japonica rice (short grain) is mostly grown in the highlands of the region, though a tropical derivative—the Javanica—is popular in Indonesia. Abnormally warm temperatures in highlands can thus have a greater impact on rice yields than on yields in lowlands.
Figure 1: Typical timing of rice cropping seasons for the 5 top rice producers, and their trade quantities, in Southeast Asia (colours denote different seasons). Heat stress at the different stages of growth and development of paddy has corresponding impacts on grain development – and eventual yields – of the crop. (Source: FAOStat, Global Yield Gap; trade data refers to “Rice,paddy (rice milled equivalent)” in FAOStat)
Heat stress can be alleviated with irrigation. However, as El Niño results in reduced precipitation, there is little reprieve for rain-fed rice farms. Irrigated farms also face competing pressures on water use for residential, industrial or biodiversity needs.
Aside from impacting on yield, heat also increases spoilage. This is worsened by the lack of sufficient storage infrastructure in Southeast Asia, as well as destruction from pests and diseases which may become more prevalent in the warmer temperatures. It also impacts on farmers’ and those along the value chains’ productivity and ability to work, resulting in less-than-optimal output supply.
In the past, Southeast Asia’s rice production had been mainly impacted by El Niño events defined as “very strong”.[27] The 1997-1998 El Niño event reduced rice production in nearly every country in Southeast Asia, particularly in the Philippines.[28] However, overall production was buoyed by Vietnam’s production increase, resulting in the slight net increase in rice production between 1997-1998 over that of 1995-1996, by approximately 2 million tonnes.[29]
The 2015-2016 El Niño, however, was considered far more severe. Once coined the “Godzilla El Niño”,[30] it resulted in a decline of 15 million tonnes of rice compared to the preceding two years. The impact on agriculture, however, went beyond rice. In Vietnam, aside from the impact on rice, El Niño resulted in the loss of over 6,000 heads of livestock and damage to 70,000 hectares of aquaculture. Over two million people were impacted, 1 million of whom were left food insecure.[31] The Philippines too faced drought especially in the central and southern regions, resulting in a productivity decline in the fisheries sector by 20 per cent.[32] In Cambodia, it was estimated that 2.5 million people were affected by drought, and by loss of farmland and livestock.[33]
Figure 2: Rice production in Southeast Asia experienced dips, particularly in Indonesia, Thailand Myanmar, Philippines during “very strong” El Niño events. (Source: FAOSTAT, GGweather[34])
Implications for rice production for 2023-2024
Considering 2023’s record-breaking ocean temperatures,[35] El Niño could be considered “very strong” towards the end of the year. During this time, El Niño typically results in warmer weather in Thailand, Myanmar, Laos and North Vietnam, and warmer and drier weather in Indonesia, the Philippines, South Vietnam, Cambodia and Malaysia (See maps). Major rice cultivation zones all fall within the areas likely affecting winter and spring paddy seasons.
Figure 3: El Niño will impact nearly all of Southeast Asia’s rice growing areas, however the impact on the winter and spring rice will be more significant. (Sources of data for maps: NOAA[36] and Han et al[37])
Figure 4: Rice production in the major growing regions in the top 3 rice producing countries in Southeast Asia. Winter paddy likely to have the greatest yield reductions due to El Niño impacts. (Data sources: NSO Thailand, Vietnam General Statistics Office, Badan Pusat Statistik Indonesia)
It is thus anticipated that rice production, particularly winter and spring rice production, will decline as a result of El Niño. Southeast Asian countries are responding through policies and direct intervention. In May 2023, Thailand requested its farmers to cut 2023 rice planting to only the summer/autumn season to conserve water and avoid loss, and instead to switch to other drought-tolerant crops.[38] Vietnam has announced a plan to switch exports to higher quality rice, effectively cutting rice exports from the current 7.1 million tonnes to 4 million tonnes by 2030; the switch will happen gradually from 2023 onwards.[39] Indonesia has ordered the import of one million tonnes of rice from India to counter shortfalls and price inflation.[40]
The reduction in rice supply is coming at a risky time. The Russian invasion of Ukraine in 2022 had strained wheat supplies, raising global demand for rice. Extreme weather has also caused harvest losses in both of the world’s largest rice producers—China and India. India, the world’s largest exporter of rice, banned broken rice shipments and imposed a 20 per cent duty on rice exports in September 2022, due to a decline in production.[41]
Combined, India, Thailand and Vietnam account for more than half the global rice export (approximately 21, 6 and 5 million tonnes respectively in 2021).[42] Production declines will have huge implications on supply of rice not only in Southeast Asia but across the world.
