Malaysia

Seizing opportunities in the Halal market

Italian companies can benefit from the Malaysian experience.

Editorial by Consulate of Malaysia / Malaysia External Trade Development Corporation (MATRADE)

Viewed through a business lens, the current Halal market offers a myriad of attractive opportunities with considerable economic value on a global scale. As outlined in the analysis report titled "Global Halal Economy Growth Opportunities" by research and consulting firm Frost & Sullivan, the market for the global halal economy is forecasted to undergo significant growth, with expectations of reaching US$4.96 trillion by 2030, up from US$2.30 trillion in 2020. With traditional Halal markets, primarily in Muslim-majority countries, approaching saturation, new markets are springing up worldwide, providing lucrative commercial prospects for the sector, including in the regions like Europe.

Mr. Ravidran Manogaran, the Consul and Trade Commissioner of Malaysia in Milan, highlighted the unexplored business opportunities in Italy's Halal sector, well-positioned to serve the growing Muslim community and influx of Muslim tourists. He voiced the hope that one would perceive halal not only for its Islamic ethical values but also as a comprehensive value proposition. He emphasized that the Halal economy signifies quality assurance and is in line with sustainable development objectives. Additionally, Mr. Ravidran underscored that when looking at halal holistically, it includes aspects like hygiene, cleanliness, health safety and inclusivity, all of which hold appeal for diverse communities.

As part of the national strategy to establish Malaysia as the premier global Halal hub, Malaysia External Trade Development Corporation (MATRADE) leads the charge in promoting the internationalization of Halal products and services through the Malaysia International Halal Showcase (MIHAS), an esteemed annual event recognized worldwide as the largest Halal expo. Mr. Ravidran extends an invitation to Italian companies interested in participating in this year's MIHAS, scheduled to take place at the Malaysia International Trade and Exhibition Centre (MITEC) in Kuala Lumpur from September 17th to 20th, 2024. Attending MIHAS would serve as a valuable opportunity for Italian businesses to connect with Muslim consumers in Italy and the surrounding regions. Through collaboration with Malaysia's Halal-certified manufacturers, Italian companies can explore private label branding possibilities and delve into diverse expanding Halal sectors beyond the food, such as pharmaceuticals, Islamic finance, modest fashion, and Muslim-friendly tourism.

The Italian importers seeking Halal products/services from Malaysia are encouraged to participate in B2B business matching sessions through the International Sourcing Programme (INSP) alongside MIHAS, available in virtual, physical, and hybrid formats. Meanwhile, Italian companies interested in exporting to Malaysia are invited to exhibit their Halal products and services at MIHAS.

Interested parties can contact the Consulate of Malaysia / MATRADE in Milan for more information via telephone at +39 02 669 81839 or email at milan@matrade.gov.my. 

* Note: MATRADE is the national trade promotion agency under the Ministry of Investment, Trade, and Industry (MITI) of Malaysia, responsible for promoting export and positioning Malaysia’s companies on the international stage.

Mr. Ravidran Manogaran
Consul & Trade Commissioner
Consulate of Malaysia,
Malaysia External Trade Development Corporation (MATRADE),
Via Alberico Albricci 9
Milan, Lombardy 20122
Italy.
Tel : +39-02-669 81839 
Fax : +39-02-670 2872 
Email: milan@matrade.gov.my
Countries of Coverage: Albania, Corsica, Croatia, Cyprus, Greece, Italy, Kosovo, Malta, Montenegro, Serbia, Slovenia

Photos of MIHAS

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https://www.mihas.com.my/static/img/in_the_news/2023/news_tremendous_response_mihas.jpg
https://www.mihas.com.my/static/img/in_the_news/2023/news_mihas_2023_records_3_billion_in_sales.jpg

International Sourcing Programme (INSP) ) in-conjunction with MIHAS

(B2B Business Matching)

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https://mihas.com.my/static/img/gallery-2024/INSP%20Crowd.jpg

Global Halal Summit (GHaS)

(Halal summit/conference)

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Knowledge Hub 

(Halal Seminar/Talks)

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Fashion Show

(focused on modest fashion)

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Event Venue: MITEC

Address: 8 Jalan Dutamas 2, 50480 Kuala Lumpur

https://www.mihas.com.my/static/img/about_mihas/mitec-2022.jpeg

The Malaysia International Trade and Exhibition Centre (MITEC) is the country’s largest exhibition centre with 1 million square feet of gross exhibition space. The first component and flagship of KL Metropolis, a city within a city where trade, commerce, living and transport converge over 75.5 acres of prime land development, MITEC is poised to be the exhibition venue of choice in the Southeast Asia region. The 12,960 sqm of column free space on level 3 providing an unobstructed and expansive view, making it the largest pillar-less exhibition hall in Malaysia. The entire combined exhibition halls are able to accommodate up to 47,700 visitors in theatre style seating and 28,300 guests in the banquet arrangement at any one time. 

The increasingly central role of Malaysia in microchips sector

Kuala Lumpur is attracting more and more foreign investors to its semiconductor sector, aiming to move up the value chain for chips, particularly those for electric vehicles

By Walter Minutella

Malaysia is emerging as a crucial node in the microchip supply chain. This leading role is supported not only by its strategic location in the heart of ASEAN and the relative political and economic stability of the country, but also by developed infrastructure, highly skilled workforce, and government policies favorable to foreign investment. 

Furthermore, the growth of the domestic market and the presence of natural resources contribute to making Malaysia an increasingly attractive option for investors, especially from the United States and Europe, in the microchip sector, seeking to diversify their production across different areas. This phenomenon reflects how geopolitics is shaping technological production.

According to the Financial Times, Malaysia has become a magnet for major companies in the sector, including Intel, Micron, and others. With a significant increase in foreign direct investment, the semiconductor sector in Malaysia is experiencing unprecedented expansion. In just the northern state of Penang, foreign direct investments worth $12.8 billion were activated last year, surpassing those of previous years.

The Malaysian government has recognized the strategic importance of the semiconductor industry and is actively committed to further developing it. Prime Minister Anwar Ibrahim has stated that the development of the semiconductor industry is a crucial goal for the country.

US technology companies are playing a key role in this growth scenario. For example, Intel has invested $7 billion in new facilities in Malaysia, including an experimental 3D packaging plant. Another industry giant, Micron, opened a second plant in Penang last year, while Infineon announced a $5.4 billion expansion plan.

These investments not only indicate Malaysia's growing role in the semiconductor sector but also have significant implications for the local economy. Industrial land prices have increased by 60% since 2002, while road traffic has experienced increasingly frequent congestion.

However, Malaysia faces crucial challenges in maintaining this sustainable growth. One of the main issues is the shortage of skilled labor, with the expanding sector requiring at least 50,000 new engineers annually, while the country's universities produce only 5,000 graduates in the field.

