A+ A-

ISEAS Perspective

2024/37 “Bleak Future for Islamic Parties in Indonesia after the 2024 Election” by Pradana Boy Zulian and Neni Nur Hayati

 

Among Indonesian Islamic parties, the future of the Partai Keadilan Sejahtera (PKS) is the brightest, and this is due to the loyalty of its support base. PKS’ Islamist ideology—inspired by the Muslim Brotherhood in Egypt—is developed for a further goal, namely the founding an Islamic state in Indonesia and pushing for the Islamisation of society in Indonesia. Picture: Facebook Page of the PKS, accessed on 12 May 2024.

EXECUTIVE SUMMARY

  • The recently concluded 2024 Indonesian legislative election raises questions about the future of Islamic political parties. Their last strong showing was in the 1955 election, after which they have been experiencing a slow decline. They are now on the periphery of the country’s political arena.
  • Only the National Awakening Party (PKB) and the Prosperous Justice Party (PKS) increased their vote share in the 2024 election. Others, such as the United Development Party (PPP) and People’s Party (Partai Ummat), a new Islamic party founded by reform icon Amien Rais, failed to secure any parliamentary seats.
  • Islamic political parties are thinly spread. Moreover, there is no correlation between their affiliation with Islamic organisations and choice of political party. Nahdlatul Ulama (NU) members do not automatically vote for PKB; the same is true of Muhammadiyah’s relationship with the National Mandate Party and Partai Ummat.
  • Among Indonesian Islamic parties, PKS’ future is the brightest and this is due to the loyalty of its support base. PKS’ Islamist ideology—inspired by the Muslim Brotherhood in Egypt—is developed for a further goal of founding an Islamic state in Indonesia and pushing for the Islamisation of Indonesian society. These ideas and beliefs foster strong political aspirations and have successfully bound members to the party.  

ISEAS Perspective 2024/37, 21 May 2024

* Pradana Boy Zulian is Visiting Fellow with the Regional Social and Cultural Studies Program at ISEAS – Yusof Ishak Institute. Neni Nur Hayati is the Director of the Democracy and Electoral Empowerment Partnership (DEEP), in Indonesia.

Download PDF Version

INTRODUCTION

In Indonesia’s political history, Islamic parties, collectively, have never been a dominant force. Their best performance was in the 1955 election, the Republic’s first. Back then, the total vote percentage gathered by them was 43.5 percent. Of the four parties with the highest voters, two were Islamic parties, Masyumi (7,903,886 votes) and Nahdlatul Ulama (NU) (6,955,141 votes), with the other two being Partai Nasional Indonesia (PNI) (8,434,653 votes), and Partai Komunis Indonesia (PKI) (6,179,914 votes).[1]

However, after 1955, Islamic parties underwent a steady decline. The trend continued during the Suharto New Order period (1966–1998). Even in the post-New Order period, after political restrictions were lifted and political space opened for all groups, Islamic parties never managed to repeat their 1955 showing.

Throughout the Reformasi era, the vote share of Islamic parties swung between 16 percent and 30 percent.[2] The Islamic parties’ vote share from year to year are as follows: 1971 election (26.0 percent), 1999 election (36.8 percent), 2004 election (38.1 percent), and 2009 election (29.0 percent). The 2024 election recorded a similar pattern. If the National Mandate Party (PAN) is considered “Islamic” and included, then all Islamic parties gained about 30 percent. But if PAN is excluded, then Islamic parties only secured about 23 percent of the popular vote. In the past, PAN was undoubtedly categorised as an Islamic party. However, in recent years, some have questioned whether it can be considered as such, since its primary motivation is national development despite it originating from Muhammadiyah, the second largest Islamic organisation in Indonesia. A split within PAN’s ranks further fuelled questions of its Islamic identity. On 29 April 2021, PAN’s key founder, Amien Rais, founded the splinter Partai Ummat to move in a more conservative Islamic direction.

Considering this historical fact and current political dynamics in the country, discussing the future of Islamic parties becomes very important. This article argues that although Islamic parties showed partial improvements in the latest election, they will nevertheless remain stagnant and will not play any significant role in the future. Their prospects will not change much as long as they do not move beyond sectarian politics. Unless they can be sensitive towards rapid changes in Indonesian society, their ability to compete for political significance will remain weak.

Be that as it may, one party that deserves scrutiny is the PKS. Although it is unlikely to make any major inroads in the country’s politics or increase Islamic parties’ overall performance in the national polls, it enjoys much stronger loyalty from its members and supporters than its Islamic counterparts are able to do.

This article will analyse several factors contributing to the Islamic parties’ abysmal performance and examine their future trajectory. It considers the following trends: Islamic parties are not the main preference for Muslims in Indonesia; although all Islamic parties strive for the upholding of Islamic teachings, their goals are fragmented; and there is a disjuncture between voters’ religious ideology and political loyalty.

ISLAMIC PARTIES NOT MUSLIMS’ GIVEN CHOICE

Muslims do not automatically vote for an Islamic party. Only in the 1955 election—the first ever held in the country—did Islamic parties demonstrate a strong showing; two of them were among the top four parties then. In 2024, the votes gained by Islamic parties are as follows: the National Awakening Party (PKB) gained 10.62 percent, followed by the Prosperous Justice Party (PKS) at 8.42 percent, the United Development Party (PPP) at 3.87 percent and Partai Ummat at 0.42 percent. The last two—PPP and Partai Ummat—were left with no seat in parliament. Based on the Indonesian parliamentary threshold, a political party must secure a minimum of four percent of the popular vote to qualify for parliamentary seats.

Despite the large number of Muslims in Indonesia, not all voted for Islamic parties.[3] To be sure, although the non-Islamic parties are mostly led by Muslims, their goals are not to pursue shariah laws or an Islamic state. In 2019, the total number of votes gained by Islamic parties was 30.0 percent, which showed a slight drop from the 2014 figure of 31.4 percent.

Taking NU supporters as a case in point, most NU members preferred to vote for non-Islamic parties. This is surprising, as NU members constitute one of Indonesia’s biggest voter groups, and political parties tend to compete for their support. One could assume that a majority of NU members would vote for PKB, as it is a political party formally and ideologically affiliated with NU. A survey, however, reveals a different situation. More importantly, under Yahya Staquf’s current chairmanship, NU is strongly endeavouring to return to Khittah 26, which underlines the neutrality of NU in practical politics. In addition, NU’s members have been divided in their support of parties and presidential candidates.

Compared to NU, Muhammadiyah members show a different political attitude and orientation. NU leaders are bolder when expressing their political interests than Muhammadiyah members. The same situation can said concerning political affiliation. The NU leadership is open about expressing the organisation’s relationship with the PKB, and stating that the PKB is a party for NU members. Muhammadiyah, on the other hand, describes its relationship with PAN not as organisational, but as cultural. However, despite these two differring stances, both failed to secure support. Interestingly, Partai Ummat could only gain less than one percent of the popular vote, even though the founder of the party was Amien Rais, a veteran and Muhammadiyah leader.

THE QUESTION OF SOLIDITY

In addition, the solidity of Islamic parties is under serious question. Although these parties adopt different orientations—broadly distinguished as traditionalist, modernist, Islamist, progressive, and humanist—they derive legitimacy through their common promotion of Islamic values and ideals. Their political posturing differs as well, as was evident in their separate preferences for presidential candidates. For example, in order to overcome the parliamentary threshold, the PPP joined Partai Demokrasi Indonesia Perjuangan (PDI-P) in promoting Ganjar Pranowo and Mahfud MD for president and vice-president. Meanwhile, PKB and PKS endorsed Anies Baswedan and Muhaimin Iskandar as their favoured candidates. Muhaimin is incidentally a popular NU member who has a solid grassroots base in Islamic boarding schools and among traditionalist clerics (kiai).

The question is whether the coalition between PKB and PKS can bring political solidity to Islamic parties. Some argue that a union between PKB and PKS would reduce division among Islamic parties. This is unlikely though. The ideological differences are too deep. Even though both parties hold to the rahmatan lil alamin (mercy for all the world) credo, their ideological inclinations are not easily reconcilable. Their constituents are at two extreme poles: PKS members are often labelled as Wahhabi-inclined, while NU is widely known for its moderation in practising Islam. NU moderation involves the loose accommodation of local culture, something that Wahhabi-inclined ideologies vehemently reject.

Other Islamic parties such as PAN and the Crescent Star Party (PBB) chose to support the Prabowo-Gibran coalition. PBB’s motto rahmatan lil alamin (a blessing for mankind) emphasises religious and humanitarian values and how these inspire Indonesian culture, language and attitudes towards life.[4]

FRAGMENTED VOTER LOYALTY ACROSS ISLAMIC PARTIES

During the 2024 election, Islamic parties in most instances saw increases in voter support, except for PPP.

For PKB and PKS, the increase was significant, due to various factors. In PKB’s case, the increase in votes was a coattail effect of Anies Baswedan’s and Muhaimin Iskandar’s candidacy in the presidential election. Cucun Ahmad Syamsurijal, one of PKB’s central board chairmen, is one who believes this to be the most important factor. However, other NU politicians such as Syaifullah Yusuf, disagree. Yusuf maintains that the increase was due to the struggle of PKB members at the grassroots level and to Kiai’s untiring support and efforts to promote PKB.[5] These two statements are correct to varying degrees. While both PKB and PKS, may have shared some coattail effect, PKS’ increase in vote share was also closely related to its members’ high level of loyalty.

A deeper analysis demonstrates that the future looks brighter for PKS compared to PKB. A survey by Denny JA from Lembaga Survey Indonesia reveals the surprising fact that PKB is not the main preference for NU members. Rather, PDI-P is, with Gerindra as second preference. This places PKB only in third place.[6] In addition, in terms of relations between NU and PKB, the fragmentation cannot be hidden. The conflict between the late Abdurrahman Wahid, the founder of PKB, and Muhaimin Iskandar, PKB’s current chairman, remains an unresolved. Yenny Wahid, Abdurrahman Wahid’s daughter, even strongly stated that she would be in opposition to PKB.[7]

Furthermore, PKS enjoys a higher level of loyalty other parties in general do, and Islamic parties in particular. Loyalty can be measured by indicators such as the tendency to vote for the same party in consecutive elections, as well as the tendency to choose the presidential and vice-presidential candidate pairs supported by their party. In other words, PKS members or sympathisers consistently vote for PKS and also for the presidential candidates promoted by PKS.

On 14 February 2024 (election day), Kompas Research and Development Institute conducted a post-voting survey or exit poll. The survey drew 7,863 respondents from the 38 provinces and demonstrates that PKS voters are more consistently loyal, when compared to supporters of other parties: As many as 70.2 percent of respondents who voted for PKS in 2024 had also voted for PKS in the 2019 election.  The level of loyalty shown for PKS is relatively consistent especially among urban and educated Muslim voters; this phenomenon was corroborated by several other surveys conducted before the election.[8] PKS even outperformed the ruling party PDI-P.[9] Before the election, more than 70 percent respondents from PDI-P declared their loyalty to the party, but this figure decreased significantly to 47.2 after the polls.

Nationally, PKS gained 8.42 percent of votes, making it among the six biggest parties in the country. In some provinces, PKS showed great promise, despite being a relatively small party compared to the PDI-P, Golkar, and Gerindra. It won in Jakarta, and secured the third place in West Java.

Two plausible factors explain the relatively high loyalty among PKS members and supporters. First, PKS has developed a strong presence on campuses. To many Muslim university students, especially those involved in Muslim student missionary organizations, PKS is not just a political party but a religious group that fulfils their spiritual needs. The other Islamic parties do not evoke this sentiment. Campuses serve as the party’s vehicles of indoctrination, allowing it to recruit solid cadres from among them who will later support the party. This explains why PKS has a high following among urban Muslim youths; PKS is seen to be representing and striving for Islamic religious and moral values. The party is also often seen as bringing concrete solutions to diverse political and social issues. The young Muslims who voted for the PKS are also eager to play an active role as agents of change, and strengthen social justice and welfare for all Indonesians. They also feel that only PKS can govern Indonesia in line with Islamic principles.

Second, PKS’s agenda is a simple one: to uphold Islamic principles. It does not make any pretensions to showcase otherwise, and this resonates with conservatives and anti-pluralist segments in society. Members understand that their support for the party equates to upholding Islamic supremacy. As Imdadun Rahmat reveals,[10] for PKS, building a strong ideological foundation among its cadres is a critical goal. This strategy is similar to the Muslim Brotherhood in Egypt, which it drew inspiration from.[11]

In the same vein, PKS’ consistent messaging about upholding the shari’a in Indonesia shores up loyalty among its constituents.[12] Although its efforts have not succeeded so far— namely to realise comprehensive implementation of shari’a in Indonesia, or more specifically, to raise shari’a to be the national law—PKS has played a role in gaining more Islamic regulations at the local level,  including the ratification of shari’a regulations in several regions. Its loyalists appreciate these efforts.

CONCLUSION

In post-2024 elections, Islamic parties will remain in the periphery. This is due to less support from Indonesian Muslims in general, and to fragmentation within the parties. Rather than work for a shared agenda, Islamic parties are very much engaged in disparate agendas—this leaves them vulnerable to fragmentation and friction.

Among Islamic parties, only PKB and PKS have reached beyond the four-percent support requirement. Others, such as PPP and Partai Ummat failed to meet the parliamentary threshold. Both these latter two are in a complicated situation, going forward. Thirdly, although PKB and PKS gained increased votes, both showed fragmentation in voter attitudes as well. PKS voters’ attitudes are more consistent compared to those of PKB’s. In the long run, this modality promises a relatively solid future for PKS.

ENDNOTES


For endnotes, please refer to the original pdf document.

ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute   30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735.  
Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/
ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed.   Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission.  
© Copyright is held by the author or authors of each article.
Editorial Chairman: Choi Shing Kwok  
Editorial Advisor: Tan Chin Tiong
Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha  
Managing Editor: Ooi Kee Beng  
Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng  
Comments are welcome and may be sent to the author(s).

 

2024/36 “The Aftermath of the 2024 Indonesian Elections: A Season for Speculation” by Max Lane

 

Indonesia’s President-elect Prabowo Subianto (L) and Vice President-elect Gibran Rakabuming Raka (R) react in front of the portrait of Indonesia’s President Joko Widodo after the plenary meeting of the General Elections Commission (KPU) announcing the 2024 presidential election at the KPU office in Jakarta on 24 April 2024. (Photo by Yasuyoshi CHIBA / AFP).

EXECUTIVE SUMMARY

  • The course of the 2024 Presidential and Parliamentary elections confirmed the absence of substantive ideological differences among all the parties, despite rhetorical positioning by candidates.
  • Since the elections, there has been constant speculation about how the political parties and figures would relate to each other after the elections, especially about which parties would join the governing parties and when.
  • One focus of speculation has been about how the relationship between incumbent President Joko Widodo and incoming President-elect Prabowo Subianto will evolve after Prabowo is sworn in in October.
  • The second focus has been around the relationship between Prabowo and the Indonesian Democratic Party of Struggle (PDIP) and whether the PDIP would join the Prabowo government.
  • Apart from the relationships among these parties, the criticisms from a spectrum of elements in civil society of manoeuvres by President Widodo to build a political dynasty and of Prabowo’s campaign will be a factor in how parties, especially the PDIP, relate to the new government. Tensions between the mainstream parties and civil society may sharpen.

*Max Lane is Visiting Senior Fellow at ISEAS – Yusof Ishak Institute. He is the author of “An Introduction to the Politics of the Indonesian Union Movement” (ISEAS 2019) and the editor of “Continuity and Change after Indonesia’s Reforms: Contributions to an Ongoing Assessment” (ISEAS 2019). His newest book is “Indonesia Out of Exile: How Pramoedya’s Buru Quartet Killed a Dictatorship”, (Penguin Random House, 2022).

ISEAS Perspective 2024/36, 20 May 2024

Download PDF Version

INTRODUCTION

There are two major ways in which the 2024 elections can be assessed. First are the relations between factions of the political elite, including the prospects for stability among that elite. Second are the relations between that elite as a whole, represented by all the parliamentary parties, and that section of politically active Indonesia outside the parties, referred to as “Masyarakat sipil” (“Civil Society”). At the moment, it can be noted that the most widespread political activity is speculation, even as more and more political actors firm up their decisions.

The contestation that took place in the 2024 elections was among rival factions within the broad Indonesian elite. Every coalition of parties nominating Presidential candidates included parties participating in the current Joko Widodo government. The two parties outside the Widodo government, Democrat Party (PD) and the Party of Justice and Welfare (PKS), had voted with the government on most occasions. Now they found themselves in coalitions alongside parties of the government. There were no outsiders among any of the parties supporting Presidential candidates.

Among the presidential candidates themselves, Anies Baswedan was not a party member. In the past he had sought collaboration with the PD, the Democratic Party of Struggle (PDIP), and was supported for the Governorship of Jakarta by the Great Indonesia Movement Party (Gerindra) and the PKS.

The election, including the process that will stretch to include the election of regional executives in November this year, is about settling any new arrangements among the various factions of the elite, represented by the different parties. While there was the rhetorical positioning of continuity versus “change” among the contending coalitions, there were no substantive ideological, programmatic or policy disputes affecting the basic direction of future government policy during the elections. Two of the three parties whose candidate positioned himself to be for “change”, have now joined Prabowo’s coalition for “continuity”. It was the relationship between the factions that is of major concern to the participants. However, significant tension has emerged around how this internal rivalry should be conducted. There were criticisms, from within the elite as well as from without, over the political manoeuvres of the incumbent, Joko Widodo, to ensure that his son, Gibran Rakabuming Raka could stand as Prabowo’s Vice-Presidential candidate, and also over Widodo’s use of social welfare funding for last minute pork-barrelling. These tensions, which are ongoing, may have an impact on how negotiations to manage the internal rivalries will be conducted. However, a few things are already clear.

PRABOWO AND PRESIDENT JOKO WIDODO

First of all, Prabowo Subianto as head of state and head of government will have the prerogative to appoint cabinet ministers and a host of other positions in the state apparatus, including those relating to state owned enterprises. Prabowo has repeatedly declared his support for Widodo’s policies in government, including since the election.[1] There have been no statements by Prabowo or his party, Gerindra, that suggest any divergence from the policies pursued for 10 years by President Widodo. This is not to say we will not see attempts by Prabowo to stamp his government with his own imprint as his installation as President nears.[2]

The most speculated rivalry in the Indonesian media is that between Prabowo and President Widodo himself. Some ask: will there be ‘dua matahari (two suns)’?[3] Speculation over whether there is rivalry or accord between Prabowo and Widodo is rampant in the media. How many times they meet, what their associates say on any one day – all these and other minor incidents are reported widely, with multiple interpretations.[4]

In the meantime, Prabowo remains President Widodo’s Minister for Defence, while also operating as the President-elect. In effect combining these roles, Prabowo visited Beijing and met Xi Jinping, then the Prime Minister of Japan, Fumio Kishida, and then the Prime Minister of Malaysia, Anwar Ibrahim.[5] This has been interpreted both as a possible reassertion of his closeness with President Widodo[6] — and Prabowo has claimed that his visit was arranged by Widodo — as well as something connected to a possible Beijing attempt to pre-empt US moves to get close to Prabowo.[7] It can also be read as an initial assertion of Prabowo’s own international profile.

There has also been speculation on what Widodo’s role might be after Prabowo is sworn in as president. The most common relates to Widodo’s role in selecting Ministers for Prabowo’s cabinet. Widodo’s spokesperson continually affirms that the appointment of cabinet Ministers will be fully Prabowo’s prerogative, despite the media speculation,[8] which continues non-stop.[9] Spokespersons from Prabowo’s party, Gerindra, have themselves said that Prabowo would seek Widodo’s suggestions on cabinet membership.[10] Commentary on the existence of “two suns” shining in the current Widodo cabinet is bound to continue,[11] right up till October.

There has also been other public commentary on Widodo’s position. There was a flurry of statements regarding how the Golkar leadership had encouraged Widodo to join Golkar and make it part of his base.[12] His son, future vice-president Gibran, has also been encouraged to join Golkar.[13] Others, such as the former PDIP figure turned Prabowo supporter, Budiman Sujatmiko, have suggested that Widodo could be Advisor to President Prabowo.[14]

Perhaps more substantially, there is also discussion of whether, or to what degree, Widodo will be able to place his supporters in key positions during the election of Province and District heads scheduled for November. Many current incumbents are his direct appointees, leading to more speculation that these appointments are a manoeuvre to place Widodo dynasty supporters, including family members, in important positions after his departure.[15]

PRABOWO AND MEGAWATI SUKARNOPUTRI

The largest party in the parliament will remain the Indonesian Democratic Party of Struggle (PDIP), although its vote, at 16%, is down on its voter support in 2019. Megawati remains the unchallenged Chairman of PDIP. Speculation over what relationship may or may not be possible between Prabowo and Megawati (and the PDIP), is also rife. The central question is whether the PDIP will join the Prabowo government or remain outside it. It looks likely now, although as yet nothing is completely clear, that Prabowo will be supported by a majority in parliament even without PDIP support. Prabowo is definitely supported by Gerindra, Golkar, National Mandate Party (PAN) and the Democrat party. The National Democrat Party has joined the Prabowo coalition. There is ongoing debate in the National Awakening Party (PKB) over whether it should join the Prabowo government but a final decision has not yet been made by the highest party bodies.[16] If both these parties do join, it gives Prabowo a clear majority in the DPR. These parties, currently outside the Prabowo coalition, have been delaying their final decision until after their challenges to the election results in the Constitutional Court are decided.[17] Even under these circumstances, the attitude of the PDIP will still be important to general political stability and the smooth functioning of the parliament. The relationship between Prabowo and Megawati is still considered important.

Prabowo and Megawati have collaborated politically in the past. In 2009, Prabowo was Megawati’s Vice-Presidential running mate. In 2010, when the PDIP nominated Joko Widodo for the Governorship of Jakarta, Prabowo’s party also supported Widodo, and Prabowo campaigned for Widodo. Of course, in 2014 and 2019, Prabowo stood against the PDIP’s nominee, Joko Widodo. In 2019, however, Prabowo joined Widodo’s government after Widodo won the election. At that time, the PDIP welcomed him into the government.[18] There is no history of ideological or programmatic conflict between the two.

The reason for the intense speculation is that it is assumed by most people that the relationship between Joko Widodo, whom the PDIP twice nominated for President, and Megawati has soured. Widodo is considered to have betrayed the PDIP by strongly supporting Prabowo against the PDIP’s nominee, Ganjar Pranowo, in these last elections.

The last time Megawati was betrayed by somebody – her Defence Minister before 2009, Susilo Bambang Yudhoyono – no collaboration between the two of them has been possible. This latest betrayal resulted in both Ganjar Pranowo’s serious defeat and a loss of votes for the PDIP in its heartland.[19] Joko Widodo and Megawati have not met since before the election campaign started in late 2023. While speculation about the PDIP’s position once Prabowo has been sworn in as president is common, current speculation centres on when Megawati will meet Prabowo. Now, this seems unlikely before the PDIP’s legal challenge to the election results is over.[20] Such a meeting would, perhaps, indicate Megawati’s intentions.

Any tension between Prabowo and Megawati is clearly not because of ideological or policy disagreements, or because of known personal clashes. The tension arises from Prabowo’s alliance with Widodo. Possible future collaboration between Megawati and Prabowo may depend on how the relationship between Prabowo and Jokowi develops.[21] Rumours circulate that Megawati is insisting that Prabowo ditch Widodo before any such collaboration is possible.[22] The possibility of Widodo being abandoned by those around him after Prabowo becomes president has also been publicly aired by figures from the PDIP.[23]

There have also been very heated exchanges between Vice-President elect Gibran, and Hasto Kristiyanto, PDIP Secretary-General. Most recently Hasto accused Gibran, who was nominated to stand for Mayor of Solo as a PDIP member, of having often lied to the PDIP. Gibran responded that Hasto’s always negative tone “meresahkan” (created restlessness and disruption).[24] This exchange was very widely reported in the press on TV.[25] Most recently the rift was confirmed more clearly when the PDIP announced on April 25 that Jokowi Widodo and his son Gibran were no longer members of the PDIP.[26]

Prabowo himself, urging general unity,[27] has made it clear he is open to any and all of the parties in parliament joining his government.[28] There are indications that he would welcome all the parties, including the PKS, PPP and PKB into the government, as well as the PDIP. With no serious differences in programme or ideology, tensions had been primarily created by changes in tactical alliances as intra-elite rivalry intensified during the election period. In this, Prabowo’s tactical allegiance to Joko Widodo is now the key factor.

THE POLITICAL ELITE AND CIVIL SOCIETY

There is a potential additional dynamic that may operate after this election. The change in alliance by Widodo, from an alliance with his nominating party (PDIP), to an alliance with Prabowo against the PDIP took a form that also attracted intense and broad criticism from civil society – the social opposition.[29] The criticisms relate to Widodo’s use of his incumbency, and of his family connections at the top of the Constitutional Court, to change rules that allowed Gibran to stand as Prabowo’s candidate for Vice-President. The criticism also extends to the huge allocation of social welfare payouts in the final weeks of the campaign, and of intimidation during the distribution of these payouts, in money and in rice.

A range of human rights and social justice non-government organisations has criticised the government. Additionally, in a very unusual process, groups of university professors have also issued highly condemnatory statements.[30] These have continued after the elections, with academics, students and lawyer groups also filing statements with the Constitutional Court regarding election irregularities.[31] A documentary produced by an NGO, called Dirty Vote, was watched by over one million people.[32] As a social opposition – that is a critical sector of society which is not presenting itself as an alternative political force – it had no serious impact during the campaign, just as it had no impact in other campaigns during the Widodo period. However, these issues have become entangled with that of the Widodo betrayal of the PDIP. The PDIP has taken a strong stand against the use of the welfare payments and associated intimidation and is presenting their complaints to the Constitutional Court. A key legal spokesperson for the PDIP is Todung Mulya Lubis. Mulya Lubis has been a central figure in the history of Indonesian civil society since the 1980s when he was Director of the Legal Aid Institute. In 2014, he was a supporter of Joko Widodo. He was later appointed as Indonesian Ambassador to Norway. His switch to support the PDIP and in particular to play a leading role in disputing the election results is reflective of the alienation certain sections of civil society feel towards Widodo.

For the PDIP to join the Prabowo government and not face a total collapse in credibility among the whole critical sector of civil society will be very difficult. For many sections of the social opposition, Megawati’s history of collaboration with Prabowo, who is accused of human rights violations in Timor Leste, of the kidnapping and disappearance of activists who opposed Suharto in his last year in power, and involvement in stirring up anti-Chinese rioting in May, 1998, is already negative. To join a Prabowo cabinet while he is still in alliance with Widodo and without Widodo being punished for dynasty building and excessive use of his powers of incumbency in the elections, would surely lead to a total collapse in credibility across the social opposition spectrum. At the same time, it is difficult to assess how important a positive relationship with civil society is to Megawati and the PDIP.

