What Kind of High-Income Country will Malaysia Become?

Malaysia is no longer stuck in the middle-income trap, given the steady growth of its gross national income. Yet, Malaysia is confronted with one key question—what type of high-income country will it be?

Malaysia is no longer stuck in the middle-income trap, given the steady growth of its gross national income (GNI). Malaysia’s GNI per capita in 2015 was $10,570. It is just short of the World Bank’s benchmark of $12,475 per capita for high-income nations and should achieve this by 2020. Yet, Malaysia is confronted with one key question—what type of high-income country will it be?

Will resource-rich Malaysia, like South Korea, be a progressive liberal democracy where high incomes are sustained by innovation-induced productivity based on strong human capital development, or one that relies on revenue growth from natural resources, such as Saudi Arabia?

Comparing Malaysia to these two economies provides an idea about the kind of high income country it could become in the next few years.

Components of Growth (2010-2015)*

In 2015, South Korea was the 11th largest economy in the world (1.89 percent share of the world economy), Saudi Arabia was ranked 20th (0.86 percent share of the world economy) and Malaysia 33rd (0.43 percent).

In Saudi Arabia, the manufacturing sector’s value add as a percent of GDP peaked at just 12.3 percent in 2015, while high-technology exports contributed less than 1 percent of the country’s manufactured exports, illustrating a lack of innovation and productivity improvements.

However, total natural resources rents as a percent of GDP in Saudi Arabia stood at 41 percent in 2014. Though lower than the 52 percent in 2011, it was still relatively very high. Similarly, oil rents as a percent of GDP fell from 49 percent in 2011 to 39 percent (still high) in 2014.

Select innovation-related indicators Source: World Development Indicators

Select innovation-related indicators
Source: World Development Indicators

In South Korea, the value added from the manufacturing sector hovered at about 30 percent between 2011 and 2015, and high technology exports constituted around a quarter of the manufacturing exports. Not surprisingly, South Korea derives no revenue from resources or oil.

It is clear that these two countries stand in contrasting positions when considering the chief contributors to economic growth. While Saudi Arabia depends on natural resources, South Korea depends on high technology exports and greater value added.

Malaysia currently finds itself somewhere in the middle of these two divergent examples. In 2015, the country’s manufacturing sector value added was 23 percent of GDP. Strikingly, high-tech exports accounted for 43 percent of its total manufacturing exports. Malaysia has also been gradually reducing its reliance on resources as a source of growth, with natural resources rents as a percentage of GDP declining from 11 percent in 2010 to 8 percent in 2014, and oil rents as a percent of GDP decreasing from 6 percent in 2010 to 4.8 percent in 2014.

Links with Innovation and Human Capital Development

South Korea had 6,899 researchers and 1,241 technicians in R&D per million people, while Malaysia had 2,052 researchers and 212 technicians per million people, respectively (there was no data available on the number of researchers and technicians in R&D for Saudi Arabia). This illustrates that Malaysia still has a long way to go to catch up with South Korea in terms of its R&D human capital and skills capabilities.

The issue is exacerbated given that while South Korea invested 4.3 percent of its GDP toward R&D in 2014, Malaysia invested just 1.2 percent. For Malaysia to move toward more innovation-led growth, it needs to increase its expenditure on R&D and education.

Similarly, the total number of patent applications registered in Saudi Arabia in 2010-2014 was by far the lowest among the three countries in question. In the same period, Malaysia saw a total of 34,600 patent applications, whereas the number of patents in South Korea was a whopping 27 times greater.

Where is Malaysia Headed?

These numbers provide a clear illustration that Malaysia needs to do a lot more if it is to become a high-income country in the footsteps of South Korea. It needs to increase expenditure on R&D and promote human capital development, both of which will be critical to its economic performance.

The Malaysian economy’s structure is transitioning toward that of South Korea with high-tech exports and services being on par with South Korea. Yet, Malaysia is certainly not investing in its human capital in the same way that South Korea has done; and in terms of outcomes of innovation (as measured by patent applications), Malaysia is far behind South Korea. For example, patent applications submitted by Malaysian residents were only 1 percent of those submitted by South Korean residents.

