The Many Wars of Malaysia’s Anwar Ibrahim

This Policy Brief examines the rise to power of Malaysia’s Anwar Ibrahim – a story of political perseverance and hope with few parallels – and how he has fared in handling the Southeast Asian country's many challenges in his first year in office. A rare intellectual-politician, his career has careened from street protests to the centre of power, back to street protests, incarceration, custodial torture, repression, then slow progression back to high politics, and eventually the apex of political power. Becoming the fifth prime minister in as many years in 2022, stability has been his priority, complicating his dual task of revving up the economy and battling the ever-lengthening shadow of Islamist conservatism over Malaysia. Anwar’s report card after a year is hence a mixed bag of some hits and many misses amid abounding constraints.

Contents

• Anwar’s Journey
• Identity Politics
• Fixing Malaysia
• Countering Islamism
• Anwar’s Malay Dilemma
• The Task Ahead

It was only fitting that Anwar Ibrahim would complete his first year in power against the same backdrop of politicking and intrigue that marked its beginnings when the world’s only remaining democracy icon took the helm of Malaysia after a protracted period of political uncertainty and an even longer personal struggle.

Anwar ascended to power at a critical time for Malaysia following a highly divisive election in November 2022 amid the polarizing surge of an Islamist party in the diverse country beset with economic challenges. The Malaysian Islamic Party (PAS), which has become the single largest party in Malaysia’s parliament for the first time in the country’s history, has been gaining strength in the vacuum left by the collapse of an old political order led by Malay nationalist UMNO party.

Having taken the country’s leadership at the head of a precarious coalition after the election failed to throw up a clear winner, Anwar is backed by the necessary legislative numbers but isn’t immune to political manoeuvres threatening his government’s House majority. Becoming the fifth prime minister in as many years, stability has thus been a priority, complicating his dual task of revving up the economy and battling the ever-lengthening shadow of Islamist conservatism over Malaysia. As a result, the much-needed reforms needed to steer Malaysia’s economy out of its current doldrums have become a hostage to its politics.

The end of Anwar’s first year as prime minister coincided with yet another reminder of the challenges to his survival: what Malaysian media calls the “Dubai Move”—a rumoured conspiracy to topple his government in a meeting between opposition leaders and some government figures on a trip to the United Arab Emirates (UAE) —and the opposition daring him to take a floor test in the House to prove his majority.

The objective of the Dubai meeting was supposedly to identify government MPs ready to switch allegiance, which happens so frequently in Malaysia that an “anti-hopping law” had to be enacted in 2022. The law does not, however. foreclose the possibility of parties changing coalition partners or individual MPs from crossing over the aisle. Only in November, four opposition parliamentarians declared their support for Anwar, bolstering his two-thirds majority. But the government is still pushing a Fixed Term Parliament Act safeguarding a sitting government for a full term, underscoring the persisting political uncertainty despite the apparent legislative strength.

“Dubai Move” marks an escalation in the crossfire between Anwar and his enemies. His government has escalated an anti-corruption crackdown, going after bigwigs in the Malaysian elite. The Malaysian Anti-Corruption Commission recently seized a 60-story building in capital Kuala Lumpur as part of its investigation into former finance minister Daim Zainuddin, a key ally of Anwar’s arch-enemy and former prime minister Mahathir Mohamad. Mahathir’s son Mirzan has been interrogated and ordered to declare his assets. Former prime minister Ismail Sabri Yaakob is being questioned over possible misconduct in government spending while another former prime minister, Muhyiddin Yassin, has been charged with corruption.

Though the anti-corruption drive is in keeping with Anwar’s long-running public crusade for probity in public life in a country notorious for its kleptocratic ruling classes, his critics believe it is aimed more at neutering the opposition to him. But public opinion is proving to be a far greater challenge than machinating political rivals. A recent survey by polling group Merdeka Center found support for Anwar’s government was ebbing because of concerns over the economy. Nearly eight in 10 survey respondents said the economy is the top issue facing Malaysians today. The survey, held in late October, found Anwar’s own approval rating had plunged to 50% from 68% in December 2022. Some 60% of respondents said Malaysia was moving in the “wrong direction.” The approval of the government fell to 41% from 54%.

