REFORMS are difficult in Malaysia because the country is ruled by a “three-headed monster” of corruption, communal identity, and the concentration of power wielded by Umno, former CIMB Group Holdings Bhd’s chairman Nazir Razak said.

He described the monster as being hard to slay and said that past attempts at reform have often failed.

These negative traits came about unintentionally from the aftermath of the May 13 riots in 1969, Nazir said.

The National Operations Council (NOC) then brought positive outcomes such as political stability, poverty reduction due to rapid economic growth, and intercommunal wealth rebalancing.

However, increased corruption, hardening communal identity, and Umno’s concentration of power were the negative effects that came out of it. 

“Over time, these three negative effects do and arguably overwhelm the positive impacts of the system, so much so I have often described Malaysia as being ruled by this three-headed monster,” he said in his keynote address at The Pandemic and The Case for a National Reset webinar.

“It is a monster because it is hard to slay. It fights off any attempts of reforms and there have been many attempts, notably in the earlier years of the (Abdullah Ahmad) Badawi, Najib (Razak), and the second Dr Mahathir (Mohamad) administration, but without much success,” he added.

He said there was considerable success in Abdullah’s reforms for government-linked companies (GLCs). However, progress was soon reversed.

“In the case of Abdullah’s GLC reforms, there was initially considerable success. But progress was soon reversed and GLCs were dragged into the realm of politics with leadership appointments, financial scandals with the likes of Felda, Tabung Haji and most dramatic of all, 1MDB,” he said while adding that the 1MDB debacle shook the very foundation of Malaysian politics.

Nazir, who is the brother of former prime minister Najib Razak who oversaw 1MDB, said the Covid-19 pandemic has exposed the country’s systemic flaws.

“Malaysia went into this pandemic with unstable politics, subpar economic growth, high government debt levels, weak foreign direct investments, endemic corruption, uneasy intercommunal relations, and high talent outflow,” he said.

While former prime minister Muhyiddin Yassin’s government seemed to have had things under control initially, political dysfunction snatched the initial victory away, he added.

“Muhyiddin’s weak majority also made it difficult for him to hold politicians accountable and the fractured nature of Malaysian politics also meant that despite the onset of a war (the pandemic), we could not get any form of cooperation from across the aisle,” Nazir said.

He added that the high national debt also limited the government’s capacity to provide fiscal support and impeded it from raising funds through windfall taxes and other avenues.

“On the social front, Covid-19 exposed our underinvestment in healthcare, social safety net, and digital infrastructure.

“We saw Malaysians struggling to put food on the table with the white flag (movement),” he said, while also referring to the plight of migrants.

“In short Covid-19 was far more debilitating than it should have been because of our systemic functions. It will be a tragedy if we don’t learn the hard lessons that are in front of us and reset,” he added.

He said Malaysia must look at history during the early 70’s and how the NOC, which was set up during his father, former prime minister Abdul Razak’s tenure, had crafted structural reforms.

“We need to do that now,” he urged, while acknowledging the difficulty in pushing for change given the state of Malaysian politics, which is intertwined with race and religion. – September 10, 2021.