The choice to invest in Southeast Asian countries like Malaysia is also motivated by their strategic position in the South China Sea, which plays a crucial role in the chip sector. This strategic location allows companies to have privileged access to key trade routes for transporting components and finished products in the semiconductor sector. Furthermore, being one of the most important navigable routes globally, the South China Sea facilitates efficient transportation of materials and products to Asian and global markets, thus contributing to the competitiveness of companies operating in this sector.

The economic benefits resulting from investment in these regions include highly skilled and relatively low-cost labor, modern infrastructure, and a favorable policy for foreign investment. The presence of special economic zones and additional tax incentives makes investment in these areas even more attractive, offering companies a favorable environment to expand their operations and maximize returns on investment.

Furthermore, interest in Malaysia has increased after the Covid-19 pandemic highlighted the vulnerabilities of global supply chains. Tensions between the United States and China have prompted both countries to seek reliable sources of semiconductors outside mainland China, further accelerating interest in Malaysia.

With the semiconductor industry continuing to grow in Malaysia, the country is preparing to face challenges such as expanding infrastructure and transitioning to clean energy. Despite these challenges, many business executives are confident in Malaysia's role in the global technological supply chain, recognizing its potential to become a benchmark in the global electronics industry.

Malaysia is attracting increasing foreign investment in its semiconductor sector, aiming to advance in the chip value chain, particularly for chips used in electric vehicles.

Currently, the country holds a 13% share of the global market for semiconductor packaging, assembly, and testing services. Additionally, Malaysia ranks as the sixth-largest exporter of semiconductors globally, packaging 23% of all American chips, contributing to 25% of the nation's GDP. This makes it a key player in the global semiconductor market.

In the past, Malaysia was recognized as the Silicon Valley of the East, having been a pioneer in chip production in the 1970s. However, over the subsequent decades, it gradually lost ground to South Korea and Taiwan. Nevertheless, Malaysia is currently striving to regain leadership in the sector, pushing to diversify its production. Among the potential advantages for Malaysia is that companies are seeking a less exposed location to global turbulence and with more stable future scenarios compared to Taiwan, which currently dominates the manufacturing and assembly sector. 

Malaysia's New Industrial Master Plan (NIMP) 2030 provides a roadmap for increasing the value-added of the manufacturing sector, encouraging more sophisticated activities such as semiconductor equipment manufacturing and integrated circuit design. The country aims to develop the semiconductor sector, focusing on high-value-added activities such as wafer fabrication and integrated circuit design.

In recent years, the country has seen significant investments from European and American companies, as seen in the cases of Intel and Texas Instruments. However, there are challenges that investors must face, including the shortage of qualified talent in the semiconductor sector and heavy dependence on foreign companies to support the industry. Despite these challenges, Malaysia remains an important destination for foreign chip manufacturers, attracted by its strategic position in Southeast Asia and supportive government policies.

Diversifying supply chains offers opportunities for Malaysia to expand its presence in the global electronics industry, moving towards more sophisticated and innovative production. With targeted investments in research and development, as well as training programs, Malaysia could further strengthen its role in the semiconductor sector, contributing to economic growth and innovation.

The renaissance of Malaysian cinema

International awards spotlight domestic struggles against censorship and interventions needed to develop the film industry.

In recent years, Malaysian films have finally gained international attention and recognition. In May, "Tiger Stripes" (2023), a coming-of-age horror film directed by Amanda Nell Eu, won the Critics' Week Grand Prix at the Cannes Film Festival, becoming the first Southeast Asian film to win the prestigious award. On Oct. 5, the government selected the film as the Malaysian nominee in the Best International Feature Film category for the upcoming 96th Academy Awards. Several other Malaysian-made films have also won global accolades, including Woo Ming Jin's "Stone Turtle" (2023), Yasmin Ahmad's "Slit Eyes" ("Sepet," 2004) and Lay Jin Ong's "Brothers" ("Abang Adik" 2023), which won the best film award at the Far East Film Festival in April.

Notable among the stars of this renewed success is certainly Michelle Yeoh, who won the Oscar for best actress for "Everything Everywhere All at Once" (2022) at the Academy Awards. Malaysia's King Al-Sultan Abdullah Ri'ayatuddin and Prime Minister Anwar Ibrahim were among the first to congratulate the Malaysian actress. Film buffs, however, argue that Malaysian government policy has contributed nothing to her success abroad. Yeoh's is one of many cases of Asian actresses and actors who have ventured out of the country for better opportunities: veteran South Korean actress Youn Yuh-jung, who won the Oscar for 'Best Supporting Actress' for her role in "Minari" (2020); Malaysian-born Henry Golding and Ronny Chieng both starred in "Crazy Rich Asians" (2018); and Yeo Yann Yann, also of Malaysian descent, starred in the Disney+ series "American Born Chinese." Malaysian screenwriter Adele Lim has also made a name for herself in the United States, working on "Crazy Rich Asians" and the Disney animated film "Raya and the Last Dragon" (2021). In 2023, Lim made her Hollywood directorial debut with "Joy Ride" with Oscar nominee Stephanie Hsu.

Despite all these success stories, the country's film industry remains very static. Strict censorship laws and limited access to funding are proving to be major obstacles for many local filmmakers and actors hoping to develop their careers. Some industry figures have expressed the main criticisms. According to Badrul Hisham Ismail, director of "Maryam" (2023), "Malaysia has everything, but it is everywhere and everywhere, which means getting nothing, being nobody and nowhere." Badrul noted that Yeoh had not appeared in any Malaysian-produced films, making her success at the Oscars irrelevant to the Malaysian government's film policy. Local writer and stand-up comedian Shamaine Othman agrees with Badrul that the film industry in multi-ethnic Malaysia is highly polarized. In local productions, most high-budget roles are for actors from the majority ethnic Malay community, while actors of Chinese descent often choose to leave to work on American or Chinese productions. "For many non-Malays, it seems like the right way to go," Shamaine said, "being here just means constantly being cast as token characters."

Another critical issue hindering local film development is surely cultural conservatism in predominantly Muslim Malaysia, which has led to the banning of many films with LGBTQ references, including recent releases such as "Lightyear" (2022), "Thor: Love and Thunder" (2022) and "Whitney Houston: I Wanna Dance With Somebody" (2022). Sexual and gender issues are not the only dangerous terrain on which filmmakers must navigate. Ethnic and religious issues are also sensitive areas where filmmakers must tread carefully to avoid regulatory repercussions. The film "Mentega Terbang" (2021), directed by Khairi Anwar, caused much controversy when it was removed by Viu, a Hong Kong-based streaming platform, apparently for referring to apostasy from Islam, a crime in Malaysia. The film was eventually banned from all screening platforms in September. At the center of a national uproar, the director and cast were investigated by Malaysian authorities for their role in the film. No charges were filed, but according to Malaysiakini, an independent news outlet, the director received death threats.