STRIDES IN PREPARATION FOR EL NIÑO AND NEXT STEPS
Fortunately, Southeast Asia nations have learnt from past El Niño events, and have invested in preparedness, mitigation and risk reduction actions. Southeast Asian countries have developed national and local planning strategies to build risk-informed, resourced and coordinated systems.
Regionally, the ASEAN Specialised Meteorological Centre has further developed its early-warning meteorological capabilities. Other early warning systems have also been established, most recent of which is the regional Fire Danger Rating System (FDRS) in Malaysia in order to assess risk of fires and predict wildfire breakouts up to seven days in advance, and to help to mobilise resources for its prevention.[43] The system relies on 459 weather stations across ASEAN.[44]
As mentioned, efforts have also been made to develop drought-tolerant rice varieties. But more work is needed, and most farmers will not see its benefits in time. To address the projected drought, irrigation and water management plans have also been constructed. Thailand, for example, has developed a whole-of-country water management plan.[45] Malaysia has established a “war room” to monitor its reservoirs.[46] Vietnam is developing a drought response plan that extends until 2025 in case El Niño’s impacts extend for 3 years.[47] There is much each Southeast Asian country can learn from each other to improve domestic preparedness.
Other than the above, national safeguards are already in place to prepare for emergencies, including national rice stockpiles, integrated disaster risk management plans, and information broadcasting systems and communication means.
Still, more can be done. The following are a few examples of steps that can be taken to enhance food security.
- Educating consumers on staple diversification
With the likely rice shortfall, consumers may see higher rice prices and shortages. Often, rice alternatives exist, but it is consumers who are unwilling to switch. Consumer education is needed to diversify from dependence on rice. This is not commonly within the mandates of ministries of agriculture and should be taken up by agencies promoting food security and resilience, along with private sector, media, and even influencers, to produce a whole-of-society effort.
One promising substitute is cassava, which is drought tolerant and native to Southeast Asia. Historically, it was a staple; however due to past pro-rice policies, it is often now seen as an inferior food.[48] While it is still eaten widely in the region, few see it as a rice substitute. Cassava roots, however, have a lower glycemic index and are a rich source of fibre, vitamin C and other nutrients. Thailand, Indonesia, Cambodia and Vietnam are already major global cassava producers.[49] In Indonesia, at least one company has already processed cassava into a product that has the same texture and flavour as regular rice.[50] Innovations such as these need to be made more widely available to encourage consumers to see it as a viable substitute.
2. Increase rice reserves at country and regional levels
Most Southeast Asia countries have stockpiles, but these need to be increased or replenished.[51] At the regional level, ASEAN has established the ASEAN Plus Three Emergency Rice Reserve (APTERR) in 2011. This has calmed rice markets more than once since its establishment. For example, when the Philippines was experiencing rice hyperinflation due to supply shortage in 2008, Japan agreed to release its reserves, which then calmed markets.[52]
However, most experts agree that more can be done to bolster rice stockpile effectiveness and responsiveness. ASEAN rice surplus countries should be urged to contribute more of their share to APTERR, which now depends mainly on the “Plus Three” partners (China, Japan, and South Korea). ASEAN could also consider upgrading its shared stockpile database to a real-time system for better coordinated and quicker response times. This is to ensure that it is able to meet its purpose even as multiple shortages occur.