Another recent poll by Malaysian think tank Ilham Centre found Anwar’s rating stood at a lowly 24% among ethnic Malays – compared to 88% among the ethnic Chinese and 81% among the ethnic Indian community.

The economy continues to disappoint, growing slower than expected last year. Trade in 2023 fell 7.3% from the previous year, dragged down by shrinking exports to a slowing China, Malaysia’s largest trading partner. Rising costs of living and unemployment—the latter now back to pre-Covid rates—are adding to the gloom, dampening the popular mood that greeted Anwar’s rise to power a year ago after a lifetime of leading movements battling the establishment.

Anwar’s Journey

Anwar’s rise to power is a story of political perseverance and hope with few parallels. A rare intellectual–politician, his career has careened from street protests to the centre of power, back to street protests, incarceration, custodial torture, repression, then slow progression back to high politics, and eventually the apex of political power. Anwar’s dramatic political journey is the stuff of legend – and Netflix, where the biopic “Anwar: The Untold Story” has been topping the list of the most-watched shows in Malaysia.

Anwar entered public life in the early 1980s. As the most prominent Muslim youth leader and an influential Islamic intellectual, he was taken into the cabinet by the then UMNO prime minister Mahathir to co-opt and neutralize a growing Islamist movement inspired by the Iranian revolution in the late 1970s. Having the state spread Islam and consolidate the privileges of Malays were central to Mahathir’s project of retaining popular Malay support, fusing Malay and Islamic identities.

Malays had been left disproportionately poor by colonialism compared with the Chinese, so an elaborate affirmative action program was instituted for the “bumiputera” (or, the sons of the soil) privileging Malays and the indigenous tribes over others in everything from university seats and jobs to business loans and housing. With the help of Anwar, Mahathir further entrenched this system, and further Islamized Malaysia’s society and institutions.

Anwar rose rapidly under Mahathir, finally becoming his deputy and heir apparent, before they fell out over corruption and cronyism during the 1997 Asian financial crisis, when Anwar was the finance minister. Anwar opposed Mahathir’s handling of the crisis, especially his rejection of an International Monetary Fund (IMF) bailout, capital controls on global investors, and protection of the crony class from the crisis. He felt Mahathir’s policies amounted to protecting the Malay business elite and that Malaysia, by rejecting the IMF’s policy proposals, was losing an opportunity to carry out the much needed structural reforms to free the economy of patronage and graft. As their differences escalated, Mahathir sacked Anwar, following which Anwar launched what came to be known as the reformasi movement, demanding reforms for a truly democratic and multicultural Malaysia freed of excessive government power with an end to the system of institutionalized racial discrimination that bred a crony Malay elite while doing little for poor Malays.

Mahathir retaliated by slapping him with bogus charges of corruption and sodomy. Anwar spent the next six years in jail, enduring custodial torture that has left him with lifelong physical impairments. His persecution and imprisonment continued to fuel the reformasi movement, however. He was released in 2004 but as his new party edged closer to power, the UMNO government, this time under then prime minister Najib Razak, sent him back to jail in 2015 on charges of sodomy.

Anwar’s luck began to turn as popular anger rose over the 1MDB scandal of embezzlement of the country’s sovereign wealth fund that eventually sent Najib to jail for12 years. Mahathir came out of retirement at 92, vowing to dislodge his old party from power and joined hands with Anwar in a historical political reconciliation. The alliance led by Mahathir and Anwar won the 2018 election, defeating Najib and ousting UMNO, Malaysia’s default party of power, for the first time in 61 years.

They made a pact to share power under which Mahathir would have the first go. But it turned out Mahathir had no intention of handing over the reins to Anwar. After more political upheavals and realignments, two prime ministers, and a debilitating pandemic lockdown under a months-long state of emergency, Anwar’s rise to power finally brought hopes for stability after a lengthy period of political turmoil.

Identity Politics

Despite the lingering political threats to his government, as evidenced by the “Dubai Move,” Anwar’s completion of a year in office has partly fulfilled that expectation of stability, but has left much to be desired otherwise. When he took power after three decades of struggle, it felt like Malaysia’s forever prime minister-in-waiting had finally got a chance to cast his country in his promised mould of inclusiveness and corruption-free dynamism. But a year into power, the epochal reforms necessary to achieve these, and which he once demanded of the establishment, are nowhere in sight.