Lutfi Hakim Arif, executive producer of "Maryam," told the Nikkei that "creeping conservatism" in the Malaysian film industry is nothing new, especially in relation to Malaysians and Muslims. Both Badrul and Lutfi said the Malaysian censorship board operates under a double standard, giving the green light to films that reference sex, scandals and celebrities and blocking films such as "Mentega Terbang" that challenge the nation's status quo. According to Badrul, the main goal of the censorship board is to "control thoughts," while showing no interest in Malaysian films, which are, on the other hand, technically very good, as evidenced by the success of the following Malaysian-made animations, "Ejen Ali: The Movie" (2019), "Upin & Ipin: The Lone Gibbon Kris" (2019), and "Mechamato Movie" (2022), which were screened in Southeast Asia. "Mechamoto" was the first non-Japanese cartoon to be screened on Japanese TV channels, winning the prestigious Anime Fan Award at the Tokyo Anime Award Festival 2023. Locally, it ranks among the top five highest-grossing films to date (as of January 35.8 million ringgit, or $7.51 million).

Malaysia was a film powerhouse in the 1950s and 1960s, when actor and director P. Ramlee made several successful films for Shaw Brothers in Singapore and Kuala Lumpur. However, as contemporary actor and screenwriter Redza Minhat says, the industry landscape has failed to evolve, hampered by a small market polarized between productions aimed at Malay, Chinese and Indian audiences, the country's three main ethnic groups. "For such a small market, you need to have a long-term strategy; to overcome the obstacles in the industry, you need to bring the right people together, and the first thing is to have the political will," said Redza, whose latest the film "Imaginur" (2022) has garnered box office takings of 6 million ringgit in the first month since its release in Malaysia in late February. Redza said that ending censorship would be the best way to address the problems of the Malaysian film industry and proposed that FINAS - National Film Development Corporation Malaysia - use slate financing as a development tool. Slate is a type of film financing in which an investor provides financing for a portfolio of films, rather than for a single film, to reduce risk and diversify investment.

Meanwhile, there is already an air of change with new business entities entering the Malaysian market. In the past two years, leading Malaysian film studios Golden Screen Cinemas and Astro Shaw have ventured into the production of blockbuster action films such as "Polis Evo 3" (2023), "Malbatt: Misi Bakara" (2023) and "Air Force the Film: Selagi Bernyawa" (2022). In May, streaming platform Amazon Prime Video said it would include more local movies and dramas, including "Imaginur." On the other hand, so-called over-the-top (OTT) streaming services, which viewers access via the Internet, are growing steadily, although still lagging behind cable and satellite competitors such as Netflix, Apple TV, Disney's Hotstar and HBO. According to Statista, OTT user penetration will reach 63.7 percent of the Malaysian market this year, with revenues exceeding 1 billion ringgit.

Kamil Othman, President of FINAS, said the government is working on updating and amending the National Film Act to meet the needs of the industry, as films have great potential to contribute to GDP growth. Kamil said the film support system needs to be amended to fill gaps and encourage film production. "There is no single point of reference and FINAS intends to be one, at least within the scope of law enforcement. We are trying to see right now how this public-private partnership can work best," he said. "The answer could be a new tax system, new incentives."

On Oct. 13, the government announced a number of initiatives intended to help filmmakers, including reductions and exemptions of 25 percent, from the entertainment tax-applied on cinema tickets and art performances, tax incentives for film production, and further support for digital content and film production in Malaysia. However, broader changes in policy may be needed for the future of the industry. Former Malaysian Minister of Youth and Sports Syed Saddiq Abdul Rahman said the government and the film industry should reform the censorship regime by appointing a diverse group of professionals to the censorship board.

Malaysia is therefore looking for a middle ground. The way forward should be a policy that gives confidence to the film industry, whose enormous potential is before everyone's eyes, by aiming for independence, with no more restrictions on artistic freedom.

Chip, Intel's maxi expansion in Malaysia

Malaysia is already a vital base for packaging, assembling and testing chips for Intel. It will be even more so

By Tommaso Magrini

Intel aims to quadruple the capacity of its most advanced chip packaging services by 2025, planning to build a new plant in Malaysia. The factory under construction in Penang will be Intel's first overseas facility for advanced 3D chip packaging, what the company calls Foveros technology. The company is also building another factory for chip assembly and testing in Kulim, as part of a $7 billion expansion in the Southeast Asian nation. Malaysia will thus become Intel's largest manufacturing base for 3D chip packaging, said Robin Martin, corporate vice president for supply chain and manufacturing operations. The company did not specify when the Pengang plant will begin mass production. Intel will also use the technology for its new central processing unit (CPU) for personal computers. In the past, chip packaging was considered less crucial and less technologically demanding than chip production itself. It has emerged as a key area in the race to produce increasingly powerful chips, as the conventional approach--compressing more transistors into a smaller area--becomes increasingly difficult. According to Yole Intelligence, the market for advanced chip packaging services was worth $44.3 billion in 2022 and is expected to grow at a compound annual rate of 10.6 percent from 2022 to reach $78.6 billion by 2028. Malaysia is already a vital base for chip packaging, assembly and testing for Intel, which employs 15,000 people in the country, including 6,000 in its chip design center. The development confirms and fortifies Kuala Lumpur's ambitions to become a major regional hub for Southeast Asia for semiconductor manufacturing.

How Malaysia's state elections went

The results showed a head-to-head contest between the two coalitions that is unlikely to destabilize the Unity Government. The nationalist-Malayu front won Kelantan, Kedah and Terengganu, among Malaysia's poorest states

Article by Aniello Iannone

Department of Politics and Government Studies Diponegoro University

A few weeks ago, state elections in Malaysia concluded in 6 of the 13 states. At the polls both the coalition government PH (Pakatan Harapan , allied with BN (Barisan Nasional) and led by PM Anwar Ibrahim, and the opposition with the coalition PN (Perikatan National) and PAS secured 3 states each, mirroring pre-election predictions. The elections were an important test for Anwar to analyze the level of political polarization among the population in response to the previous general elections that occurred 9 months ago and the political crisis that, since 2018, has seen 4 different governments fall in less than 4 years as a result of internal strikes and political-economic instability post-pandemic from COVID-19. However, the importance of this election lies in the vote cast. Malaysia remains a country with a high level of ethnic national debate in politics and for decades, under UMNO hegemony, has been characterized by a pro-Malayu-Islam narrative with policies that have created some tension with the other part of the Malaysian population, namely those of Indian and Chinese origin. 