At the same time, Malaysia does not have the luxury of relying on natural resources rent as Saudi Arabia has done and cannot afford to support high levels of income through social transfers.

In fact, Saudi Arabia, too, is trying to step away from its resource-driven growth model, cognizant of its limitations. In October, Saudi Arabia’s Public Investment Fund teamed up with Japan’s SoftBank to create a $100 billion technology-investment fund that could become the world’s biggest tech investment in the coming decade.

This is one of the initiatives to support the country’s “Vision 2030”plan, according to which, the country is looking to raise non-oil revenue to $160 billion by 2020 and $267 billion by 2030. In 2015, non-oil revenue contributed only $43.6 billion.

It will be interesting to see whether Malaysia’s government will go the desired way of innovation-driven growth as it leads the country’s economic reform, or whether Malaysians will accept high income alone as a final outcome.

  • All data from World Development Indicators.

This post first appeared in BrinkAsia

Malaysia’s political malaise

Malaysia’s leadership troubles could provide a valuable lesson for other middle-income countries on the importance of effective leadership to sustain long term growth.

Malaysia’s leadership troubles could provide a valuable lesson for other middle-income countries on the importance of effective leadership to sustain long term growth. Malaysian Prime Minister Najib Razak has denied allegations of corruption made by The Wall Street Journal. But can a leader and his administration that has been rejected by the electorate drive long term growth?

In May 2008, the United Nations Commission on Growth and Development issued a report that attempted to distil the strategies and policies that produced sustained high growth in developing countries. It is clear from the report that politics and leadership are key to successful development. In particular, there are four cross-cutting issues that good leadership delivered: promoting national unity; building high quality institutions; choosing innovative and localised policies; and creating political consensus for long-run policy implementation.

Malaysia is among 13 nations (Botswana, Brazil, China, Hong Kong, Indonesia, Japan, South Korea, Malta, Oman, Singapore, Taiwan and Thailand) that the report identified as having sustained growth rates of above 7 per cent for 25 years or more. These 13 countries had five strikingly similar characteristics: they fully exploited global economic opportunities; they maintained macroeconomic stability; they mustered high rates of savings and investment; they let markets allocate resources; and they had committed, credible, capable governments.

Malaysia has been governed by the same ruling coalition since independence in 1957. This coalition provided capable leadership to address the four cross-cutting issues that enabled high and sustainable growth. But the Najib Razak administration appears not only to be faltering in managing these challenges but is actively undermining these achievements to remain in power.

At the 13th Malaysian general elections, the Barisan Nasional coalition only managed to secure 47.4 per cent of the popular vote while the opposition coalition secured 50.9 per cent. This is the first time that the ruling coalition has lost the support of the majority of Malaysians. Najib took a presidential approach to the election and committed to spending an estimated US$17.6 billion of targeted development pledges and 1 Malaysia Programs. So it was a shock when the majority of Malaysians opted for a ragtag coalition that included an Islamist party and a socialist party led by a discredited leader.

Najib’s popularity had been on a downward trend, from a high of 72 per cent in May 2010 to below 50 per cent in January 2015. But the series of damaging allegations has not only damaged his reputation irrevocably, it has also cemented a negative perception of the government. The majority of Malaysians no longer look favourably upon their government and its institutions. The most recent survey — polled in October 2015 after Najib admitted receiving a US$700 million ‘donation’ into his private bank account — found that 4 out 5 Malaysians were unhappy with the current government.

More damaging perhaps is the fact that only 31 per cent of Malays — the bedrock of support for the United Malays’ National Organisation (UMNO), the dominant party in the ruling Barisan Nasional coalition — were happy with the government’s current performance. The fall among Malays is drastic. It stood at 52 per cent in January 2015 and had never gone below 50 per cent since the independent pollster Merdeka Centre began tracking this data in February 2012. More Malaysians are also of the opinion that the country is heading in the wrong direction. Significantly, this change in sentiment began in the beginning of 2014, several months after the 13th general elections.

In response, Najib has taken several measures to protect his leadership position. These measures have further undermined Malaysia’s national unity, institutions and policy process.