The high level of criticism of Widodo’s tactics in the elections and around dynasty building poses a dilemma not only for the PDIP but also for Anies Baswedan. Baswedan and the three parties backing him – Nasdem, PKB, PKS – never made Widodo’s dynasty building or incumbency tactics a major theme in their campaigning. Baswedan did, however, attempt to position himself to be for “Change”, even if this was vaguely articulated. Baswedan’s meet-the-people events also seemed to host discussions that more often focused on these issues. Baswedan is not part of any political party so his situation after the elections is quite fragile. If the parties that supported him in the election campaign join Prabowo’s government in October, he will be left floating. If one or more of those parties decides to stay outside the government, as with the PDIP, they will be faced with a decision as to how to relate the social opposition, to civil society.

In contemplating what, if any, relationship they may wish to pursue, they will also face the reality that while there is an overlap in criticism with civil society on the tactics Widodo has pursued, there are stark differences on many of the other issues that have been raised by the social opposition, not least Prabowo’s human rights record. Further, the social opposition – including the student sector – were the opponents which all the parties supported during Widodo’s two terms – the weakening of the KPK and the new Job Creation (Omnibus) and KUHAP laws. In fact, the issues raised across the civil society and activist spectrum stand in direct contrast to those that all the parties supported during the Widodo years.

A scenario where all of the parliamentary parties join with Prabowo will exacerbate the tension between the political establishment and the social opposition. In another where one or two parties such as the PDIP and PKS stay out of the government but remain in sync with Prabowo government’s general “continue the Jokowi programme” line, in order to just concentrate their criticism on Jokowi’s dynasty building, will probably also see tensions intensify.

The ideological gap between the parties and the social opposition has been sharpening for some time but the social opposition remaining rather impotent. The pressure on the social opposition to ‘go politik’ has been increasing since before the 2019 elections.[33] The sector of the social opposition with resources to start such a process are the trade unions. In 2019, sections of the trade unions implanted candidates in a range of parties, but with just a few winning seats in local parliaments and one in the national parliament, standing for Prabowo’s Gerindra party. In 2024, a new Labor Party (PB – Partai Buruh) stood in the elections for parliament. The PB presented itself as a vehicle for sections of society beyond union – “farmers, the urban poor, and workers in the informal sector” – to obtain representation in the electoral process.[34] It did not present itself as simply a part of the unions, but of the broader critical social sectors. It presented a standard social welfare redistributionist programme, and with a central policy plank of rejection of the Widodo Job Creation Law.[35] Its candidates came not just from the unions but from a range of grassroots-based campaign organisations as well as from social democratic-minded intellectuals.[36] Its lack of resources and experience meant that it was unable to make a serious impact. It elected no members to the national parliament and only 14 to local parliaments, the majority in Papua.[37]

While recruiting grassroots activists and intellectuals from the social opposition as candidates, it consciously abstainedfrom campaigning on the most high profile issues taken up by civil society: Prabowo’s past violations of human rights and Widodo’s dynasty building and misuse of incumbency powers.[38] It was basically silent on these issues. This abstention no doubt primarily reflected the balance of forces within the PB between those who oriented towards potential alliances with elements from within the political establishment, and those who dominate the party and trade union bureaucracies. It also reflected strong views among some activists that opposition to the Job Creation Law would be a more successful campaign than attacks on Prabowo or Jokowi.[39]

The PB won just under one million votes nationally, under 1%.[40] With that number gathered in its first try, there is little doubt that the party will continue to have a presence. Ilhamsyah, a trade union leader and the head of the PB’s Election Victory Division, stated his optimism that the PB will win members in the national parliament in 2029.[41] There may be other attempts at similar projects. Campaign coalitions of different wings of civil society, such as the Civil Society Coalition (KMS) and also Labor Movement for the People (Gebrak) among others, have also been very active since the elections.[42]

At the same time, how mainstream political actors – such as the PDIP and PKB or figures such as Anies Baswedan – decide to relate to the Prabowo government and to the social opposition, will also play a role. But until Prabowo begins his government, speculation will remain rampant.

ENDNOTES


For endnotes, please refer to the original pdf document.

ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute   30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735.  
Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/
ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed.   Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission.  
© Copyright is held by the author or authors of each article.
Editorial Chairman: Choi Shing Kwok  
Editorial Advisor: Tan Chin Tiong
Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha  
Managing Editor: Ooi Kee Beng   Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng  
Comments are welcome and may be sent to the author(s).

 

2024/35 “The Impacts of Supply Chain Reconfiguration on ASEAN Economies” by Aufa Doarest and Maria Monica Wihardja

 

Forcing ASEAN to choose sides – whether to be in the US or China supply chain system – will be impossible and disruptive, and ASEAN should continue to take the pragmatic approach and reject choosing sides. Picture: Facebook page of the ASEAN Secretariat.

EXECUTIVE SUMMARY

  • At the centre of the US-China trade war are the semiconductor chip and green industries.
  • ASEAN is clearly benefiting from the resultant reconfiguration of the global supply chains in these two industries in terms of trade, value addition and foreign direct investment, at least in the short run. However, these benefits can be more than offset by the greater disruption to the global supply chains should US-China tensions continue to escalate.
  • Its high trade reliance on China while having the US as its largest investor (by far) and key source of technology transfers puts ASEAN in an increasingly precarious situation should the US-China supply chain decoupling intensifies.
  • Forcing ASEAN to choose sides – whether to be in the US or China supply chain system – will be impossible and disruptive, and ASEAN should continue to take the pragmatic approach and reject choosing sides.

* Aufa Doarest is Private Sector Specialist at the World Bank Group’s Finance, Competitiveness and Innovation and Maria Monica Wihardja is Economist and Visiting Fellow at ISEAS – Yusof Ishak Institute and Adjunct Assistant Professor at the National University of Singapore.

ISEAS Perspective 2024/35, 17 May 2024

Download PDF Version

INTRODUCTION

Interdependence within the global supply chain has been exacerbated by the growing dependence for intermediate inputs on only a few firms and a few countries (Pangestu, 2023). The semiconductor industry and the green technology industry are two examples of highly concentrated supply chains where firms from East Asia (e.g., China, Taiwan and South Korea) are now the dominant suppliers (Miller, 2022; Nguyen-Quoc, 2023).

The heightened dependence of the US on China has raised geopolitical rivalry between the two countries and driven the reconfiguration of supply chains. Countries and companies now seek to ‘decouple’, ‘diversify’ and ‘de-risk’ their supply chain configuration away from their adversaries. Consequently, supply chains in Asia are undergoing major changes.

At the country level, a number of strategies are being adopted, including re-routing trade flows through intermediary countries; home-shoring investment through investment subsidies and tax credits; and increasing self-reliance through import substitution and research and development (R&D). At the corporate level, multinational companies (MNCs) in Asia and worldwide are adapting by adopting the ‘China Plus One’ or ‘China Plus Two or Three’ model to broaden their supply base outside China while maintaining a presence in China (Nguyen-Quoc, 2023).

This essay reviews and analyses how ASEAN economies have been impacted by the changing dynamics in the global supply chain. We focus on two industries, namely the semiconductor industry and the electric vehicle (EV) industry,[1] and look at the impacts from three angles: trade, investment and R&D.

THE US INDUSTRIAL POLICY IN CHIP AND GREEN TECHNOLOGY

Since 2018, during the Trump administration, the US has been restricting the exports of “emerging and foundational technologies” to entities abroad whenever those technologies are “essential to the national security of the US” (Bradford, 2023). This started with the Export Control Reform Act of 2018 enforced through the maintenance of a Commerce Control List and a licensing system as well as a narrower export control instrument known as the Entity List. Although the idea was to restrict exports exclusively for advanced technologies that could endanger national strategic interest – dubbed as the ‘small yard, high fence’ strategy – these export restrictions were later expanded in terms of both technologies and entities. For example, in 2020, the 2018 export restrictions to ban Huawei’s access to semiconductors were extended to cover all foreign technology companies (instead of only US firms) that use US chipmaking equipment and software tools.

In August 2022, the CHIPS (Creating Helpful Incentives to Produce Semiconductors) and Science Act allocated USD280 billion to catalyse investments in domestic semiconductor R&D and manufacturing capacity. In October 2022, a set of export restrictions were issued to cut off China’s access to advanced AI chips and choke point technologies[2] (Ing and Markus, 2023). Later, these export restrictions were expanded into restrictions on direct investment (Shalal and Freifeld, 2023) and financial investment (private equity and venture capitals) (Siqi, 2024), as well as on individuals who hold US passports to work for Chinese chip companies (Lin and Hao, 2022). 

In a spirit similar to the CHIPS and Science Act, in August 2022, the US also signed into law the Inflation Reduction Act (IRA) to catalyse investment in R&D and domestic manufacturing capacity in leading-edge green technologies, including carbon capture and storage as well as EV (Badlam et al, 2022b).[3] The law will direct USD400 billion into a mix of tax incentives, grants, and loan guarantees.

The concentration of green technology production and the critical minerals associated with it in China—and in a few Chinese firms—has sounded an alarm bell for the US. For example, China dominates 75 percent of Solar Photovoltaic technology and battery manufacturing compared to the small share the US has of only 5 percent in the production of both technologies (Li and Zhao, 2023). Similarly, China commands 55 percent of wind technology manufacturing.  

IRA is the US’ biggest and most significant national policy to combat climate change. However, it is unclear whether IRA will leave any room for collaboration in low-carbon technologies where China is a major player, or lead to race-to-the-bottom protectionist industrial policies and strategic competition similar to that now found in the chip industry (Li and Zhao, 2023). Given the high concentration of green technology in China, diversification of trade source is commendable. However, focusing on where the green technologies are built could risk slowing down the low-carbon transition in the US and globally.  

THE CHALLENGES OF SUPPLY CHAIN RECONFIGURATION

At the centre of the US-China trade war and supply chain reconfiguration are chip and green technologies. Chip production-related activities, including assembling, packaging and testing, account for a significant share of the GDP and/or exports of ASEAN countries such as Malaysia, Singapore, Thailand and the Philippines (EDB, 2022a; EDB, 2022b).[4]

Supply chain reconfiguration in this context refers to aspects of production being shifted to countries or firms which are not necessarily the most competitive and efficient, due to geopolitical and national security factors. The new countries and firms may even have siloed technologies and production processes that are disconnected from others in the supply chain.

The impacts of supply chain reconfiguration on ASEAN economies can be strongly noted in three areas, namely (1) trade diversion through several intermediary countries to avoid goods flowing directly from China to the US, (2) relocation of FDI, (3) Research and Development (R&D) activities. The following sections discuss these separately.

TRADE [5]

China’s dominance as the world’s manufacturing superpower (Baldwin, 2024) is partly reflected in a significant increase in China’s export of EV (including Completely Build-Up and Completely Knocked Down cars but not parts such as batteries) and chips between 2017 and 2022. Within that period, China’s export of chips almost doubled, from USD 72 billion to USD129 billion, while China’s export of EV increased by almost 13 times, from USD2 billion to USD25 billion (Figure 1 and Figure 2).

Figure 1: China’s export and import of chips (in million USD)

Source: World Integrated Trade Solution (WITS, accessed February 2024), authors’ calculations

Figure 2: China’s export and import of EVs (in million USD)

Source: World Integrated Trade Solution (WITS, accessed February 2024), authors’ calculations

The US-China tech war, especially the escalating restrictions on China’s access to US technologies that started in 2018, are reflected in the trade in chips between the two countries in 2022. After an increasing trend since 2017, China’s import value of chip from the US declined from USD15.1 billion in 2021 accounting for 10.2 percent share of China’s total import of chips, to USD11.6 billion in 2022 accounting for 8.0 percent share (Table 1). Mirroring China’s import value decline is US’ export value decline of chips to China.

Table 1: US’ export to China and China’s import from the US in chip

 US’ export to China in chipChina’s import from the US in chip
 Value (in USD billion)Share of US’ Chip Export (%)Value (in USD billion)Share of China’s Chip Import (%)
20173.513.59.911.2
20184.216.311.612.3
20196.725.513.412.0
20208.131.213.910.9
20219.632.215.110.2
20226.524.411.68.0

 Source: World Integrated Trade Solution (WITS, accessed February 2024), authors’ calculations

The US decision to diversify its trading partners and move away from China affects international trade in chips. First, China’s chip export destination pattern has slightly shifted. The share of China’s chips export to the US dropped from 19 percent in 2018 to 11 percent in 2022. At the same time, the share of China’s chips export to ASEAN countries increased slightly from 18 percent in 2018 to 20 percent in 2022 (Table 2). While the changes in the destination pattern may be due to lack of domestic demand in the US, the positive trend of US import of chips, increasing from USD79.7 billion in 2018 to USD87.2 billion in 2022, reveals that US domestic demand has actually gotten stronger. It is predicted that the demand for chips will continue to increase as AI, robots and EV become the new normal in people’s everyday lives.

Table 2: Chip export shares of China, ASEAN and Mexico (%)

 China’s Chip Export Share (%)ASEAN’s Chip Export Share (%)Mexico’s Chip Export Share (%)
 China to ASEANChina to MexicoChina to USAASEAN to USAMexico to USA
201717.41.317.912.069
201818.41.419.29.065
201919.51.316.69.858
202021.51.312.711.960
202120.21.410.411.565
202220.11.611.114.067

 Source: World Integrated Trade Solution (WITS, accessed February 2024), authors’ calculations

Second, this export diversion is reflected in the import pattern of chips. The US import share of chips has shown an increasing reliance on ASEAN and a decreasing reliance on China (Figure 3). Both ASEAN and China accounted for 34 percent of US chips import in 2017; but while ASEAN’s share increased to 48 percent in 2022, China’s share was halved to 17 percent. Meanwhile the share of Mexico in US chips imports has barely changed while the share held by other countries has increased by 4 percentage points in the same period. This shows that ASEAN is clearly benefiting from US’ import diversion away from China.     