Anwar is no longer the idealist anti-establishment rebel everybody loves. He is the establishment. The honeymoon of his election is long over, and he has his work cut out for him. Malaysia’s economy is badly in need of the old mojo that once made it an “Asian Tiger.” And its incredibly diverse society is at the risk of being torn apart as religious and racial assertion rise with a renewed intensity, threatening the delicate racial balancing that has tethered Malaysian politics since race riots between the Chinese and Malays in the late 1960s.

When a Malay leader recently demanded that Anwar use his two-thirds majority to amend the constitution to ensure that only Malays can become prime minister, Anwar replied that there was no need for any constitutional amendment as every prime ministerial candidate has always been a Malay anyway. The controversy was triggered after an ethnic Chinese leader observed that there was no constitutional bar to any Malaysian holding the top executive office, irrespective of race, religion or gender – an innocuous statement of fact. A crusader for equal rights, Anwar might have responded differently in a different time, but Malaysia’s politics has moved so far to the right that even Anwar, himself subjected to frequent charges of not doing enough to protect Malay interests, has to tread cautiously.

One of the few Islamic democracies in the world, 50% of Malaysia’s 33 million population is ethnic Malay, 11% indigenous tribes, 21% Chinese and 6% of Indian extraction. Islam, the religion of ethnic Malays by law, is the state religion, but all other religions enjoy freedom under the constitution.

Malaysia follows the common law system. Sharia law exists but is administered lightly and applies only to Muslims for family matters such as inheritance and the conduct of Islamic practices. PAS, the fundamentalist Islamic party fast emerging as a national force, wants to change all that and is pushing for stricter forms of Sharia (‘Syariah’ in Malay), such as public caning and stoning. In a landmark decision Malaysia’s top court this month declared unconstitutional more than a dozen such Islamic laws enacted by PAS-ruled Kelantan state. The Federal Court ruled that the state government did not have the power to enact the laws, on offences ranging from sexual harassment to intoxication, as they are already covered in civil law and are the responsibility of the federal Parliament. The Perikatan Nasional bloc led by PAS now rules four of Malaysia’s 13 states. Many worry that if its influence expands and it comes to national power, PAS could rewrite the constitution and destroy Malaysia’s cosmopolitan fabric. The big question facing Anwar and Malaysia is if he can stop the march of Islamist forces and create an economic momentum to neutralize the upsurge in identity politics.

The initial signs don’t look good.

Anwar managed to stitch together a coalition government, but PAS, apart from emerging as the single largest party in the Parliament in the last election, again made major gains in important state elections in August 2023 covering 60% of the population, confirming its rising popularity.

Anwar is thus severely restricted by his political compulsions. Since he lacks the numbers in the House, he was forced to include in his Pakatan Harapan (Alliance of Hope) “unity government” several disparate parties, including the graft-ridden UMNO, the object of his agitation since 1998. He is now blamed for going easy on corruption-tainted UMNO leaders, a perception that is eroding the righteous image he forged with his long struggle against the country’s endemic corruption and his own record as a clean administrator when he was a rising star in the government in the 1980s and the 1990s.

The decision of his government’s solicitor-general in September to withdraw 47 corruption charges against the deputy prime minister and current head of UMNO, a key Anwar ally, sparked allegations of political manipulation. The move led to speculation that even ex-premier Najib, who oversaw Malaysia’s greatest corruption scandal that led to his undoing, might be allowed to walk free as Anwar needs a stronger UMNO to checkmate PAS. Malaysia’s Pardons Board, headed by its king, this month issued a royal pardon for Najib, halving his 12-year prison sentence and slashing his fine to a fourth. Najib, who began serving his sentence in August 2022, will now be set free by August 2028, and possibly even earlier if granted parole, well in time for Malaysia’s next general election by early 2028. Najib’s release has triggered anger and shock, with much of the blame aimed at Anwar’s government for allowing it. Even though Anwar is taking great pains to explain it away as a royal decision in which he did not have any part, the sense of betrayal is widespread.

Fixing Malaysia

Anwar’s first year has been ruled by the imperative of survival and his strategists understandably prioritized stability over everything, the idea being that he needs to stay in power for a reasonable amount of time to restore stable politics and reset Malaysia. Agrees the Sultan of Johor, who has just taken over as Malaysia’s new ruler for five years in January, under the country’s rotational monarchy system in which its regional kings take turns to head the country’s constitutional monarchy. Anwar needs more time to prove himself as it is not possible to change the country in one year, the Sultan said in a recent interview.

