Government corruption threatens to cripple Malaysia’s economy

Government corruption threatens to cripple Malaysia’s economy

Malaysian Prime Minister Najib Razak is under investigation by both domestic and international agencies for what could be the largest corruption scandal in his country’s history. Razak is accused of funneling approximately $700 million from 1 Malaysia Development Berhad, a strategic development company which the prime minister oversees, to his personal bank account. Malaysian, Swiss, and now American agencies are investigating the dealings of the 1MD fund, including its real estate ventures in the United States.


1 Malaysia Development Berhad was founded in 2008 with the goal of advancing Malaysia’s economic growth and turning the capital city of Kuala Lumpar into a financial hub. The company is approximately $11 billion in debt.


Prime Minister Razak has taken drastic steps to quiet his critics. According to the Wall Street Journal, Malaysian immigration officials refused to let a former government official and his lawyer travel to New York where they planned to lobby U.S. authorities to investigate Razak’s money transfers. The government also promoted four members of an investigation committee to positions within the Prime Minister’s cabinet. This change in job title prevents them from participating in the investigation.



The scandal is hitting Malaysia at a very inopportune time. The island nation’s economy has typically been very dependent on oil and other commodities. The recent slump in commodity prices has negatively affected their international trade and currency value. Since January, the value of the Malaysian Ringgit has plunged approximately 24 percent.


Malaysia’s continued economic development is in serious doubt now that the Prime Minister’s administration is engulfed in a scandal. Najib had planned on passing reforms which would end the bumiputera policy. Established in 1971 after a series of race riots, bumiputera gives special preference to Malays over Chinese and Indian Malaysians by guaranteeing Malays spots in universities and paying them higher wages. The policy has been criticized for promoting a welfare state and for draining the country of capable members of minority ethnic groups. The Prime Minister is no longer willing to move forward with his planned reforms for fear of losing the support of Malays, who make up approximately 60 percent of the country’s population.


Should the United States take a stronger stance against the Malaysian government? Feel free to leave a comment or find me on Twitter @Andrew_Morse4

Andrew Morse

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