The Malaysian government has decided to take over the troubled firm, Boustead Naval Shipyard (BNS), to complete the Littoral Combat Ship project the company failed to deliver. The alternative would be to see the RM6 billion ($1.7 billion) paid out already disappear into thin air, making a joke of an important defence project.
A new agreement, signed with BNS parent company Boustead Holdings, will see the contract price increase, but the number of ships decreases from six to five.
Concerned observers have called for a White Paper on how Malaysia got entrapped in such a serious problem and what steps the country could take to avoid similar fiascos. An infuriated commentator wants the Malaysian Anti-Corruption Commission to provide citizens with full disclosure of the practices and overlapping interests of the various financial players involved in the project.
Prime Minister Anwar Ibrahim must be commended for his decisive response to a brewing scandal. True, the bailout of BNS means that the government is taking financial responsibility for the failure of a private company to live up to its promises to the state.
Bailing out the company could amount to accepting moral hazard, a term used in economics to describe a situation where one party is disadvantaged due to another party’s behaviour.
The inability of BNS to deliver on the naval project threatens to compromise at least some aspects of Malaysia’s defence policy. However, precisely because the default involves security, it cannot be correct for the Anwar government to step in and provide the means of course correction. To not do so would represent a serious abdication of Anwar’s primary responsibility: To protect Malaysia’s sovereignty and territorial integrity above all other considerations.
The BNS debacle allows Anwar to burnish his credentials and consolidate his power on a constantly shifting electoral landscape. Handling the dismal affair with a firm eye on accountability and transparency would prove that he was right in thwarting repeated political and legal attempts to impede his deserved rise to the premiership. Hardly any Malaysian politician can claim his mantle of legitimacy, one invested in him by the hopes and expectations of millions whose everyday lives cut across race and class in a divided polity.
Of course, the BNS scandal is not of his making but was inherited from previous dispensations, but he is in charge of Malaysia’s political and economic destiny now. Anwar must show that, just as he has nothing to hide, he will not allow the parasites of the Malaysian economy to hide their burrowing under the assured cover of political patronage. Patronage was a common currency at another time. This is now.
Adversity into advantage
What is happening now is that Malaysians are at a crossroads. They are aware of how they have come to be where they are. That path was hewn through collusion among clustering interests in the government, the private sector and the media. Metaphorically, it was a crooked highway that ran through the lives of ordinary people but bypassed entrenched concentrations of wealth and power, leaving them intact.
Now, the way ahead lies in empowering the people through an open, inclusive and democratic nationalism in which earned merit will determine personal progress, and that progress, in turn, will lay the foundations of a new Malaysia. Race and religion will not be cast to the wilds, but those exploiting ethnic sentiments will no longer determine the national agenda to exclude rudimentary and foundational goals such as equity and justice.
Turning adversity into an advantage holds the key to politics, which is the art of the possible. The BNS debacle represents inherited adversity: It is up to the Anwar government to turn that adversity to its political advantage to help build the groundwork for its ambitious plans to transform Malaysia’s political economy.
The implications
The Anwar communications team, which worked so hard to convey his promise of change convincingly to a politically tired populace when he was out of power, should now go on the offensive by using the BNS saga to argue that such problems would keep occurring so long as structural changes are not made to the functioning of the Malaysian state.
It is not sufficient that Kuala Lumpur’s vocal intelligentsia, whether Malay or Chinese or Indian or Eurasian, should be aware of the implications of the BNS scandal. It is essential that others, particularly rural Malays, should grasp those implications so that they would be less prepared to be swayed by ethnocentric rhetoric of the kind that empowers governments which then go on to allow vested interests to commit economic crimes against the Malaysian people, including the very bumiputera among whom exist people with an exceeding degree of racial and religious fervour.
What needs to be communicated to the people is that a clean Malaysian polity requires clear thinking on the part of voters. Do not vote for parties that promise heaven and deliver hell. Do not go for the colour of a candidate’s skin: Look at the logic of their words, the direction of their actions, and the gathered weight of their credibility. If you don’t, the next financial scandal, even one touching on national security, could be worse than this one. That should be the message. This is a golden communications moment for the Anwar government.
The moment goes beyond communication. Even if ethnoreligious issues may not be at the top of voters’ priorities at the moment — given the pressures exerted by the cost of living and other material concerns — they have the potential of emerging as salient issues given the opposition’s habitual attempts to tar the government with the old but not exhausted trope of failing to defend Malay rights. The controversy over the “Allah” issue is an example that holds ominous resonance for the future. The government attracted the ire of Islamist groups, including the opposition Perikatan Nasional alliance, after it had dropped an appeal in April against a 2021 High Court verdict that allowed non-Muslims to use the word “Allah” in educational publications.
Conservative policies
It is worrying that the government has moved to implement more religiously conservative policies by announcing its decision to table a controversial amendment that will increase the criminal powers of the Syariah courts after obtaining Cabinet approval.
The problem with ceding ground to the religious Right is that the more you give, the more it will ask for. Indeed, appeasement appetises the Right. There is no guarantee that the Anwar government’s reformist agenda would not be derailed by visceral appeals to race and religion — not only among some Malays but also among those Chinese who have their idea of how Malaysia should be shaped in their racial and religious favour.
The Anwar administration would have to hold the balance of power as best as possible between the ethnic and the economic realms of Malaysian politics. The public disquiet over BNS offers the premier an opportunity to work on the psychological expectations of the population without ceding ground to any one extreme corner of the Malaysian ground.
International image
The Anwar administration needs to consider another factor: Its foreign image. Foreign governments and investors are not overtly interested in the domestic intricacies of Malaysian politics. Those issues are for the national government to confront and manage. Malaysia’s international partners want a stable polity and an economy where foreign companies can profit. Mr Anwar is an iconic representation of those possibilities. Of course, he needs to hold the domestic ground to deliver on Malaysia’s international promise.
However, he cannot achieve his purpose if he keeps conceding political territory to religious and ethnic forces without interest in Malaysia’s international standing. In a globalised world, national leaders must be international personalities as well. Anwar’s charismatic personality serves as a perfect springboard for Malaysia when great powers such as the US, China and Russia are all vying for the support of smaller nations in their bids to hold on to or lay claim to global supremacy. Malaysia must not lose the momentum of its new advantages on the global stage.
The BNS saga could turn out very well for Malaysia should the Anwar government seize the moment and turn a problem into an opportunity.