Despite the rhetoric of being the leader of all Malaysians, Najib has actively pursued a ‘Malay and Islamic’ supremacy strategy. And he has cosied up with UMNO’s mortal enemy, the Pan-Malaysian Islamic Party. The rise of fundamentalist Islam — as in the rest of the world — is a threat in Malaysia. But Najib has sought to bolster his credentials by appealing to conservative Muslims. This has empowered and emboldened the conservative Islamic elements within Malaysia.

Policy making and implementation have been insulated from public scrutiny since the government of long-serving former prime minister Mahathir Mohamed. But under Najib it has even been insulated from scrutiny by the cabinet, let alone the parliament. All major decisions are made by the prime minister and implemented through a hybrid organisation within the Prime Minister’s Department.

Despite Najib’s active pursuit of policies that are detrimental to Malaysian foundations, his economic track record appears to be sound. Malaysia could become a high income country by 2020. Yet Malaysians remain unimpressed by Najib Razak.

Institutions are not built in a day and the impact of Najib’s measures on Malaysia’s longer term growth prospects remain to be seen. For now, other countries caught in the middle-income trap should closely observe the developments in Malaysia.

This article first appeared in East Asia Forum

Malaysian PM Najib Razak strengthens hold on power

Najib Razak’s term as prime minister of Malaysia is now in its seventh year and there is every reason to believe he will continue to lead Malaysia for a long while yet.

Najib Razak’s term as prime minister of Malaysia is now in its seventh year and there is every reason to believe he will continue to lead Malaysia for a long while yet.

Given his scandal-ridden tenure, this is a remarkable outlook, one enabled by the sidelining of opponents, an illiberal electoral system, a divided opposition, and civil leadership that took a wrong turn.

As unlikely as it seemed when the The Wall Street Journal reported investigations of corruption and malfeasance on a massive scale related to investment fund 1MDB, Najib, through the power of incumbency, has gone from strength to strength while his detractors have lost momentum.

Even if Najib wanted to resign he could not. Unlike former prime ministers, Abdullah Ahmad Badawi and Mahathir Mohamed, who were forced to quit by their party, the United Malays National Organisation (UMNO), the corruption allegations and supporting evidence against Najib are too serious, substantive and too public (everyone knows about them). A face-saving exit strategy could not be designed without compromising its designers.

All powerful individuals who were brave enough to oppose the prime minister have been cut down to size. As demonstrated through the sackings of then deputy prime minister Muhyiddin Yassin, and then minister for rural and regional development Shafie Apda, Najib has systematically separated his detractors from the power, patronage and machinery that would have been required to topple him.

Mahathir Mohamed, Najib’s most vocal opponent, has also been diminished. This has been accomplished in two ways. Firstly, Mahathir’s power and influence has been cut down. His son, Mukhriz Mohamed, was forced to resign as the chief minister of Kedah, Mahathir’s home state. Mahathir was compelled to resign as chair of Proton (Malaysia’s national auto company) after earlier being fired as the chair of Petronas (the national oil company).

Most damaging however, was Najib’s suggestion that Mahathir had betrayed UMNO by working with the Chinese-dominated opposition. This resonated with UMNO supporters. Mahathir’s humiliation was complete when he lost the police escort accorded to former prime ministers.

On the institutional front, two of the four members of the high powered investigation team into the 1MDB are no longer there. Najib sacked the Attorney General Abdul Gani Patail while the Bank Negara (Central Bank) governor Zeti Akhtar Aziz retired. The Malaysian Anti-Corruption Commission Commissioner Abu Kassim Mohammed, appointed by the prime minister has not said much. The Inspector General of Police (IGP), Khalid Abu Bakar is the only top ranking civil servant from that high powered investigation still in favour with Najib.

Similarly, the Public Accounts Committee (PAC) that had been vigorously investigating the 1MDB issue was severely compromised through the promotion of four of its members to ministerial positions, and the appointment of a new chairperson.