3. Strengthen community-based food security
The impact of El Niño is often a slow-burning issue, as opposed to a disaster such as a one-time extreme storm event. As a result, while impacts are widespread across cities, villages and towns simultaneously, they are often patchily addressed. It is thus necessary to involve more community-based organisations that are able to identify and address distress in a timely manner and work with local government and civil society groups. Akin to the Covid-19 period, it is likely that more volunteer organisations will arise to serve communities when needed. Communities should also work towards resilience by building up community- and household-based farming projects to promote self-reliance, and to reduce exposure to potential food inflation.
As such, governments should regularly stocktake and register formal and ad-hoc community organisations, and maintain a close and cooperative relationship. In turn, these organisations should not only be urged to provide services, but also to capture and relay data and information back to government aid agencies. This would enable more effective aid provision.
4. Maintain open rice trade
Food trade restriction policies, such as export bans and taxes, have been effective in stabilising domestic markets[53]. However, they have often had the negative effect of destabilising regional and global supply and markets. Export restrictions cause panic, leading to price surges and supply chain breakdowns. A domino effect tends to contribute to price spikes for other products, resulting in overall food price inflation, ultimately hurting all consumers. Furthermore, the Food and Agriculture Organisation (FAO) has found that export restrictions often result in lower incomes for farmers, reduced production, a decline in investment, loss of global market share to competitors, decreased foreign exchange revenues and reputational damage.[54]
In 2020, in response to COVID19 supply chain disruptions, ASEAN released a statement that it would maintain open food markets, to enhance resiliency and sustainability of supply chains an promote food security.[55] It is hoped that in the face of likely rice production decline, ASEAN nations will continue to maintain open food supply chains.
5. Facilitate inter- and intra-regional collaborations and rice research
As Southeast Asian nations enter this period of climatic and food uncertainty, they could promote a culture of effective action-sharing and coordination on efforts to mitigate and adapt to climate uncertainty, so as to collectively benefit.
Aside from lessons on how to deal with El Niño, there is also a need to promote greater knowledge and technology exchange from research and development in drought, saline and heat resistant rice varieties. For example, China has developed a perennial rice crop variety that is now being trialled in Southeast Asia.[56] Perennial rice can produce consistent yields for eight harvests, and results in reduced waste, inputs and methane emissions, and labour savings.[57] More platforms for partnerships and action are needed to encourage collective collaboration between plant breeders, researchers, biologists, agronomists, and farmers.[58]
In the past, El Nino resulted in persistent economic impacts, with one study calculating losses globally of US$4.1 trillion and US$5.7 trillion in 1982-83 and 1997-98, respectively.[59] The present El Niño has just begun, and there is still time to put in place plans for the next year and the following years to allay the worst impacts. It is also timely to improve coordination across the many ASEAN mechanisms regarding agriculture, food, and fisheries towards more resilience to this climate phenomenon. Our region’s food security and social stability depend on it.
ENDNOTES
For endnotes, please refer to the original pdf document.
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2023/52 “Malaysia’s 2023 State Elections (Part 1): Projections and Scenarios” by Ong Kian Ming
EXECUTIVE SUMMARY
- Public expectations for the upcoming state elections in Malaysia, expected to take place in August 2023, are that Perikatan Nasional (PN) will likely win control of the Kedah, Kelantan and Terengganu state legislatures while Pakatan Harapan (PH) and Barisan Nasional (BN) will likely secure the Penang, Selangor, and Negeri Sembilan state legislatures.
- Using the results from the 15th General Election (GE15), it would appear that PN will win 32 out of 36 state seats in Kedah and almost all the seats in Kelantan and Terengganu. Meanwhile, PH and BN will be able to secure 32 out of 40 seats in Penang, 42 out of 56 seats in Selangor, and 33 out of 36 state seats in Negeri Sembilan.
