[Asia Report] Malaysian Prime Minister Anwar Makes a Political Gamble

Leading Economic Reforms, Battling Cronyism and Corruption
A Symbol of Hope for Democracy in Southeast Asia
First Horizontal Transfer of Power, Coalition Government
Fragile Power Base Leads to Plummeting Approval Ratings
Pushing Forward Southern Megacity Project
Embracing Rivals to Stabilize the Regime
Complementary Trade Structure with Korea
State Visit to Korea Next Week to Discuss Cooperation

It is not easy to find a figure in Southeast Asia who embodies the spirit of democracy as much as Anwar Ibrahim (77) of Malaysia. His political journey, characterized by integrity, reform, and patience, has not only shaped the political landscape of Malaysia today but also inspired hope for democratic governance across Southeast Asia.

Anwar began his youth in the 1970s as a passionate student activist advocating for social justice and Islamic reform. Entering politics through Malaysia's long-standing ruling party, the United Malays National Organisation (UMNO), he became a pioneer of modernization aimed at reforming a system deeply rooted in ethnic and religious divisions. As Deputy Prime Minister in the 1990s, he led economic reforms during the 1997 Asian financial crisis, fighting against the entrenched Malay elite plagued by nepotism and corruption.

However, the political adversity he faced was beyond imagination. In 1998, Anwar was imprisoned on charges of corruption and sodomy. Over more than 20 years, through imprisonment, public humiliation, and political exile, Anwar emerged as a unifying figure in a deeply polarized society. Citizens outraged by rampant corruption supported Anwar's reinstatement consecutively in 2018 and 2022.

◆State Visit to Korea Next Week=After long patience, he succeeded in taking office as Malaysia's 10th Prime Minister in 2022. He became the first politician to lead a horizontal regime change without relying on outdated elite politics or ethnic politics. However, since his party lacked a majority of seats, it was impressive that he emphasized reconciliation among a divided nation and formed a coalition government.

Next week, he will make a state visit to Korea to discuss cooperation measures between the two countries. On the 26th (Tuesday), a special invited lecture at Seoul National University is also scheduled. Taking advantage of Prime Minister Anwar's visit, the two countries are expected to elevate their relationship to a strategic partnership and accelerate the conclusion of the Korea-Malaysia Free Trade Agreement (FTA) negotiations next year.

Among ASEAN member countries, Malaysia ranks third in trade and fourth in investment with Korea, making it a very close partner. Last year, Korea imported $15.2 billion worth of goods from Malaysia and exported $9.7 billion, resulting in a trade deficit of $5.5 billion. Korea imports semiconductors, natural gas, petroleum products, and more from Malaysia. At the same time, Malaysia imports petroleum products, semiconductors, and fine chemical raw materials from Korea, forming a mutually complementary trade structure. It is notable as a technology-centric country in Southeast Asia where English is used. It is closely connected to Taiwan's semiconductor ecosystem and is focusing on fostering artificial intelligence (AI) and advanced technology industries based on this.

◆Popularity Plummets After Two Years=He has recently been traveling to China, Russia, and other countries to enhance Malaysia's geopolitical value. Malaysia will be the chair country of ASEAN in 2025, meaning Anwar will lead ASEAN's agenda.

However, as he approaches his third year in office, his approval ratings have plummeted to rock bottom. There are signs that his power base is shaking in many ways. Although his rise to power was encouraging, his power base is fragile, and the slogan of economic reform has not easily changed reality.

The most urgent issue is the declining economy amid the US-China economic war. Inflation, rising food prices, and stagnant wages caused by COVID-19 and the Ukraine war are putting significant pressure on Malaysia's middle class and youth. Additionally, the national currency (ringgit) continues to fall, increasing import costs and reducing purchasing power, negatively impacting the economy.

Anwar's ascension to Prime Minister in 2022 was a temporary coalition government to overcome political instability without a majority party. As a member of the Pakatan Harapan (PH) coalition, Anwar brought in rivals such as the United Malays National Organisation (UMNO), which had fallen due to past corruption charges, to form the government. This choice was inevitable but also became a cause for blocking bold reforms due to complex interest adjustments. Furthermore, Anwar's multiracial inclusive policy faced fierce opposition from the far-right Malay-Muslim party (PAS).

◆Reattempting the Iskandar Project=Anwar likely feels that four years in power is insufficient for his reforms to truly succeed. Although he is already at an age to retire from politics, if he fails, it will become impossible for reformist younger politicians to come to power. Therefore, the card he recently pulled out again is the revival of the 'Iskandar Project.'

Iskandar refers to a large area in southern Johor, including cities like Johor Bahru and Nusajaya (currently Iskandar Puteri and surrounding areas). Simply put, it is the area bordering Singapore. This region had long been underdeveloped land in Malaysia. During Prime Minister Mahathir's era, Putrajaya near Kuala Lumpur was designated as the new capital, and national resources were concentrated on developing this metropolitan area.

However, when Najib Razak became Prime Minister in 2006, he halted the development of Putrajaya and suddenly launched the southern Iskandar megacity project. The goal was to transform southern Johor into a major economic hub by leveraging its proximity to Singapore. Putrajaya succeeded as an administrative capital but was justified as failing to develop into a vibrant economic center due to its bureaucratic purpose. This also implied rejecting the influence of former Prime Minister Mahathir.

Najib's decision sparked significant controversy and was naturally linked to corruption. Initially, Anwar opposed such policies. Since many new towns around Kuala Lumpur and Klang Valley had not yet established industries, building a megacity far south was seen as a waste of national resources.

However, Anwar's stance has recently changed 180 degrees. He has attracted new investments worth hundreds of billions in cooperation with the Iskandar Regional Development Authority (IRDA). Foreign investments have been attracted from Singapore, China, and the Middle East. He is betting on the growth of new industries such as education, healthcare, logistics, manufacturing, and tourism. The plan is to redistribute economic growth in the south and encourage development to reduce regional economic disparities. Discussions on reviving the Johor-Singapore Economic Special Zone (JS-SEZ) are also gaining momentum.

There are several political reasons behind Anwar's sudden change of attitude, who was initially negative about the southern megacity plan. First, it is important that he embraced the Najib faction, which had been in strong opposition to him. It is also notable that the current king is the Sultan of Johor. In other words, by actively courting the royal and aristocratic factions that had vetoed him, and simultaneously involving Singaporean and Chinese capital in the new town construction plan, he aims to enhance the regime's stability. This is interpreted as an intention to extend the lifespan of the current coalition government in the next election.

Jung Ho-jae, Secretary General of Asia Vision Forum