— Tengku Razaleigh

Although its size remains a mystery, we are glad to be told that the mini-budget will now be bigger and more comprehensive. This is because we have now discovered that the crisis is “more serious than anybody anticipated,”

I wonder who this ‘anybody’ is, and what remote mountaintop he has been living on.

Let’s see if what happened within the month of September 2008 alone in the US was serious enough to wake anybody up:

  • The US Government had to take over Fannie Mae and Freddie Mac
  • Merrill Lynch, AIG and Wachovia had to be rescued
  • Goldman Sachs and Morgan Stanley were turned into bank holding companies.
  • Lehman Brothers submitted the largest bankruptcy filing in US history at USD639 Billion.
  • The Dow fell 777.68 points in a day.
  • There was a massive electronic run on the money markets, with 550Bn reportedly being withdrawn within one two-hour period.
  • The financial crisis became the dominant issue of the US Presidential campaign
  • Henry Paulson, the US Treasury Secretary, had announced a proposal for a USD700 Billion bailout.

By early October, the country of Iceland was bankrupt and the leading central banks of the world had taken the drastic step of making a coordinated interest rate cut. Global credit flows were paralyzed. The global free market system tottered on the brink of an abyss.

Seven months ago it was clear that the world faced the worst financial and economic crisis since the Great Depression.

The world’s markets for goods, services and finance are now tightly integrated by trade, distributed manufacturing and huge flows of  capital. They are electronically linked. Globalization ensures that the crisis is evolving and spreading in ‘internet time.’

Back home our response to the crisis remains bound to bureaucratic and political timetables.

As I said in my last posting, the age of father-knows-best central planning is over. We need quicker, more responsive government. This implies a greater ability to gather and process information, formulate plans, put them into action and measure the results of that action.

We are still not sure if and how the first two stimulus measures have been translated into action.

Meanwhile, tens of thousands have already lost their jobs. The effects of the drop in manufacturing activity have spread to the retail sector as domestic consumption has contracted. Credit remains scarce.  Our poor, especially our urban poor, are at high risk.

It now looks like the downturn will last not one or two but three or four years. We face a cascading series of difficulties at just the moment when our political system is broken and our basic institutions appear to be dangerously decayed.

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Even in the best of times, it is bad practice to run an economy on a political timetable. In this unprecedented global economic meltdown, it is a disastrous practice.

We have an economic crisis on a scale none of us has ever seen before. Despite being spared the first wave of financial repercussions of this crisis, we are fully exposed to the collapse of the flow of global manufacturing. The value of the retirement savings of America’s Baby Boom generation has been halved. Their demand for Asia’s manufactured goods will be drastically reduced. This disrupts the entire system of global manufacturing whose largest consumer and debtor has been the United States. In nett terms, Asia manufactured and America consumed. Asia lent, America borrowed. That arrangement is over. Asia’s manufacturers will have to rely more on an expanded domestic demand, overwhelmingly from China. A new global economic order will have to emerge from the destruction wrought by this crisis.

What are we doing about this crisis and opportunity?

We need to be prepared to weather this crisis, but more than that we have to be prepared to come out of it equipped for this new landscape, which will be dominated even more than it has been by the growth of the BRICs (Brazil, Russia, India and China).

The last decade has seen us slip from being a model of development and growth to an also-ran economy.

I have argued (see here and here) that we need to get beyond thinking merely about “stimulus packages” in how we attack this problem. It’s not about throwing money at a problem. We need an economic plan, a strategy, a vision for what we want to excel at, how we are to reform and restructure the economy so that we emerge more competitive, instead of having just “survived” passively. And we need to organize ourselves to execute these plans.

In the Great Depression of the 1930’s, the Americans built their national highway system. The Germans built the Autobahn. Eighty years later this infrastructure continues to support economic growth in these countries.

South Korea used the Asian Financial crisis to reinvent itself as the broadband leader of the world.

I have suggested we should develop our petroleum industry to focus on improving energy security for the region. This involves developing oil and gas and petrochemical industries and oil and gas trading and financing capabilities. It involves building storage and transport facilities that tap our ancient geographical advantage as the maritime crossroads between China and India, East Asia and the West.

I have also suggested a national housing programme.

The point is to have an idea, and to be absolutely serious about the execution of that idea.

How we cope with the present crisis will determine whether we come out with a chance at being once more in the leading pack, or seal our irrelevance even in our own backyard.

