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Giorgio Cafiero Headshot

What MH370 Says About Malaysia's Challenge

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The Malaysian government has been widely criticized for a lack of perceived transparency in releasing information related to the disappearance of Malaysia Airlines 370. This is undoubtedly part of the reason why Malaysian Prime Minister Najib Razak went to such lengths at Monday's press conference to state that the Malaysian government wants to be transparent in releasing its apparently newly acquired knowledge that the plane went down in the South Indian Ocean. The perception that the government previously withheld information, or deliberately misled the world about what it knew and when, points to a larger set of issues that the Malaysian government and its people need to address -- political and social reform.

When Prime Minister Razak and his ruling coalition (Barisan Nasional, or National Front) won re-election last year, it was confirmation that the majority of Malaysians fear change and prefer the devil that they know. It was also affirmation that the country is increasingly out of step with the dynamic political change that has swept many of its neighbors, and that the ancien regime can remain in power even though it clearly does not represent the aspirations of many of the country's minorities and youth.

Public discontent with corruption and the state of race relations were the main issues that mobilized Najib Razak's opponents. For many years the BN's ties with big business have secured its power base, in conjunction with the economic interests of the elite. Opposition candidate Anwar Ibrahim struck a chord in many young Malaysians when he argued that such cronyism has undermined economic opportunities for the average Malaysian.

The "brain drain," particularly among the country's young, has resulted in a significant cost to Malaysia, as more than a million of its citizens have moved to other countries to work for higher wages in recent years. Some 60 percent of skilled emigrants cited 'social injustice' as an important reason for leaving Malaysia. However, the underlying economic health of the Malaysian economy -- for which the BN may rightly claim credit -- has enabled the country to overcome the negative effects of the brain drain. Annual GDP growth has ranged from five percent to six percent in recent years, inflation is low, and the unemployment rate has remained below four percent since 2009. This economic record ultimately tipped the balance in favor of the BN and Prime Minister.

Malaysia's racial divisions have shaped national politics for many years. Since the 1970s, the government has implemented a series of affirmative action policies designed to favor 'Bumiputras' (indigenous Malays) at the expense of racial minorities, primarily Malaysian citizens of Chinese and Indian ancestry. As a result, Malay citizens were privileged with respect to land ownership, bank loans and admission to universities. Bumiputra policies created a large, mostly urban Malay middle class, and fueled resentment on the part of the country's minorities. It remains to be seen whether Malaysia's re-elected leaders will make the difficult decisions needed to ensure future prosperity for young Malaysians.

Malaysia sits at the crossroads. Although the legacy of semi-authoritarian rule remains strong, the country is slowly changing in some fundamental ways. It remains to be seen whether the BN is capable of enacting meaningful political reform, or whether it will attempt to continue with business as usual. The real test will be a dismantling of the Bumiputra system before the next election. A 2008 survey found that 71 percent of Malaysians agreed that race-based affirmative action was obsolete and should be replaced with a merit-based policy. But after decades of institutionalizing preferences for the majority Malays, turning the spigot off will prove to be no easy task.

Given that the BN won, with Bumiputra policies in place, it has little incentive to change the formula. If history is any guide, Malaysians have every reason to doubt that the Bumiputra system will be dismantled under BN rule. But the BN is swimming against the long-term tide. Maintaining a system of preferences for a majority population is not a prescription for the long-term political stability the government says it wishes to ensure. Surely, the Prime Minister knows that.

The lack of transparency shown to the world by the Malaysian government regarding MH370 is also symptomatic of the larger issue of presumed invulnerability, which in this case was transferred from the domestic political stage to the international stage. The world more generally, and the governments and citizens of the countries who lost loved ones on MH370, acquired a good taste of what it is like to be reliant on a government that has remained unaccountable for too long. Perhaps this terrible tragedy will inspire the Malaysian people to demand more from their government, and spur the government to seriously consider implementing the reforms that so many of its citizens have been demanding.

*Daniel Wagner is CEO of Country Risk Solutions, a cross-border risk advisory firm and author of the book Managing Country Risk. Giorgio Cafiero is a research analyst with CRS based in Washington.