Then there is the electoral system. Bridget Welsh, in her extensive analysis of the recent Sarawak elections, demonstrated the extent to which Najib can rely on the illiberal electoral system to keep him in power. (Read Welsh’s extensive analysis here, here, here, here and here).

Some have suggested the Sarawak electoral results would not be replicated on the peninsula. But domestic politics have once again aligned in Najib’s favour as the opposition, civil society and the majority of the Rakyat, united in the general elections of 2008 and 2013, are now again fragmented.

The People’s Justice Party (PKR), which bridges the secular and the conservatives on the peninsula faces leadership transition uncertainty, both within the party itself and the opposition coalition. The party is split between those who support PKR deputy president Azmin Ali for leadership and those who don’t. Other possible candidates for the leadership include PKR vice president (and Anwar Ibrahim’s daughter) Nurrul Izzah, and PKR’s secretary general Rafizi Ramli.

Outside of the opposition coalition, Azmin Ali appears to have a good working relationship with the Islamic conservatives in the Pan-Malaysian Islamic Party (PAS) but this has alienated both the Parti Amanah Negara (PAN), PKR’s newly formed coalition partner (in the new coalition Pakatan Harapan), made up of moderates who were purged by the PAS, and some members of the Democratic Action Party (DAP).

The upshot of all of this is there is no longer a united opposition to UMNO and Najib. In fact, PAS (the largest opposition party by membership) is now actively being courted by UMNO, and its newly chosen conservative leader, Abdul Hadi Awang, has defended Najib on several occasions.

Civil society, in particular Bersih, had been in recent years the champion of principled politics through its efforts to reform Malaysia’s flawed electoral system. However, the recent actions of its leading lights, Maria Chin Abdullah and Ambiga Sreenevasan, who have supported Mahathir Mohamed (albeit in their personal capacities) in his efforts to topple Najib, have sown confusion and discord.

Mahathir Mohamed has made it clear his ‘Save Malaysia’ campaign is primarily focused on toppling Najib and saving UMNO, and much less so on improving governance. One time supporters of the campaign, such as jailed former opposition leader Anwar Ibrahim, have come to see it primarily as a Mahathir vehicle rather than a genuine reform movement, as made clear in this scathing letter to PKR leaders.

With these formidable challenges crippling the opposition and his detractors, it is difficult to see how Najib can be dislodged.

This article first appeared in the Lowy Interpreter

Malaysia’s Prime Minister Resurrected And Hitting Back?

Malaysia’s embattled prime minister seems to be weathering the corruption allegations – and by some signs may even be going back on the offensive.

Malaysia’s embattled prime minister seems to be weathering the corruption allegations – and by some signs may even be going back on the offensive.

On Jul. 2, 2015, the Wall Street Journalalleged” that $700 million had gone into the personal bank accounts of Malaysian Prime Minister Najib Abdul Razak.

On Aug. 3, 2015, the Malaysian Anti-Corruption Commission (MACC) reported that the alleged $700 million deposited into Razak’s accounts came from donations, and not from the debt-laden 1MDB.

Many opined that he could not possibly survive this disclosure (e.g. here and here); with several suggesting that he was a “dead man walking” (e.g. here and here (video)).

If Razak is likened to a pharaoh – a term given to Malaysia’s longest serving prime minister, Mahathir Mohamed, who is now the main protagonist in attempting to bring down Razak – one could say that the period between Jul. 2, 2015 and May 8, 2016 was a period where Razak was “mummified,” safe within the pyramid. Several defensive measures were later followed with the election triumph of the Barisan Nasional (the ruling coalition that the prime minister leads) in the Sarawak state election, suggesting that the “mummy” is now fully resurrected.

The defensive measure taken included steps taken toward three of the four senior civil servants appointed by the prime minister to investigate the 1MDB allegations. The Attorney General, Tan Sri Abdul Gani Patail, who was tasked to lead this high-powered multi-agency team, and believed to be preparing charges against Razak, was sacked.

The prime minister also sacked Tan Sri Muhyiddin Yassin (the deputy prime minister, education minister and deputy president of UMNO) who had publicly raised questions over the 1MDB issue.

