Fractional Malaysian politics holding a golden goose hostage

Never-ending melodrama in Malaysian politics, which had taken an especially vicious turn in 2020, has found a new pawn to take center stage – this time pitting two coalition partners against each other within the fragile government of Perikatan Nasional as avowed champions of the majority Malay race or Bumiputeras (princes of the earth) within the Southeast Asian country.

The pawn in question is a multi-billion dollar project that is set to catapult backwater Melaka state’s fortunes by creating a bustling deepwater port that could potentially become one of the Top 10 in the world come 2030.

And the antagonist is the United Malays National Organisation (UMNO), which is bristling at being relegated to playing second fiddle to Parti Pribumi Bersatu Malaysia (Bersatu) within the Perikatan Nasional ruling coalition.

Controversy over this Melaka pawn isn’t new. Called Melaka Gateway, it involves the creation of 3 artificial islands off the state’s coast and straddling the deepest point in the Malacca Strait – arguably the world’s busiest trade shipping route as oil travels east to China, Korea and Japan while finished goods and various commodities flow the other direction to Europe via the Suez Canal.

Begun in 2014 during the UMNO-led government, which got dethroned after 61 years in power by the Pakatan Harapan coalition, concern over fears that China had sunk its fingers into this strategic port project led to its suspension. But once it became clear that no government funding of any sort was involved, it was reinstated about a year later when prodded by a high-profile lawsuit.

This prolonged project suspension, plus another work stoppage due to the 2020 coronavirus-induced restrictions, offered the necessary leverage for UMNO to derail Melaka Gateway again to seek political concessions from its Perikatan Nasional coalition partner Bersatu. Via its proxy holding the Melaka state leadership, a 36-month land reclamation contract for the 3 artificial islands was allowed to lapse.

Project owner KAJ Development cried foul as around half the land reclamation work had been completed – as it only had half the 36 months to work with due to the two forced suspensions. Worse, the Melaka state government refused 4 written requests from KAJ Development to extend the contract period to make up for the suspensions – then blamed the firm for failing to complete the land reclamation!

An UMNO insider reluctantly confirmed all this was just ‘wayang’ (Malay for  drama) or a ploy to extract further concessions – playing the race card to ensure benefit for Bumiputeras. The insider admitted the bigger plan is to extract concessions from KAJ Development so that UMNO can show it is a better champion of Malays compared to Bersatu.

How was this to be achieved?

To avoid any repeat of the 1969 racial riots in Malaysia, there is a national policy to give Bumiputeras at least 30% of any business venture within the country – but no such condition was imposed on Melaka Gateway, even when it was granted national project status with a slew of tax incentives to attract foreign direct investments.

The earlier project suspension by the Pakatan Harapan government on claims of hidden China control failed because KAJ Development was able to prove it is a wholly Malaysian-owned, operated and funded project.

It further rankled that KAJ Development is a wholly Chinese family-owned outfit. And all it would be giving back to the Melaka state would be about 16.7% of the artificial islands – sans any interest in the Melaka Gateway project and its port operations, projected to be raking in billions come 2030.

So the latest UMNO ploy is to get 30% interest in Melaka Gateway for Bumiputera interests – all the way from the construction stages right through to future operations – which its Perikatan Nasional coalition partner Bersatu has failed to do. In so doing, UMNO aims to court the Malay vote to regain control of the government at the next national election and abort its uneasy alliance with Bersatu.

So far, the Melaka state leader has remained mum over the issue and the UMNO insider said this is to let KAJ Development stew for a while and realize it has no options other than to agree to the 30% Bumiputera participation demand. In the meantime, the Melaka Gateway project remains hostage to this political bickering between UMNO and Bersatu.

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