Anwar does need time, but time is of the essence as Islamists close in. He was chosen early for power but power has come to him late in life, and at 76, this may be his last chance. And Malaysia’s too.

So, how does he plan to shape the Malaysia of his dreams and protect its multicultural democracy? His two top priorities, Anwar told a recent TIME interview, are reviving the economy while ensuring its fruits are shared equitably; and countering toxic Islamism by spreading inclusive Islam through “proper” Islamic teachings.

For the first, the government’s budget focuses on the low-income groups, including nearly $2 billion in cash handouts to the poorest 60% of the population. This is meant to prevent the most vulnerable from falling prey to extremist ideology. This year the government will roll out a plan to end the blanket subsidies on fuel and electricity that is said to benefit mostly the rich and large corporations, and channel it to low-income households and small traders. Household income is also to be raised through a new wage policy this year.

To generate the cash for such welfare measures, Anwar is spurring investments with policy incentives. His government has drawn up multiple industrial plans and policy roadmaps to steer the economy up the value chain. Malaysia is the third richest country in Southeast Asia, having successfully transformed its economy from one driven by agriculture to a manufacturing hub. But it has been stuck in the middle-income trap, unable to sustain high rates of growth to reach high-income status through new areas of innovation while having grown too rich to retain the old manufacturing competitiveness it once commanded as other low-cost economies catch up.

The new policy incentives include an ambitious $5.3 billion fund for renewable energy and green technology. In his first year, Anwar pulled off an investment coup of sorts by persuading Elon Musk to establish Tesla’s regional headquarters in Malaysia. German chipmaker Infineon is expanding its presence with $5.5 billion while Chinese carmaker Geely is pumping in $10 billion to develop a regional hub.

But the economic challenges remain formidable. Anwar effected his first cabinet reshuffle in December on completing a year in office. Expanding his cabinet size from 66, he has banked on experienced hands and technocrats, particularly in view of the economic challenges. Anwar, who holds the finance ministry portfolio, appointed the head of the country’s largest pension fund as the second finance minister, in a nod of acceptance that a lot more needs to be done.

Anwar’s economic challenges are compounded by the conflicting goals of achieving fiscal prudence and winning over the Malay vote that requires more generous welfare measures. Malaysia’s economic growth is estimated to have slowed sharply to 3.8% last year from 8.7% in 2022, as have exports (from a 25% growth in 2022 to 8% last year), while the ringgit continues to be one of Asia's worst performing currencies, contributing to inflation. The stock market remains listless. Fitch Ratings has reaffirmed its BBB+ credit rating on the Malaysian government’s long-term debt, barely a notch higher than junk bond status, citing “insufficient fiscal consolidation” as one of the reasons. The Malaysian government debt stands at a high 81.6% of the GDP.

Malaysia is likely to transition to a high-income economy between 2024 and 2028, according to the World Bank, but it is struggling to get there. Its productivity growth over the past couple of decades has been lagging global and regional peers. Some 5.6% of Malaysian households live in absolute poverty, making the country’s income inequality markedly high compared to other East Asian countries. The Anwar’s government’s targeted social welfare measures for the poorest sections of the population seeks to address the problem but has limited room for manoeuvre as tax revenues account for only 12 percent of the GDP. Reimposing a hugely unpopular goods and services tax that had to be scrapped, remains politically impossible. The low tax base makes it all the more difficult to make substantial improvements in social protection, health and education that are needed for realizing the full human potential to become a developed economy and neutralize identity- based political forces that thrive on popular resentments.

Countering Islamism

Politically countering intolerant Islam is particularly challenging. Rabid Muslim television preachers and hateful Tik Tok videos abound. Islam has infiltrated politics like never before. Anwar’s party leaders say that in the rural Malay heartland, PAS is basically telling voters that it is the party of God, and only if they vote for PAS, do they get to go to heaven. In control of schools, even kindergartens, and deeply embedded in the social life in rural Malaysia, the Islamist party and its dedicated cadre and extended network of allied organisations give PAS an upper hand.