So far, all we have seen are an RM5 billion plan to prop up the stock market and a RM7 billion stimulus package. There appears to be no clear economic thinking behind either measure, and nobody seems to know what has and has not been implemented. So far the government has not revised its official growth estimate of 3.5%. This means we have essentially failed to respond to a problem that in any case we don’t officially acknowledge exists.

And so far all details of the Second Stimulus package are a secret. The Prime Minister has dropped the hint that “it will be bigger than the first”.  All we know about the thinking behind this package is that “with enough money, growth is still possible.”

Estimates of the duration, proportion and depth of the crisis are still being worked out by world markets. So there’s no need to stand by outdated projections as if they were magic numbers. We are past the era of central planning. Economic plans should be transparent and discussed openly so that the public and the business community can respond to them.

The US stimulus package was debated heavily before it was passed. The world knows what the US, UK, China, Singapore, Australia and South Korea will do in response to this crisis, but not what Malaysia or North Korea will do. We need greater clarity, and quick, transparent decisionmaking. There is no need to politicize growth estimates or to time stimulus announcements as if they were political goodies.

This is a rescue we are talking about, and our future is at stake.

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I was recently asked to answer some questions for an Australian news programme:

1.      Barisan Nasional has won several apparent victories over the Opposition in the last few weeks, but you have been critical of some of these. Could you explain why?

It depends what you mean by victory, and victory for whom. What happened in Perak recently has all the appearance of a desperate and ill-conceived grab for power, with constitutional consequences that are still being played out.

Barisan Nasional’s loss of popular support is the real issue, so our task must be to regain support.

We really have lost support. March 8 was not a freak result. We have had two by-election losses, both of which were exacerbated by our own members abstaining, or voting for the Oppostion, to have that message drummed into the party leadership.

Victory would be to regain that support, and to translate those gains constitutionally into a stronger presence in the government. It would mean coming to terms with the true causes for our loss of support, and addressing those causes with real reform. Yet our leadership has done nothing of the kind over the last year. Instead we celebrate “victories” achieved by tricks and shortcuts liable to lose us even more ground with the Malaysian electorate.

These moves harm the long-term prospects of Umno, and especially those of Barisan Nasional. However, they may serve candidates trying to secure their standing within the party in view of upcoming party elections. Weak leaders will pass off pyrrhic victories for the real thing, rally party members in the opposite direction from reform, and march them farther from the expectations and values of the Malaysian electorate.

No party can survive long with leaders who are so ready to sacrifice its viability for short-term and short-sighted political interests.

2.      Some commentators speak of the need for BN and, particularly, UMNO reform, in particular a return to a more negotiated style of government. How far would you say UMNO has strayed from this consensus building mode of government, and how far is such reform necessary?

Consensual leadership is BN’s value proposition, if you will. If we lose this, we might as well close shop.

The negotiated power-sharing model that BN practiced successfully in the past requires a genuine partnership among the leaders of the various parties. It takes far more strength and ability to negotiate a consensus than to carry decisions by numerical dominance alone. As the dominant partner of this coalition, Umno has a special responsibility of leadership in this process. It means we pick leaders with the ability and moral authority to mediate consensus and hold a moderate, pragmatic centre while maintaining an ethnic support base. This is something that cannot be done by weak or tainted leaders.

The consensus building mode of government requires leadership formed in a tradition in which the skills and relationships needed to govern in this manner are consciously handed on. But the party succession is now dominated by ethnic champions or party warlords with little else to qualify them to govern a plural society with a sophisticated, trade-oriented economy.

There is also a structural reason for the incipient breakdown of our consensual model. For the model to work, each of the major ethnic parties must credibly and reliably represent its ethnic base. This is no longer the case. MIC, MCA, and now possibly UMNO, have each lost the majority support of the ethnic communities they claim to represent. The very raison d’etre of the model, and perhaps even of these parties, is at stake.

Nevertheless we still need this model of consensus-based government, helmed by a Malay leadership imbued with a sense of duty to Malaysia in all its plurality, East and West. The country still needs capable, centrist leaders who are also real leaders of the Malay and Muslim community, able to anchor and partner a multiracial and multi-religious consensus for a progressive country. At the outset this means a solid commitment to the rule of law which alone guarantees our form of government by constitutional monarchy and the rights and freedoms of all Malaysians. Umno is failing to provide this leadership but this does not mean we don’t still need it, and need it desperately.

