VZCZCXRO3849
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHKL #1975/01 2920904
ZNY CCCCC ZZH
P 190904Z OCT 06
FM AMEMBASSY KUALA LUMPUR
TO RUEHC/SECSTATE WASHDC PRIORITY 7814
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 2230
RHHMUNA/CDR USPACOM HONOLULU HI

C O N F I D E N T I A L SECTION 01 OF 04 KUALA LUMPUR 001975 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 10/18/2016 
TAGS: PGOV PREL ECON MY
SUBJECT: MALAYSIA’S CHINESE MINORITY:  THE POLITICS OF MARGINALIZATION 
 
REF: A. KUALA LUMPUR 942 
 
     ¶B. KUALA LUMPUR 1935 
     ¶C. KUALA LUMPUR 1942 
     ¶D. KUALA LUMPUR 1913 
 
Classified By: Political Section Chief Mark D. Clark for reasons 1.4 (b 
, d). 
 
Summary 
------- 
 
¶1.  (C) Malaysia's Chinese minority struggles to find new 
footing in national politics.  In September Singapore's 
Minister Mentor Lee Kuan Yew ignited a nation-wide debate on 
the marginalization of Malaysia's Chinese minority.  Leaders 
from across the Chinese political spectrum agreed, at least 
privately, with LKY's conclusion and confided that most 
Chinese Malaysians feel marginalized by the United Malays 
National Organization (UMNO)'s race-based, Bumiputera 
policies.  As the Chinese community grows restless, Chinese 
parties of the UMNO-led National Coalition (Barisan Nasional, 
BN) fear losses to opposition parties in the next general 
election.  The People's Movement Party (Gerakan) faces change 
at the top and candidates have begun to vie for the coveted 
chief minister's job in Penang.  Many Chinese have questioned 
their own leaders after Prime Minister Abdullah humiliated 
current Penang Chief Minister and claimed the Gerakan-led 
state government is marginalizing ethnic Malays in Penang. 
The Democratic Action Party (DAP) stands to gain Chinese 
votes, but remains unorganized and ill-prepared to capitalize 
on Chinese discontent.  Opposition parties in general fail to 
present a valid alternative to the BN.  A think tank report 
on Bumiputeras' economic share created another rallying point 
for the Chinese community's expressions of marginalization. 
While post-Mahathir political openings allow Chinese 
political discontent to bubble to the surface, ethnic Chinese 
voters appear to have no realistic alternatives.  End Summary. 
 
Singapore's Lee Kuan Yew Ignites a Fire 
--------------------------------------- 
 
¶2.  (SBU) In September, Singapore's Minister Mentor Lee Kuan 
Yew ignited a political firestorm when he commented during a 
seminar that Singapore's neighbors, Malaysia and Indonesia, 
systematically marginalized their Chinese minorities.  Cries 
of outrage were heard from Malaysia's ethnic Malay leaders. 
Prime Minister Abdullah Badawi publicly demanded an apology 
from Lee, and the two exchanged highly-publicized letters 
demanding and feigning apology.  Dozens of senior Malay 
officials derided Lee for his comments and a few Chinese 
members of the ruling Barisan Nasional (BN) coalition 
government came to the defense of GoM and denied there was 
any systematic marginalization of Malaysia's minorities.  But 
most Chinese Malaysians agreed with Lee, and Chinese 
politicians that denied the accusation are now viewed with 
growing disdain. 
 
MCA admits marginalization and fears backlash 
--------------------------------------------- 
 
¶3.  (C) Malaysian Chinese Association (MCA) Vice President 
Ong Tee Keat, who also serves as the Deputy Minister of 
Higher Education, was one of the few ministerial level 
Chinese politicians who refused to deny publicly or privately 
the fact that Chinese Malaysians are marginalized.  In a 
private meeting with poloff Ong commented that although 
Chinese leaders from MCA and the People's Movement Party 
(Gerakan) were bound to support government (i.e. UMNO) 
positions, their Chinese constituents were not satisfied with 
their responses.  Ong commented that in cases such as this, 
"silence is sometimes our only valid response."  But he 
acknowledged, "of course we are marginalized, big business to 
small stall owners know that -- but MCA cannot admit it."  So 
when pressed by reporters for a public response to Lee's 
accusation, Ong related an old Chinese proverb -- "Whether 
the water in the tea cup is hot or cold, he who drinks it 
knows best." 
 
¶4.  (C) According to Ong, MCA will face its greatest 
electoral challenge ever in the next two years.  In his 
opinion, there was great dissatisfaction with the status quo 
in the Chinese community that was only partially seen in the 
Sarawak elections when the opposition Democratic Action Party 
(DAP) won six seats (Ref A). "Sarawak was a wake-up call for 
all Chinese parties," Ong told poloff.  MCA and Gerakan have 
studied the results of the Sarawak elections, but are not 
sure they can counter the growing discontent in their 
communities.  The Chinese component parties of BN no longer 
have community focused development projects to show their 
constituents, as these have all been redirected to Malay 
communities.  "There was once a day in Malaysia when MCA 
would get the left-overs, but now we are just hoping to get 
some crumbs from the UMNO table," said Ong.  Ong admitted 
that an example of only getting the crumbs could be seen in 
the Ninth Malaysia plan wherein the government planned for 
the construction of 180 new elementary and secondary schools, 
none of which would be vernacular schools for either the 
Chinese or Indian communities.  Only after loud outcries from 
the Chinese community did the Ministry of Education "cave in" 
and announce that two of the 180 schools would be designated 
as Chinese vernacular schools.  Again, MCA could not provide 
a proportional voice for the Chinese minority, and Ong 
believed the community took note. 
 