Anwar wants to counter this with what he calls better Islamic teachings. “If Muslims are not given an adequate understanding of their own religion, Muslims will not survive this challenge of religious fanatics,” Anwar told TIME in the interview. “A more just, equitable system so that no community or part of the country is seen to be ignored or marginalized,” is his goal, he said. His slogan of “Malaysia Madani,” or “Civil Malaysia”—an acronym made up of six core values of sustainability, prosperity, innovation, respect, trust and compassion—that stresses social harmony and civil society, sums up his goals.

But he is in a double bind here. Taking the Islamists head-on and stressing equality puts him at the risk of being seen as anti-Islam by conservative Malays. So, he is trying to reach out to them with pro-Islamic gestures while also stressing multiculturalism. But that does not help allay the fears of others who are put off by Islamized state rhetoric. He wants to impart “better” Islamic teaching to foster religious harmony, while those alarmed by the march of Islamism in Malaysia want less of Islam in the classroom.

Anwar’s noticeably prominent stance on Gaza and a subsequent controversy over student protests is a case in point. Emerging as a leading global voice against the Israeli offensive, calling it “the height of barbarism,” he has led anti-Israel rallies, has delivered rousing speeches in support of Palestine, defied Western pressure to condemn Hamas, and asserted that Malaysia will maintain its ties with the group. His demonstrably ardent pro-Palestine noises are in line with his new projection as the true-blue Malay-Muslim conservative in place of Anwar the cosmopolitan progressive revolutionary since he needs to tap into the majority Malay-Muslim vote to solidify his leadership and stabilize his government. But a viral video in late October of teachers and students in black-and-white checkered Palestinian keffiyeh brandishing toy guns in a Malaysian school amid a government-led Palestine Solidarity Week triggered widespread condemnation and concern.

Many such overtures to the majority community are similarly not translating into Malay– Muslim support while putting off his core voters—urban Malays and the minority Chinese and Indian communities—who are alarmed at the creeping Islamization of politics and society. But the compulsions of coalition politics and the rising tide of identity politics make it imperative for Anwar to try to establish his Islamic connect with Malay voters all the same.

Anwar’s Malay Dilemma

It is not just PAS that has moved far right and is breathing down Anwar’s neck. Even a mainstream leader like the 97-year-old Mahathir, Malaysia’s longest-serving prime minister who has espoused multiculturalism before, now openly says he does not consider the minority Chinese and Indians to be Malaysian as they still have loyalties to “their countries of origin.” He claims a multiracial Malaysia would be unconstitutional and alleges Anwar is trying to “give this country away to outsiders.”

Mahathir’s book “The Malay Dilemma” published in 1970 essentially laid out the intellectual argument for Malay supremacy and the blueprint for the affirmative action program favouring Malays over others. Since independence in 1957, UMNO had engineered a coalition of parties on ethnic lines that ensured ethnic representation while preserving a constitutionally mandated dominance of Malays, with successive UMNO governments since the early 1970s instituting an elaborate affirmative action program for the “bumiputera” (or, the sons of the soil) privileging Malays.

This has had a debilitating effect on the economy and society by killing off merit, stifling competition and innovation, breeding minority resentments, and spawning cronyism by creating a rich Malay elite without doing much for poor Malays. Anwar’s reformasi movement, apart from demanding reforms for a truly democratic Malaysia freed of excessive government power, sought an end to this system of institutionalized racial discrimination. Anwar’s ascent to power at long last understandably triggered hopes of racial justice, but Anwar now finds his hands tied by politics. His critics, however, allege that he isn’t just reluctant to disturb the status quo; he is in fact making it worse by trying to out- Islamize the Islamists with gestures, policies and statements that the minorities find deeply worrying.

The director and producer of a banned Malaysian film about a young Muslim girl who explores other religions were charged this month with offending the religious feelings of others. The Human Rights Watch accused Anwar’s government of prosecuting the two filmmakers to win political support from Malays. His government also banned a film about a Muslim woman seeking to marry her younger boyfriend, even for private screenings. To escape the censors, some Malaysian filmmakers are now looking to launch their works on social media platforms. One such film, Pendatang, the first crowdfunded film in the country, premiered on YouTube in December and went viral. Pendatang, which is a racial slur for Chinese and Indian communities, is a Cantonese-language dystopian thriller set in a nation under legally mandated racial segregation. Within hours of its launch, it garnered 100,000 views and led to calls for the film to be shown in schools.