3.      Last week, the three contenders for the post of UMNO Youth chief held a live debate. Do you think these representatives of the future leadership are likely to embrace any necessary change?

Their individual records on that score have not inspired hope. None of them has presented a consistent and principled orientation towards reform. Some views expressed in that debate actually called for reversion to bad old form rather than for reform. If the party continues on its present recourse, the question would be moot.

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This is not the first constitutional crisis in which the rights of the Rulers has been touched upon. Today’s crisis in Perak is about the legitimacy of the process by which a new state government has been formed in Perak. It’s not about the status of the Rulers. In comparison, the constitutional crisis of 1993 arose from an ugly confrontation between Umno and the Rulers over a question that had direct and profound implications on their sovereignty and that of the Yang Dipertuan Agong. For good reason, the Head of State in most countries may not be prosecuted in an ordinary court of law. In 1993, the government campaigned to remove this immunity through amendments to the Constitution.

I opposed these amendments.

In the event, Rulers and Parliament were railroaded by the  government of the day and the amendments passed. These are the very same amendments which today make it legal for a Ruler to be prosecuted. Mr Karpal Singh, though I disagree with him, was acting well within rights that an Umno-led government enacted in 1993 when he earlier proposed to sue DYMM the Sultan of Perak.

Let’s reflect on this irony. Does Umno serve the Rulers more genuinely by upholding and protecting the Constitution which guarantees their status, or by histrionic displays tuned for the coming Umno elections?

This bears upon the question of the kind of leaders, and the kind of party, we want. Do we want to be led by those who can understand and address the foundational issues facing our society today, and shall we have leaders capable of forging “mutual consent by debate and discussion, inquiries and elections” or shall we again be landed with those whose main talent is to strike poses that people outside a small, insecure circle in Umno, and particularly Malaysia’s internet generation, find ridiculous?

Was greater harm done to the sovereignty of the Rulers in 1993 through Parliament or a week ago on the streets of Perak?

And is today’s Umno, with its inconsistent adherence to the rule of law, its inconstant respect for the key institutions of our country, a credible or effective defender of the Rulers and of the laws upholding thisinstitution?

Or do we actually harm what we claim to protect?

Below is a video recording in two parts of the speech I made in Parliament in 1993 opposing the amendments to the Constitution.

I stand by my argument.

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Umno is a party with great deeds to its name.

Umno was founded in 1946 to defend the rights of the Malays and the Rulers. It formed an alliance to unite the people of Malaya in working out and achieving our independence in 1957. In 1963, Umno’s leader, Al-marhum Tunku Abdul Rahman Putra Al-Haj, worked out an even bolder vision, the formation of Malaysia, which on  Sept 16, he proclaimed, had been  “decided upon after much care and thought,” the fruit of “mutual consent by debate and discussion, inquiries and elections”

He declared his pride in the way “we have created Malaysia through friendly argument and compromise. The spirit of co-operation and concord is living proof of the desire we share for a common destiny.” This spirit he called the very “basis of Malaysia” and its “augury for the future.”

Malaya and Malaysia were achievements of vision executed by patient deliberation. Umno’s leadership articulated that vision, won others over to it, and helped forge the constitutional underpinnings for a new nation in negotiations over many months. “Step by step the concept came to life.” Constitutional discussions were pursued in the teeth of an internal communist insurgency, violent confrontation with neighbouring countries determined to frustrate the union, and under the cloud of the Cold War.

Nevertheless, Tunku said, we succeeded “because the ideal of Malaysia caught the imagination of all the peoples concerned.”

This, in its youth, was how Umno realized its mission of being the party of the Malays and the party of the nation. This is how Umno protected the sovereignty of the Malay rulers, and achieved the eminence of Malay political leadership. We were able to “catch the imagination” of all the peoples.

We had the confidence and leadership to envision a new nation not once but twice and to bring it to birth. Despite there being far fewer educational opportunities for young Malays in those days, we had the calibre of leaders to articulate this vision, draw diverse communities into it, and to found it on the rule of law. We had the confidence to unite people under a  vision of the common good.

Contrast the breadth of vision we had fifty years ago, and our method of naming and solving our problems then, even in the face of serious threats to our security, with how we conduct ourselves now, having surrounded ourselves with self-made threats while real challenges such as education and the economy go begging.

