(image from Wikipedia)
[Article original published August 2008.]
INTRODUCTION
Malaysia and Indonesia share similarities in geography, culture and cuisine. However the politics of both countries differ quite significantly.The Federation of Malaya gained independent from the United Kingdom in 1953. The federation was renamed to Malaysia when the states of Sabah and Sarawak joined in 1963. The independence from the United Kingdom was amicable but delayed since Second World War until after the communist insurgency was suppressed.
Indonesia declared independence shortly after the Japanese surrendered in 1945. But unlike Malaysia, Indonesia’s former colonial rules fought unsuccessfully for four years to regain control. Indonesia’s first leader, Sukarno, maintained tenuous control and relied on support from the Military and the Communist Party of Indonesia (PKI).
MAHATHIR AND SUHARTO
Two politicians stand out for their role in transforming their respective countries into modern emerging economies, former Malaysian Prime Minister Mahathir bin Mohamad and former Indonesian President Suharto.
Mahathir ruled Malaysia for 22 years from 1981 and is credited with the country’s phenomenal economic growth during the late 1980’s and 1990’s. Mahathir is best known internationally for the large scale projects such as the planned capital city of Putrajaya, the Bakun Dam and the iconic Petronas Towers. Mahathir believed in the Keynesian economic theory that growth can be achieved in a mixed economy through infrastructure investment.
Suharto, a former military leader, became Indonesia’s second President after purging the country of communist. Suharto ruled Indonesia for 32 years with the economic and diplomatic support from the West. Suharto encouraged foreign investment which led to dramatic economic growth. However the Suharto regime (referred to as the “New Order”) is also synonymous with corruption and anti-Chinese legislation that attempted to suppress Chinese culture and reduce Chinese economic control.
Anti-Chinese policies were not restricted to Indonesia. In 1971, Malaysia launched the New Economy Policy (NEP) whose goal was to redistribute Malaysia’s wealth from non-Malay, such as Chinese, to Malay. The policy mandated that all initial public offerings (IPO) reserve 30% share for Malay investors. Other provisions include quotas at educational institutions and discounted housing. The policies of the NEP continue today as the National Development Policy (NDP) even though the success of the program is questionable.
The domination of these two regimes took a major blow when the Asian financial crisis occurred in 1997. It is interesting to compare how Malaysia and Indonesia were affected (and handled) the crisis. Prior to the crisis Malaysia was progressing towards its vision of achieving developed nation status by 2020. However this nationalist vision took a step back when the country plunged into a recession following the Asian financial crisis. In less than a year the ringgit and stock exchange had lost half of its value. In opposition to the international community and his own finance minister, Mahathir refused IMF aid and instead choose to impose capital controls and fix the ringgit against the US dollar. This strategy proved successful, by 2005 Malaysia had a budget surplus of US$14 billion however asset values are still to return to the pre-crisis level.
Prior to the crisis, Indonesia had a trade surplus, large foreign exchange reserves and a strong currency. Following the crisis, the rupiah’s value dropped dramatically and Indonesia was forced to accept economic reforms in exchange for IMF aid. The rupiah continues to decline from a pre-crisis value of RP 2,400/dollar to RP 17,000/dollar in 1998. Indonesia’s inflation and the removal of subsidies for food and education caused widespread public unrest. In May of 1998, protests turned to riots, with Chinese-owned businesses being the target for many looters. On May 21, Suharto resigned due to public pressure. Incidentally, there is strong evidence that the protests and riots were engineered by the military to persuade Suharto to resignation.
Many different parties reportedly were involved, including local hoodlums, mass organizations, and elements of the armed forces. The team criticized the armed forces for failing to take preventive action or steps to stop the riots once they began.
(U.S. Department of State, 1999)
POST MAHATHIR AND SUHARTO
In 2003, Mahathir retired from politics and was succeed by his deputy, Abdullah Ahmad bin Badawi. Abdullah’s commitment to eliminate corruption in government may have contributed to the Barisan Nasional coalition’s landslide victory in 2004. The Barisan Nasional coalition has led the government since Malaysia’s independence in 1957.
In recent years, the Malaysian opposition parties have gained public support in their campaign for free and fairer elections. Specific demands include access to government controlled media and reforms to the electoral system which is prone to tampering. The campaign culminated in the 2007 Bersih rally in which 100,000 protesters demanded reform in the nation’s capital.
Abdullah’s Barisan Nasional coalition won a narrow victory in the 2008 general election. The Berish rally and resistance to the NEP’s affirmation action policy is thought to have contributed to the opposition’s success.
