Malaysia Defence and Security Report Q3 2008

BMI's newly updated Malaysia Defence & Security Report Q3 2008 provides an assessment of the country's internal and external security situation.

Broadly speaking, the security situation across South East Asia in 2008 has remained stable, if not slightly improved. Internally, Malaysia has been able to maintain strict controls, in particular over the flow of information, that appear effective in checking terrorist threats.

On the other hand, the political situation appears on a tipping point where major change may occur. The United Malays National Organisation (UNMO) party has ruled Malaysia since independence. It won 90% of the vote and 12 of the 13 states in 2004, but slumped to its worst ever result in this year's elections, receiving just 62% of the vote and losing four states. Multiple issues are in play and multiple forces at work. The government decision to suspend visas for migrant Indian workers caused great resentment (and raised the risk of violent protests) among the large number Indians in the Malaysian population. Certainly a protest vote from this community against the government had been anticipated. In the end, though, it was support for Islamist party Parti Islam SeMalaysia (PAS) that was more responsible for eroding the government vote.

In view of the weak electoral performance, the position of Prime Minister Abdullah Ahmad Badawi may well come under threat when the UNMO elections are held in December.

We may well see a more accommodating UNMO as it tries to garner renewed support. At the same time, the opposition parties will become more strident in the their demands to address what they perceive to be a gerrymander in favour of the UNMO. The challenge for the opposition parties lies in the lack of cohesion among them that makes forming a coalition that could challenge UNMO unlikely.

The backdrop to this political manoeuvring will be rising world oil and food prices and the loss of some manufacturing from Malaysia to lower cost labour forces in countries such as China and Vietnam.

While the coming period will certainly be challenging for Malaysia, we continue to believe that Malaysia will remain a stable, multiracial country, with a population that is bound together by a strong sense of nationalism and an aversion to religious extremism.