- The number of seats won by PH, BN, and PN, are calculated using 3 scenarios of “low”, “neutral”, and “high” vote “transfers” between PH and BN. Even under the “low” scenario of a relatively low vote transfer rate of 30% from BN to PH, the combined electoral strength of PH and BN is sufficient to retain Penang, Selangor, and Negeri Sembilan relatively easily. At the same time, even with a relatively high vote transfer rate of 70% from BN to PH, the electoral gains for PH and BN in Kedah, Kelantan and Terengganu, will remain limited, based on the GE15 election results.
- There are more marginal seats in Penang, Selangor, and Negeri Sembilan for PH, BN, and PN under all three scenarios compared to Kedah, Kelantan, and Terengganu. The focus of the campaigns will likely be in these marginal seats, mostly in Malay majority areas in the three PH-governed states.
- The potential upside for PH-BN is higher in Penang, Selangor and Negeri Sembilan, especially if a high vote transfer between PH and BN supporters takes place.
* Ong Kian Ming is Visiting Senior Fellow at ISEAS – Yusof Ishak Institute. He was a former Member of Parliament representing the DAP and former Deputy Minister of International Trade & Industry (MITI).
ISEAS Perspective 2023/52, 10 July 2023
INTRODUCTION
One of the most important questions facing the ruling Unity Government (UG) in Malaysia is the extent to which supporters of Pakatan Harapan (PH) and Barisan Nasional (BN) will likely “transfer” their votes to their former political rivals in the upcoming state elections in the six states which chose not to dissolve their state assemblies in 2022 when the federal elections were held. Three of the governments in these states – Kedah, Kelantan, and Terengganu – are held by Perikatan Nasional (PN), while the remaining three – Penang, Selangor, and Negeri Sembilan – are held by Pakatan Harapan (PH).
While the overall results of these state elections are not likely to affect the stability of the federal government, the performance of PH and BN will still be important both politically and economically. Politically, the results will influence the thinking within UMNO of the strategic advantages of working with PH in future elections. It will also affect the overall confidence of UMNO leaders and grassroots members in the UMNO president and Deputy Prime Minister, Zahid Hamidi. For PH, the important question of whether it can increase its share of Malay support by working with a Zahid-led UMNO will be answered in these state elections. From an economic perspective, a positive result for the UG will give it more space to introduce more substantive economic reforms post-elections, including the rationalisation of various general subsidies towards more targeted programmes.
This article is divided into two parts, which are to be published separately. Part One uses the results of the 15th General Election (GE15) held in 2022 to project the possible outcomes in the upcoming state elections, through the use of various scenarios. These projections can then be compared against different electoral baselines to show what would constitute successful results for PH, BN, and PN.
Part Two (to be published soon) focuses on the likely campaign issues and strategies used by the three major coalitions. The fact that this will be the first time that more than one state will be holding state elections at the same time will add to the unpredictability and importance of the campaign itself. Some thoughts of the implication of the results on political developments in Malaysia are presented in the conclusion.
OVERVIEW OF GE15 RESULTS IN THE SIX STATES
Based on the results of GE15, the expectation among political observers in Malaysia is that PN is likely to retain Kedah, Kelantan, and Terengganu while PH, together with UMNO, will retain Penang, Selangor and Negeri Sembilan.
The rationale behind this expectation can be gleaned from the electoral outcomes for GE15 in these six states (Table 1 below).
Table 1: Overview of GE15 results for and ethnic composition of the six states
| State | PH% | PN% | BN% | PH Seats | PN Seats | BN Seats | Malay% | Chinese% | Indian% |
| Kedah | 21.8% | 54.3% | 20.6% | 1 | 14 | 0 | 77.7% | 14.5% | 6.8% |
| Kelantan | 8.7% | 62.9% | 26.5% | 0 | 14 | 0 | 95.0% | 3.4% | 0.5% |
| Terengganu | 5.4% | 61.8% | 31.4% | 0 | 8 | 0 | 96.7% | 2.9% | 0.2% |
| Penang | 59.4% | 23.7% | 15.0% | 10 | 3 | 0 | 39.4% | 49.3% | 10.9% |
| Selangor | 52.4% | 27.3% | 17.3% | 17 | 5 | 0 | 53.9% | 31.4% | 13.8% |
| Negeri Sembilan | 44.4% | 21.7% | 31.9% | 3 | 0 | 5 | 57.6% | 26.4% | 14.8% |
Source: Election Commission, Own Analysis
PN dominated the elections in Kedah, Kelantan, and Terengganu in GE15 by winning 14/15, 14/14 and 8/8 seats and 54.3%, 62.9%, and 61.8% of votes, respectively.