Earlier, his education minister’s announcement that a collection of Prophet Muhammad’s sayings would be taught at schools caused a stir, before it was clarified days later that it was only meant for Muslim students. Anwar’s administration has increased funding for Islamic schools and moved to table a contentious amendment to further empower Syariah courts. In a video that went viral, he told a student that the 90% quota system for bumiputeras in college admissions would never be replaced by a meritocratic system; he presided over the ceremony for a young Hindu’s conversion to Islam at a mosque; and his government has cracked down on displays of LGBTQ identity, including banning rainbow Swatch watches and two children’s books. Books deemed as un-Islamic are censored or banned, including several titles on Karl Marx and communism.

The Task Ahead

Anwar has also been averse to overhauling the bureaucracy, in particular the religious bureaucracy, the Department of Islamic Development (JAKIM), which has come to wield formidable power and enjoys a greater budget than many other departments. The bureaucracy, almost entirely staffed with Malays, is not only grossly under-representative of other communities, it is also considered unnecessary bloated. With 1.7 million civil servants in a population of 32 million, Malaysia’s bureaucracy is one of the biggest in the world. It is also a hub of productivity-killing nepotism and patronage. State-owned enterprises and government-linked companies and entities dominate the economy, accounting for more than 50% of the benchmark Kuala Lumpur Composite Index.

Here, too, Anwar’s dilemma is that he is up against a hostile bureaucracy that is predominantly Malay and wedded to the old order. That makes it risky to focus on separation of powers and let go of control just when he needs more of it to consolidate it. Not to mention the elite resistance to even a slightest hint of dilution of Malay privileges.

“Reforms if done too rapidly will lead to the collapse of the system,” Anwar said in a recent TV interview, citing the example of the popular backlash when a previous government tried to ratify the International Convention on the Elimination of All Forms of Racial Discrimination, as it was seen as incompatible with Malaysia’s constitutionally enshrined affirmative action policies. Such has been the political scaremongering over a possible loss of Malay dominance that even discrimination is seen as a right.

These fears are accentuated by the prospect of a long-overdue delimitation of electoral constituencies. Malaysia suffers from an acute problem of electoral malapportionment by way of a vast disparity in population sizes of constituencies. The constituencies of rural heartland—overwhelmingly Malay and the bedrock of Malay–Muslim chauvinistic politics—are considerably less populated than urban constituencies, where the mixed communities of Chinese, Indians and Malays tend to be more inclusive. This disparity goes against the principle of equal vote and give Malays a disproportionately greater say in politics over others. Malay supremacists dread a delimitation exercise establishing parity between constituencies as it will undercut their support base.

Amid these multiple undercurrents of Malay anxieties and political constraints, Anwar has still, however, managed to move the needle in many ways. In a first for the country, his government has decided to enact a political funding law. There’s also a new trend toward multipartisan select committees working as shadow ministries, making the government more accountable. The cabinet has agreed to enact a Freedom of Information Act. The enactment of the Fiscal Responsibility Act in October has been commended as the right step toward improving transparency in public finances. The mandatory death penalty has been abolished and attempted suicide has been decriminalized.

All of these are important reforms, but look light compared to the weight of expectations from Anwar, whose reformasi movement changed Malaysia in profound ways, most importantly ushering in a spirit of democratic scrutiny in what was practically a one-party state. To Anwar’s credit, he has given a sense of purpose to the government after several years of rudderless drift. His coalition, despite its inherent frailties, look better managed and on message. Anwar’s report card after a year is hence a mixed one of some hits and many misses amid abounding constraints.

But there’s still miles to go when it comes to arresting the march of right-wing extremism. As a leader seeking to protect a multicultural democracy in a society lurching to the right, Anwar’s challenges are in some ways similar to those confronting President Lula in Brazil, where the veteran leftist leader is cleaning up after a hateful strongman who has left behind a bitterly divided society teetering on the edge of violence.

Like Lula, Anwar has focused on welfare measures and boosting the economy to blunt polarization. It helps that, like Lula, Anwar is a towering personality and a bridge builder with the heft and the ability to form broad coalitions with disparate ideological inclinations across the political spectrum; Anwar in fact is even open to including PAS in his coalition provided it retreats from its extreme politics. But it will need a lot more to set Malaysia right.

---