Razak also promoted four members (and in the process dropped another four ministers and a deputy minister) from the bipartisan parliamentary Public Accounts Committee (PAC) that had been vigorously pursuing the 1MDB issue. And after replacing the chairman of the PAC, it performed to expectations with the final report taking the heat off the prime minister. Also, among those dropped was Rural and Regional Development Minister Mohd Shafie Apdal, an UMNO vice-president and a powerful politician from Sabah.

Meanwhile, the Bank Negara (Central Bank) Governor Tan Sri Zeti Akhtar Aziz, came under intense attack. Among those, a blog, The Recounter, at the time of the 1MDB investigations, alleged that the police were investigating Tan Sri Zeti on a water contract that had been awarded to a company which had several directors who were related to her. Another investigation was supposed to be focused on her husband, who received a commission on the takeover of Southern SO -0.55% Bank by CIMB that was approved by the central bank. Although Malaysia’s Inspector General of Police (IGP) denied this, there was no further query if indeed there was any merit to the allegations. Tan Sri Zeti has denied the allegations and threatened to sue those responsible for making them, but she still has yet to do so.

Kevin Morais, a senior deputy public prosecutor, who was believed to be working on the 1MDB case (and believed to have reviewed or prepared the charge sheet), was then found brutally murdered (Note: This video by the award-winning Four Corners team of the Australian Broadcasting Corporation pieces together all the available evidence on the 1MDB issue).

Tan Sri Abu Kassim, the MACC chief commissioner, had quietly gone on extended leave to recover from an operation after the investigation had begun. Only the Inspector General of Police, Tan Sri Khalid Abu Bakar, remained active in the public eye, investigating officers to find the source of leaks that had embarrassed Razak.

His administration had also been clamping down on the already limited civil and political rights of Malaysians. The Director General of Immigration recently announced that Malaysians who criticized the government overseas could be banned from travelling for up to three years. All of these are designed to have a chilling effect, particularly among Malaysia’s middle class – one of the most vocal groups since the general election of 2008, both at home and abroad.

The Sarawak elections is likely a purveyor of things to come. Bridget Welsh provides some insight from the ground on what happened in Sarawak and its implications to Malaysia in general. Key to this is the fact that Razak has figured out how he can win at the next Malaysian general election – skew the electoral system further; break up the opposition; demonstrate that they are incapable of cooperation; ensure that Sabah and Sarawak remains in the BN orbit, win enough rural and marginal seats (where the opposition does not have a commanding majority through any means) on the peninsula.

After the recent Sarawak state elections, a triumphant Razak was in London for a two day working visit that includes the Malaysia-UK Investor Showcase. While in the U.K., Razak announced several high profile ventures.

Khazanah – Malaysia’s other sovereign wealth fund – had set up an endowment of 5 million pounds over five years to sponsor up to three Malaysian scholars to pursue postgraduate studies at the University of Oxford. The prime minister also announced that Khazanah would set up a Khazanah Residency Program that will sponsor up to 10 qualified Malaysians every year for short-term residencies and fellowships in locations around the world. These fellowships are focused on five areas: arts, culture and society, design, public service, journalism, and science and technology. One wonders if individuals critical of the government will be able to apply. Razak also officiated the opening of Khazanah Europe Investment Ltd office at London’s iconic The Shard. Richard Graham, David Cameron’s trade envoy to Malaysia possibly summed up the view of international leaders towards Razak:

“I think business with Malaysia is extremely important and that must carry on.”

These high profile events were designed to signal Razak’s return in a very public way. He is now back on the offensive. While in London, he publicly attacked former Prime Minister Mahathir Mohamed by stating:

“He has received so much through Barisan and Umno. Without the BN and the party, he would not have been a minister or the prime minister for 22 years. He and his family have benefited from his position as prime minister, and this is due to the strength of Barisan and Umno.”

