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Malaysia (country profile)

MALAYSIA (Federation of Malaysia) Gordon P. Means 1. History and Development of Federalism The Federation of Malaysia is composed of 13 states and one federal territory. It is located on the Malay Peninsula at the southeastern tip of continental Asia and along the northern part of the island of Borneo. The federation evolved from the pattern of British rule, which was based on treaties with Malay sultanate states. Four of the Malay states joined in a federation in 1896, while five states remained “unfederated”. In the colonial period the British also directly ruled three colonies—Singapore, Malacca and Penang—and exercised indirect colonial rule over the states of Sarawak and North Borneo on the island of Borneo. After the Second World War, various efforts were made to unify these states and territories. A proposal to form a Malayan Union had to be abandoned due to the combined opposition of the Malay sultans and the Malays, who feared loss of political power if immigrant communities of Chinese, Indians and others were fully represented in the proposed democratic institutions. Instead, in 1948 a Federation of Malaya was created, with special provisions to protect the powers of the Malay Rulers and the interests of their Malay subjects. The federal system was designed to assure the political dominance of the Malays and provide a bulwark against pressures from immigrant communities for full representation and democratic reforms. The 1948 federation included nine Malay states and the former colonies of Malacca and Penang, but not Singapore. The system centralized legislative powers but decentralized administrative responsibility to the states. British rule over the Federation of Malaya continued until 1957 when Malaya was granted independence. A new constitution in 1957 providing for independence revised the federal system, and gave each level of government prime responsibility for the administration of subjects within its legislative competence. Both the states and the federal government were given power to delegate their powers to the other through agreements made by executive action. This feature has made the federal system flexible over time and amenable to the enhancement of federal authority. During the years from 1948 to 1960, the government was preoccupied with a communist guerrilla insurrection, which was gradually suppressed. The guerrillas attempted to recruit support primarily from Chinese labouring and rural communities. In response, government counter-insurgency policies attempted to address the threat by vigorous military measures and by meeting some of the demands of the immigrant communities, thus slightly tempering the overt ethnic bias (in favour of the Malay population) of the federal system. In 1963 the Federation of Malaya expanded to include the states of Singapore, Sarawak and Sabah (formerly North Borneo), which had been under British rule and were now facing independence. An agreement was worked out for the creation of an expanded Federation of Malaysia. The proposal was vigorously opposed by some minorities in the joining states and by both Indonesia and the Philippines. Despite the opposition, however, the Federation of Malaysia came into being in 1963. The new Malaysia Agreement further modified the federal system in a complex set of special arrangements to placate the concerns both of joining states and of the federal leaders in Malaya. Shortly after the formation of the Federation of Malaysia, a disagreement developed between the leaders of Singapore and the federal government over the terms of the Federation Agreement defining the relative autonomy of Singapore and the exercise of federal powers over security and political activity. At issue was whether the ruling party in Singapore had the right to mobilize political support in the remainder of Malaysia and whether the political supporters of the federal government, backed by sympathetic federally-controlled security forces, could mobilize opposition to the government in Singapore. Political demonstrations rapidly escalated over ethnic issues, since the population of Singapore was 75% Chinese and only 14% Malay, while the rest of Malaysia, excluding Singapore, was 45.9% Malay and 36% Chinese. Furthermore, the federal government was committed to asserting the primacy of the Malays as the indigenous people through an elaborate system of special rights. Thus, the contest between the federal authorities and Singapore raised fundamental issues of ethnic political supremacy, rights of minorities, and the equality of citizenship. Demonstrations and counter-demonstrations, egged on by politicians on both sides, inflamed ethnic passions. Finally, Malaysia’s Prime Minister, Tunku Abdul Rahman, decided Singapore should be expelled from the federation. Confronted with an ultimatum, Singapore’s leaders agreed and in August 1965, with great secrecy and haste, Malaysia’s Parliament ratified the Constitution Amendment Bill which expelled Singapore. This dramatic event demonstrated the superior political and legal powers of the federal government and had a profound effect on the subsequent development of federal-state relations within the revised Malaysian federation. Singapore’s exit from the federation also changed the political calculus since Malaysia without Singapore reinforced the political dominance of the Malays and assured that federal policies would remain unchallenged. This was especially true for the formula of inter-ethnic