BMI’s Malaysia Defence & Security Report Q4 2008 provides an assessment of the country’s internal and external security situation. Across South East Asia the security situation has remained fairly stable.

Internally, Malaysia has maintained strict controls, primarily via the use of the Internal Security Act (ISA). Malaysia has been particularly successful in controlling the flow of information and this has contributed greatly to its ability to monitor and respond to terrorist threats.

On the other hand the political situation is increasingly volatile. The United Malays National Organisation (UNMO) party has ruled Malaysia with over a two-third majority since independence. While still in power, UMNO had its worst ever result in this year’s March elections, receiving just 62% of the vote and losing four states. The co-operation of the opposition parties, broadly united under Malaysia’s former Deputy Prime Minister Anwar Ibrahim, has been recognised as a key factor in UMNO losses. Other factors included concerns about a slowing economy, rising fuel and consumer prices, and Prime Minister Badawi’s inability to follow through on promises to tackle corruption.

Post-election, Anwar has continued to push the government hard. In July he filled a motion seeking a debate in parliament on ‘loss of confidence’ in the Government and he has now vowed to seize power.

Meanwhile, Mr Anwar faces new allegations of sodomy – the same charge for which he was jailed over a decade ago. He says the charges are fabricated by the Government.

Amongst all these political pressures, Prime Minister Abdullah has committed to step down in 2010 and power will be handed to his deputy, Najib Razak.

Despite this ongoing political intrigue, we continue to believe that Malaysia will remain a stable, multiracial country, with a population that is bound together by a strong sense of nationalism and an aversion to religious extremism.