Razak’s detractors have tried their best to shame him into resignation, but this has not worked. Instead, Razak has used the resources availed to him as prime minister of Malaysia and president of the BN and UMNO to effectively stifle any challenge. He has broken up Malaysia’s most successful and effective opposition, Pakatan Rakyat. The new opposition, Pakatan Harapan, is in disarray as key players in PKR are still hanging onto PAS. Razak has broken up the two major challenges to UMNO on the peninsula, the two other Malay majority parties, PKR and PAS. Several in PAS seek closer cooperation with UMNO, while several in PKR seek closer cooperation with PAS. Civil society shot itself in the foot when its leading lights, such as Bersih’s Maria Chin Abdullah and Ambiga Sreenevasan, joined (in their personal capacity) Mohamed’s “Save Malaysia” coalition. This has cast doubts among Malaysians who were genuinely seeking a root and branch culling of UMNO from Malaysia’s political landscape.

Meanwhile, Malaysia’s economy continues to chug along. It remains a stable polity. Most Malaysians get on with their daily lives as they always have.

Najib Razak is back, and evidence suggests that the “mummy” is here to stay.

This article first appeared in Forbes

Malaysian PM’s battles have only just begun

Malaysian Prime Minister Najib Razak was cleared by the country’s attorney general this week of any wrongdoing after nearly $700m was discovered in his personal bank account. The money was a “personal donation” from the Saudi Royal Family, according to the ruling.

Prime Minister Najib Razak must be commended for his ability to remain composed under pressure and stick to his story. But it is uncertain if those associated with him can do the same. The systematic nature of the leaks that are damaging him and his party, the United Malays National Organisation (UMNO), must certainly come from those in the highest echelons of power.

The leaks continue, despite the sacking of the previous deputy prime minister, Muhyiddin Yassin, and the previous attorney general, Abdul Gani Patail, as well as the reshuffling of cabinet ministers. Added to this is the gruesome murder of the deputy public prosecutor,Anthony Kevin Morais, who was investigating corruption in 1MDB [a strategic state fund $11 billion in debt] and the pressure on Malaysia’s top civil servants investigating 1MDB not to mention the direct intervention in investigations into 1MDB. This must certainly be unnerving even for seasoned warriors.

The Sarawak Report and, more recently, the Wall Street Journal have alleged that Najib is involved in activities that are illegal under Malaysian laws and, possibly, international laws. The systematic nature of these allegations as reported by [those newspapers] appears to be built on good journalism, robust investigation and, after Attorney General Mohamed Apandi Ali’s press conference, authentic data and information.

The government of Malaysia, and certainly the new attorney general, never questioned the veracity of the data and information used by Sarawak Report and the Wall Street Journal. So the question then becomes: who is feeding these organisations such highly classified information?

It is certainly not the opposition. The opposition does not have the connections within the public sector at such high levels. Neither does it have connections with individuals within government-linked corporations (GLCs) at such high levels. It is common knowledge that only individuals who… UMNO find not objectionable reach the highest echelons of the public sector or GLCs.

The real issue for UMNO is not about resolving corruption. This is a political party built on patronage and that thrives in a political system that relies on patronage. The real issue is whether they can win the next general election and if Najib can be the one to deliver that win.

Judging by the systematic nature of the leaks, it is almost certain that there are groups within UMNO who are not confident that Najib can lead them to electoral success. There are sound reasons for this assessment. Although the electoral system is stacked in their favour, Barisan Nasional (BN) [the ruling coalition] has done badly at the past two general elections – in 2008, by losing the psychologically important two-thirds majority and, in 2013, unbelievably losing the majority of the popular vote. And projections suggest that ­– if there is no further gerrymandering – the BN will lose at the next elections. Most worrying is perhaps that even among Malays, Najib’s approval ratings are now at 31% – the lowest ever in his seven-year administration, with approval ratings for the BN below 50%.

It is entirely plausible that it is groups within UMNO that are hostile to Najib, with access to senior civil servants, who are providing the damaging evidence to Sarawak Report and the Wall Street Journal. Why are they doing it? The answer is simple: there is simply no room within UMNO to democratically replace its leader. Ever since Razaleigh Hamzah’s unsuccessful challenge for the leadership of UMNO in 1987, there has been no contest for the top post. A succession of changes to the rules by the incumbent has made it impossible for challengers, especially those who lack the adequate resources, to go for the top post.