Similarly, PH was dominant in non-Malay majority Penang, winning 59.4% of votes and 10 out of 13 parliamentary seats.
PH and BN’s combined vote share of 69.3% and 76.3% in Selangor and Negeri Sembilan respectively with PH winning 17/22 parliament seats in Selangor and PH + BN winning 8/8 parliament seats in Negeri Sembilan should also result in both states being won by PH+ BN in the upcoming state elections.
METHODOLOGY FOR PROJECTING 2023 STATE ELECTION RESULTS
However, the narratives surrounding the upcoming state elections are not just solely focused on which coalition(s) will win control of which state assemblies. In this study, attention will also be paid to the number of seats and percentage of votes won by each coalition. The detailed results will in turn provide fodder for the political class to discuss the advantages of PH and BN working together to “pool” the votes of their supporters on the one hand, and the possible further momentum gain by the PN among the Malay voters on the other.
Projecting the results of the upcoming state elections using the GE15 results as the baseline and then assuming different scenarios with regards to the extent of vote “pooling” between PH and BN will provide possible floors and ceilings of electoral benefits stemming from PH and BN working together.
Calculating the outcomes at the state seat level based on the GE15 results at the parliamentary seat level is quite straightforward. The detailed polling stream or “saluran” results tabulated in each of the classrooms where voters cast their vote is available from the Election Commission (EC).[1] These results for GE15 were obtained for all the parliament seats, except where election petitions have been filed to contest the results leading to the EC withholding the data pending the outcome of these petitions. GE15 results are therefore available for all 15 parliament seats in Kedah, 13 out of 14 parliament seats in Kelantan,[2] 5 out of 8 parliament seats in Terengganu,[3] all 13 parliament seats in Penang, all 22 parliament seats in Selangor and all 8 parliament seats in Negeri Sembilan. The results for the polling streams under the state seats in each of the six states are calculated and the party which won the largest number of votes identified.[4] The results are tabulated in Table 2 below.
Table 2: State seats won by PH, PN, and BN in the six states using GE15 results
| State | PH | PN | BN | Total |
| Kedah | 4 (2) | 32 (5) | 0 | 36 |
| Kelantan | 0 | 42 (1) | 0 | 42[5] |
| Terengganu | 0 | 19 | 1[6] | 20[7] |
| Penang | 31 (5) | 8 (6) | 1 (1) | 40 |
| Selangor | 40 (18) | 14 (9) | 2 (2) | 56 |
| Negeri Sembilan | 17 (5) | 3 (3) | 16 (12) | 36 |
Notes: The numbers in parentheses (X) are the number of seats which were won with less than 50% of the popular vote.
Source: Election Commission, Own Analysis
The results shown in Table 2 above confirms the figures in Table 1. PN should score resounding victories by winning 27 out of 36 seats (or 75%) in Kedah by more than 50% of votes and winning almost all seats in Kelantan and Terengganu with more than 50% of votes. PH+BN should be able to secure a comfortable victory in Penang by winning 32 out of 40 seats including 26 with more than 50% of the vote. PH+BN is expected to emerge victorious in Selangor and Negeri Sembilan by winning 22 out of 56 seats in Selangor with more than 50% of the vote (with another 20 seats with less than 50% of the vote), and 16 out of 36 seats in Negeri Sembilan with more than 50% of the vote (with another 17 seats with less than 50% of the vote). This is probably why PN sees Selangor and to a lesser extent Negeri Sembilan as states where they can make some headway. But if the support for PH+BN shifts even a little in favour of the Unity Government, PN may end up with only a handful of seats in these two states. The nuances in each of the states are discussed below.