A disturbing and somewhat distasteful chapter in Malaysian politics is the treatment of Mahathir’s former protégé, Anwar Ibrahim. Anwar served as Mahathir’s deputy and finance minister but was sacked in 1998 over a disagreement on how to handle the Asian financial crisis. Following the dismissal, Anwar became a vocal critic of Mahathir and the coalition government. In 1999, he was convicted and sentenced to 15 years in prison on questionable charges but was released in 2004 after the federal court dismissed one of the changes. In August 2008, Anwar was admitted as a member of parliament after winning a seat in the constituency of Permatang Pauh. It is envisioned that Anwar will play a more prominent role in Malaysian politics in the years to come.
Indonesia has experienced considerable political reform following Suharto’s resignation in 1998. Suharto’s successor and former Vice President, Jusuf Habibie, introduced legislation in 1999 that gave greater freedom to political parties. In a surprisingly move, Habibie allowed the people of East Timor to vote for their independence from Indonesia. This decision was very unpopular in Indonesia and ultimately led to his political demise. Abdurrahman Wahid became Indonesia’s first elected president following Suharto’s departure. Abdurrahman’s time as president is notable for his amicable resolution of the separatist movements in Aceh and Papua (formerly “Irian Jaya”). Megawati Sukarnoputri, daughter of the first Indonesian president, replaced Abdurrahman in 2001 for the remainder of the 1999-2004 presidential term. Megawati continued to implement political reform but her poor public profile ultimately led to her defeat in the 2004 general elections.
In 2004, the constitution was amended so that the President and Vice President could only be elected by popular vote and would be restricted to two five year terms. Additionally, the House of Representatives would no longer have seats reserved for candidates selected by the armed forces (TNI).
The term of the current president, Susilo Bambang Yudhoyono, has been be plagued with disasters. The first of which (and most devastating) was 2004 tsunami that killed more than 130,000 people. In 2006 and 2007 Indonesia experienced volcanic eruptions, mudflows, bird flu and terrorist bombings.
Country Comparison Fact Sheet
| | Malaysia | Indonesia |
| Type | Constitutional Monarchy | Republic |
| Legal System | Based on English common law | based on Roman-Dutch law |
| Head of State | Paramount Ruler Sulltan MIZAN Zainal Abidin Nine of the thirteen Malaysia states have hereditary rulers (or Sultans). The head of state is chosen by (and from) the Sultans for 5 year term. | President Susilo Bambang YUDHOYONO The President is both head of state and head of government. Elections are held every 5 years. |
| Head of Government | Prime Minister ABDULLAH bin Ahmad Badawi The prime minister is selected by MPs of the ruling party. | |
| Executive Branch | Paramount Ruler, Prime Minister and the Cabinet (members of parliament selected by PM) | President and Cabinet (members are selected by the president). |
| Legislative Branch | Senate House of Representatives | House of Representatives |
| Judicial Branch | Civil Courts at Federal and State level. Sharia Courts deal with religious and family matter for Muslim people. | Supreme Court Justices are selected by the house of representatives and approved by the president. |
| Independence | 8/31/1957 (from UK) | 8/17/1945 (from The Netherlands) |
| International organization participation | ADB, APEC, APT, ARF, ASEAN, BIS, C, CP, EAS, FAO, G-15, G-77, IAEA, IBRD, ICAO, ICC, ICRM, IDA, IDB, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, IMSO, Interpol, IOC, IPU, ISO, ITSO, ITU, ITUC, MIGA, MINURSO, MONUC, NAM, OIC, OPCW, PCA, PIF (partner), UN, UNAMID, UNCTAD, UNESCO, UNIDO, UNIFIL, UNMEE, UNMIL, UNMIS, UNMIT, UNWTO, UPU, WCL, WCO, WFTU, WHO, WIPO, WMO, WTO | ADB, APEC, APT, ARF, ASEAN, BIS, CP, EAS, FAO, G-15, G-77, IAEA, IBRD, ICAO, ICC, ICRM, IDA, IDB, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM (observer), IPU, ISO, ITSO, ITU, ITUC, MIGA, MONUC, NAM, OIC, OPCW, OPEC, PIF (partner), UN, UN Security Council (temporary), UNCTAD, UNESCO, UNIDO, UNIFIL, UNMIL, UNMIS, UNOMIG, UNWTO, UPU, WCL, WCO, WFTU, WHO, WIPO, WMO, WTO |
(CIA, 2008)
REFERENCES
- CIA. (2008, August 21). The World Factbook - Indonesia. Retrieved August 28, 2008, from CIA:
https://www.cia.gov/library/publications/the-world-factbook/geos/id.html - CIA. (2008, August 21). The World Factbook - Malaysia. Retrieved August 26, 2008, from Central Intellegence Agency:
https://www.cia.gov/library/publications/the-world-factbook/geos/my.html - U.S. Department of State (1999, February 26). 1998 Human Rights Report - Indonesia. Retrieved September 6, 2008, from Federation of American Scientists:
http://www.fas.org/irp/world/indonesia/indonesia-1998.htm
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