Figure 3: US import of chip

Source: World Integrated Trade Solution (WITS, accessed February 2024), authors’ calculations 

Unlike the chips trade, the trend of EV trade between the US and China continued to be robust in terms of value until 2022 but declined in terms of reliance (or share) (Table 3). The US used to account for 28.1 percent of China’s export in EVs but this fell to only 7.9 percent in 2022. At the same time, China had accounted for 52.5 percent of US’ import in EV but this declined to 12.8 percent in 2022.; ASEAN’s export of EVs has been increasingly going to the US (Table 4) while ASEAN’s import of EVs has been increasingly coming from China (Figure 4). The two-wheeler EV has been driving the increase in ASEAN’s export of EVs to the US. The main exporter before the COVID-19 pandemic was Vietnam.      

Table 3: US’ import from China and China’s export to the US of EVs

 China’s export of EVs to the USUS’ import from China of EVs
 Value (in USD billion)Share (%)Value (in USD billion)Share (%)
20170.316.60.123.9
20180.728.10.452.5
20190.721.40.420.7
20201.020.40.933.4
20211.812.61.015.3
20222.07.91.612.8

 Source: World Integrated Trade Solution (WITS, accessed February 2024), authors’ calculations

Table 4: EV export value (in USD million) and share (%)

 China to ASEANChina to MexicoChina to USAASEAN to USAMexico to USA
ValueShareValueShareValueShareValueShareValueShare
2017136.77.07.80.4326.016.60.11.1182.498.3
2018119.94.512.10.5746.328.14.79.143.364.5
2019202.36.321.70.7685.521.431.624.520.865.2
2020200.03.913.80.31,033.920.443.828.124.936.7
2021409.53.032.00.21,750.512.674.633.21,734.243.7
20221,073.64.280.10.32,017.47.9243.951.22,341.554.8
Note: Value in USD million. Share in %.

Source: World Integrated Trade Solution (WITS, accessed February 2024), authors’ calculations

Figure 4: Source countries for ASEAN’s import of EVs (%)

 Source: World Integrated Trade Solution (WITS, accessed February 2024), authors’ calculations

In short, while the US-China trade in chips shows signs of ‘decoupling’ (reduced trade values), the US-China trade in EVs shows signs of ‘diversifying’ (reduced trade shares) but not ‘decoupling’.

VALUE ADDITION

Looking at trade in total value or volume may not give the complete picture of trade diversion. China might divert its trade to the US through intermediary countries to avoid sanctions or higher tariffs placed on goods coming directly out of China and exports coming out these intermediary countries to the US may actually be high in Chinese content.

It is therefore important to also look at trade in value-added (TiVA) data of goods and services, which measure the value added by each country in the production of goods and services that are consumed worldwide (gross production minus the purchased intermediates). We use the OECD TiVA data used in Baldwin (2024) to analyse the changes in ASEAN participation in the global value added:

  • ‘Foreign Production Exposure: iMport side (FPEM)’: Share of imported input from a source country out of all industrial inputs (including domestically source inputs) used by a country on a scale of 0 to 100. Industrial inputs extend beyond the manufacturing sector and includes the agriculture and service sectors as well. The higher the index, the more reliant (and exposed) a country is to the source country on the production side.

  • ‘Foreign Production Exposure: eXport side (FPEX)’: Share of a country’s manufactured production from the manufacturing sector that is exported to a particular partner on a scale of 0 to 100. The higher the index, the more reliant (and exposed) a country is to the destination country on the sales side. 

Data for ASEAN are taken as the average of all ASEAN countries. Instead of looking at reliance of trade in value-added in the chip and EV industries, we look at realiance of trade in value-added in the whole economy. With a lag in the OECD TiVA data (the latest TiVA data is for 2020),[6] we may not be able to see the impacts of the more current policies such as the CHIPS and Science Act and the Inflation Reduction Act. However, we can observe a longer-term trend of trade in value-added, including China’s increasing dominance and ASEAN’s increasing participation in global value added.

The US reliance on China’s industrial inputs skyrocketed since the mid-1990s to decline since 2015, albeit with a slight up-tick in 2022 (Figure 5a). Despite this decline, in 2020, US’ reliance on China’s industrial inputs was still three times higher than China’s reliance on US industrial inputs. On the sales side, China’s reliance on the US was more than 17 times higher than US reliance on China in 1995, but the ratio declined since the early 2000s to two times in 2020 (Figure 5b).   

Figure 5a and 5b: US-China reliance on the production side, and US-China reliance on the sales side

Source: OECD TiVA (updated 2023, accessed February 2024), authors’ calculations

How has the participation of ASEAN economies in global value added changed?

China replaced the US as the dominant industrial input source for ASEAN countries in 2003 (Figure 6a). In 1995, ASEAN’s reliance on US industrial inputs was three times ASEAN’s reliance on China inputs. In 2020, ASEAN’s reliance on China’s industrial input was more than five times ASEAN’s reliance on that of the US. Similarly, China replaced the US as the dominant industrial output destination for ASEAN countries in 2011 (Figure 6c). In 1995, ASEAN’s reliance on the US market was more than eight times ASEAN’s reliance on that of China. In 2020, this flipped, with ASEAN’s reliance on China’s market coming close to 1.5 times ASEAN’s reliance on that of the US. Conversely, China’s reliance on ASEAN’s industrial inputs and market is increasing and is higher compared to US reliance on those of ASEAN (Figure 6b and Figure 6d). 

Intensification of ASEAN’s reliance on both China’s industrial inputs (production side) and the US market (sales side) since 2016 indicates ASEAN’s growing role as an intermediary region for Chinese goods to the US. This is supported by evidence at the country level with the correlation between Vietnam’s exports to the US and Vietnam’s imports from China doubling from 0.4 in 2020 to more than 0.8 in 2024, where 1 shows perfect correlation (The Economist, 2024).       

Source: OECD TiVA (updated 2023, accessed February 2024), authors’ calculations

FOREIGN DIRECT INVESTMENT

General FDI trends

Export-oriented FDI inflow positively correlates with the trade pattern. As the trade war intensifies, trade through intermediary countries and the investment inflow going to these intermediary countries surge, including investment to build new manufacturing factories. International investors have relocated or diversified their production locations away from China and sought other Asian economies as destination for FDI to de-risk their businesses from uncertainties arising from geopolitical tensions, pandemic-induced supply chain disruptions, and rising production costs in some countries while seeking potential gains from the new global value chain and emerging sectors such as chips and EVs.

The ASEAN region is a major beneficiary of this FDI relocation (ASEAN and UNCTAD, 2023). FDI inflow to ASEAN-6 (Malaysia, Singapore, Indonesia, Thailand, Vietnam, and the Philippines) reached an all-time high of USD227 billion in 2022 and surpassed the FDI inflow to China (Figure 7). Meanwhile, China’s FDI fell to its 30-year low in 2023.

Figure 7: FDI (in USD mn) in China and ASEAN-6

Source: CEIC (accessed February 2024); authors’ calculations.

Note: ASEAN-6 is used instead of ASEAN since other ASEAN countries’ investment data is not up to date.

Reconfiguration of supply chain-related FDI in ASEAN can be categorized into two groups:

  • Existing investors expanding their production capacities in the region.
  • New investors with/without plant/business presence in China establishing in the region while keeping their presence in China, including Chinese and Taiwanese firms (e.g., the ‘China Plus One’ strategy), or moving their plant and businesses out of China because of the intense US-China conflict.  

EVs, EV batteries, electronics and chips, data centres, and the digital economy received robust new and expanded investment in 2022 (ASEAN and UNCTAD, 2023). Manufacturing investment notably scored much stronger growth than in previous years with its share in total FDI in ASEAN rising more than three folds from just nine percent in 2020 to 28 percent in 2022.

FDI by Industry

The electronics and electrical industry accounted for more than 70 percent of new manufacturing investments at USD37 billion, with chips and electronic components alone making up 27 percent of the 70 percent (ASEAN and UNCTAD, 2023), reaching close to USD9.5 billion in 2022, six times the annual average between 2010 and 2019.

Besides chips and electronic components, the ASEAN region also attracted strong investment in EVs and EV battery production as well as charging stations. New investment in batteries rose by 656 percent in 2022 compared to 2021 to USD8.4 billion, accounting for 23 percent of new manufacturing investment (ASEAN and UNCTAD, 2023). Chips, electronic components and battery production combined accounted for half of new manufacturing investment in 2022. FDI in EV-related sectors shot up from USD2.1 billion in 2019 to USD18.1 billion in 2022 (ASEAN and UNCTAD, 2023).

FDI by source and host countries

It is predicted that FDI flows are being increasingly concentrated to countries that are geopolitically aligned with the investor (Ahn et al, 2023). The US, which recently upgraded its bilateral economic relationship with Singapore, Vietnam and Indonesia, was the largest investor in ASEAN with investment reaching USD37 billion in 2022.[7] It was also the largest investor by far in the manufacturing and financial sector. Japan was the third largest investor after intra-ASEAN investment. Japanese FDI in ASEAN was concentrated in the transportation and storage industry, accounted for 88 percent of investment in the industry, reflecting its interest in the automotive industry, including EVs. FDI from China fell by USD1 billion to USD16 billion in 2022, with investment predominantly being in infrastructure projects, EV-related activities and the digital economy.

How ASEAN countries benefit from the reconfiguration of the global supply chain depends on their specialized capabilities (Varas et al, 2021). For example, outsourced chip, assembly and testing (OSAT) firms have been diversifying their global footprints in Southeast Asia such as in Malaysia, Vietnam and the Philippines. Meanwhile, Singapore captured new investment in new chips factories and hosted one of the world’s leading global semiconductor research institutions, A*STAR, whose research goes beyond chip technology.

RESEARCH & DEVELOPMENT

The recent trade and technology war between the US and China has spurred R&D subsidies. The CHIPS and Science Act of 2022 directs USD200 billion of its total USD280 billion spending for scientific R&D and commercialization into chips (Badlam et al, 2022a). Similarly, the Inflation Reduction Act of 2022 increased and expanded tax credits for R&D activities including to jump-start R&D and commercialization of cutting-edge green technology such as EV (Badlam et al, 2022b). In the same year, China upgraded the country’s tax credits for investment in semiconductor R&D from existing chips subsidies worth at least USD150 billion. The R&D subsidies in chips and green technology spill over to other countries including the European Union and Japan. Although most R&D investment is made to unlock financial constraints in the upstream and midstream industries, it usually has a chain synergy effect that catalyses R&D in the downstream industry and the overall innovation ecosystem.

How does the R&D subsidy race affect ASEAN economies? First and foremost, most ASEAN countries do not have the capability (e.g., human capital, physical capital, and regulatory ecosystem) to do cutting-edge R&D. Second, not all ASEAN countries can afford to engage in a subsidy race. Third, technology has become synonymous with geopolitical alignment and trust is a prerequisite to technology transfers. The US as the largest investor in ASEAN is key to bringing new technology to ASEAN as investment often times comes with technology transfers.  At the same time, countries with a good reputation in patent and copyright law have an additional advantage in getting R&D investment.

ASEAN economies will not and should not rush into the R&D subsidy race and could instead promote an ASEAN R&D hub, perhaps located in Singapore, as a way to create a production ecosystem in the region.     

CONCLUSION

ASEAN’s high trade reliance on China while having the US (by far) as its largest investor and key source of technology transfers puts it in an increasingly precarious situation if US-China supply chain decoupling intensifies. Forcing ASEAN to choose sides – to be in the US or China supply chain system – will be impossible and disruptive, and ASEAN should continue to take the pragmatic approach and reject that option. In the short run, some ASEAN countries are benefiting from the relocation of global supply chains as shown by trade, value addition and FDI data, but the high level of interdependence of global supply chains and  the many hubs in China suggests that these benefits could be more than offset in the long term by the greater disruption to the global supply chains if the US-China tensions continue to escalate. 

REFERENCES

Ahn, J., Carton, B., Habib, A., Malacrino, D., Muir, D. and Presbitero, A., 2023. ‘Geoeconomic fragmentation and foreign direct investment’. Chapter 4, IMF World Economic Outlook: A Rocky Recovery. IMF Publication.

The ASEAN Secretariat and United Nations Conference on Trade and Development (ASEAN and UNCTAD). 2023. A Special ASEAN Investment Report 2023. International Investment Trends: Key Issues and Policy Options. Jakarta: ASEAN Secretariat.

Badlam, Justin, S. Clark, S. Gajendragadkar, A. Kumar, S. O’Rourke, and D. Swartz. 2022a. ‘The CHIPS and Science Act: Here’s what’s in it’. McKinsey & Company Publication. Link: https://www.mckinsey.com/industries/public-sector/our-insights/the-chips-and-science-act-heres-whats-in-it#/

Badlam, Justin, J. Cox, A. Kumar, N. Mehta, S. O’Rourke, and J. Silvis. 2022b. ‘The Inflation Reduction Act: Here’s what’s in it’. Link: https://www.mckinsey.com/industries/public-sector/our-insights/the-inflation-reduction-act-heres-whats-in-it

Baldwin, Richard. 2024. ‘China is the World’s Sole Manufacturing Superpower: A Line Sketch of the Rise’. CEPR Publication. Link: https://cepr.org/voxeu/columns/china-worlds-sole-manufacturing-superpower-line-sketch-rise

Bradford, Anu. 2023. Digital Empires: The Global Battle to Regulate Technology. Oxford University Press.