The results showed a head-to-head contest between the two coalitions that is unlikely to destabilize the Unity Government. The nationalist-Malayu front led by the PN coalition won Kelantan, Kedah and Terengganu, among Malaysia's poorest states, winning two-thirds of the electorate. In detail, PH was completely defeated, managing to snatch only 3 seats from PN out of 36 in Kedah. In Kelantan the situation was worse, where Anwar managed to win only 2 out of 45 seats. In Terengganu, on the other hand, all 32 seats went to PN. Kedah, in particular (but also Kelantan and Terengganu), was swept into the last 2022 elections by the green wave (referring to the color of PAS, the Pan-Malaysian Islamic Party and an important member of the PN coalition), where PN won 14 out of 15 seats, minimizing BN's influence in the region.

PAS itself can be considered the winner of these elections, emerging from the green wave managed to show its importance within the PN coalition. However, this emergence of PAS could have major consequences both vis-à-vis other PN coalition parties such as BERSATU and for the unity government given PAS's extremist national-Islamic nature. Ideologically and historically, PAS has a nationalist political philosophical framework, born in 1951 during conservative Muslim meetings between Kuala Lumpur and Pengan and heavily influenced by the Egyptian revolution and the rise of the Muslim brotherhood in the Middle East and the Khomeinist revolution in Iran. However, an important difference from other dominant nationalist parties, such as UMNO, is the role of Sharia-based ideological Islam. This also explains its victory in elections in Malay-Islam-dominated states such as Kelantan.

The progressive PH coalition, allied with BN (which in this context is an extension of UMNO within the ruling coalition and is the only nationalist party in the coalition), currently leads the government with Anwar as its leader. Instead, it won the states of Selangor, Negeri Sembilan, and Penang. This result appears balanced, at least on first analysis, and maintains the status quo. Out of a total of 13 states, elections were held in 6 of them, of which 3 went to the opposition with a large majority. Moreover, even in the richest states in the country, such as Selangor, the political battle between the two parties saw PN succeed in part, managing to win 22 out of 56 seats and preventing PH from gaining a majority in the Selangor assembly.

Nine months after the 15th general elections, the state elections were an important test for the Anwar-led unity government. Out of 6 states in which elections were held, the opposition, particularly the Islamic nationalist right, won a majority in 3. The current result will not result in a change of the status quo in the country, which is led by the unity government under the leadership of Anwar's progressive coalition. However, at this time the government should focus on preserving popular support, especially in Malayu majority areas. Any lack of support from both the public and the electorate could prompt the opposition to call for the holding of new general elections.

 

Progress on human rights in Malaysia

Abolished the mandatory death penalty for a range of crimes in the Southeast Asian country. An important and significant decision

Article by Aniello Iannone

On Monday, April 3, the Malaysian parliament voted on a bill that will result in the reform of part of the country's criminal justice system. Specifically, the reform, in addition to abolishing the mandatory use of the death penalty (Abolition of Mandatory Death Penalty Bill DR7), will revise sentencing for crimes punishable by the death penalty and life imprisonment (Revision of Sentence of Death and Imprisonment for Natural Life Temporary Jurisdiction of The Federal Court, Bill DR 8). The reform does not abolish the death penalty in the country altogether, but it removes its sentencing requirement. Significant step. The death penalty will remain imposable for 34 crimes including those involving drug trafficking, terrorism and murder. However, the reform will give discretion to the judge in interpreting the sentence, with the possibility of imposing other milder sentences. The reform is a considerable step forward for human rights in the country. Currently in ASEAN out of 10 countries, only the Philippines (2006) and Cambodia (1989) have completely abolished the death penalty by law. Timor-Leste, as an ASEAN observer country abolished the death penalty in 1999. 

Death penalty in Malaysia

In Malaysia, the criminal justice system was introduced by the British Empire and imposed the mandatory death penalty in cases of murder. How much in 1957 Malaysia gained independence, it inherited the common law system including the death penalty. In 1952, also under the British administration, the Dangerous Drugs Act was established , where in 1975 it became a crime punishable by non-mandatory death penalty. It was not until 1983 that the government led by Mohamad Mahathir, in order to demonstrate the government's zero tolerance for drug trafficking, which at that time was beginning to see high flows from producing countries in the area such as Laos, Myanmar and Thailand, that the death penalty for drug trafficking was made mandatory. However, it must be understood that from a socio-political perspective, Malaysia since its independence in 1957 has always lived in a perpetual state of perceived emergency. The death penalty in this context has been an important element in maintaining this perception of continuous emergency in the country. 

Nowadays in Malaysia 34 counts may be punishable by death penalty, until the reform there were 12 punishable by mandatory death penalty: declaring war against the Yang ruler of Pertian Agong and the state, taking hostages, killing, committing terrorism, leading a terrorist group, providing services for terrorist purposes, providing property for terrorist acts, facilitating terrorist activities, facilitating organized crime activities, illegal discharge of firearms, accomplice to illegal discharge of firearms, and drug trafficking. These 12 counts will no longer be punishable by the mandatory death penalty but will fall under the other 22 counts punishable by the death penalty or, depending on how the guidice intereprehends the indictment, alternative punishments.

Reform in the post-government crisis period 2020-2022

Since 1957 to date, according to Amnesty International data, about 469 people have been executed, 1337 are currently sentenced on death row, of these a quarter are foreigners. Moreover, of these, 67.5 percent have been convicted of drug trafficking and other crimes not considered a threat to international law. For years activists have been fighting for the abolition of the death penalty in the country. In 2010, a petition drive was activated to save the life of Vui Kong, a Malaysian sentenced to death in 2007 in Singapore for trafficking 15 grams of heroin. His sentence was reduced to life imprisonment, and the signature collection reached 109,346 signatures and was then sent to the government. The International Center for Law and Legal Studies (I-CeLLs) was later established to arrive at a solution on the death penalty in the country. In 2018, a moratorium to abolish the death penalty was proposed by the Mahathir government and the coalition that won the elections, Perkatan Harapan, as one of the points in the coalition's political manifesto. However, the proposal was opposed by both the opposition and far-right conservative-Malay nongovernmental organizations such as PERKASA. Now the major breakthrough is with the government led by Premier Anwar Ibrahim.

The current situation in ASEAN 

ASEAN has no law or mechanism for an eventual total ban on the death penalty in member countries. Moreover, its current organizational structure would not allow it as it is based on a strict interpretation of the policy of non-interference and protection of national sovereignty of member countries. According to a survey by the Ministry of Law and Human Rights in Indonesia about 80 percent of the population supports the death penalty. But progress continues, unlike in other parts of the world, as the case of Malaysia shows.

