VZCZCXRO1479
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHKL #0334/01 1210358
ZNR UUUUU ZZH
R 300358Z APR 08
FM AMEMBASSY KUALA LUMPUR
TO RUEHC/SECSTATE WASHDC 0912
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RHHMUNA/USCINCPAC HONOLULU HI

UNCLAS SECTION 01 OF 03 KUALA LUMPUR 000334 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EAP, EAP/MTS 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM MY
SUBJECT: NEW OPPOSITION-CONTROLLED STATES PUSHING THE RIGHT 
BUTTONS, FOR NOW 
 
REF: 2007 KL 1647 ) HINDRAF RALLY 
 
Summary 
------- 
 
¶1. (SBU) Following the March 2008 election, four new 
opposition-controlled state governments assumed power in 
Selangor, Perak, Penang and Kedah, while in Kelantan the 
opposition Islamic Party of Malaysia (PAS) significantly 
increased a previously thin majority.  In their first weeks 
of power, these new state governments have taken numerous 
steps to reassure non-Muslims their rights will be respected, 
and in some cases have resolved long-standing grievances of 
minority communities.  They have also pledged to promote 
clean governance, attempting to draw contrasts in that regard 
with the previous Barisan Nasional (BN) regimes.  Clearly 
seeking to win over middle class voters, these new 
opposition-controlled administrations, and the re-elected PAS 
government in Kelantan, have all announced populist oriented 
economic reforms.  This report is based on media reports and 
contacts with some key figures in the states concerned. End 
Summary. 
 
 
PAS Kedah: We will do it the Kedahan way 
---------------------------------------- 
 
¶2. (SBU) The three opposition parties, grouped after the 
election under the Peoples Alliance (PA), wrested control of 
Kedah in the March 2008 general election, winning 21 of 36 
state seats.  PAS, which took 16 seats, received 7 of the 11 
state executive council positions, the other four going to 
the Peoples Justice Party (PKR).  PAS state leader Azizan 
Abdul Razak became Chief Minister.  Azizan, who has impressed 
us in the past with his flexible approach to issues, quickly 
announced a reduction of state taxes by 30 percent across the 
board.  While noting that he saw Kelantan,s economic 
policies as a good model, Azizan stressed in public 
statements that Kedah would not emulate Kelantan,s cultural 
policies (e.g., restricting liquor sales, discotheques, and 
gambling).  Noting that around 30 percent of Kedah,s 
population is non-Muslim, Azizan said any cultural or 
religious policies would be implemented based on Kedah,s 
&social fabric,8 and only after discussions with the 
Chinese and Indian communities and other parties in the 
opposition front. 
 
¶3. (SBU) The new Chief Minister met representatives of the 
Kedah Hindu Association, assuring them that the state 
government would consider their long-standing request to 
declare the Hindu festival &Thaipusam8 a state public 
holiday. Hindu Association President Vaithalingam told 
reporters that this was the first time a Kedah Chief Minister 
had ever received a delegation from his group.  One Kedah PKR 
representative told poloffs that to the pleasant surprise of 
Hindus, PAS leaders have been attending thanksgiving prayers 
at Hindu temples, something no UMNO leaders had ever done. 
 
 
 
Perak: &Justice, transparency, and accountability.8 
--------------------------------------------- ------ 
 
¶4. (SBU) In Perak, the PA unexpectedly won 31 of 59 state 
seats (Democratic Action Party, DAP-18, PKR-7,PAS-6). Malays 
initially feared that DAP would push for the appointment of a 
Chinese Chief Minister but in the end the choice was left up 
to the Sultan, who picked the well-educated PAS candidate 
Nizar Jamaluddin.  DAP, however, obtained six of the ten 
state executive council positions.  For the first time in 
Malaysian history, a Malaysian Indian, V. Sivakumar of the 
DAP, was appointed Speaker of the state legislative assembly. 
 Chief Minister Nizar assumed office promising to rule by 
&universal values of justice, transparency, and 
accountability.8  One of his first moves was to approve 
issuance of permanent land titles to scores of farmers, 
including Chinese relocated during the communist insurgency. 
One MCA leader told poloffs that with the stroke of a pen the 
PA government achieved what the BN component parties had 
failed to do for 50 years.  The Chief Minister also announced 
direct elections for village chiefs in Perak, previously 
appointed by the ruling coalition parties.  The state 
executive council has slashed land taxes for non-profit 
religious and educational institutions to a nominal RM 1. 
 
¶5. (SBU) Nizar has stated an intention to review certain 
decisions of the previous BN government that were &unfair 
and robbed others of their rights8 and to quickly approve 
 
KUALA LUMP 00000334  002 OF 003 
 
 
applications for projects deemed &fair and right for the 
people.8  Perak DAP leader Ngeh Koo Ham has promised that in 
awarding contracts the new government &will not discriminate 
based on race, religion or political beliefs,8 a policy that 
if implemented would be a significant departure from policies 
of the previous BN government. 
 