Curran, E., S. Donnan, M. Cousin, N.D. Tu Uyen, Q. Nguyen, M. Martewicz, M. Averbuch, B. Murray, A. Lee, G. Sihombing, and C. Jiao. ‘These Five Countries Are Key Economic ‘Connectors’ in a Fragmenting World’. Businessweek, Bloomberg New Economy.

Dahlman, Abigail, and Mary E. Lovely. 2023. ‘US-led Effort to Diversity Indo-Pacific Supply Chains Away from China Runs Counter to Trends’. Peterson Institute for International Economics (PIIE) Publication. Link: https://www.piie.com/blogs/realtime-economics/us-led-effort-diversify-indo-pacific-supply-chains-away-china-runs-counter

Ebrahimi, Arrian. 2023. ‘China Boosts Semiconductor Subsidies as US Tightens Restrictions’. The Diplomat. Link: https://thediplomat.com/2023/09/china-boosts-semiconductor-subsidies-as-us-tightens-restrictions/

Economic Development Board Singapore (EDB). 2022a. ‘Southeast Asia’s Rising Semiconductor Fortunes’. Link: https://www.edb.gov.sg/en/business-insights/insights/southeast-asia-s-rising-semiconductor-fortunes.html

Economic Development Board Singapore (EDB). 2022b. ‘Diverse Capabilities, Infrastructure Help Drive Chips Industry in Singapore’. Link: https://www.edb.gov.sg/en/business-insights/insights/diverse-capabilities-infrastructure-help-drive-chips-industry-in-singapore.html

Ing, Lili Yan, and Ivana Markus. 2023. ‘ASEAN in the Global Semiconductor Race’. Fulcrum. ISEAS-Yusof Ishak Institute Publication. Link: https://fulcrum.sg/aseanfocus/asean-in-the-global-semiconductor-race/

Li, Cheng, and Xiuye Zhao. 2023. ‘Renewable energy should not be the next semiconductor in US-China competition.’ Brooking Institution Commentary. Link: https://www.brookings.edu/articles/renewable-energy-should-not-be-the-next-semiconductor-in-us-china-competition/

Lin, Liza, and Karen Hao. 2022. ‘American Executives in Limbo at Chinese Chip Companies After US Ban’. Wall Street Journal. Link: https://www.wsj.com/articles/american-executives-in-limbo-at-chinese-chip-companies-after-u-s-ban-11665912757

Miller, Chris. 2022. Chip War. The Fight for the World’s Most Critical Technology. Scribner Publication. 

Nguyen-Quoc, Thang. 2023. ‘The Deglobalization Myth: How Asia’s Supply Chains Are Changing’. Hinrich Foundation Publication. Link: https://www.hinrichfoundation.com/research/wp/trade-and-geopolitics/how-asia-supply-chains-are-changing/

Pangestu, Mari Elka. 2023. ‘Critical Minerals: Challenges for Diversification, Climate Change and Development’. Slide Presentation at Peterson Institute for International Economics Webinar, on 27 April 2023. Link: https://www.piie.com/sites/default/files/2023-04/2025-04-27pangestu-ppt.pdf

Ross, Laura. 2020. ‘Inside the iPhone: How Apple Sources from 43 Countries Nearly Seamlessly’. Link: https://www.thomasnet.com/insights/iphone-supply-chain/

Shalal, Andrea, and Karen Freifeld. 2023. ‘US starts process to restrict some investment in key tech in China’. Reuters. Link: https://www.reuters.com/technology/us-starts-process-restrict-some-investment-key-tech-china-2023-08-09/

Siqi, Ji. 2024. ‘US Congress considers new legislation to further restrict investment in Chinese tech sectors’. South China Morning Post. Link: https://www.scmp.com/news/china/article/3250360/us-congress-considers-new-legislation-further-restrict-investment-chinese-tech-sectors

The Economist. 2024. ‘How Trump and Biden have failed to cut ties with China’. The Economist. Link: https://www.economist.com/finance-and-economics/2024/02/27/how-trump-and-biden-have-failed-to-cut-ties-with-china

Varas, Antonio, Raj Varadarajan, Jimmy Goodrich, Falan Yinug. 2021. Strengthening the Global Semiconductor Supply Chain in an Uncertain Era. Boston Consulting Group (BCG) and Semiconductor Industry Association (SIA) Publication. Link: https://www.semiconductors.org/wp-content/uploads/2021/05/BCG-x-SIA-Strengthening-the-Global-Semiconductor-Value-Chain-April-2021_1.pdf

ENDNOTES


For endnotes, please refer to the original pdf document.

ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute   30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735   Get Involved with ISEAS.
Please click here: /support/get-involved-with-iseas/
ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed.   Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission.  
© Copyright is held by the author or authors of each article.
Editorial Chairman: Choi Shing Kwok  
Editorial Advisor: Tan Chin Tiong  
Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha  
Managing Editor: Ooi Kee Beng   Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng  
Comments are welcome and may be sent to the author(s).

 

2024/34 “Malaysia’s Out-of-Sync Federal and State Elections: The Good, the Bad, and the Untimely” by Francis E. Hutchinson

 

Prime Minister Anwar Ibrahim (centre) speaking at a press conference after the release of state election results at the World Trade Centre in Kuala Lumpur on 12 August 2023. Malaysians in six states went to the polls on 12 August to vote for state assembly members in elections widely seen as a barometer of support for Prime Minister Anwar Ibrahim’s unity government. (Photo by Mohd RASFAN / AFP).

EXECUTIVE SUMMARY

  • Elections in Malaysia are held at the national and state levels, and in holding these concurrently, disruptions and costs have been reduced.
  • As with the federal government, state governments can decide when to hold their elections. In the past, when Barisan Nasional (BN) was in power at the centre and in most states at the same time, this discretion was largely discounted.
  • Following BN’s fall from power in 2018 and the country’s political context becoming more fluid, state government elections have been increasingly held out of sync with federal elections. In the last four years, state polls have been held on six separate occasions.
  • Concerned about rising costs, prolonged campaigning as well as implications for the country’s political stability, some have proposed clustering state elections or ensuring that they are held alongside national polls.
  • There are pros and cons to such arrangements. Concurrent polls can be cheaper, encourage higher turnout rates, and reduce the length of campaign seasons. Conversely, state leaders would be forced to hold elections at times not of their choosing, and state-level issues could be overshadowed by national ones.
  • The challenges inherent in pursuing such a reform in Malaysia are considerable and would involve amending the federal constitution, as well as the various state constitutions.
  • Consequently, it is likely that the Unity Government will head into the next electoral season under the current arrangement. The Sabah and Sarawak state elections are due in 2025 and 2026 and can be held without much concern for the current coalition arrangements.
  • In contrast, the Melaka and Johor elections will be crucial barometers for the Unity Government. Due by late 2026 and mid-2027 respectively, they may expose internal weaknesses in the run-up to the general election due some 9-12 months later.

* Francis E. Hutchinson is Senior Fellow and Coordinator of the Malaysia Studies Programme at ISEAS – Yusof Ishak Institute. The author would like to thank Lee Hwok Aun, Ong Kian Ming and Sara Loo for their comments, feedback, and inputs.

ISEAS Perspective 2024/34, 15 May 2024

Download PDF Version

INTRODUCTION

Malaysia has a multi-levelled political system, which is comprised of a federal government and 13 state counterparts – all of which hold their own elections.[1] Influenced by the British Westminster system, the federal government holds elections for parliament – and the state governments for their assemblies – at least once every five years. With the exception of Sarawak, which has run on its own electoral cycle since 1963, elections for the federal and state governments have traditionally been held simultaneously.[2]

This arrangement has been a tradition, rather than a result of any specific legislation. According to the Constitution, elections at the federal and state levels are called by the King or Sultans and Governors on the advice of the elected leadership in parliament or respective state assembly. Given this, state leaders have the prerogative to call for elections at any time, independently of the federal government.[3] Elections at both the national and state levels are organized and overseen by the Election Commission, whose establishment is stipulated by the Federal Constitution.[4]

What minimized dispersion in election dates in the past was the fact that, up until 2018, the Barisan Nasional (BN) coalition was in power at the federal level and also in most states. Consequently, elections were held at the behest of the BN leadership and taken with national interests at the forefront. While BN state leaders may or may not have been in agreement with the timing, internal party mechanisms served to ensure compliance. BN state leaders often aspired to subsequent national cabinet positions and were reluctant to defy orders from national leaders which could compromise their career trajectories. Furthermore, recalcitrant menteri besar or chief ministers could be toppled by votes of no confidence passed by BN assemblypersons.[5]

In recent years, this homogenizing influence has lost force. In 2008, Barisan Nasional was beaten unprecedentedly in five state governments. In 2018, BN was defeated at the national level and in most states for the first time. Following a two-year interlude, BN returned to federal power – but in a subordinate position in the Perikatan Nasional and then the Unity Government groupings. The relative decline in BN’s power at both federal and state levels allows more autonomy for state leaders to prioritize local considerations when calling for elections.

Out-of-cycle elections can occur for several reasons. First, state governments can rise and fall due to local-level machinations. Motions of confidence and no-confidence can be passed in state assemblies, and – similar to the Sheraton Move in February 2020 that led to the fall of the Pakatan Harapan administration – local coalitions can come undone. Thus, the precipitous Sabah election in 2020 arose due to a faction of the ruling coalition crossing the floor to join the opposition. Deprived of his majority, then-chief minister Shafie Apdal opted to call an election.[6] In a similar move, the 2021 Melaka election was held because a group of UMNO representatives withdrew their support for the sitting administration, thereby denying it a majority in the state assembly.[7] The Johor election in early 2022 was ostensibly called because the death of an assemblyperson meant the sitting coalition commanded only the slimmest of majorities.[8]

Second, elections can be held out-of-cycle when the federal government decides to hold its own polls early. National-level leaders often seek to hold elections in circumstances that are favourable to them, such as following budget launches or when economic tailwinds are particularly favourable. Of course, national-level political dynamics may also push for earlier polls. While the fifteenth general election could have been held as late as in September 2023, in October 2022 the Ismail Sabri-led administration ceded to pressure from the United Malays National Organisation (UMNO) to ride on the momentum generated by the Melaka and Johor state elections, maximize the political bounty from the October budget release, and avoid the worst of the monsoon season.[9]

However, the November 2022 date meant that state governments also holding their polls then would have effectively lost almost a full year of their terms. Despite the recommendation by the Prime Minister Ismail Sabri that all eligible state governments hold their elections along with the national government, only the BN-led state governments of Perlis, Pahang, and Perak opted to do so.[10]

Conversely, states led by the opposition grouping Pakatan Harapan (PH) and the Islamist party, Parti Islam Se-Malaysia (PAS) opted to go to their full terms.[11] Among other reasons, party leaders argued that they needed to prepare for the year-end flooding season.[12] Despite being led by different coalitions, the leaders of these six states were able to arrive upon a mutually-agreed schedule to dissolve their assemblies.[13] Following this, the Electoral Commission established 12 August as the common date for elections in Negri Sembilan, Selangor, Penang, Kedah, Kelantan and Terengganu.[14]

Faced with the cost of holding elections more frequently, as well as the potential for instability, there have been calls for measures to make the political system more structured.[15] There are arguments in favour of, and against simultaneous elections. While relatively few countries have mandated simultaneous polls and some actively discourage them, this reform is currently being debated in India, for example. This country’s constitutional similarities to Malaysia and the related discussions illustrate the complexities inherent in pursuing such a reform.

As Malaysia transitions towards a more dynamic and fluid political context, this issue will continue to simmer. This Perspective examines this issue in four sections. Following this introduction, the second will look at the costs and benefits of synchronous and asynchronous elections. The third section will look at the experience of other countries. The final section will look at how such a reform could work for Malaysia going forward.

COSTS AND BENEFITS

There are theoretical arguments for and against holding simultaneous elections.

The first argument in favour of simultaneous elections is cost. Holding national and state elections on the same day means that the election workers, physical infrastructure, and associated logistics are only used once. For example, the August 2023 state elections cost an estimated RM 420 million.[16] Had they been held alongside their national equivalent in November 2022, they would have added little to the RM 1.1 billion budget earmarked for those polls.[17] It is also important to note that the costs involved in organizing the elections are borne by the federal government. This means that state governments actually wield the discretion of when to hold elections but do not incur the associated costs.[18]

The second argument concerns political participation. National polls usually have higher rates of voter turnout than their state-level equivalents. Thus, holding elections simultaneously would increase the proportion of people voting for their respective state leaders.[19] This issue is of particular importance to outstation or overseas residents, who need to travel back to their constituencies to vote. Holding simultaneous elections would increase the probability of them voting for both levels of government, rather than requiring them to return more than once over a five-year cycle.

Analysts also argue that holding national and state elections simultaneously would concentrate political activity to one specific period, allowing life to return to normal soon after. Despite the Unity Government’s large parliamentary majority, many argued that the August 2023 state polls constituted a de facto referendum on the new administration. Consequently, much bandwidth and political capital were consumed in preparing for these polls, held a mere nine months after the November 2022 election. Furthermore, frequent elections, persistent campaigning, and prolonged periods of political uncertainty can undermine public trust in polls altogether.