Malaysia, Anwar Ibrahim is the new prime minister

After a five-day deadlock, the Council of Sultans has chosen Malaysia's new prime minister. An overview of the most complex election ever held in the country

Malaysia has a new premier. It took five days, hours of consultations and the intervention of the sultan before the results of the 15th general election were (for now) crystallised. On Thursday 24 November, the current monarch Sultan Abdullah Sultan Ahmad Shah convened a special meeting with his counterparts from the nine Malaysian states (an overview of the sultans' rotation system here) and made the final decision. Normally, the Yang di-Pertuan Agong plays a representative role, but can intervene in situations of emergency or uncertainty, as happened in recent days.

Malaysia's Prime Minister is now Anwar Ibrahim, leader of Pakatan Harapan (PH), the coalition that had triumphed in the 2018 elections only to be scuttled by the factional changes of some key leaders. Now 75, he was a member of Malaysia's historically ruling party, the United Malays National Organisation (UMNO). In 1997, with the arrival of the worst financial crisis in Asia's history, he clashed with the party leadership over his reformist views, initiating a new generation of democracy activists with the Reformasi movement. Expelled from the party and imprisoned in 1998 for sodomy and corruption (charges common to many political imprisonments in Malaysia), he returned to the political scene in 2004, after the resignation of the historic UMNO premier Mahathir Mohamad. With his entry into the PH leadership, Anwar has the merit, observers claim, of having created Malaysia's first truly multi-ethnic coalition, capable of both gaining the support of the Malaysian Muslim majority and that of the country's main minorities (Sinhalese and Indians).

The election results

The 19 November elections had ended without a clear majority, although the balance of votes hung in favour of Pakatan Harapan (PH). At the count, the PH had gained 82 out of 222 seats in the lower house, compared to 73 for the Perikatan Nasional (PN) and 30 for the Barisan Nasional (BN). But to gain confidence, PH needed to win the support of at least 112 MPs, an attempt also made by the BN and PN. Five days before the vote, it was still unclear who would lead the country for the coming years. Right from the start, part of the Malaysian public was against BN and PN's obstructionism: 'It is absurd that the party that won the most seats is somehow defeated. Malaysians have voted, Anwar must become premier'.

The 2022 elections have shown how much the political scenario is changing: before 2018, government crises of this magnitude had never happened, nor had so much friction emerged between the key players in Malaysian politics. The results of the 15th general election, however, confirmed the slow decline of the ethnonationalist United Malays National Organisation (UMNO) faction. Once the party of the Malaysian government for almost sixty years, it has now moved to the other side of the political contest after its worst election defeat ever.

In the meeting scheduled before the meeting with the sultan on Tuesday, 22 November, former UMNO interim premier Ismail Sabri Yaakob (who took over the leadership of the government after the 2020 reshuffle) had then confirmed that he would remain in opposition. Later, UMNO itself said it was in favour of trust as long as the PN leader, Muhyiddin Yassin, was not elected premier.

Winners and losers

The real winner of these elections, observers claim, would be the PN coalition. Formed after the 2020 crisis, the group was able to take home a larger percentage of votes than expected with its strong Muslim and Malay identity connotations. Also winning the souls of its voters, analysts point out, was the search for a third way to the conflict between PH and BN.

This choice has not convinced everyone: there are those who accuse the PN of having thus favoured the rise of the Malaysian Islamic Party (44 seats), a party emblematic of that wing of Malaysian politics in favour of the total implementation of Sharia law. So much so that one citizen vented on Twitter: 'Now it's obvious. Malaysians are racists and religious fanatics. Welcome back to the past. Sayonara to our future."

Time for change?

No significant surge in the youth vote, as anticipated by some analysts. With the lowering of the right to vote to 18 years of age, the electorate took in 1.4 million new voters, and this may have affected the sinking of some historical leaders and UMNO itself. Among the big losers in these elections was the man who led the Malaysian government for almost two decades, the 97-year-old Mahatir Mohamad. His coalition, the Gerakan Tanah Air (GTA), failed to reach 20% of the vote, and the former premier lost the chance to win a seat in Langkawi, in the north of the country: the first time this has happened to him since 1969. The reaction of the markets was consistent with the uncertainty in the hours after the polls closed: on Monday the ringgit fell 0.8% against the dollar and stocks on the stock exchange demonstrated investors' low expectations of the stability of Malaysia's political class.

The impasse did not keep irony on the internet at bay. Memes circulated on social media with a job advertisement titled: 'Position open for the role of Malaysia's tenth prime minister'. Other users spoke of the embarrassment of feeling one's fate in the hands of the political class: 'It feels like we are all in divorce court, waiting for someone to decide who should take custody of us'. Social media were, however, also a cause for concern. Widely used platforms such as TikTok were alerted by the Malaysian authorities for fear that content inciting violence, or fake news, would depopulate.

Malaysian elections, youth vote will be decisive

For around six million people in Malaysia, the early elections on 19 November represent their first time at the ballot box. A constitutional reform in 2019 lowered the voting age from 21 to 18. But a younger electorate does not automatically translate into progressive opinions

Six million new voters and electors will be called to the polls in the upcoming general election in Malaysia on 19 November. Indeed, thanks to a constitutional reform in 2019, the Malaysian parliament lowered the voting age from 21 to 18, as well as included an automated registration system that further extends the electoral pool. Since Asian youth movements are often iconically associated with the fight against authoritarianism, there is a tendency to consider young people as 'natural liberals' and to assume that they will opt for more progressive policies than their older fellow citizens. But the preferences of the younger electorate in Malaysia are an unknown for everyone.

The next general election was supposed to be held in 2023. Instead, Prime Minister Ismail Sabri Yaakob, of the conservative United Malays National Organisation (UMNO) party, called early elections because he believes that the challenges of the Malaysian economy make the future of the coalition he heads, the Barisal Nasional (National Front), uncertain. The Russian-Ukrainian conflict, the slowdown of the Chinese economy, and the unresolved controversy over the 1MDB scandal are the perfect storm that is shaking the National Front's consensus again.

As the Guardian points out, no party in Malaysia has ever managed to govern alone. In the next general election, the main coalitions will be the Barisan Nasional, the Perikatan Nasional and Pakatan Harapan (Alliance of Hope), which ruled from 2018 until the political crisis of 2020. It was the Alliance, in a constitutional reform in 2019, that expanded the national electoral pool by lowering the voting age from 21 to 18. The amendment also included an automated registration system that also streamlines the Malaysian bureaucratic system for registering new voters. Thus, the national electorate increased from 14.9 million in 2018 to 21 million in the upcoming general election on 19 November. Social movements such as Undi18 fought for the passage of the law, reflecting the desire of Malaysia's young men and women to participate in the decision-making process of Asian parliamentary democracy. The Malaysian United Democratic Alliance (MUDA) would like to position itself as a catalyst for the demands of this demographic. People between the ages of 15 and 39 amount to about 45% of the population, but this is still an underrepresented sample in Malaysian politics. About 70% of the legislators are over 50 years old.