relations—based on a system of Malay rights and privileges—that was being promoted by the Malay leaders in the federal government. There were differences in the ethnic mix between the peninsular states and those in Borneo, yet, after Singapore’s exit, there was steady pressure from federal authorities to bring the Borneo states into conformity with federal policies and integrate their party structures into the system of ethnic party alliances that sustained the federal government. Great effort has been taken by federal authorities to intervene in Borneo state politics to maintain in power political coalitions that would collaborate with the federal leadership and be harmonious with federal objectives and policies. Extensive federal patronage, combined with federal police and other coercive powers, have been used to reward supporters and isolate and defeat those state leaders who defend all the conditions of state autonomy for Sarawak and Sabah that were incorporated into the original Malaysia Agreement. A constitutional crisis developed in May 1969 which dramatically shifted the balance of the federal system. Following an inconclusive election, racial riots broke out and the government declared a national emergency which suspended both the constitution and Parliament. For over 15 months a government-appointed National Operations Council ruled the country by decree. State governments continued to function but under the restrictions of emergency rule. When constitutional rule was finally restored, the Sedition Act was amended to make it unlawful for anyone, including Members of Parliament, to discuss or criticize the powers or status of Malay Rulers, citizenship rights, Malay special rights, the status of Islam as the official religion, and Malay as the national language. Since some of these issues were included in the federal-state distribution of powers, this ordinance made it a crime to have public discussion of any of these issues even in Parliament or in state legislative assemblies. Conviction under the Sedition Act is an automatic disqualification for holding elected office. On ethnic issues, it became clear that the states had to conform to the direction of federal leaders. 2. Constitutional Provisions Relating to Federalism Malaysia is a parliamentary democracy. The head of state is a constitutional monarch known as Yang Di-Pertuan Agong (Paramount Ruler). He is elected on the basis of seniority for a five-year term by the Conference of Rulers from among their own members who are the nine Malay Rulers (Sultans) of the original Malay States in the earlier Federation of Malaya (Articles 32-38). This system creates a rotation of office among the Malay Rulers. The Malay Rulers are important defenders of federalism, since they exercise substantial power at the state level and they provide political continuity with a traditional political system that predates British colonial rule. After Singapore’s expulsion from Malaysia in May 1965, the federal system was composed of 13 constituent units which included nine Malay States plus Penang and Malacca (both former British colonies) in Peninsular Malaysia, plus the two East Malaysian (Borneo) states of Sarawak and Sabah. The nine Malay States are headed by a hereditary ruler (Sultan) and the other four states are headed by a Governor appointed by the Paramount Ruler (on the advice of the federal Prime Minister). Each constituent state is governed by an elected Legislative Assembly, with effective power given to a Chief Minister who is elected by majority support in the Assembly. Each state has a constitution which must include “essential provisions” set out in the Eighth Schedule of the federal constitution, thereby imposing a degree of uniformity on all the states. Parliament has legislative power to remove constitutional provisions in the states that are inconsistent with the Eighth Schedule. Both the federal government and the states are given the power to delegate their powers to the other through executive agreements. The formal division of powers in the constitution allocates to the federal government the most important powers thus giving the federation a very strong central government. Federal powers include, inter alia, external affairs, defence, civil and criminal law, citizenship, state and federal elections, finance, trade, commerce and industry, taxation, education, health, labour, and social security (Article 74, 9th Schedule). Federal laws take precedence over state laws in matters of incompatibility. Although residual powers are assigned to the states, the extensive list of functions defined in the constitution has left virtually no unassigned residual powers for the states to claim. The states have primary responsibility for land and agriculture, local government and services, plus administration of Islam and Malay customary law (Article 95B, Ninth Schedule). Because the latter issues are less relevant to the non-Malay states, additional powers were given to the states of Sarawak and Sabah at the time they joined the federation, thus creating a federal system with unequal powers among the constituent states. At the federal level, the upper house of Parliament, the Senate (Dewan Negara), was designed to represent the states and to be a bulwark against federal encroachment of state rights. The Senate consists of 69 members, two elected from each state by the Legislative Assembly, and 22 appointed by the Paramount Ruler on the advice of the Prime Minister. Because the ruling Alliance Party has usually won controlling