In Kedah, even though PH (21.8%) and BN (20.6%) of the popular vote, the concentration of the support for PH was mostly in the urban areas which allowed it to “win”[8] the most votes in 4 state seats, 2 of which were won with less than 50% of the popular vote. BN’s support was more dispersed among the non-urban seats which meant that it did not win the largest number of votes in any of the 36 state seats in Kedah.
In Kelantan, PN won 41 seats with available data with more than 50% of the popular vote with the only exception being the N9 Kota Lama seat in the heart of the capital city, Kota Bahru, which has almost 1/3 of its voters being non-Malay. It is also likely that the BN would have won the largest number of votes in at least one out of the three state seats in P32 Gua Musang which was won by PAS at the parliamentary level in GE15 with a razor thin margin of 163 votes.
In Terengganu, PN won 19 of the 20 seats with available data with more than 50% of the popular vote. The remaining seat, N21 Telemung, was won by the BN with 50.5% of the popular vote.[9] It is likely that the polling stream results would have shown PN winning the other 12 state seats in P36 Kuala Terengganu, P37 Marang and P40 Kemamam, given that PN won these parliament seats with 64.8%, 66.5% and 57.5% of the popular vote respectively.
In Penang, PH won 31 out of 40 state seats (5 with less than 50% of the popular vote) while PN won 8 (with 6 with less than 50% of the popular vote), and BN taking only one state seat, with less than 50% of the popular vote.
In Selangor, PH won 40 out of 56 total seats. However, 18 of these seats or 45% of the 40 seats were won with less than 50% of the popular vote. It is probably this calculation which gives PN some confidence that it may be able to win control over the Selangor state assembly in the coming election.
In Negeri Sembilan, PH won 17 seats (5 with less than 50% of the popular vote) while BN won 16 seats (12 with less than 50%). With the PN only having won 3 state seats (all of which with less than 50% of the popular vote), the BN will have to win all of PH’s and BN’s marginal seats for it to take control of Negeri Sembilan, a highly possible achievement, especially given that UMNO managed to preserve its political strength in Negeri Sembilan in GE15 where it won 5 out of 8 parliament seats in the state.
The results in Table 2 above does not take into account what will happen if PH and BN are to avoid three-corner fights in the upcoming state elections. If PH and BN achieve a successful seat negotiation outcome and instead “pool” their resources and voters in a joint campaign, both coalitions can expect better support compared to the GE15 results, especially for candidates from UMNO. A reasonable assumption is that PH voters are much more likely to “transfer” their vote from PH to BN in seats where PH makes way for the BN candidate to face a PN candidate. A projection of between 80% to 100% of vote transferability from PH to BN is used in this article. At the same time, it is reasonable to assume that BN voters, especially those from UMNO, will be more wary of PH candidates, especially those representing the DAP. UMNO supporters may be less likely to support a PH candidate over a PN candidate compared to the likelihood of PH supporters voting for an UMNO candidate.[10] A projection of between 30% and 70% of vote transferability from BN to PH is used in this article.
Table 3: Three Scenarios of Vote “Pooling” or “Transferability” between PH and BN[11]
Table 3 above uses three scenarios to project the state election results. Scenario 1 represents a “low” outcome for PH and BN with a low transfer rate of 30% from BN to PH and a relatively low transfer rate of 80% from PH to BN. Scenario 2 represents a “neutral” outcome with a transfer rate of 50% from BN to PH and a 90% transfer rate from PH to BN. Scenario 3 represents a “high” outcome for PH and BN with a 70% transfer rate from BN to PH and a 100% transfer rate from PH to BN. The vote transfer from PH to BN is used in all the state seats won by BN or where BN came second place to PN. The vote transfer from BN to PH is used in all the state seats won by PH or where PH came second place to PN.
How will the projected results in each of the states change under these three Scenarios? The results are summarized in Table 4 below.