But which issues will stir the young electorate's spirits? Professor James Chin, director of the Asia Institute at the University of Tasmania, said that it is not certain that MUDA will be able to capture all the demands of the newly eligible voters. The leader of the movement, Syed Saddiq, said that the movement will focus on issues such as the cost of living, education, access to public transport and job opportunities. But in reality 'we don't know (...) how young people vote', Chin told The Diplomat, 'because there is no voting history'. It is not necessarily the case that the young electorate in Malaysia is oriented towards progressive policies, for a number of reasons. First, while ensuring greater democratic participation, the law to lower the voting age exacerbates the problems of 'malapportionment' in Malaysian constituencies. This mismatch dampens the impact of newcomers on political participation, as the majority of new voters between the ages of 18 and 20 are in urban areas. The electoral law, however, is centred on the majority principle of 'first past the post'. There is no proportional correspondence between seat allocation and population, so the high concentration of people living in urban constituencies - including young people - is underrepresented. Secondly, young people are not necessarily more oriented towards the multiracial and inclusive 'new politics' advocated by MUDA, because birth rates vary according to demographic composition. The new young voters mostly belong to Malay and indigenous groups, which often support the National Front's identity-nationalism inspired policies.

Malaysia on the ballot

Malaysians are preparing to vote in what could be decisive elections to get the country back on track. But instability is just around the corner

Everything is set for the vote on 19 November, when over 21 million Malaysians will be able to choose their representatives. This will be the 15th general election in the history of the former British colony and perhaps one of the most turbulent in recent years. Certainly, analysts say, the one with the most difficult results to predict. Because in Malaysian politics everything seemed to be going smoothly, until 2018. The United Malays National Organisation (UMNO), the majority party, dominated the political scene with very few changes in leadership while the long-standing issues of inter-ethnic representation remained unresolved (only 50 per cent of citizens are Malays, with the remainder made up of Sinodescendants, Indians and other groups - some of which are considered indigenous). Then came the financial scandals (the most egregious was the one related to the state fund 1MDB) and government crises.

The new political landscape

After almost sixty years of stability, Malaysia has seen three governments change within four years, and two prime ministers in less than 20 months. The Pandora's box of Malaysian politics opened wide in 2020, when a number of leading politicians switched coalitions, causing the majority to collapse. The instability continued with new local elections called in the states of Malacca, Sarawak and Johor, while in October the fall of the government was announced and general elections were called. Thirty parties competed in this round, more than half of them merged into four of the existing coalitions. For the first time, the distribution of preferences could come out of the coalition that brings together some historic majority parties (Barisan Nasional, BN) against the opposition that had won the 2018 elections (Pakatan Harapan, PH).

The 2022 elections will be significant for the new political environment that is forming in the country. The crisis has exposed the limitations of the Malaysian electoral system, ranging from the weight of its 222 constituencies to gender parity. Constituencies, for example, have changed over time for various reasons, such as favouring the ethnic majority or maintaining the status quo. The changes that occurred at the dawn of the 2018 elections then redefined the boundaries in the name of 'representation on a local basis' and redistributing the number of registered voters into numerically similar groups. Where gerrymandering - the practice of redrawing the distribution of seats to gain political advantage - does not arrive, accusations of electoral fraud remain: it happens that people with the same personal data are registered on different lists, or names of deceased and non-citizens appear.

Mindful of what has happened over the past five years, MPs passed a law against 'party-hopping', which came into force on 5 October. The legislation prohibits politicians from changing parties once they have been elected by the citizens - an attempt to prevent a repeat of a government crisis premeditated by factions intent on dismantling the majority.

The voting factors

In this context, there is a momentous innovation: the lowering of the voting age from 21 to 18. With this manoeuvre, which took effect at the end of 2021, some 6.2 million new voters were added. With this manoeuvre the under-40s became the most important voting bloc, the one that will determine the course of the elections. An element that has not gone unnoticed by the parties, who have tried to introduce younger figures and have made big promises on the issues of work and economic stability. All this amidst attempts at communication straddling traditional rallies and the use of social platforms (especially Facebook and TikTok).

Nevertheless, 'there is a lot of uncertainty,' William Case, professor of history and international relations at Nottingham University in Kuala Lumpur, told The Guardian. 'This massive influx of young people will increase the size of the electorate but will not significantly change the results'. The low expectations of younger people seem consistent with what is perceived as a more general disillusionment of Malaysian citizens with politics. "[...] In the absence of good and sustainable policies for all the problems we collectively face, it will be my generation that will face the consequences of inaction and identity politics. However, I am not sure that these issues are priorities for the people I am supposed to vote for,' comments 20-year-old Rifqi Faisal.

Justifying this narrative is the idea that UMNO's impregnable position at the top of the government has always made elections a de facto empty exercise of the right to vote. Nevertheless, since the thirteenth general election (conventionally General Elections 13, GE13), turnout has increased significantly, reaching 82.32% in 2018. But the low election turnout in Johor (54%), for example, is dampening expectations.

No less important - to the extent that they have often polarised and monopolised public opinion - are ethnic and religious issues. A survey of Sinodescendants shows a strong focus on the candidates, with 9 out of 10 advocating voting for the coalition closest to the ideal of a multi-ethnic Malaysia.

The issues

The mismatch between politics and citizenship is not just a perception of young voters. Even politicians this year have to deal with a plethora of issues to prioritise. For several years, the theme of corruption seemed to permeate the political discourse, with the different parties ready to accuse each other of real or alleged involvement in the financial scandals that have emerged in recent years (such as the aforementioned 1MDB one). But even this narrative seems to be faltering, as reported by the news site SAYS citing Malaysia's progress in the Corruption Perception Index: the fact that the latest scandals have emerged, and the alleged culprits identified and sanctioned, would have reduced the presence of this issue in public opinion.

Most analysts seem to converge on a macro-issue common to countries in the region at this time: the economy. The rising cost of living, real estate prices, and the strengthening of welfare are just some of the problems that are emerging in post-pandemic Malaysia. Young Malaysians also have to contend with a labour market that is less and less aligned to their skills and where wages are no longer sustainable. 

However, the economic data for 2022, as Bloomberg points out, appear almost contradictory: Malaysia's GDP growth was among the strongest in the region (+14.2% in Q3). Unemployment rates also seem to have returned to pre-pandemic levels, but with interesting differences between ethnic groups (there are more unemployed among Malaysians, 4.2%, than among Sinhalese, 2.7%) and states (in Sabah, in the north, the unemployment rate is 8.2%, while in neighbouring Sarawak it is 3%). Inflation has doubled since the beginning of 2022, while during the summer there was a record spike in fuel and food prices. One of the many factors driving this trend was a drop in the ringgit exchange rate, which favoured exports but raised import costs. Still to be seen are the results of the outgoing government's latest manoeuvre, which in June was to allocate at least USD 17 billion to an aid plan for citizens and businesses - a record figure in the country's history.