 
Selangor: Temples, churches and free water 
------------------------------------------ 
 
¶6. (SBU) Selangor, contributing 35 per cent of Malaysia,s 
GDP, was UMNO,s crown jewel until the March election when 
the PA captured the state, winning 36 (PKR 15, DAP 13 and PAS 
8) of 56 state legislative assembly seats. Former PKR 
Secretary General Khalid Ibrahim was appointed Chief Minister 
 
SIPDIS 
and for the first time in the state,s history the 10 state 
executive council positions were equally divided between 
Malays and non-Malays with PKR allocated four, DAP 3 and PAS 
¶3.  Another first was the selection of a non-Malay, veteran 
DAP state assembly member Teng Chang Khim, as Speaker of the 
State Legislative Assembly. 
 
¶7. (SBU) Khalid has quickly undertaken numerous initiatives 
to address concerns of minorities.  He announced plans to 
fund rebuilding the Hindu temple controversially demolished 
by the previous BN government, an event that led to the 
November 2007 Hindu Action Force (HINDRAF) rally in Kuala 
Lumpur (reftel).  Khalid is forming a special committee to 
regularize the status of temples and churches located on 
private properties or in squatter settlements.  He also has 
stated that his government would not prolong or impose 
conditions on construction and renovation of temples and 
churches.  As in Perak, the State government has decided to 
impose only a token RM1 tax on registered religious and 
educational institutions. 
 
¶8. (SBU) The new state government is considering a bylaw 
compelling plantation owners to provide land or mid-cost 
houses for displaced workers, and also plans to provide 
Chinese new villages with 99-year leases.  The BN attempted 
to politically exploit the new government,s announcement of 
a RM100 million pig-farming project but backed off when it 
was revealed that the previous BN government gave the initial 
approvals.  The state also announced in March a scheme to 
provide free water that would benefit 1.5 million consumers 
in the state. 
 
 
Penang: &Competency, Accountability, and Transparency8 
--------------------------------------------- --------- 
 
¶9. (SBU) The PA captured Penang, the only state with a 
non-Malay majority and non-Malay Chief Minister, winning 29 
of 40 seats in the state assembly.  DAP won 19 seats while 
PKR and PAS took nine and one seat respectively.  Lim Guan 
Eng, the DAP,s Secretary General, became Chief Minister and 
for the first time in Malaysia,s history a Malaysian Indian, 
Dr. Ramasamy, was appointed Deputy Chief Minister II, while a 
Malay from PKR received the Deputy Chief Minister I slot. 
DAP claimed seven state executive council seats with the 
remaining three going to PKR.  The new Penang state 
government has pledged to dismantle BN policies that bred 
&cronyism, corruption, and systemic inefficiency,8 and to 
promote &competency, accountability, and transparency.8  It 
has announced several initiatives, including open tenders for 
all projects, and a ban on state party leaders applying for 
state land (rampant during the BN era).  The PA government 
has appointed at least one BN figure, former Gerakan Deputy 
Secretary General Lee Kah Choon, appointed director of the 
 
SIPDIS 
Penang Development Corporation (PDC) and executive chairman 
of &InvestPenang8, a state owned investment promotion 
agency. 
 
¶10. (10) In unprecedented moves, the state government has 
appointed NGO representatives to the Penang Municipal 
Council, and pledged to restore, before the next general 
election, local government elections suspended in 1965 and 
later abolished in 1976 by the Federal government.  Lim 
announced the establishment of an Inter-Religious Goodwill 
Council to ensure that &racial and religious issues would 
not be exploited by certain quarters.8 
 
Kelantan: &We are all brothers and sisters8 
------------------------------------------ 
 
¶11. (SBU) The Islamist opposition party PAS retained Kelantan 
for the fifth consecutive term, but significantly increased 
 
KUALA LUMP 00000334  003 OF 003 
 
 
its previous two seat majority, winning 38 seats in the 45 
seat Kelantan state legislative assembly.  PKR won one of the 
five seats the party contested.  PAS retained all ten state 
executive council positions and PKR members gained some 
places on local councils.  Chief Minister Nik Aziz thanked 
all races for this victory and added, &From an Islamic point 
of view this means everyone is equal.  We are all brothers 
and sisters and there should no more dividing people 
according to racial lines.8  He nevertheless defended PAS,s 
Islamic state concept, urging critics to ask the eight 
percent non-Muslims in Kelantan whether they had faced 
discrimination under the PAS government.  Non-Malay 
businessmen have told poloffs that since PAS took control of 
the state in 1990, the state government has relaxed laws on 
land ownership by non-Malays and non-Kelantanese compared to 
the previous BN government.  Nik Aziz also announced April 21 
that PAS would allow non-Muslim Chinese to contest under the 
PAS banner in future general elections. 
 
¶12. (SBU) The Chief Minister added that since PAS, March 8 
general election manifesto focused on creating a &welfare 
state,8 state policies will be fine-tuned towards this 
direction.  In this context, the state government has 
abolished state property taxes that are below US$18 and 
announced a review of water tariffs in the state. 
 
COMMENT 
------- 
 
¶13.  (SBU) The new opposition controlled state governments 
are clearly trying to push the right buttons, for now. 
Except in Kelantan, the opposition has little experience in 
governing, and bumps along the way can be expected. 
Potential problems in holding opposition coalitions together 
in these states could exacerbate any difficulties. In 
addition, the BN already has made clear that, as in the past, 
it will use all available powers of the central government, 
including its financial leverage, to undermine these 
opposition-controlled state governments. 
 
 
 
 
 
 
 
KEITH