Prime Minister claims Malays marginalized in Penang 
--------------------------------------------- ------ 
 
¶5.  (C) In an ironic exercise in hypocrisy and political 
expediency prior to the UMNO district meetings in September, 
Prime Minister Abdullah Badawi echoed the earlier remarks of 
his son in law, Khairy Jamaluddin, and publicly charged 
Penang's Chief Minister Dr. Koh Tsu Koon, with systematically 
marginalizing the ethnic Malays of Penang.  Penang is 
Malaysia's only Chinese majority state (but only by a razor 
thin margin) and is led by BN coalition partner Gerakan. 
Despite the conflict resolution principles touted by the 
Barisan Nasional, at an UMNO divisional meeting in Penang, 
Abdullah publicly chided Koh and demanded immediate action to 
address the needs of the marginalized Malay community. 
Deputy Prime Minister Najib Tun Razak later called for  the 
Penang Chief Minister to more equally divide his executive 
powers with the Malay deputy chief minister, while federal 
Education Minister Hishamuddin Tun Hussein demanded Koh take 
unconditional immediate action to address the needs of the 
Malay community in Penang.  According to sources who attended 
the meeting, Koh was dumbfounded and unprepared to respond to 
the Prime Minister's accusations.  Penang State Executive 
Councillor Dr. Toh Kin Woon later admitted in a private 
meeting with poloff that the PM thoroughly humiliated Koh, 
and although Malays in Penang have a higher per capita income 
than Malays in many other states, Koh was unprepared and 
unable to respond.  Gerakan Central Committee member, Lee Kah 
Choon, stated to poloff that Koh was viewed by the whole 
Chinese community as weak:  "it is just his personality, and 
everyone comes to expect it."  It was this type of weakness, 
opined Toh, that places BN's Chinese component parties in 
danger of losing ground to DAP or the People's Justice Party 
(KeADILan) in more mixed districts.  (Comment:  Chief 
Minister Koh is an intellectual, who holds a doctorate in 
physics from Princeton.  His technocratic style makes him 
popular with corporate leaders, who appreciate his business 
friendly approach to governing, but is ill-suited to the 
cut-and-thrust of party politics.  End Comment.) 
 
Gerakan plans for leadership change 
----------------------------------- 
 
¶6.  (SBU) Koh, who in addition to duties as the Chief 
Minister of Penang is also Deputy President of Gerakan, is 
expected to become the Gerakan president in April 2007 when 
current president Dr. Lim Keng Yaik steps down.  Koh's 
elevation to party head will likely mean he will move from 
state politics to a federal ministerial position, and several 
Gerakan politicians are already jockeying for the anticipated 
vacancy as Penang Chief Minister.  The three front runners 
for the job in Penang are currently Lee Kah Choon, Gerakan 
Deputy Secretary General and Parliamentary Secretary for the 
Ministry of Health; Dr. Teng Hock Nan, Gerakan Vice 
President; and Chia Kwang Chye, Gerakan Party Secretary 
General. 
 
¶7.  (C) In a separate meeting with poloff, Lee Kah Choon 
admitted that, like MCA, Gerakan too would face a strong 
political challenge in the next general election, as they 
have not been able to overcome the perception that the 
Chinese community is continually discriminated against by the 
Malay majority government.  Lee's only hope was that DAP 
"would continue to run dishwashers and truck drivers" for 
state and federal parliamentary seats, and thus would remain 
uncompetitive in the general elections in Penang.  In another 
meeting, Dr. Toh Kin Woon lamented that UMNO was resorting to 
"blatant racist tactics that Malaysia has not seen since the 
late 1980s."  He attributed the rise in UMNO's racist 
rhetoric to PM Abdullah's weakness as a leader.  "Malaysians 
need a strong leader who knows when to be ruthless.  Mahathir 
knew how to be ruthless, but he became cruel, and that's when 
he lost respect.  Abdullah is not cruel, but neither is he 
ruthless when he needs to be.  He is just weak; so he resorts 
to racist tactics to hold on to the majority Malays."  He 
faulted Koh for not standing up to Abdullah regarding his 
accusations of the Chinese marginalizing ethnic Malays in 
Penang, and opined that such weakness in the party opened the 
door for the opposition to make significant gains in then 
next general election. 
 