The climate factor

The resignation of the government in October raised a number of controversies, first and foremost the climate issue. Deciding to hold elections in the autumn in Malaysia means dealing with the monsoon season, a phenomenon that is becoming less and less controllable due to climate change. Many rallies have been cancelled due to heavy rain and gusts of wind, while there are fears of a drop in voter turnout caused by flooding. To deal with the problem, a network of civil society associations, Undibanjir (from undi, vote, and banjir, floods) has been set up with the aim of organising rescue teams and facilitating the relocation of voters to their constituencies.

On the climate issue, young Malaysians also seem more attentive than past generations. Ninety-two per cent of them say climate change is a crisis that concerns them closely, according to the results of the National Youth Climate Change Survey by UNICEF and UNDP. Climate change has also entered the political debate in this election, and could draw a percentage of the vote towards the names that are more outspoken in favour of the environmental cause, as an in-depth report by Malaymail points out.

Malaysia in search of political stability

Could the anti-party hopping law for upcoming elections be the solution?  

By Aniello Iannone

On February 23, 2020, during the government led by the Pakatan Harapan coalition (PH), exponents of the Pribumi Bersatu Malaysia (Bersatu) party, the main party of the PH coalition, meet with members of the Pertubuhan Kebangsaan Melayu Bersatu (PEKEMBAR) party, at the Hotel Sheraton, in Kuala Lumpur.

That event, known in the media as "Sheraton Move," will cause the collapse of the PH coalition with the exit from the coalition of the BERSATU party and a fraction of the Keadilan Rakyat (PKR) party. This event will cause a government crisis in Malaysia with Mahathir's resignation on February 24, 2020.

The events that preceded the Sheraton Move are linked to the victory of the Pakatan Harapan (PH) coalition during the G-14 (14th General Election) when the Barisan Nasional (BN) coalition was defeated after 60 years in command.

The PH coalition, led by former Prime Minister Mahathir Mohammed, managed to gain support during the G14 by taking advantage of internal weakness in the opposing coalition.

This weakness resulted from the tax scandal involving Najib Razak within the Barisan Nasional coalition and the Pertubuhan Kebangsaan Melayu Bersatu (PEKEMBAR) party, better known by the English acronym UMNO. 

However, after less than 22 months of PH's rule, the ideological differences between the parties within the PH coalition, with weak leadership at its helm, led to its crumbling. The unfulfilled promise by Mahathir to cede the role of prime minister to Anwar Ibrahim has given rise to a crisis within PH, which has consequently led to the exit from the coalition of an entire party, BERSATU, and a fraction of the Keadilan Rayat party (PKR). A government crisis began in Malaysia from these events, known as the Sheraton Move. 

This crisis led to the resignation of Mahathir and the beginning of an alternation of governments. First of all, there was the government of Muhyiddin Yassin, followed by the formation of the government of Ismail Sabri Yaakob, exponent of the UMNO / PEKEMBAR party and of the Barisan Nasional coalition in August 2021, currently in office. 

Why an anti-party hopping law now? 

The problem of the government crisis opened a debate in Parliament for an anti-party hopping bill. The law would require any members of Parliament who change parties during legislation not to be able to continue their role as a parliamentarian. Members of Parliament (MPs) who change parties do not maintain loyalty to the part of the population who voted for them. The law would also prevent larger parties from attracting members of smaller parties (Chacko, 2020)

The practice of “hopping” from one party to another by parliamentarians is not new in Malaysian politics. The political crisis in Sabah in 1994 started when supporters of the Bersatu Sabah (SPB) party, which won the state elections against BN, left the party to join the opposing party.

After the events of the Sheraton Move, the PH and the current government have agreed on a memorandum of understanding (MoU) which states that the plan for an anti-party hopping bill should be implemented no later than the first session of the fifth session of Parliament. To date, the law plan has been postponed for further insights.

Analyzing Malaysia's political and constitutional situation, an anti-hopping law should revise various articles of the Malaysian constitution, in particular article 10. The Mahkamah Persekutuan Malaysia (Federal Court) 1992 declared an anti-hopping law illegitimate because it went against 'Article 10 of the constitution, which defines freedom of association.

To deal with this regulatory conflict, the government has asked for a reform of Article 10. Should this reform pass, it will introduce a clause (A) in paragraph 3 of Article 10, i.e., the introduction of limitations for members of Parliament who change party during a period of active government and the introduction of a second clause stating that the act of hopping is harmful to public order (Loh, 2020)

Uncertainties: Is it heading in the right direction?

The events during the Sheraton Move may not justify the government's proposed law. The bill provides that if one member of Parliament leaves his party for another, they will automatically lose their role as parliamentarians. Nevertheless, what led to the Sheraton Move events stems from different problems. In that context, an entire party, BERSATU, left the PH coalition. Even if there had been an anti-hopping law, it still would not have changed events at the Sheraton. 

The law is currently being reworked. The lawyer for Liberty (LFL) group noted that an anti-hopping law could become a double-edged sword in the Malaysian context, with dangerous repercussions for democracy.

According to LFL, the bill lacks a concrete definition. According to LFL, this law does not concern itself with solving the problem of party-hopping but, in a contradictory way, grants decision-making power to the party to expel any members, limiting the independence of elected representatives.

In addition, this would put the parliamentarian below the decisions taken by the party, for fear of possible repercussions. 

The criticism of the bill also comes from parliamentarians. The MPs Nurul Izzah Anwar from the PH harshly criticized the bill. Anwar said that if this law were to be passed, parliamentarians would see their freedom and discretion restricted during their work in ParliamentParliament.

 

Reference 

Chocko D., P. (2020) “ Policy Briefs: party-hopping of Lawmakers in Malaysia: a menu of remedies. Jeffrey Sachs Center on Sustainable Development, Sunway University 

Loh J. (2020) “Outlawing party hopping for good” EMIR Research 

Muhyiddin Yassin: stepping out of the shadows under the August sun

After the end of the state of emergency, there is only one month left for the Malaysian Prime Minister to launch the vaccination campaign which could save his political life.

Just over one-and-a-half year ago, Malaysia's most popular politician, Muhyiddin Yassin, was unknown to many if not most. However, Muhyiddin, 74, who became the Prime Minister on March 1, 2020, is not exactly a newbie in Malaysian politics. After joining the United Malays National Organization (UMNO), the former dominant party, in 1971, Muhyiddin, "a very serious and boring man", managed to get through the major political transitions which have occurred in the country over the last fifty years.

