Malaysia: Authoritarian Leader Lures Investors With Promise of “Responsible” Dams
Companies that invest in the Sarawak dams are still exposed to the risk of becoming embroiled in corruption scandals, human rights violations, and conflict. Unfortunately, for some investors, this is not a deterrent.
Kirk Herbertson, Southeast Asia Policy Coordinator, International Rivers
The Malaysian state of Sarawak is the new star of the global hydropower industry. Located on the island of Borneo in Southeast Asia, Sarawak is largely unknown around the world. Five years ago, Sarawak’s ruler Mr. Abdul Taib Mahmud announced that he will “transform Sarawak into a developed state” by building 12 large dams in the state’s remote, tropical forests. He argues that the dams will produce an abundance of cheap electricity, which will attract heavy industry and create jobs. Reuters has called Taib’s scheme “staggeringly ambitious,” especially since the dams will produce 450% more electricity than Sarawak currently needs.
Mr. Taib’s scheme has caught the attention of the world’s leading hydropower companies. Next week, on May 20-25, Sarawak will host the industry’s world congress, which is organized every few years by the International Hydropower Association (IHA). The IHA’s mission is to demonstrate that large dams—which are often a source of controversy—can be built in an environmentally and socially responsible way. The IHA is now promoting Sarawak as an example of responsible dam-building that brings profit as well as local development.
Sarawak has a dark history of dam building, having completed the disastrous Bakun Dam in 2011 after five decades of delays. The project is widely criticized for displacing 10,000 indigenous people and leaving them in impoverished conditions, while much of its electricity remains unused. However, Mr. Taib says his government has learned lessons from the Bakun Dam and is committed to do a better job on the next 12 dams. IHA is advising the Sarawak government and will showcase its efforts at next week’s congress. The Sarawak government will also use the opportunity to reach out to potential investors.
Doing business in Sarawak requires buying the favor of Mr. Taib, who has ruled Sarawak since 1981. Corruption is well documented. The government carefully controls the information that reaches the public, and journalists are forbidden from scrutinizing Mr. Taib. This creates serious risks for investors who want to steer clear of corruption and human rights abuses.
The IHA has helped the Sarawak government to make modest improvements in its dams. Yet this has not been enough. To date, IHA’s efforts have been largely cosmetic and do not address the real challenges of investing in Mr. Taib’s dams.
