What does the standoff in Perak mean?
(Reuters) KUALA LUMPUR, May 7 — Police arrested more than a dozen anti-government protesters in Ipoh today at a rally to coincide with the first sitting of the Perak state assembly since the state government was ousted in February.
Perak was one of the five states ruled by the opposition until a putsch organised by Datuk Seri Najib Razak, who became prime minister a month ago.
Here are some of the questions and answers about what the protest could signal:
WHY PERAK?
The ousting of the state government appeared to be an attempt by Najib, who was then deputy prime minister, to show he would be a strong leader and came just a few months before he took power, replacing Tun Abdullah Ahmad Badawi.
It came after a series of by-election losses for the coalition that has ruled Malaysia for 51 years.
The Perak takeover has a powerful mix of race, religion and royals. The Islamist opposition has even accused the new mentri besar of using black magic, which he denies, and the takeover is subject to court action.
A PERFECT STORM BREWING?
Politics are becoming increasingly bitter and the opposition questions Najib's character and his ability to deliver reforms on racial equality and the economy.
Tensions look set to remain high with opposition leader Datuk Seri Anwar Ibrahim due to appear in court in July on what he says are trumped-up sodomy charges.
Anwar was deputy prime minister until he was imprisoned in the late 1990s for sodomy and corruption. His jailing caused tens of thousands of people to protest and united the reformist opposition that is challenging the Barisan Nasional's hegemony.
IS MALAYSIA THE NEXT THAILAND?
No. Street protests are not widespread and the BN has a firm grip on all state institutions as well as a wide range of laws to punish dissenters, including detention without trial.
For all that, simmering discontent between the majority Malays and smaller ethnic Chinese and Indian communities has broken out into street protests in the past and the recent series of arrests for sedition has ended any hopes that Najib could undertake serious political reforms to unite the country.
WHY SHOULD IT MATTER TO INVESTORS?
Reforming Malaysia's race-based political system is one of the keys to unlocking economic reforms. A system of economic and social privileges for Malays has been blamed by many for hurting the country's competitiveness and fostering corruption.
With rising political tensions, Najib may not be able to reform without risking a backlash from Malays, the core voter base of his party, Umno.
Malaysian bonds yield more than those in Thailand, largely reflecting the country's rising budget deficit and bond issuance.
Malaysian five-year paper yields 3.813 per cent against 2.55 percent for 5-year Thai debt despite the country's A-credit rating compared with Thailand's BBB-rating.
Malaysia wants to attract more foreign investment, especially in the services sector so as to reduce its reliance on exports. The country is the third most export-dependent economy in Asia and has been hit hard by the global economic downturn.
There has been some relaxation in rules that stipulate ethnic Malays must own 30 per cent of certain businesses. Moves so far have been to avoid antagonising Malays at a time when the country is entering its worst downturn since the 1998 Asian crisis.