majorities in at least nine or more of the state assemblies, Senators have been appointed for their loyalty and service to the ruling party, thus making the Senate an important source of patronage for the ruling party. In practice the Senate has not defended state interests but has become primarily a rubber stamp for government-sponsored legislation coming from the popularly elected lower house of Parliament (Dewan Rakyat). A constitutional amendment requires the support of a two-thirds majority in Parliament without any participation by the states (Article 15). In practice, because the federal government has always commanded greater than a two-thirds majority, constitutional amendments have been passed at a rapid pace, some of them with retroactive effect to make legal those federal actions which might otherwise have been challenged in court. A number of constitutional amendments were introduced, passed both houses of Parliament and received royal assent in a matter of hours with no prior public announcement and virtually no public debate. From 1957 to 1977, the constitution was amended 23 times, and since then the pace of new amendments has continued with a cumulative effect of creating overwhelming superiority of federal power and federal control over state policy and administration. Fiscal arrangements outlined in the constitution favour the central government. All major tax powers are assigned to the federal government, but states are guaranteed a share of federal revenues calculated primarily on the basis of population and road mileage (Tenth Schedule). There have also been revenue-sharing agreements involving oil revenues for the littoral states for offshore production. A National Finance Council composed of federal and state representatives was supposed to provide coordination but, because it had only consultative authority, it never developed into an effective coordinating institution. Instead the Economic Planning Unit in the Prime Minister’s Department and the Ministry of Finance produce the annual economic reports and the national five-year economic plans that shape public revenue distributions and set economic goals. With strong federal direction and scrutiny, a series of national, state and district development committees oversee and coordinate the implementation of those national economic plans. Because all major taxing powers reside with the federal government, all levels of government rely on a system of transfers from federal to state authorities and from state authorities to local authorities. In 1995, about 13% of federal revenues were transferred to state governments, and state governments in turn transferred about 40% of their revenues to local authorities. This system has created a persistent financial deficit for state and local authorities, making them reliant on federal bailouts or special grants, which give federal authorities leverage over policy and politics at both state and local levels. The largest sources of federal revenues are derived from direct tax on companies, petroleum tax and individual income tax, which together accounted for over 40% of revenue in 1995. Other federal sources include property tax, capital gains tax and estate duties. In addition, export and import duties on a wide variety of products and commodities, plus excise duties on products, petroleum and motor vehicles, combined with indirect taxes gives the federal government a very extensive tax base. The major sources of revenue for the states are derived from license fees and royalties from forests, lands and mines. The limited base of state revenues has tended to generate excessively rapid resource depletion policies by state authorities both to generate needed state revenues and also to provide lucrative opportunities for high levels of corruption by state authorities controlling the allocation of resource extraction licenses. Rapid resource depletion is particularly rampant in states with large stands of tropical rain forest, despite sustained protests by many of the inhabitants living in the areas affected. The constitution assigned resolution of constitutional disputes to the courts. However, the power of the courts is limited under Article 150 of the constitution which gives the federal government authority to declare an “Emergency”. When invoked, emergency legislation cannot be challenged in the courts on grounds of constitutionality, except as relating to religion, citizenship, language, Malay custom and native law. Preventive detention laws and the Sedition Act, which prohibits any “seditious tendency”, have given virtually unbridled powers to the Prime Minister to restrict individual rights and freedoms, and these acts also over-ride the balance of powers in the federal system. The role of the courts was further compromised in 1988 when Prime Minister Mahathir objected to several Supreme Court decisions relating to individual rights and to the legal status of the ruling party. First a constitutional amendment was passed limiting the power of the courts, leaving ultimate jurisdiction for the federation as a whole to Parliamentary enactments. Then, Prime Minister Mahathir appointed an impeachment tribunal which removed the Lord President and two other Supreme Court judges from the High Court. Finally, the Prime Minister appointed judges who were less confrontational. Following that crisis, a constitutional amendment transferred the power of judicial review from the courts to Parliament. Thereafter, subject to increased executive control, the courts now give extraordinary deference to federal authorities in the interpretation of laws and the constitution. In addition to their preeminent financial powers and their capacity to influence the judiciary, federal authorities have consistently relied upon Parliament’s power to amend the constitution to enforce their view on any matters of dispute in the federal system. 