Umno’s most recent achievement has been to wrest power by underhanded means from a democratically-elected state government. In doing so we came across as the party of the desperate, not the confident.

Contrast the broad field we ranged over, with the narrow stage we now strut before a shrinking audience.

Today’s Umno, under its present leadership, is probably beyond reform. Our leaders are the problem, and they have structured the party, bullied and bought it, so that they cannot be replaced by those who would lead to serve.

But no other party can do what Umno once did, and must do again.



Tunku Abdul Rahman’s Speech on Malaysia Day 16th September 1963



THE great day we have long awaited has come at last – the birth of Malaysia. In a warm spirit or joy and hope, 10 million people of many races in all the States of Malaya, Singapore, Sarawak and Sabah now join hands in freedom and unity.

We do so because we know that we have come together through our own free will and desire in the true spirit of brotherhood and love of freedom.

We have made our decision after much care and thought, finally arriving at mutual consent by debate and discussion, inquiries and elections held over two and a half years.

We can feel proud indeed of the way we have created Malaysia through friendly argument and compromise. The spirit of co-operation and concord is living proof of the desire we share for a common destiny.

What better basis for Malaysia can there be, what finer augury for the future?

The road to nationhood has not been an easy journey. Surprises and disappointments, tension and crisis, have marred the way.

The peoples of Malaysia, however, have endured all trials and tribulations with confidence and patience, calmness and forbearance, with faith in our final goal – Malaysia.

In the first eighteen months of political and constitutional discussions, beginning from May 1961, things went ahead favourably, because the ideal of Malaysia caught the imagination of all the peoples concerned.

We can all recall the remarkable enthusiasm and interest aroused then in the evolution of Malaysia.

Step by step the concept came to life. The activities of the Malaysia Solidarity Consultative Committee, the merger talks between the Federation of Malaya and Singapore, the broad agreement reached in London to establish Malaysia, the appointment of the Cobbold Commission and its exhaustive inquiries in the Borneo Territories, and the subsequent establishment of the Inter-Governmental Committee – all these steps were taken in internal harmony and in full public view.

Suddenly towards the end of 1962 the situation changed. Communist China committed unjustifiable aggression against India. I stood up for democracy and condemned China’s attack.

One immediate reaction was that Communists throughout South-east Asia retaliated by an indirect assault upon me by opposing my idea of Malaysia, and they set about creating every possible difficulty to baulk Malaysia.

Other external complications occurred – the Philippines’ claim to North Borneo, the sudden and abortive revolt in Brunei, and the startling adoption by Indonesia of a policy of confrontation against Malaya.

All these events projected an international crisis in South-east Asia this year, the climax coming in June. The successful meeting of the Foreign Ministers of Malaya, Indonesia and the Philippines, followed by my own conference with President Soekarno in Tokyo eased tension considerably and brought new hopes for harmony and peace.

Prospects for a Summit Conference were good, confrontation from Indonesia subsided, so we went ahead with arrangements for the final talks in London on Malaysia.

The Malaysia Agreement was duly signed in early July. Unexpectedly Indonesia reacted most strongly, renewing its policy of confrontation with the result that the Summit conference of leaders of Malaysia, Indonesia and the Philippines at the end of July began in an atmosphere of doubt.

The Summit conference ended in an agreement by the three countries to form an Association of States of Malay origin to be known as Maphilindo.

It was agreed that in order that the partners in Maphilindo could welcome Malaysia the United Nations Secretary-General should be asked to ascertain anew the wishes of the peoples of Sarawak and Sabah. That request has not been implemented.

Now finally the peoples of Malaysia are celebrating the establishment of Malaysia. This is the time to think earnestly and hopefully on the future of Malaysia as the whole country resounds with joy.

So I pray that God may bless the nation of Malaysia with eternal peace and happiness for our people.

The Federation of Malaya now passes into history. Let us always remember that the Malayan Nation was formed after many difficulties during a long period of national Emergency, yet its multi-racial society emerged, endured and survived as a successful and progressive nation, a true democracy and an example to the world of harmony and tolerance.

As it was with Malaya, so it can be with Malaysia. With trust in Almighty God, unity of purpose and faith in ourselves, we can make Malaysia a land of prosperity and peace.

In doing so let every Malaysian in all the States of Malaya, Singapore, Sarawak and Sabah ensure that our Malaysia is truly worthy of the aims and hopes we have shared, the trials and stress, we have endured, in working together to achieve our common destiny.


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