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Anger over Malaysia Scandal

Hideki Yabu

Nov. 29, 2016

Tens of thousands protested in Malaysia have been demanding that Prime Minister Najib Razak resign over allegations of corruption connected to a state development fund.

The scandal has added to a sense of crisis about the state of Malaysia's economy, previously seen as one of the most stable in Southeast Asia.

On Nov. 19, tens of thousands of protestors took to the streets demanding his resignation. Angry demonstrators took to the streets in Kuala Lumpur, holding placards demanding Najib's resignation.

"There is a whole a lot of corruption, and our day-to-day-living is not getting any better at all," said one protester.

The scandal centers on a state investment fund known as 1MDB, established by Najib to raise cash for infrastructure. But in July last year, allegations emerged that Najib received about 700 million dollars from the fund.

After an investigation, the Malaysian authorities said in January that the money was a political donation and was not illegal. But in July, US investigators also began probing the case.

"Unfortunately, sadly, tragically, a number of corrupt 1MDB officials treated this public trust as a personal bank account," said US Attorney General Loretta E. Lynch.

The US Justice Department claims Malaysian officials and their families used 1MDB funds to buy an expensive painting by Claude Monet, a private jet and other assets worth about a billion dollars using US banks.

In court papers filed by the department, the name "Malaysian Official 1" appears 34 times. The papers do not name Najib, but imply that person is him.

"We are serious about good governance, so anything that's against the law, we want the process to take place," Najib has said.

Young Malaysians have led the protest movement, voicing a deep sense of frustration. Some 2,000 students took to the streets in August.

"We demand that authorities investigate and identify Malaysian Official 1," said Muhammad Luqman, one of the leaders of the protest.

He's angry about the corruption scandal while young people like him struggle to get by. He lives with 11 other students and they try to cut costs where they can -- but they feel the pressure of rising prices.

Malaysia is an oil producer and saw its coffers drain when global prices fell last year. The government introduced a 6 percent consumption tax and cut subsidies for cooking oil and other products.

The education budget was cut for the second year in a row. The corruption allegations emerged just as students were losing their scholarships and their lives were becoming harder.

"We know that it is maybe quite difficult to change the government, as a student, as a society," Luqman said, but they would try their best.

Political analyst Ei Sun Oh says economic troubles could lead to more unrest.

"I think a lot of people are perceiving the economic situation to be quite bad," he says. "If the economic situation continues to deteriorate, I think it will embolden more people to be willing to go to the streets."

The truth about what happened with the 1MDB fund is still murky but the scandal's broader impact is becoming clearer.


NHK Singapore Bureau Chief Hideki Yabu joins anchor Aki Shibuya in the studio.

Shibuya: Who are the people behind the massive protest?

Yabu: Anti-government protests were held last year as well. There were more minority Chinese Malaysians than ethnic majority Malays then. But this year, many Malays seem to be joining the rallies.

I get the impression that criticism of the government is spreading to a wider range of the population. Malaysia continues its "bumiputra" policy that favors majority Malays. But a growing number of people, mainly in the urban areas, are turning critical of the government. They include some of the administration's traditional supporters.

Shibuya: How has this protest affected the Najib administration?

Yabu: The administration has taken a huge hit from the political corruption scandal that has dragged on for over a year, and the repeated anti-government rallies. But it's not in immediate danger of collapsing.

Some 60 percent of Malaysia's population lives in rural areas, where the administration still enjoys solid support. People in such areas don't have much access to foreign media that have been enthusiastically reporting the scandal. Many people have never even heard of the scandal.

And the government is taking a high-handed approach in repressing criticism. It has detained more than 10 people, including leaders of the NGO that organized the rally. The government maintains control of the media, so few domestic media outlets covered the rally, apart from some online media sites. It has been successful in suppressing criticism to a certain extent so far.

Shibuya: What are some factors that are likely to influence the outcome of the scandal?

Yabu: First, the outcome depends on how far the US judicial authorities will go in their probes. The US Justice Department filed civil lawsuits in July in connection to the 1MDB fund. It's seeking to seize assets that were purchased via US financial institutions.

The US Federal Bureau of Investigation is also looking into the 1MDB fund for alleged money laundering. Swiss and Singaporean authorities are also investigating alleged misappropriation of money from 1MDB funds involving financial institutions in their countries. The international probes into the scandal could put the government in a tight spot.

Another determining factor is how long the economic slowdown will continue. Roughly 20 to 30 percent of Malaysia's government budget is covered by dividends from state-run oil companies, so low oil prices have been dealing a serious blow to state finances. If the government continues to cut spending in areas that directly affect people's lives, public anger could reach a boiling point.

Malaysia has continued to pursue policies that place priority on economic growth. It aims to become a developed country by 2020. But that may be difficult, as the Najib administration must deal with a political scandal as well as a slowing economy.