Nonetheless, there are valid counterarguments to such an arrangement. First, it can be argued that forcing state governments to align their electoral cycles with national ones goes against the spirit of federalism, which seeks to incorporate different political, cultural, and social aspirations within one framework. Additionally, such a measure would deny autonomy and agency to state leaders. As with their national equivalents, states have their own political rhythms and dynamics, and a specific state administration may have valid reasons for holding polls at another time. Furthermore, holding elections simultaneously would reduce the salience of state-level political issues, as attention to national-level issues and debates would be prioritized.[20] Last, making politicians face more frequent electoral tests increases their accountability to voters.[21]

There is an additional argument that holding smaller subsets of elections makes the logistics more manageable. This is because the election machinery is not overly stretched and can focus on specific polls in different parts of the country.[22] This argument has more traction for demographically and geographically large polities, as large numbers of officials need to be mobilized and immense logistical challenges addressed all at once.[23]

Asynchronous elections can also provide crucial information for national leaders. Thus, state or provincial elections held in the run-up to national polls can yield crucial information for party leaders and strategists. Results can be used as a barometer for prevailing opinions and support for flagship policies. In addition, electoral weaknesses and swing voters can be identified to allow more focussed messaging during national campaigns. However, these elections can also create instability should support levels in key states drop or exacerbate existing electoral vulnerabilities.

INTERNATIONAL EXPERIENCES

Despite the theoretical advantages to holding concurrent elections, there are relatively few countries that currently have this electoral arrangement. South Africa and Sweden are two notable cases where national and subnational elections are held at the same time.

In South Africa, the electoral arrangements were the result of protracted negotiations between different ethnically-based parties that were concerned about issues such as voter turnout and representativity. The end result was an agreement that national and provincial elections would be held simultaneously in order to enable out-station voters to return to vote, but that voters would use different voting forms for each election in order to underline their different purpose.[24]

In Sweden, simultaneous elections have been credited with the country’s high turnout rates, particularly for subnational elections. That said, there have been calls to separate the elections in order for more media coverage of local issues. This is due to the perception that national-level issues tend to dominate elections.[25]

Most federal countries prefer to hold national and subnational elections on different dates and, in some cases, follow distinct electoral cycles. Australia and India are useful comparators for Malaysia, as they are both federal systems with a central government and state counterparts. Indeed, these two countries’ federal systems influenced the eventual structure adopted in Malaysia upon its independence. The Reid Commission, charged with designing Malaysia’s federal system, had constitutional experts from the United Kingdom, Australia, India, and Pakistan.[26]

Turning to Australia, its electoral system is specifically designed to ensure that federal and state elections do not coincide. Federal elections for the lower house are on a three-year cycle although, following the Westminster tradition, parliament can be dissolved and elections held earlier than this.[27] In contrast, most state elections have a fixed four-year cycle, with stipulated dates and days of the week when these elections must take place.[28]

While some states have held elections on the same day, federal elections have never been held concurrent with a state election.[29] There is, at present, no discussion about moving towards simultaneous elections in Australia, although extending federal government terms to four years is being debated.[30] Constitutional amendments are onerous to organize and require the bill to be passed in parliament and then decided via a national referendum.[31]

India offers another instructive comparator. Being a federal system like Malaysia, the Indian constitution provides state governments the authority to hold their own elections. During the first two decades following independence, the Congress party was in power at the centre and in most states and all shared the same electoral cycle. However, after 1967, elections began to be held out of sync, as first several state governments and then the central government dissolved early.[32] Today, with the federal government and 30 state and territory governments holding their elections, polls are a frequent event.

In a bid to promote national unity, reduce time and resources spent on campaigning, as well as lessen administrative costs, the Modi administration has been promoting ‘One Nation, One Election’. The arguments have focussed on cost efficiency, reducing the time spent on elections and campaigns, lessening demands on the armed forces who are mobilized to ensure safety and security, and reducing the salience of polarising discourse during campaigns.[33] The biggest pushback has come from state- or regionally-based political parties who argue that this measure would lessen the time and importance spent on local issues, and voters would be encouraged to vote the same way for national and state leaders. Others such as Congress leader Rahul Gandhi have argued that it goes against the country’s formation as a ‘Union of States’.[34]

Beyond the theoretical reasons for or against this reform, the practical challenges inherent in this reform are formidable. Homogenizing national and state elections would require curtailing the tenures of more recently elected state administrations and lengthening the terms of other administrations that had been elected earlier. However, while this could be done as a one-off exercise, unless the legislation bestowing autonomy to the state governments to call for their elections is amended, there is nothing to prevent them from reverting to their own cycles if they so wished.

Ensuring a more permanent arrangement would involve adding an elaborate framework of rules. These would govern how state administrations can be dissolved, as well as provide for the frequent use of President’s Rule or Emergency powers by the central government to run states for the intervening periods between when their assemblies are dissolved and when the next scheduled elections take place.[35] 

OPTIONS FOR MALAYSIA

How, then, does the scenario look for Malaysia?

In the short term, it is unlikely that the Unity Government administration will be able to persuade the leaders of the different states to adopt timings for elections that are against their interests. Internal party hierarchy can influence state administrations run by Pakatan Harapan, given that this coalition is at the core of the sitting government. However, given that it is not yet clear whether BN will remain a coalition partner with PH going into the next national election,[36] it is likely that BN will decide election dates for the states it controls based on its interests alone. This is even more likely for states run by the opposition coalition, Perikatan Nasional.

Consequently, the Unity Government has two options for addressing this issue. The first would be an ambitious structural reform along the lines being debated in India. This would require some amendment to the timing of a national election, perhaps along the lines of a fixed term. Such a reform would require a constitutional amendment. The Unity Government ostensibly has more than a two-thirds majority in parliament which could be used to pass this measure. However, this would only apply to the federal government. Amendments to provisions surrounding the dissolution of legislative assemblies are stipulated in the various states’ constitutions and changes would also require amendments to these foundational documents.[37] For any reform of this nature, it is likely that extensive preparation would be necessary, including studying electoral processes elsewhere.

In addition, discussion of political reform is currently more focussed on separating the offices of the attorney general and public prosecutor, as well as the extension of citizenship to children born overseas to Malaysian mothers.[38] Consequently, it is highly unlikely that substantial changes to the electoral system will be implemented ahead of the next round of elections.

This then leaves the more organic approach of having the state elections follow their current cycle. The table below has the dates of the most recent election for Malaysia and for the thirteen states, along with the latest date on which parliament or the respective state assemblies can dissolve. This date is five years from the day of the first parliamentary or assembly sitting. Following dissolution, elections need to be held within the subsequent 60 days.

State/nationalDate of last electionLatest date for dissolution
Sabah26 September 20208 October 2025
Melaka20 November 202127 December 2026
Sarawak18 December 202114 February 2027
Johor12 March 202221 April 2027
Malaysia19 November 202219 December 2027
Perlis19 November 202219 December 2027
Perak19 November 202219 December 2027
Pahang19 November 202219 December 2027
Negri Sembilan12 August 202326 September 2028
Selangor12 August 202319 September 2028
Penang12 August 202329 August 2028
Kedah12 August 202325 September 2028
Kelantan12 August 20235 September 2028
Terengganu12 August 202324 September 2028

Looking ahead, Sabah and Sarawak are among the earliest state elections to be held. The political configuration of these two states is quite different from the peninsula and the results of the elections are likely to be relatively self-contained. For Sabah, it is quite likely that the eventual ruling coalition at the state level will seek to align itself with the ruling coalition at the federal level. For Sarawak, past trends indicate that the coalition in power at the state level, Gabungan Parti Sarawak (GPS), is likely to remain in power. GPS is also a current member of the Unity Government and it is unlikely that there would be a reconfiguration of this relationship so far ahead of national polls.

This is not the case for Melaka and Johor, whose elections are due roughly one year and eight months ahead of the next general election. These two states are particularly important for UMNO, lying in the southern part of the peninsula, which is one of the last redoubts of Malaysia’s grand old party. Of the two, Johor is the most important, given the party’s founding in the state and traditional strong reputation of people from the state at the party’s apex.[39]

There will be several dynamics at the forefront when UMNO party strategists plot the ideal date for the various state elections. The first will be the popularity of UMNO party president Zahid Hamidi particularly among UMNO grassroots members. In Melaka and Johor, the party is exceptionally disciplined and able to mobilize contingents of supporters to turn up to vote. However, should Zahid’s leadership be contested or should there be signs of unrest within the party, the turnout levels could be affected. Indeed, party members could even use these polls as a way of signalling their discontent. An upset in one of these states would affect UMNO’s momentum in the run-up to the national election. 

Conversely, should the UMNO leadership feel confident, it could contemplate holding the Melaka, Johor, and even the Perak and Pahang state elections together. This would cost the latter states almost a year of their terms and would represent a huge gamble for the party. That said, solid wins across these states would put UMNO in a very solid position ahead, both of national polls and of inter-coalition bargaining in preparation for national polls.

Another option would be to delay elections in some of these states to cluster them. The way to do this would be to declare an Emergency in the states running on an earlier electoral cycle. This was done most recently in 2021, when the Sarawak state election was delayed from June to December 2021, due to the COVID pandemic.[40] That said, a plausible reason would need to be given, and consent obtained from both the King and the Prime Minister. This, in turn, would require delicate inter-coalition negotiation between PH and BN.

Relatedly, the other determining factor would be the relationship between PH and BN as they plan their electoral strategies for the next general election. Will they contest jointly or separately? From PH’s point of view, the Melaka and Johor elections would be held uncomfortably close to national polls if they were to run their full terms. However, any move to bring the national election forward to coincide with the elections in these states would entail sacrificing almost a year of the current term. This is unlikely.

Another option would be for the current schedule to run its course, with the Sabah, Melaka, Sarawak and Johor elections taking place in that order. Then, if the Unity Government and particularly Pakatan Harapan is feeling confident, they can bring the Penang, Selangor, and Negri Sembilan elections forward and hold them alongside the federal election. This would allow them to accumulate political capital and begin the second term on the front foot. Given that Perikatan Nasional is solidly in power in Kedah, Kelantan, and Terengganu, there will be little that the Unity Government can do to influence the timing of their state elections. However, in reducing the number of states holding their elections just after national polls, the ‘mid-term’ effect on the sitting administration (should it be elected) would be reduced. Conversely, should Pakatan Harapan feel unsure about its chances at the federal level, it may seek to allow the elections in the states it currently controls to proceed to their full term, thus spreading the risk across two sets of polls. It is also possible that different PH component parties have different preferences regarding the timing of the polls in the states they control.[41]

The end of BN’s dominance in 2018 has had multiple effects on Malaysia’s political system. The reduction of the coalition’s influence at both the federal and state levels has uncovered the underlying autonomy of state governments. Given the challenges inherent in adding more structure and predictability to the timing of elections, the most likely scenario is that out-of-cycle polls will remain a characteristic of Malaysia’s political system for the foreseeable future. Political leaders will continue to cross the river by feeling the stones and seeking to determine the direction of the wind. Now, however, the wind blows from different directions.

ENDNOTES


For endnotes, please refer to the original pdf document.

ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute   30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735   Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed.   Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission.  
© Copyright is held by the author or authors of each article.
Editorial Chairman: Choi Shing Kwok  
Editorial Advisor: Tan Chin Tiong  
Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha  
Managing Editor: Ooi Kee Beng  
Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng  
Comments are welcome and may be sent to the author(s).

 

2024/33 “A Study of the Emerging Electric Vehicle (EV) Supply Chain in Malaysia” by Tham Siew Yean and Neo Hui Yun Rebecca

 

The Malaysian Investment Development Authority (MIDA) has been tasked to promote and facilitate the investments needed to create the EV supply chain for the country. Screengrab of the Facebook Page of the Malaysian Industrial Development Authority at https://www.facebook.com/OfficialMIDA taken on 7 May 2024.

EXECUTIVE SUMMARY

  • Hybrids and Battery Electric Vehicles (BEVs) comprised a mere 4.9% of total four-wheeled vehicles sold in Malaysia in 2023. The government is, however, targeting to achieve at least 15% of Electric Vehicles (EVs) penetration in the country by 2030. This is in line with the Low Carbon Mobility Blueprint (LCMB 2021-2030), whose figures include hybrids and electric motorcycles. The basis for the target is unknown and therefore it is also unclear whether the target has been set at too high or too low a level.
  • The Malaysian Investment Development Authority (MIDA) has been tasked to promote and facilitate the investments needed to create the EV supply chain for the country.
  • EV investments in Malaysia over the last few years show a diverse and diffused pattern, covering different segments of the supply chain, and distributed across various states in the country.
  • While the emerging supply chain sees the entry of new automotive players spread across different states, the main foreign brands assembling in Malaysia, namely Toyota, Honda, and Mitsubishi, have yet to introduce battery electric vehicles (BEVs). These are instead still assembling at the Energy Efficient Vehicle (EEV) segments, which include hybrids.
  • The demand for EVs continues to be deterred by the unavailability of affordable BEVs and the slower than expected installation of charging infrastructure. The capital costs for the latter are relatively high, while EV adoption rates remain low.
  • This chicken-and-egg problem requires the government to intervene in the development of public charging infrastructure and to provide a clear roadmap for the transition from internal combustion engines (ICE) to BEVs, rather than just set aspirational targets alone.

ISEAS Perspective 2024/33, 9 May 2024

* Tham Siew Yean is Visiting Senior Fellow at ISEAS – Yusof Ishak Institute and Emeritus Professor at Universiti Kebangsaan Malaysia. Neo Hui Yun Rebecca is Research Officer at ISEAS – Yusof Ishak Institute. Both authors would like to thank Manggi Habir, Siwage Dharma and Cassey Lee for their comments on an earlier draft.