The Democratic Action Party lacks a national strategy 
--------------------------------------------- -------- 
 
¶8.  (C) Notwithstanding their successes in the Sarawak 
elections (ref A), DAP has not yet formulated a national 
campaign strategy aimed at capitalizing on the growing 
discontent in the Chinese community (also see ref B).  In 
Penang, Member of Parliament Chow Kon Yeow (DAP - Tanjong) 
admitted to poloff that his party traditionally has had very 
little success in recruiting high caliber candidates for 
parliamentary elections.  Such past failures have influenced 
the party's motivation to recruit more viable and electable 
candidates.  According to Chow, DAP often struggled with 
supporting issues germane to the Chinese community, such as 
promoting vernacular schools, and therefore, at times seems 
to alienate itself from its natural voting base.  Chow 
indicated that DAP's current plan was to continue to run 
young party activists who had previously contested elections 
in Penang and hope that discontent with BN policies would 
draw voters to vote merely for the party rather than the 
quality of the candidate.  Since many of the seats in Penang 
currently are held by third term parliamentarians, term limit 
laws prevent the incumbents from seeking re-election.  DAP 
hoped for a more level playing field if their candidates were 
not battling incumbents, Chow said, and thus anticipated 
better electoral results in Penang and other metropolitan 
areas of the country where Chinese voters are concentrated. 
 
¶9.  (U) DAP Secretary General Lim Guan Eng has completed his 
term of exclusion following his conviction under the 
publications act, and DAP insiders expected him to contest 
for another seat in parliament in the next election.  Lim and 
his wife have fallen out of favor with party members in 
Melaka, so Lim likely would challenge a seat in Penang or in 
Kuala Lumpur.  Such mobility is common among Chinese 
candidates, and due to his relative popularity, party 
officials were quite optimistic of Lim's election and ability 
to join his father Lim Kit Siang as a leader in the 
opposition. 
 
Bumiputera Equity:  Chinese cry foul 
------------------------------------ 
 
¶10.  (SBU) The GOM's negative reaction to the recent public 
release of the Asian Strategy and Leadership Institute 
(ASLI)'s analysis of bumiputera equity in the marketplace has 
stoked the fires of Chinese discontent (Ref C).  With 
characteristic cries of sedition for daring to challenge 
government statistics, ethnic Malay politicians, including PM 
Abdullah and DPM Najib have done all in their power to 
discredit the ASLI report.  Despite pressuring the Malay 
president of ASLI, Mirzan Mahathir, to retract the report, 
the Prime Minister and UMNO have not been able to quiet the 
discussion of bumiputera equity and their race-based policies 
aimed at perpetually increasing Malay market share. 
(Comment:  Mirzan Mahathir is the son of former Prime 
Minister Mahathir Mohamad.  Ironically, the elder Mahathir 
and his two sons, Mirzan and Mukhriz, continue to publicly 
champion bumiputera set-asides, leading one to question the 
possible political maneuvers behind the release of the ASLI 
report.  End Comment.) 
 
¶11. (SBU) Perhaps emboldened by his announcement that he will 
retire as Gerakan president in April 2007, Dr. Lim Keng Yaik, 
Minister of Energy, Water and Communications, stepped forward 
to challenge the government to release its statistics and 
explain how Bumiputera equity is only 18.9 percent rather 
than the 45 percent ASLI found.  DPM Najib replied that the 
GoM can certainly release its methodology for its more 
"exhaustive study" and that Lim should not imply that the 
government is not transparent.  Despite Najib's remarks, the 
GoM has not released its methodology, and UMNO continues to 
hope that this issue will die a quick and quiet death. 
Chinese politicians and activists, however, do not yet seem 
willing to let the issue die, and although the study 
reiterates what many Chinese have long believed, it now gives 
quantifiable evidence to support their feelings of 
discrimination. 
 
Comment 
------- 
 
¶12.  (C) The increasingly strong Islamic identity of the 
dominant Malay population has a natural corollary -- an 
increase in race based politics.  As Chinese sensitivities 
heighten regarding Malay-centric policies, discontent with 
the status quo grows.  Of note, political openings in the 
post-Mahathir era have allowed greater public airing of such 
discontent, albeit with limits.  Abdullah's inability to shut 
down the divisive debate stands in stark contrast to 
Mahathir's firm control.  Comprising 25 percent of the total 
population, ethnic Chinese Malaysians have the most to lose 
of all the minority groups from the Bumiputera policies aimed 
at ever increasing Malay equity in the marketplace, often at 
the expense of Chinese equity.  While no one is yet 
predicting the collapse of the coalition Barisan Nasional, 
growing discontent in the Chinese community has led many 
political pundits to forecast that many Chinese will abandon 
MCA and Gerakan and vote for DAP in the next election.  We 
anticipate the next general election will be held in the 
fourth quarter of 2007 or first quarter of 2008, and although 
UMNO is not in danger of losing significant numbers of votes, 
Chinese component parties fear they will take a hit. 
Nevertheless, Chinese voters have poor alternatives.  DAP and 
KeADILan are not sufficiently organized to provide a real 
alternative to BN, particularly given the disproportionate 
powers wielded by the UMNO-led coalition.  The Pan-Malaysia 
Islamic Party (PAS), the strongest Malay-based opposition 
party, holds no appeal for the Chinese electorate.  Without 
better alternatives, MCA and Gerakan will not lose their 
dominance of the Chinese vote. 

LAFLEUR