More power-sharing, stronger opposition in M’sia: PERC

The Hong Kong-based Political and Economic Risk Consultancy Ltd (Perc) has come up with its Asian Risk Prospects for 2009. It has identified India, Thailand, Malaysia and Indonesia as high-risk countries for 2008/09. This is what its Executive Summary is saying about Malaysia for 2009.

2008-10-28 15:37 Malaysia political struggle is aggravating long-standing racial and religious sensitivities. Although the odds favor the UMNO-led coalition staving off an attack by the opposition led by Anwar Ibrahim, the status quo is changing in ways that will see a stronger political opposition than in the past and UMNO forced to share more power with non-Malay groups, including parties from Sabah and Sarawak. This sharing will both give the other partners in the ruling coalition more senior political posts and ensure that they get a larger share of the budget.

I am not quite sure if it’s the “political struggle” that is aggravating racial and religious tensions. Rather, it looks to me like it is certain politicians in Umno and the other BN component parties, certain newspapers, as well as segments within Pas that are stirring such sentiments in an effort to whip up support. Attempts to reform the economy have also fuelled insecurities, as Najib himself found out after his comments on Malay “special privileges” and the Pakatan government in Selangor discovered after trying to put in place someone best qualified to lead PKNS.

How will our main trading partners in the region, China and Singapore, fare?

China will have a difficult year economically in 2009 but not a disastrous one. The environment could see conservatives increase in influence in the government. They will view security threats along the border as a major vulnerability and will push modernization of the military even harder than before. Conservatives could also favor a more cautious approach in reforming state-owned companies and in the kinds of foreign investments state-owned companies make.

Economically, the emphasis of the government will be to sustain economic momentum as much as possible in the face of a markedly weaker export sector. The key variable will be domestic consumer demand. Despite a desire to get average Chinese to spend more, layoffs in factories, weak stock prices and lower real estate prices in key markets like Shanghai are likely to make average Chinese turn more cautious in their consumption. There could also be a rise in demonstrations directed against perceived abuses by local-level officials.

And Singapore:

Singapore has the lowest socio-political risks of any country covered by this report. The domestic political and social situations are very stable and likely to remain so despite the sharp economic slowdown. Institutions like Temasek and GIC are well positioned to capitalize on opportunities that emerge regionally and globally during the financial crisis, and, as in Hong Kong, Singapore’s credentials as a regional and international business center should be enhanced.

That’s a questionably rosy report on Singapore, bearing in mind that it is now in the midst of a recession whereas Malaysia (officially, at least) is not. Blog reader Michael Cheah raises a valid question: What kind of organisation is PERC? Some clues can be found here.