Download PDF Version

INTRODUCTION

Malaysia has announced an ambitious plan to boost Electric Vehicles (EVs) development within the country, proposing to achieve at least 15 percent EV usage of the country’s total industry volume (ITV)[1] by 2023, and 38 percent by 2040.[2] To facilitate this ambitious plan, the government formulated the National Automotive Policy (NAP) and the New Industrial Master Plan 2030 (NIMP 2030). The NIMP 2030 is an industrial policy document formulated to provide national strategic directions for industrial development. It mainly oversees all manufacturing and manufacturing-related service sectors, and facilitates collaboration between the government and the private sector.[3] The NAP, on the other hand, focuses more on the development of energy-efficient vehicles (EEVs) through specific strategies.[4] These include establishing a framework, roadmaps and blueprints for developing next-generation vehicles (NxGVs) or EEVs with some degree of automation, designed to make Malaysia a regional hub for NxGVs.[5] In that sense, the NAP’s primary aim is to develop various types of EEVs, while the NIMP specifically highlights the development of EVs as part of Malaysia’s industrial policy mission to push to net zero.

New investments are needed to create an EV ecosystem. This includes having multiple stakeholders who effectively cover the end-to-end value chain for EVs, such as power utilities providers, infrastructure developers, manufacturers (for example, original equipment manufacturers (OEMs), component suppliers etc), battery providers, policymakers, regulators, EV-related business associations, and researchers for research & development (R&D) purposes.[6] To facilitate investments in this new sector, the Malaysian Investment Development Authority (MIDA), which is the main government agency tasked to promote and facilitate investments in manufacturing and services in the country, has provided incentives such as Pioneer Status or Investment Tax Allowance for a list of promoted products in the EEV and NxGV supply chain. The products promoted include the critical components needed in the assembly of EEVs and NxGVs, such as electric motors, batteries, and battery management systems.[7]

According to MIDA, 58 projects worth RM26.2 billion were approved for EV and its related ecosystems from 2018 to March 2023.[8] This includes foreign marques establishing a presence to sell and distribute cars in Malaysia as in the case of Tesla, which has just established an office as well as an experience and service centre for the import of Tesla EVs that are assembled in Shanghai.[9] Tesla is also building a network of Supercharger fast-charging stations, with its latest installation in Pavilion Bukit Jalil, the sixth Supercharger deployment within six months of its debut in Malaysia.[10] These charging stations differ from the government’s network of charging stations, given that they are designed only for Tesla vehicles. That being said, the Malaysian government has stepped in to ensure that foreign investors like Tesla can contribute to the expansion of the EV ecosystem in the country. As part of the approval process for Tesla’s establishment, the company is required to set up at least 50 Superchargers within three years, with 30% of these being accessible to other EV brands.[11]

This article attempts to shed light on various little-known investments that are being made to support the entire EV supply chain, focusing on what and where these investments are located, as well as which parts of the supply chain these involve. This article will also elaborate on the key challenges faced in establishing an EV ecosystem in Malaysia.

EV SALES IN MALAYSIA

Four-wheel vehicle sales fell in 2019-2021 due to the Covid-19 pandemic, but recovered from 2021 onwards to grow to 774,600 units for passenger and commercial vehicles in 2023 (Figure 1). Sales of hybrids grew by 3.5 times while battery EVs (BEVs) grew from a low base of 278 to 10,159 from 2021 to 2023 (Figure 1). Demand picked up after the government provided various incentives, facilitated by the post pandemic economic recovery and the market entry of EV versions of popular premium cars like the BMW and Mercedes Benz as well as new and well-known EV marques like Tesla, BYD and GMW.[12] Be that as it may, in 2023, hybrids and EVs comprised a mere 4.9% of total vehicles sold in 2023. The government is targeting to achieve at least 15% by 2030, based on the Low Carbon Mobility Blueprint (LCMB 2021-2030), whose calculations include electric motorcycles. Although electric motorcycles were also provided purchase rebates[13] by the government, the uptake has been slow; these bikes have reportedly a market share of only 1.7%.[14]

The government has targeted to have 100,000 electric cars on the road, including 2,000 electric buses and 125,000 charging stations in the country by 2030. Achieving this depends on several factors including how fast the EV ecosystem evolves to meet the aspired demand.[15] Overcoming challenges such as EV’s affordability, and accessibility to charging infrastructure is important if the EV ecosystem is to advance.

Figure 1. Sales of Total Vehicles, Hybrids and BEVs, 2021-2023

Source: MAA and Chan 2024[16]

EMERGING EV SUPPLY CHAIN

The EV supply chain comprises several key components, starting with the sourcing and transportation of raw materials, followed by battery manufacturing, vehicle design and assembly, EV sales and dealership, and lastly EVs’ end-of-life management, such as battery recycling.[17] This differs from the supply chain of ICE, in having fewer mechanical parts, with the EV battery being the key component and representing over 40% of the total cost.[18] However, as the technology develops, the cost of EV batteries is also expected to fall over time.

Investments in Malaysia over the last few years show a diverse and diffused pattern. These cut across all segments of the supply chain, and are distributed across various states in the country (Figure 2). The following sections illustrate the various components of the EV supply chain, and the companies involved.

Figure 2. Manufacturing Plants for EVs in Peninsula Malaysia

No.Technology Partner(s)Local partner/companyName of companyProducts/Service
Kedah
1Stellantis (US)NoneStellantis (US)ICE, hybrids and EV Assembly plant
2Infineon and Siemens (Germany)NoneInfineon Technologies AG EV electronic chips
3Eve Energy (China)
*Unconfirmed site
NoneEve Energy Malaysia Sdn BhdBattery assembly
Penang
4Shenzhen Serious Technology Material Co. (China)n.a.INV New Material Technology (M) Sdn. BhdBattery separators
Enovix (US)NoneEnovixBattery for four-wheelers
5United E-motor (Indonesia)Antroniq (Malaysia)Antroniq Bhd. E-motorbikes
Selangor
6Volvo (Germany) Federal AutoVolvo MalaysiaAssembly of EVs
7China’s Sharkgulf Technologies Group Ltd, Blueshark (China)EP Manufactuing BerhadEP Manufactuing BerhadElectric motorcycles
8Tron Bradbury Energy (Taiwan)NoneTron Bradbury Energy (Malaysia) Sdn BhdCommercial EVs and energy storage systems (including Battery R&D)
9Thamlev (USA-based)NoneKulim Thamlev Mobility Sdn. Bhd (Malaysia)Electric motorbikes
10Graphene Synergy (Malaysia)Graphene Synergy R&D Berhad (Malaysia)Graphene Synergy R&D BerhadGraphene-based raw materials
Negeri Sembilan
11Samsung SDI Co Ltd (Korea)NoneSamsung SDI Energy Malaysia Sdn Bhd (SDIEM)Lithium-ion battery by 2025
12Chinese companies like Higer and Yu Tong and Hozon AutoJoint venture between Careplus Group Bhd and GoAuto Group Sdn Bhd with Chinese companies like Higer and Yu Tong and Hozon AutoNexV Manufacturing Sdn Bhd (NMSB)Assembly of Neta brand and other completely-knocked-down (CKD) operations
Melaka
13BAIC and Great Wall (China)EP Manufacturing Bhd (EPMB)EP Manufacturing Bhd (EPMB)Manufacture and assembly of four-wheel EEVs, EVs, and electric commercial vehicles
Johor
14United E-motor (Indonesia)
*Unconfirmed site
Antroniq (Malaysia)Antroniq Bhd. E-motorbikes
Pahang
15Mercedes Benz (Germany) DRB HicomMercedes Benz MalaysiaAssembly of EVs
16Graphjet Technology Sdn Bhd (Malaysia)Graphjet Technology Sdn Bhd(Malaysia)Graphjet Technology Sdn Bhd(Malaysia)Transform palm industry waste materials, palm kernels, into graphite and single-layer graphene.

Notes: n.a.: Not available

Source: Compiled by authors

COMPONENTS OF EV SUPPLY CHAIN

Minerals

Critical minerals like nickel, lithium, cobalt, manganese, rare earth, and graphite are needed for battery Electric Vehicles (BEVs). Indonesia, for example, has used its nickel reserves to develop an EV battery supply chain as well as the manufacture and assembly of EVs.[19]

Although Malaysia has some critical minerals such as rare earth elements (REE),[20] policies regarding its extraction, processing and usage are still being formulated. A Parliamentary Caucus for Critical Minerals was established in March 2024 to strengthen understanding of matters relating to critical minerals as well as advocate for a legal and regulatory framework to manage Malaysia’s critical mineral sectors.[21] Malaysia currently has domestic sources of nickel, cobalt, manganese, and graphite, which should ease the country’s efforts to develop its own EV supply chain.

Nevertheless, foreign investments in minerals have begun to emerge in Malaysia. From Figure 3, Sarawak in East Malaysia is venturing into graphite manufacturing, including synthetic graphite, in Bintulu, under a Memorandum of Understanding (MOU) between Sarawak Economic Development Corporation (SEDC), and Gallois New Energy Materials (M) Sdn Bhd.[22] The latter is a subsidiary company of the established Madagascar graphite miner, Gallios.[23] Although graphite is used for EV batteries, Sarawak has announced that it also intends to use it for the development of hydrogen fuel cells. The state is championing the use of such cells in public transportation.[24]

Figure 3. Manufacturing Plants for Mineral and Batteries in Sabah and Sarawak

No.Technology Partner(s)Local companyProducts/Service
1SK Nexilis (South Korea)KKIP (Kota Kinaablu Industrial Park) Sdn Bhd (Malaysia)Copper foil manufacturing for EV batteries
2Gallois New Energy (HK)SEDC Energy (Sarawak), Gallois New Energy Materials (M) Sd BhdGraphite plant

Source: Compiled by authors

Peninsular Malaysia is also pursuing the development of alternative mineral resources, namely graphene. In fact, a National Graphene Action Plan was launched in 2014, which focuses on the commercialisation of graphene, including for the use of lithium-ion battery anodes.[25] The most important development on this front is the emergence of an initially private local company, Graphjet Sdn. Bhd, in 2019. Graphjet has patented technology to produce graphene from recycled palm kernel shells, which can then be used for EV batteries, medical devices and home appliances.[26] The company was also identified as one of NIMP’s national mission-based projects or catalytic projects, at the launch of the plan in 2023.[27] It is building a factory at Malaysia-Kuantan Industrial Park (MCKIP) in Pahang, where it is expected to produce 10,000 tonnes of graphite and 60 tonnes of single-layer graphene annually.[28] In March 2024, the company went public on Nasdaq Global Market.[29] It also aims to be the leading source of graphite and graphene in the US market, thereby offering itself as an alternative source to China, which is the largest synthetic graphite manufacturer in the world.

Another local R&D company, Graphene Synergy R&D Sdn. Bhd, is also producing graphene and graphene-based materials at Teknologi Park Malaysia, in Selangor. It is exploring partnerships with producers and manufacturers.

EV Batteries

Malaysia also has investments in EV battery assembly for two and four wheelers as well as the manufacture of key components for EV batteries. The government has initiated various incentives to attract investors, including having tax break extensions for the production of various components in battery assembly.[30] For battery assembly, investments come from different countries such as China, the US, Taiwan, and South Korea. Their new manufacturing plants are primarily concentrated within Kedah, Negeri Sembilan, Penang and Sabah. Table 1 illustrates the investors involved in the development of EV battery components.

Table 1: List of Investors for EV batteries and its components

StateName of Investor(s)Details of investment
KedahEve EnergyManufacture lithium-ion batteries at a new factory in Kulim.[31]
PenangJoint-venture between Enovix Corporation (lithium-ion manufacturer listed in Nasdaq), and YBS International of MalaysiaManufacture silicon battery at Penang Science Park.[32]
INV New Material Technology (M) Sdn Bhd, which is a subsidiary of Shenzhen Senior Technology Material Co. LtdManufacture wet process and coated separators for lithium batteries, key components in ensuring battery safety
Negeri SembilanTron Energy Technology Corporation, in partnership with Bradbury Asset Management (Hong Kong) LtdPlanning to build a battery research and development facility at Malaysia Vision Valley
Samsung SDIBuilding a battery factory
SabahSouth Korea with SK NexilisProducing copper foil for EV battery materials manufacturer SKC

EV ELECTRONICS

Germany’s Infineon Technologies and Siemens will expand their facility in Kulim Hi-Tech Park to manufacture chips for different uses, including in EVs. These are crucial components in EVs and can affect their optimal and efficient performance.

Vehicle Assembly

Luxury cars with plants in Malaysia have already started assembling EV models locally. For example, Mercedes Benz in Pahang launched locally assembled CKDs in early 2023.[33] Volvo is also assembling EVs at its plant in Shah Alam and plans to export locally assembled EVs to other countries in ASEAN.[34]

There are also new vehicle players coming from new source countries. Stellantis from the US has acquired Naza Automotive Manufacturing Sdn. Bhd. and the latter’s manufacturing plant in Gurun, Kedah.[35] This company assembles various marques such as Peugeot, Alpha Romeo, and Citroen, and is reportedly planning to assemble ICEs, hybrids and BEVs for Malaysia and the regional market, using Malaysia as its ASEAN hub.[36] The targeted plan is to assemble the first EV in Malaysia by the second half of 2024, followed by the production of its BEV series (STLA medium vehicle) in 2025.[37] Tron Bradbury Energy (Taiwan) and Bradbury Asset Management (Hong Kong) Ltd, are also planning to assemble commercial vehicles at Port Klang.[38]

Locally assembled electric motorcycles are also emerging. The first is a partnership between Malaysia’s Antroniq, an investment holding company, and Indonesia’s United E-motor in Batu Kawan, Penang and Johor.[39] US-based Thamlev, which was started by a Malaysian, is assembling at Balakong in Kuala Lumpur.[40] A local parts and components manufacturer, EP Manufacturing Berhad is partnering with China’s Sharkgulf Technologies Group Ltd, to assemble, manufacture and distribute the latter’s Blueshark two-wheeler at Glenmarie in Shah Alam, Selangor.[41]

Two local companies have been given the license to assemble EVs with technology partners from China, in Melaka and Negeri Sembilan. While new players make an entry into the automotive market in different states, main foreign brands assembling in Malaysia, namely Toyota, Honda, and Mitsubishi,[42] have yet to introduce BEVs and are in fact still assembling at the EEV segments, including hybrids. According to Toyota, their stand remains at providing a broad range of engine options for their consumers, which includes petrol, diesel, hybrid, plug-in hybrid, and hydrogen. As much as electric cars can be a solution to carbon neutrality, Toyota believes that there is still value in investing in other fuel types such as hydrogen fuel cell, synthetic fuel etc.[43] This could account for their slow entry into the BEV markets, including in Malaysia.

