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COUNTRY BRIEFING: Malaysia Security risk

Malaysia risk: Security risk

(RiskWire Via Thomson Dialog NewsEdge) COUNTRY BRIEFING – [August 18, 2006]

FROM THE ECONOMIST INTELLIGENCE UNIT

RISK RATINGSCurrentCurrentPreviousPreviousRatingScoreRatingScoreOverall assessmentB35B35Security riskB25B25Note: E=most risky; 100=most risky.SUMMARY

The situation in southern Thailand remains very unsettled, while relations with Indonesia remain strained. A dispute over offshore territorial rights remains unresolved, and Malaysia’s policy towards illegal workers from Indonesia is also a bilateral issue. Within Malaysia, the government can use the Internal Security Act (ISA), which allows indefinite detention without trial, against terrorist suspects, although this has in the past been used mainly to neutralise government opponents. Divisions between the moderate and conservative faces of Islam are likely to become more apparent. The passage of an amended Islamic family law, which accorded more rights to husbands in the event of a divorce, prompted protest from civil society groups as well as Muslim women’s groups. Nevertheless violent crime, kidnapping and extortion are still rare. 

SCENARIOSNon-Malays and foreign nationals are exposed to terrorist activity by Islamist militants (High Risk)

Although the country is effectively policed, there is a security risk to foreign companies operating in Malaysia. The major threat comes from groups of the Islamist extremists that have become better organised in recent years. In the past, attention has focused, in particular, on the militant Islamic group, Jemaah Islamiah (JI), which aims to establish a Muslim state across Malaysia, Indonesia, Brunei, Singapore and the Southern Philippines. More recently, the situation in southern Thailand has caused concern: instability in the area will make it easier for foreign terrorists to operate there. In the past, several suspected terrorists have been detained under the Internal Security Act (ISA), although the ISA is more frequently used to detain opposition members for political purposes. Further detentions are certain, possibly in connection with on-going security operations in neighbouring Indonesia, the Philippines and southern Thailand.

Violence in southern Thailand raises religious tension in northern Malaysia (High Risk)

Malaysian-Thai relations have been deeply strained by the fate of 130 Thai Muslim protesters who fled to Malaysia in August 2005. The fugitives claimed they feared for their lives in the military crackdown on the insurgency in Thailand’s three southern provinces, which are largely Islamic and Malay. Since the start of the troubles in January 2004, violence has left more than 1,000 dead, many as a result of the excessive response by the Thai security services. Behind the scenes, co-operation between the two countries’ security forces will continue, but it is unclear what either government can do to make the border between the two countries less porous. One problem is that much of the population of southern Thailand has both Thai and Malay citizenship, making it very difficult to stop potential terrorists from moving across the border (or even to arrest suspected perpetrators of terrorist attacks). But a more profound problem may be caused by Islamic groups in northern Malaysia using further attacks as a pretext for raising racial tensions.

BACKGROUND

(Updated: August 30th, 2005)

The security risk to foreign companies operating in Malaysia is real but moderate. There have been no terror attacks on Malaysian soil. The most spectacular regional attacks have taken place in neighbouring Indonesia: the bombings in Bali in October 2002, of the Jakarta Marriott hotel in August 2003 and of the Australian embassy in Jakarta in September 2004. A militant Islamist group, Jemaah Islamiah (JI), which is linked to the al-Qaida international terror network, has been blamed for the attacks. JI acts as a central co-ordinator for radical groups across the South-east Asian region, as it works towards its goal of establishing an Islamist state embracing Malaysia, Indonesia, Singapore, Brunei and the southern Philippines. In September 2002 Singapore foiled a series of planned terrorist attacks on foreign targets, private companies and embassies; the terrorists intended to destabilise the governments of Singapore and Malaysia and foment ethnic strife between the Chinese and Malays. During 2004 there were security scares involving the US and Australian embassies in the capital, Kuala Lumpur.

The Malaysian government has blamed Indonesians for inspiring Islamic militancy in Malaysia. However, international investigations of Islamist terrorism have made it clear that for many years Malaysia was considered a safe haven by Islamic extremists. The Malaysian branch of JI is Kumpulan Mujahidin Malaysia (KMM, Malaysian Mujahideen Group). By September 2004 around 90 Islamic militants were being held under the Internal Security Act, which allows for a two-year detention period that can be renewed indefinitely. In July 2004 the prime minister, Abdullah Badawi, declared that South-east Asia was slowly winning the war against terrorism.

To fight terrorism effectively, the countries of the region have begun to co-operate closely, involving the US and Australia. In 2003 a co-ordinating regional counter-terrorism centre was opened in Kuala Lumpur. A major concern is the vulnerability to piracy and terrorist attacks of shipping in the Malacca Strait, through which one-third of global trade and one-half of the worlds oil supplies pass each year. In July 2004 Singapore, Indonesia and Malaysia started co-ordinated patrols.

Social Unrest

The major long-term risk to business comes from a return of economic and political conditions that could lead to an outbreak of racial violence. Tensions persist below the surface between the majority Malays on one hand and the minority ethnic Chinese and Indian populations on the other. In the most serious post-war racial conflict, in 1969, divisions within the Malay majority led to the scapegoating of the ethnic Chinese, hundreds of whom were killed in riots. The governments desire to reduce the privileges of the bumiputera (sons of the soilethnic Malays and other indigenous peoples) could stoke Malay resentment. However, the short-term risk of large-scale racial violence appears low.

Large-scale demonstrations against the government and the ruling United Malays National Organisation (UMNO) were last held in 1998, when the deposed deputy prime minister, Anwar Ibrahim, led reformasi (reform) demonstrations. Although Mr Anwar was released from prison in September 2004, a revival of large-scale public protests looks unlikely under the reform-minded Mr Badawi, even though most traditional means of protest remain blocked. There is widespread awareness within Malaysia that it is heavily dependent on foreign direct investment, and the opposition is unlikely specifically to target foreign businesses.

Armed Conflict

The risk of armed conflict affecting business is low. Sporadic Islamist violence has occurred during the past few years. In 2001 KMM members were arrested and accused of involvement in bank robberies, the murder of a state assembly representative, and the bombing of a church and a temple. There are no no-go areas in Malaysia, and the government remains very much in control of the country. It is unlikely that Islamist extremists could develop the ability to stage an armed conflict. The revival of Islamic militancy in southern Thailand, where the population is mainly of Malay origin, poses no direct threat to Malaysian security but strains relations with Thailand.

Organised Crime

Malaysia is, in general, a fairly safe country. Violent crime, kidnapping and extortion are rare, although they have attracted more publicity in recent years. Organised crime is seldom a threat to foreign business. Foreigners are, however, often the target of pickpockets, burglars, car break-ins and purse-snatching. Credit-card fraud is a growing problem.

Copyright 2006 Economist Intelligence Unit

Source: http://www.tmcnet.com/usubmit/2006/08/18/1816759.htm

Thursday, August 24, 2006 - Posted by | Commentary

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