Najib has also successfully fended off other democratic options such as a vote of no confidence in parliament, here with the abetment of the opposition. They would rather face him than another UMNO candidate not linked to the 1MDB scandal.

Yet, because the leaks are now so damaging, it is impossible to find an exit strategy for Najib. Hence his battle cry of “No retreat, no surrender” is not about saving face, but about ensuring that he is not convicted.

The important question now is how far Najib will go to stop the leaks.

Greg Lopez is a Malaysian research fellow at Murdoch University’s Asia Research Centre in Perth, Australia.

This article first appeared in Southeast Asia Globe

 

 

Job satisfaction and ‘Power Distance’ in Malaysia

Malaysians are not happy with their work.

According to a survey conducted by JobStreet.com in 2012 on employee job satisfaction in Malaysia, 78% of the respondents claimed that they were unhappy with their current job.[1]

The reason that they were unhappy is surprising. The survey found that it was dissatisfaction with their scope of work that was the main reason for their unhappiness at work and not the remuneration they received. These employees noted that they felt that they had too much work or that their work was predictable and boring. Another important factor was also their poor relationship with their immediate supervisor.

The remaining 22% of the respondents who were happy at work revealed the following as the top three factors which influenced their happiness:

  • Firstly, enjoyable working experiences and working challenges (50%);
  • Secondly, bosses who appreciate and value their input (21%);
  • Thirdly, friendship with their colleagues (19%).

Two key questions need to be answered:

  • Why is there a high percentage of Malaysians working under unhappy conditions?
  • Why have the employers not done anything about it, let alone detect it?

One approach that could possibly provide the answers to these questions isHofstede’s Power Distance Index.

Globally, Malaysia has the highest Power Distance.

Hofstede defines Power Distance as:

“the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally.”

In Hofstede’s formulation:

“Malaysians accept a hierarchical order in which everybody has a place and which needs no further justification. Hierarchy in an organisation is seen as reflecting inherent inequalities, centralisation is popular, subordinates expect to be told what to do and the ideal boss is a benevolent autocrat. Challenges to the leadership are not well-received.”

Hofstede’s findings may provide the answers to the two questions raised. Malaysian employees suffer in silence because they are afraid to voice out their dissatisfaction with work conditions; and Malaysian employers have no reason to enquire if their employers are satisfied at work as all seems well.

What do you think?

[1] A total of 1,145 employees, of which 62% were from the middle management level, took part in this JobStreet.com survey that was conducted in September 2012.

Be part of Murdoch University’s new Executive Masters in Leadership, Strategy and Innovation.  

This post first appeared in Pulse

The plot to topple Malaysia’s prime minister

As scandal swirls around Malaysia’s beleaguered prime minister Najib Razak, GREG LOPEZ assesses Najib’s prospects of remaining in power.

On 2 July 2015, the Wall Street Journal alleged that US$700 million from the state development fund 1 Malaysian Development Berhad (1MDB) had gone into a personal bank account of Malaysia’s prime minister Najib Razak.

Najib labelled these reports as political sabotage. His supporters allege this was an attempt to topple a democratically elected leader through dubious means. Najib then went to extreme lengths to silence his detractors, immediately threatening to sue the Wall Street Journal—although his lawyers have yet to take any concrete measures.

On 20 July, the government blocked the Sarawak Report, a blog that had been systematically publishing reports on corruption and abuse of power in Malaysia, and subsequently issued an arrest warrant for its founder and editor Clare Rewcastle-Brown.

On 24 July, the government suspended The Edge Financial Daily and The Edge Weekly, which had been reporting extensively on the 1MDB issue, although Malaysia’s High Court would later revoke the suspension.

On 28 July, Najib sacked his deputy and four other ministers. He then reshuffled his cabinet in an effort to strengthen his control of the government and his party, the United Malays National Organisation (UMNO), and to undermine the Parliamentary Public Accounts Committee, which had been vigorously investigating the 1MDB affair.

