Malaysia’s economic situation has deteriorated. Growth has slowed, the current account surplus is shrinking, and the 1MDB corruption scandal has sparked a domestic political crisis and the loss of confidence of international investors. The political situation could remain muddled for several more years. Yet Malaysia’s medium-term prospects are still favourable. If the country’s political situation stabilises and the business climate improves, Malaysia’s integration in the regional economy and its upmarket shift in global supply chains could make it one of the main beneficiaries of the new Trans-Pacific Partnership (TPP) free trade agreement.
- World-scale financial scandal
Malaysia has long been seen as the region’s most politically stable country. The current ruling coalition has governed the country since its independence in 1957. After the 2013 legislative elections, however, national unity seems to be increasingly fragile in the midst of a structural slowdown in growth.
The current Prime Minister, Najib Razak, has been severely weakened since summer 2015 after he was accused of being involved in an international-scale financial scandal. He was accused of embezzling enormous sums from the 1MDB sovereign fund, which he himself created after taking power in 2009 (and managed through April 2016), to support his policies and to modernise the country’s infrastructure. Although corruption charges have been officially dropped, the prime minister’s exact role in the fund’s management and the fraud’s organisation continues to be investigated closely, both nationally and internationally.
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by Hélène DROUOT