Table 4: Projection of state election results under Scenario 1, Scenario 2 and Scenario 3 (using GE15 results as the baseline)
Numbers in parentheses (X) indicate the seats which are projected to be won by the respective coalitions with less than 55% of the popular vote, which is the threshold used to define marginal seats in a contest featuring two parties.
For Kedah, the vote pooling effects has little impact on the projected outcomes calculated in Table 2. Only one extra seat is won by PH[12] under Scenario 3. This is because the PH vote transfers to BN / UMNO are not sufficient to overcome the advantage achieved by PN in GE15. The attention of PH and BN will likely be on the eight marginal PN seats under Scenario 3 during the state elections.[13]
In Kelantan, the vote polling effects also have little impact on the projected outcomes. Only under Scenario 3 is PH able to win one state seat (N9 Kota Lama) with the help of sufficient vote transfers from BN / UMNO. The number of marginal PN seats is just limited to one even under Scenario 3.[14]
In Terengganu, the status quo of PN dominance remains, even under Scenario 3. Only one PN state seat appears marginal under Scenario 3.[15]
In Penang, under Scenario 1, where more BN votes are transferred to PN than to PH, PN is able to pick up 4 additional state seats (from 8 to 12). BN, meanwhile, is able to pick up one additional state seat (from 1 to 2) while PH is the most negatively impacted, losing 5 state seats in total (from 31 to 26). Under Scenario 2, PH is able to maintain 31 state seats with BN gaining 2 (from 1 to 3) and PN losing 2 (from 8 to 6). Under Scenario 3, PH is able to gain an additional 2 seats (from 31 to 33), with BN winning 3 while PN loses 4 seats (from 8 to 4). The competition in Penang will be in the Malay majority state seats located under the P41 Kepala Batas, P42 Tasek Gelugor, P44 Permatang Pauh, P47 Nibong Tebal, and P53 Balik Pulau parliamentary seats. PH and BN are able to benefit more or less equally from a high transfer of votes under Scenario 3.
In Selangor, it is interesting to note that even under Scenario 1, with a low transfer of votes from BN to PH, PN actually loses one nett seat (from 14 to 13). This is because the relatively high transfer rate of votes from PH to BN helps the latter win an extra 4 seats (from 2 to 6). PH loses nett 3 seats. Under Scenario 3, with a relatively high transfer of votes from BN to PH, the latter is able to increase its number of seats by 2 (from 40 to 43) with BN picking up 5 extra seats (from 2 to 7) and PN losing 8 seats (from 14 to 6). In Selangor, BN is able to benefit more from PH’s support in Malay majority areas where BN still maintains some baseline strength, such as the northern and more rural parts of the state (areas under the parliament seats of P92 Sabak Bernam, P93 Sungai Besar and P95 Tanjong Karang). These projections show that unless PN is able to manufacture a significant swing in the Malay support away from PH and BN in the state, it faces an uphill task to capture control of the state, despite recent assertations by former UMNO state chief, Noh Omar.[16]
Finally, in Negeri Sembilan, under Scenario 1, PN is only able to increase its number of seats by 2 (from 3 to 5) at PH’s expense (from 17 to 15). Under Scenario 3, PN faces the prospect of being left with no seat won.
CONCLUSION
To conclude Part One, unless there are big swings in favour of either PH-BN or PN among Malay voters (perhaps more likely) or non-Malay voters (much less likely), the anticipated outcome of three states remaining in the PN column (Kedah, Kelantan and Terengganu) and three in the PH-BN column (Penang, Selangor and Negeri Sembilan) will be the most likely. The upside for PH-BN is higher because of the potential of higher vote transferability from PH to BN in Penang, Selangor, and Negeri Sembilan and from BN to PH in the same states (but with a lower probability).
Part Two of this article (to be published soon) will discuss the likely campaign strategies and the possible political impact arising from different electoral outcomes.
ENDNOTES
For endnotes, please refer to the original pdf document.
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