Najib also sacked Malaysia’s attorney general who, as part of a high-level task force involving the attorney general’s chambers, the Malaysian Central Bank, the Malaysian anti-corruption commission (MACC) and the Royal Malaysian Police, was believed to have been preparing corruption charges against him. Several other senior officers involved in the investigation was then investigated by the police and transferred.

On 3 August, MACC announced that the US$700 million channelled into the Najib’s account came from a donor—not 1MDB.

So, are the prime minister and his supporters correct in stating that this was an attempt to topple a democratically elected prime minister? The story is a little complicated.

Ruling class split

Just as Najib Razak became deputy prime minister, there was already a clear sign—the Altantuya murder—that forces within the ruling elite were moving to topple him. The probability that the professional murderers (two members of Malaysia’s special forces unit)—of an unknown foreigner whose record of entry into Malaysia had been erased, linked to individuals in the highest echelons of power—could be identified signalled a split in Malaysia’s ruling class.

The systematic leaks against Najib, his deputy Muhyiddin Yassin, and close associates since then were simply a new development in UMNO in laying the groundwork for removing unpopular leaders. The advent of technology, such as electronic copying devices, blogs and social media, facilitated more in-depth and focused leaks, while splits at the highest levels of the government meant highly confidential information was now being leaked by those trusted with this information and made easily available to the public.

The reliability and veracity of reports from sources such as the Sarawak Report and The Edge, and from many other whistleblowers, were never questioned—only the manner in which the information had been acquired. This was in stark contrast to information from UMNO, which was always dismissed as fraudulent.

A primary reason for Najib’s remaining in office is the powers accorded to him as prime minister and as president of UMNO. Najib is in full control—of his cabinet and the majority of the higher echelons of his party and the Barisan Nasional coalition, of most of the clerical class and senior civil servants, and of most of the monarchy and the elite business class.

Although the majority of Malaysians voted against Najib at the 2013 elections—despite his expending billions of ringgit through direct transfers of money to Malaysians, for example, through the 1Malaysia People’s Aid (BR1M) assistance for households program, and on development projects—he remains in power because the system is designed to keep the ruling party in power. Najib’s popularity among the Malays, the traditional UMNO base, is now at an all-time low.

All attempts by his detractors within UMNO to humiliate him into resignation have so far failed, and this strategy is no longer an option. Attempts to use institutions such as the attorney general’s office, MACC, the Central Bank and parliament to remove him have also failed.

Reputation damaged

No doubt Najib’s opponents will continue to try to destabilise his administration, although it will no longer be efficacious. This means that the reputation of institutions associated with the prime minister, such as the monarchy and Islamic religious bodies—and also Barisan Nasional—will continue to suffer.

Realignment within and between the coalitions that form the government is also taking place. The higher echelons in the Pan Malaysian Islamic Party (PAS) have cast their lot with Najib, while the majority of moderates in the party, who were removed from the leadership in the party election, have formed a new party.

This development has introduced further complexities within the opposition ranks. Segments of Anwar Ibrahim’s party, Parti Keadilan Rakyat (PKR), favour continued cooperation with PAS, while others—particularly the Democratic Action Party—want to sever ties with PAS completely. The opposition in general has no qualms about Najib remaining in power, as he is a symbol of all that is wrong with the UMNO, Barisan Nasional,—and Malaysia.

Barisan Nasional itself has no-one to turn too. Former prime minister Mahathir Mohamed’s 23 year tenure robbed it of capable leaders, leaving only Najib as an acceptable option for the leaders in all 13 parties that comprise BN. Neither Najib’s deputy Zahid Hamidi nor the former deputy Muhyddin Yassin are as widely accepted.

Meanwhile an increasing number of Malaysians are organising themselves. The rising number of strident youth and student groups, ethnocratic and Islamic groups and also secessionists groups, particularly in Sabah and Sarawak, are indicators that a sizeable number of Malaysians are fed up with both sides of the political divide.

The current political and institutional factors in Malaysia will ensure Najib remains in power—at least until the next election, scheduled for 2018. However, the extent to which Najib’s detractors will go to try to remove him before then—and the extent to which Najib will go to remain in power are the important questions.

This post first appeared in the Asian Studies Association of Australia (ASAA) blog.