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Briefings: Special Report on Malaysia in Transition

December 2002


The announced retirement of the Malaysian Prime Minister Dr. Mahathir Mohamad in less than a year from now has stirred a great interest and strong speculation among policy-makers and analysts to examine what would be the impact on the Malaysian politics and economy. The period between now to next October 2003 is important to monitor as events leading up to the transfer of political leadership would be important indicators to the post-Mahathir government.

Being a consummate politician, Dr. Mahathir, in the past, has been able to manage the delicate balancing of conflicting demand among the major element of the Barisan Nasional (National Front). Lately, Parti Islam SeMalaysia (PAS) has been gaining suport from the Malay constituency at the expense of UMNO as evidenced in the last general election and the recent by-election in Kedah. With the expected passing of the leadership baton to Datuk Abdullah Badawi, and against the economic backdrop for major restructuring and deteriorating external environment, the transition period would be a daunting task for the Malaysian political leadership.

The Malaysian economy is currently facing cyclical structural disequilibrium. The over-reliance on export-oriented electronic industries has to be reviewed. The Malaysian government is giving much attention to domestic-oriented sources of growth in the rural agricultural sector and domestic service industries in order to supplement the relative decline of export-oriented industries. The much publicised Multimedia Super Corridor (MSC) grand objectives towards information and communication technology has not been progressing as expected because of the world-wide information techonology (IT) bust, the declining flow of foreign investment and the inadequate supply of required skill manpower.

Notwithstanding those serious challenges, the Malaysian political and economic management is vital to create a positive and robust environment for Datuk Abdullah Badawi to inherit the reign of power and for Dr. Mahathir to establish his political legacy.

This is the forth special Briefings offered by the SIIA to its corporate members. Previous reports have looked at Indonesia and Singapore to discuss issues of immediate relevance to the region's political stability and economic prospect. This issue of Briefings aims to do the same.


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