Umno insiders would challenge Najib if he moved too strongly on government reform, with civil servants refusing to implement them, says a leaked US cable.
A confidential US cable on Najib’s economic reforms stated that “Umno would not survive in power by moving to an open and transparent system”.
It also stated that “Umno insiders would challenge Najib if he moved too strongly on government reform”.
The cable was sent by top US diplomats to the US State Department in Washington on Feb 19, 2010, after Najib had introduced his first wave of limited economic reforms shortly after taking office in April 2009.
The premier has also promised more substantial economic reforms designed to improve Malaysia’s competitiveness.
Details of the cable were leaked by WikiLeaks to popular blogger Raja Petra Kamarudin who had published the leaked cable in his Malaysia Today website today.
Under his economic reforms, Najib had formed the National Economic Advisory Committee (NEAC) to develop a New Economic Model (NEM), an economic policy roadmap which he hopes will lead Malaysia from middle income to high income country status.
The US cable stated that leading Malaysian economists believed that Najib was sincere in his desire to address these problems.
“However, they question his ability to make major changes in the government’s long-standing discriminatory Bumiputera preference policies which have discouraged domestic investment and new business formation and are driving the ‘brain drain’ of young professional Malaysians frustrated with limited opportunities under this system.
“Economists here expect Najib to establish a policy framework that will foster a more gradual move away from ethnic preferences to a merit-based economy, but believe that may be insufficient.
“If PM Najib is unable to deliver on NEM reforms, they expect the opposition will seize the reform agenda as an issue for possible 2012 elections,” added the US cable.
The cable noted that Najib will face “steady opposition from within his own political party, particularly from members who fear their parliamentary seats may be lost if the current patronage system is dismantled”.
“Each of our contacts agreed that political will is the key to reform, but none are convinced all of the coming announcements of plans to reform Malaysia’s economy will be backed by substantially broad concrete measures,” said US diplomats in the cable.
Najib’s biggest obstacles
According to the US diplomats, top economist Mohamed Ariff had informed them that some Umno insiders do not want reform that would take away the economic rents and patronage system they have relied on to maintain the party’s power base for over a generation.
Ariff is also the managing director of Malaysian Institute for Economic Research and a long-time Umno economic adviser.
“Ariff predicted that Umno would not survive in power by moving to an open and transparent system and that Umno insiders would challenge Najib if he moved too strongly on government reform,” added the cable.
Another of Najib’s economic adviser, Economic Planning Unit deputy director general K Govindan told the US diplomats that the biggest obstacle to the prime minister would be the increasingly incompetent and largely pro-Umno civil service.
“He commented that the civil service has a very narrow worldview and will oppose, even refuse to implement, reforms perceived as damaging ethnic Malay interests, even if convinced of the long-run gains for Malaysia.”
Govindan, who briefs Najib and the Cabinet weekly on Malaysian economic performance and economic policy, also had felt that the premier was sincere about wanting economic reforms.
“He believes Najib understands in general terms the reforms needed to improve human capital and productivity, increase trade and investment, and reduce corruption.
“Nevertheless, Govindan said he does not make specific economic policy recommendations at those meetings for fear of offending other ministers in the meeting who oppose the reform agenda,” added the cable.
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