• It’s shaky at the top in Vietnam and Malaysia

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    saludo

    Ricardo Saludo

    Ric Saludo’s former colleague Roger Mitton contributed this article

    Fortune is a fickle beast that can suddenly propel a nobody to prominence and reduce a king to a commoner.

    It has no favourites, as two of this region’s most powerful men discovered last month when fortune pushed them to the precipice and, to paraphrase Steppenwolf, left them with political tombstones in their eyes.

    And those whose business fortunes depend on stability and growth in Vietnam and Malaysia would do well to pay heed. Not to mention other seemingly secure Asian leaders.

    First of the suddenly shaky leaders, Vietnam’s Prime Minister Nguyen Tan Dung was humiliated by his own partymates on May 10 when the country’s legislature held its inaugural confidence vote on the national leadership.

    Dung, 63, came in last among the most senior elected officials.

    It was a pitiful show, as one-third of the members of the National Assembly, dominated by
    the long-ruling Vietnam Communist Party (VCP), voted against him, and an astonishing 57 per cent said they did not have complete confidence in him.

    Of course, the Vietnamese public has long loathed and ridiculed him, but now large swathes of his own party have turned against him.

    Crippled, PM Dung survives by the skin of his teeth only because the dysfunctional VCP is petrified over the ramifications of sacking him and his coterie of corrupt dunderheads.

    The party knows it is reviled for chronic economic mismanagement and continued rampant graft, particularly in the huge and inefficient nationalised enterprises that still dominate the economy.

    As the International Monetary Fund has repeatedly admonished, Hanoi has to get moving on reforming its state enterprises. “Structural reforms have moved a bit slower than one might have expected or is desired,” said Sanjay Kalya, the IMF’s man in Hanoi.

    With change stalled, the Fund has cut its economic growth forecast for Vietnam to 5.2 percent this year and next, from the previous 5.8 percent for 2013 and 6.4 percent for 2014.

    The Vietnamese central bank has been cutting interest rates to spur expansion, but the World Bank, among other economy watchers, stresses that monetary easing won’t address the need for reform.

    From the parliamentary vote last month, it seems Premier Dung’s fellow party members may be thinking of other measures. They certainly should know that if they do not act decisively, some kind of change will be forced on them, either peaceably, as recently in Indonesia and Myanmar, or violently, as in Egypt, Libya and now Turkey.

    Concurrently, fortune has also turned against another regional leader, Malaysian Prime Minister Najib Razak, whose position, while not as desperate as Dung’s, is now under severe threat.

    Najib, 59, led his ruling National Front government to its worst election result last month.
    The Front not only lost more seats than in its disastrous 2008 showing, which caused then PM Abdullah Badawi to quit, but it came second in the total number of votes cast nationwide.

    Najib had promised to reverse Abdullah’s shocking losses, but he never came close and as a result the coalition is now a front in name only.

    Its Chinese and Indian components deserted en masse to the opposition People’s Alliance led by former Deputy PM Anwar Ibrahim.

    It was only thanks to pandering to the rural Malay Muslim masses that the Front managed to scrape home with a reduced majority.

    So, as with Dung in Vietnam, many now view Najib as a lame duck PM and the kris daggers are already being unsheathed by many in his own party, the United Malays National Organisation.

    Last week, one of its old warhorses, Razaleigh Hamzah, openly talked to government and opposition MPs about his desire to replace Najib as prime minister. Razaleigh, 76, is a quixotic animal who had challenged for the premiership back in 1987, nearly unseating then PM Mahathir Mohamad.

    Ironically, it was the votes of Najib’s faction that helped Mahathir retain power and consigned Razaleigh to the wilderness, until his reassimilation into the party years later.

    So there is no love lost between the two men and if Razaleigh can muster 112 MPs he could oust Najib on a parliamentary confidence vote.

    It is unlikely to happen, but in acting as a stalking horse he may siphon off enough support from Najib that stronger UMNO leaders will enter the fray and then the PM’s fate will be doomed.

    Last Thursday, Najib tried to forestall such an outcome by saying he’d got the message from the voters and that he would make the Front more meritocratic and restore its appeal to the non-Malay communities.

    “The benefits of economic transformation must flow to all Malaysians,” said Najib. “I will work to ensure our national success leaves no one behind.” That’s going to be a tough task, but unless it happens, and happens fast, fortune will leave him and his hapless Hanoi counterpart dead ducks before the year is out.

    As in Vietnam, economic challenges add urgency and breadbasket issues to the political pressures on the Malaysian PM. The Asian Development Bank forecasts that real growth in gross domestic product will ease to 5.3 percent this year and 5.5 percent next, from 5.6 percent in 2012.

    Generating half of GDP, “growth in private consumption will likely moderate from 2012,” says the ADB. Reason: lower global commodity prices “will weigh on incomes and consumption spending, especially in rural areas.” Investment will also decline from last year’s 22% growth. A further concern, which limits government moves to pick up the slack: rising state debt.

    In this less robust economic environment, the dominant UMNO, like the VCP, cannot but think of ways to unload any drag on its political fortunes. And fast.

    Roger Mitton is a Southeast Asia regional consultant and a former senior correspondent for Asiaweek magazine and The Straits Times of Singapore.

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