3. Recent Political Dynamics The traditional Sultans in the nine Malay States symbolized Malay political dominance and were given prerogative powers to protect Malay rights. Because they were also made part of democratic institutions, their role was somewhat ambiguous, especially on matters requiring “royal assent”. In several states, the Sultan refused to cooperate with a Chief Minister in disputes over timber concessions, patronage, legislation, or alleged lack of deference. Prime Minister Mahathir decided to reduce the scope of royal powers by a constitutional amendment that would allow 15 days for royal assent to bills, after which assent was deemed to have been given. A crisis ensued when the Paramount Ruler refused to assent to the amendment passed by Parliament. Despite the Sedition Act which prohibits any public discussion of the status and prerogatives of the Malay Rulers, in 1983 the government launched a campaign to build public support for the disputed amendments. Eventually, agreement was reached with the Sultans that royal assent could only be delayed for 30 days. This did not end the erosion of their powers. In 1993 constitutional amendments revoked the Rulers’ power of delay in conferring royal assent, eliminated their immunities for personal actions, and terminated their power to grant pardons. In 1997 the countries of Asia experienced devastating economic problems, with stock markets plunging, high corporate debts, bankruptcies and falling currency values. In Malaysia a dispute arose between Prime Minister Mahathir and Deputy Prime Minister Anwar Ibrahim, who was also Finance Minister, over how best to deal with the problems. Mahathir favoured implementing economic controls by imposing fixed currency rates, limiting currency transfers, providing government bailouts combined with forced mergers of debt-ridden enterprises. Anwar Ibrahim favoured the program of free market economic reforms promoted by the International Monetary Fund, including reduction of government spending, and elimination of waste and patronage. Mahathir blamed the economic crisis on “globalization”, international currency traders and share-market speculators. Anwar blamed cronyism, nepotism and corruption. When these policy differences became public, faced with a potential succession challenge, Mahathir first removed Anwar from office, then removed his supporters from government, party posts and party-owned enterprises. After public rallies in support of Anwar, Mahathir had him arrested and charged with corruption and sodomy. The trial opened a major fracture in the government’s political support base, amid charges of violations of human rights, forced confessions, coercion of witnesses, and manipulation of the justice system. After 14 months of legal proceedings and massive public protests, Anwar was sentenced to 15 years in prison and also barred from participating in politics for five years after his release. A number of Mahathir’s critics and journalists were convicted of sedition or other offences, including Anwar’s defence lawyer for his efforts to prove the innocence of his client during the trial. In the wake of this prolonged crisis, the issues of federalism and the balance between federal, state and local government have received no serious public attention. The federal system in Malaysia is dominated by the central government. Yet, for political and cultural reasons, the states continue to be viable because of citizen loyalties to their states and political leaders, especially to the Malay Rulers in the Malay States. The federal government relies on the states for administration of many of its programs, and the political system at all levels is based on state representation. Proposals have been made for reforms which would balance revenue sources in the federal system and revive the powers and autonomy of local government. If and when a more open and democratic political system becomes established at the federal level, it may then be possible to address the accumulating issues of reform and renewal at both state and local levels of government. 4. Sources for Further Information Amnesty International, Malaysia Human Rights Undermined: Restrictive Laws in a Parliamentary Democracy, London: Amnesty International, 1999. Crouch, Harold, Government and Society in Malaysia, Ithaca, NY: Cornell University Press, 1996. Lau, Albert, A Moment of Anguish: Singapore in Malaysia and the Politics of Disengagement, Singapore: Times Academic Press, 1998. Lee, H.P., Constitutional Conflicts in Contemporary Malaysia, Kuala Lumpur: Oxford University Press, 1995. Means, Gordon P., “Federalism in Malaya and Malaysia” in Roman Serbyn (ed.), Fédéralisme et Nations, Montréal: Les Presses du l’Université du Québec, 1971. —, Malaysian Politics, 2nd ed., London: Hodder and Stoughton, 1976. —, Malaysian Politics: The Second Generation, Singapore: Oxford University Press, 1991. Milne, R.S. and Diane K. Mauzy, Malaysian Politics Under Mahathir, London: Routledge, 1999. Muhammad Kamil Awang, The Sultan and the Constitution, Kuala Lumpur: Dewan Bahasa dan Pustaka, 1998. Sheridan, L.A. and Harry E. Groves, The Constitution of Malaysia, Dobbs Ferry, NY: Oceana Publications, 1967.