In 2016 he was kicked out of UMNO for criticizing then-Prime Minister Najib Razak, who was involved in an international corruption case. In the May 2018, he played a crucial role in the election victory of the Alliance of Hope (Pakatan Harapan, PH), the pact of opposition parties which ousted UMNO from power for the first time since Malaysia's independence in 1957. However, not even two years later, the power struggles within the new government coalition and the miscalculations of the 94-year-old Mahathir Mohamad, a former Malaysian strongman who returned to power in the 2018 democratic revolution, the PH government collapsed. Muhyiddin won the support of his former UMNO colleagues and emerged as a compromise candidate for the premiership.

Muhyiddin – the official spelling is Mahiaddin – was born in 1947 in the state of Johor, at the southern end of the Malay Peninsula, then a British colony. His father, Muhammad Yassin, was an influential Muslim cleric belonging to the Malay ethnic majority. After graduating in economics and Malaysian studies at the University of Malaya, Malaysia’s oldest university, Muhyiddin joined the young generation of UMNO politicians led by Anwar Ibrahim, who was then climbing up the party hierarchy by promoting religiously-inspired pro-Malay policies.

In 1978, Muhyiddin entered parliament as a representative of the Pagoh district, whereas in 1986 he was appointed Menteri Besar, the chief minister of the state of Johor, where he built his electoral base. In 1995, he joined the cabinet of then-PM Mahathir as Minister of Youth and Sports and remained in government for the following twenty years, leading several departments under various prime ministers, until he was sacked by Najib in 2015 and expelled from UMNO the following year.

As Oh Ei Sun, a senior fellow at the Singaporean Institute of International Affairs, rightly pointed out, at that point most of the other members of the cabinet were still supporting Najib. Muhyiddin however realized the growing social outrage over the 1MDB scandal, denounced publicly "the birth of a new dictatorship", and saw an opportunity for political change. Five years later, Muhyiddin, then-President of the newly formed Malaysian United Indigenous Party (BERSATU) and Minister of Home Affairs in the government led by Mahathir, was able to capitalise on his deep knowledge of the system and enduring friendships across the political spectrum to present himself as the only one who could "save the country from prolonged political turmoil".

The appointment of Muhyiddin as Prime Minister, however, was not sufficient to solve the political crisis which was triggered by Mahathir to get rid of Anwar in February 2020. Mahathir and Anwar, the two most prominent personalities of the PH, have since defined Muhyiddin a “political opportunist” and a traitor, respectively, accusing their former ally of “compromis[ing] on principles to form a backdoor government with kleptocrats.” However, it was precisely because of the personal rivalries between Mahathir and Anwar that the Alliance of Hope was unable to provide a durable alternative to the “kleptocrats”. In the context of the dire Covid-19 situation, then, Muhyiddin declared a state of emergency which allowed him to rule by decree without having to test his narrow parliamentary majority.

Only on 5 July, after being rebuked twice by Sultan Abdullah of Pahang, the Yang di-Pertuan Agong, head of state of Malaysia, Muhyiddin agreed to convene a special sitting of the Parliament to present his national recovery plan. At the beginning of the session, on 26 July, the Prime Minister called on all parties to “stand in solidarity” with the government while Covid-19 cases were still on the rise. However, he refused to allow a debate on the measures announced by the government and declared the lifting of the emergency ordinances without consulting the Sultan. If the chaotic management of the so-called ‘second wave’ and the clashes with the king have raised the pressure on Muhyiddin to step back, the fragmentation of the opposition and the suspension of parliament have allowed him to buy time. For the moment, the Prime Minister is shunning critical voices and ignoring calls for resignation, while focusing on his ambitious vaccination plan which may ultimately ensure his political survival. With the state of emergency coming to an end and the next sitting of the parliament scheduled for early September, the fate of Muhyiddin, the politician who has always worked in the shadows, could be decided under the August sun.

Dialogue for an EU-Malaysia trade agreement reopens

Despite the controversial issue of palm oil, European and Malaysian industry groups are pushing to restart trade negotiations

After free trade agreements with Singapore and Vietnam, the European Union aims to expand its network of bilateral agreements in Southeast Asia. With an economy devastated by the pandemic crisis, Thailand and the Philippines have expressed interest in reopening talks, while negotiations with Indonesia are proceeding. Now it seems that the conditions are in place to relaunch negotiations with Malaysia as well after some industrial groups have announced that they want to put pressure on Brussels and Kuala Lumpur to reach an agreement.

Today, Malaysia is one of the most advanced countries in Southeast Asia overall: it is the third region in terms of GDP (12%) and the EU's third-largest partner in ASEAN. It is the second-largest oil producer in the region and the third-largest exporter of liquefied natural gas in the world, thanks also to its strategic position among the main energy trade routes.

Malaysia has already tried to start talks with the EU in 2010, but these broke down two years later due to the difficulty in agreeing on key elements. The main obstacle, now as then, remains the controversial issue of palm oil. Lobbies in Indonesia and Malaysia - which supply 84% of global palm oil production - have long opposed EU environmental protection rules on biodiesel imports. Above all, this is because the crops are an important source of income for rural dwellers, who also make up a large part of the electorate in both countries. On the other hand, environmentalists are fighting hard against the intensive production of palm oil, which is the main cause of deforestation that destroys the habitat of orangutans and other endangered species.

This is why in 2018, with the Renewable Energy Directive II and the subsequent Delegated Regulation, the Commission established strict "eco-friendly measures" for the European energy sector, which include the total ban on imports of all those biofuels that cause even indirectly the increase in greenhouse gas emissions by 2030, including palm oil.

However, now, like Indonesia, Kuala Lumpur has decided to open proceedings against the EU using the WTO dispute settlement mechanism in January this year. Both states accuse the EU of pursuing discriminatory and protectionist trading practices. A risky move that could jeopardize negotiations with the EU, and all for a product that accounts for less than 5% of exports to the old continent.

Nevertheless, given the economic importance of a free trade agreement, some analysts believe that the well-known palm oil issue would be raised mainly for domestic political reasons. They highlight how the Malaysian Prime Minister, Muhyiddin Yassin, and his minority government, in view of the general elections scheduled for 2023, are committed to a nationalist agenda for the benefit of the country's Muslim majority, which accounts for the majority of owners and workers in the palm oil industry.

Meanwhile, pressure is growing on the Malaysian government, especially from local businesses, which are well aware that a free trade agreement with the EU would stimulate post-pandemic recovery. At the same time, the restart of the negotiations would allow European countries to take advantage of the commercial and investment opportunities offered by a dynamic market in an area of the world on which EU companies are betting a lot. Today, therefore, after the failed attempts of the recent past, the time seems finally ripe for Malaysia and the EU to sit down at the table to restart negotiations.