CHALLENGES TO THE EMERGING SUPPLY CHAIN

Slow take-off of affordable EVs

EVs continue to remain out of reach for most Malaysians, primarily due to their high prices. According to MITI’s Franchise AP policy, the import of completely built-up (CBU) EVs is capped at the road price tag (OTR)[44] of RM100,000 to prevent dumping and to provide time for local car manufacturers, primarily Proton and Perodua, to develop their EVs for the local market. As much as the restriction aims to protect the interest of local players, it has nevertheless led to a slow introduction of affordable EVs in the market. This effectively means that the majority of EVs are priced much higher than petrol-powered vehicles (the cheapest EV in the market still costs around RM140,000[45]), a price unaffordable for most Malaysians. While Proton and Perodua have announced intentions to produce their own EVs by 2025,[46] no concrete plans have been released.

Difficulty in developing an EV supply chain that can support local assembly could be the reason for slowness in pushing out affordable EVs. Both Proton and Perodua will have to deal with the need to upgrade the capabilities of existing vendors or facilitate their exit since EVs use a smaller number of moving parts compared to ICE engines. Proton has reportedly 116 vendors[47] while Perodua has 120.[48] Handling the transition therefore requires careful planning to phase out existing suppliers and concurrently introduce new suppliers with the right capabilities. This is not such a simple matter in Malaysia since national car producers have to nurture localization, especially Bumiputera auto parts suppliers.[49] Moreover, there are also implications on the company’s approved permits (AP) if such localisation is not properly managed within their supply chain. A potential relaxation of Bumiputera equity requirement for AP qualification could hasten the development of a local EV supply chain.[50]

Apart from that, foreign suppliers for Proton will also have to shift their current capabilities to support EV assembly. To illustrate, Camel Power Battery (CPB) from China entered Malaysia and built a factory at Malaysia-Kuantan Industrial Park (MCKIP) in 2018. It is a key supplier of batteries for Proton.[51] To stay relevant in the transition and beyond, CPB will have to shift from traditional ICE batteries to EV batteries. The same goes for other suppliers. This could be difficult if the company is not equipped to manage the transition, given that moving into EV production means shifting from developing an electromechanical intensive vehicle (such as ICE) to an information intensive vehicle (such as EV).[52] This also entails demands such as software designing and supporting electronics, all of which require higher capital and technological advancement. High costs could deter companies from moving into this field, especially when the demand in Malaysia is still relatively low.

Nonetheless, both Proton and Perodua may be able to produce their own EVs in the coming years. Proton has been distributing the SMART EV for Malaysia and Thailand since 2023 and will be exploring the local assembly of this vehicle at its Tanjung Malim plant. Apart from that, Proton is planning to shift progressively to hybrid engines for existing models, while developing Range-Extender EVs (primarily driven by an electric motor but using a small combustion engine functioning as a battery generator) as a bridging technology before migrating to full BEVs from 2028 onwards (Figure 4).[53] Perodua is also reportedly planning to launch a new energy vehicle by end 2025, which may possibly be a hybrid rather than a full BEV.

Interestingly, two other local companies have also been given the license to manufacture EVs. Listed auto parts producer and distributor, EPMB, has ventured into EV assembly operations with technology from China’s BAIC and Great Wall. Another company, NexV has also announced local assembly of Neta cars produced by China’s Hozon Auto. While pricing is still not known at this juncture, the cars assembled by these two new EV assemblers with Chinese technology can pose serious competition to Proton and Perodua’s planned hybrid/EV cars.

Figure 4. Local companies planning to assemble BEVs, March 2024

Need for policy coordination

While Malaysia manoeuvres the shift in the supply chain, policy coordination is needed to shift the demand. Demand is largely affected by the slow uptake of charging infrastructure needed to reduce range anxiety, especially for intra-state travel. The government’s aim of having 10,000 EV charging infrastructure by 2025 may be quite challenging; by January 2024, only 1,500 have been installed.[54] Private investors are slow to invest as the capital costs are high; it is estimated that installing 10 rapid charging stations costs RM1.5-RM2 million. At the same time, demand is held back by the lack of affordable EVs.

Furthermore, the removal of general fuel subsidies which is to take place in 2024, is facing challenges due to lower than expected registration at the Central Database Hub (PADU), which is to provide information on who will be receiving subsequent targeted subsidies.[55] If the subsidies are given back as cash transfers to the targeted groups, as planned, it may not facilitate any shift towards the use of electric vehicles since these groups can still choose to use ICE, especially in view of the slow development of charging infrastructure and affordable EVs.[56]

There is essentially a chicken-and-egg situation; both supply and demand must move forward at the same time to accelerate EV adoption. Hence the government has to review the incentives for the private sector to participate in EV adoption, and increase public provision especially along the highways for inter-state travel.

The government should also reveal its EV policy for 2026 onwards. At present, it is not known what will happen to the import cap of RM100,000 after 2025. It appears likely that Proton and Perodua will be introducing hybrids as a transition to BEVs.[57] Should the government further extend the import cap, then the availability of affordable BEVs will be further delayed, and it will be difficult to overcome the chicken-and-egg problem.

CONCLUSION

Malaysia has planned to draw in foreign and domestic investments to build an EV supply chain in the country. The investment pattern that has emerged is diverse and diffused across different segments of the EV supply chain, stretching from minerals to the assembly of batteries and vehicles in the two-wheeler and four-wheeler markets.

Be that as it may, Malaysia still faces outstanding challenges for the EV market to take off. This can be attributed to the slow emergence of affordable EVs; the number of BEVs still remains small, though growing. The demand for EVs is also deterred by the slower than expected installation of charging infrastructure. This chicken-and-egg problem requires the government to intervene in developing public charging infrastructure and providing a clear roadmap for the transition from ICE to BEVs. Setting aspirational targets alone is not enough.

ENDNOTES


For endnotes, please refer to the original pdf document.

ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute   30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735   Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed.   Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission.   © Copyright is held by the author or authors of each article.Editorial Chairman: Choi Shing Kwok   Editorial Advisor: Tan Chin Tiong   Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha   Managing Editor: Ooi Kee Beng   Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng   Comments are welcome and may be sent to the author(s).

 

2024/32 “Assessing Prabowo-Gibran’s Victory: An Exit-Poll Aftermath Analysis of the 2024 Presidential Election” by Burhanuddin Muhtadi and Kennedy Muslim

 

Indonesia’s president-elect Prabowo Subianto (Left) speaks to the media with vice president-elect Gibran Rakabuming Raka (Right) as they arrive at the plenary session of the General Elections Commission (KPU) after his main rivals’ challenges to his election victory were rejected at the KPU office in Jakarta, on 24 April 2024. (Photo by Yasuyoshi CHIBA/AFP).

EXECUTIVE SUMMARY

  • Prabowo-Gibran’s landslide victory in the 2024 presidential election can be explained by two major factors: Jokowi’s high approval rating, and support from young voters (Gen Z and millennials).
  • Ganjar Pranowo’s failure to develop a political brand and a narrative outside the influence of Jokowi, together with his chosen strategy of attacking Jokowi, led to election defeat. This left him with little appeal outside his own PDIP base.
  • In turn, Anies Baswedan’s strategy of offering change appealed to anti-Jokowi voters. But given Jokowi’s high approval rating, this did not boost support for him to any significant extent.
  • The social assistance (Bansos) programme indirectly boosted support for Prabowo-Gibran by way of maintaining Jokowi’s high approval due to the fact that the recipients of Bansos were generally spread across the camps of all the three candidates.

* Burhanuddin Muhtadi is Visiting Fellow of ISEAS – Yusof Ishak Institute and Professor of Politics at the State Islamic University, Jakarta; and Kennedy Muslim is Senior Researcher at Indikator Politik Indonesia.

ISEAS Perspective 2024/32, 6 May 2024

Download PDF Version

INTRODUCTION

After a long and widely criticized vote recapitulation process, the General Election Commission (KPU) finally announced the results of the 2024 presidential and legislative elections on March 20, 2024. Prabowo Subianto-Gibran Rakabuming Raka were declared the winner with a landslide margin of 58.6%, beating rivals Anies Baswedan-Muhaimin Iskandar at 24.9% and Ganjar Pranowo-Mahfud MD at 16.5%.[1]

The KPU’s final vote tally surpassed the predictions of several leading Indonesian pollsters which had estimated Prabowo-Gibran’s victory in the range of 52-54%. How could someone with a track record of human rights violations, who had repeatedly lost elections, suddenly manage to defeat two strong rivals by such a large victory margin? Using exit poll data, this article investigates the factors that contributed to the overwhelming triumph of Prabowo-Gibran.

Survey trends ahead of the election had indicated a landslide victory for Prabowo.[2] Once Prabowo had picked Gibran as his vice-presidential candidate, his electability had continued to rise. Jokowi’s high approval rating throughout the election cycle favoured the candidates who promised to continue Jokowi’s programmes. Picking Gibran as running mate was a clear political cue from Prabowo to voters that he was the only candidate running in “Jokowi’s lane,” which he previously had had to share with Ganjar. From then on, support for Prabowo was accompanied by a sharp decline in Ganjar’s poll numbers. This trend continued until election day, February 14, 2024. Ganjar voters had migrated to Prabowo.

At the same time, Anies’ electability trend tended to stagnate. Even though he overtook Ganjar in mid-December 2023, Anies failed to increase support in Prabowo’s traditional electoral base, except in Aceh and West Sumatra. He also failed to attract Jokowi voters in Central Java, East Java and in the non-Muslim bases.

Prabowo also benefited from the presence of so-called ‘shy voters’. Almost all ‘shy voters’ who did not reveal their choice at the time of the survey gave their votes to Prabowo. One reason could be as predicted in the spiral of silence theory,[3] which asserts that when individuals notice that their opinion is shared by their like-minded community, for example, in social media like Twitter, they will in time become more confident and outward with their opinion. However, if the individual notices that his opinion is unpopular in the group, he will be more reserved (shy to reveal their opinion). People who backed Prabowo, especially middle-class people who knew Prabowo’s background and who were active on social media, especially Twitter, tended to hide their preferences before the election.

EXIT POLL ANALYSIS OF THE CANDIDATES

An exit poll conducted by Indikator Politik, a leading pollster, covering 2,975 respondents after they cast their votes across the country[4] helps us understand the demographic base of supporters of the three presidential candidates. In terms of gender, there is no significant difference between male and female voters who supported the three candidates. In terms of age, the younger voter group displayed greater support for Prabowo. On the other hand, the older voter group showed higher support for Ganjar. In contrast to previous trends where the participation of young voters tended to be lower than the national average, the findings of the Indikator exit poll showed that Generation Z and millennial voters’ participation rates were very high. This explains Prabowo’s convincing majority in the 2024 presidential election.

The Central Statistics Agency (BPS) recorded the proportion of Indonesian Zillennial (Gen-Z and millennial) voters at 53% whereas the exit poll recorded the turnout rate of the Zillennial voters at 58.7%.

Graph 1: Candidate support based on demographic variable (%)

In contrast to the widely held assumption that Gen Z voters tend to be progressive, recent studies show a tendency for them to be more conservative than expected in their political preference.[5] In this regard, Indonesian young voters seem to follow the global trend. Indonesia’s young generation, raised in an environment where democratic elections and the safeguarding of civil liberties are considered ‘normal’, may be taking for granted their democratic rights and are exhibiting reduced sensitivity towards the potential risks associated with anti-democratic and illiberal state policies.[6] Moreover, Prabowo’s smart campaign strategy, recasting him as a cute, cuddly—gemoy in Indonesian—grandpa and his signature gemoy dance, also connected well with the young.

Based on ethnic background, support for Prabowo was dominant in almost all ethnic groups, except for Minang voters, who tended to vote for Anies. Interestingly, Prabowo received huge support from both Muslims and non-Muslims. Meanwhile, Ganjar relied too much on non-Muslim voters, and was weak among Muslim voters. In contrast, Anies depended too much on Muslim voters and was very weak among non-Muslims.

Interestingly, the magnitude of support among NU members for Prabowo was much higher than among members of Muhammadiyah or other mass organizations. Prabowo’s prominence within NU circles is interesting because neither Prabowo nor Gibran has NU background. This was different from the cases of Muhaimin Iskandar and Mahfud MD who are closely associated with NU. Studies show that the mobilization of support by NU leaders, or Pengurus Besar Nadhlatul Ulama (PBNU)[7] and popular NU-affiliated figures such as the Governor of East Java Khofifah Indar Parawangsa, boosted NU support for Prabowo. Again, the Jokowi factor was at play here. Jokowi’s popularity and traditional support base at NU’s grassroots level and his patronage relationship with current NU Chairman, Gus Yahya, strongly influenced NU members to support Prabowo.

Regarding social class categories, Prabowo dominated all lower-, middle-, or upper-class segments based on education level or monthly income level. The assumption that Prabowo was only supported by lower educated groups, while Anies was supported by educated circles, proved to be incorrect. Overall, Prabowo supporters from educated circles were much more than those favouring Anies. This finding confirms that many from the educated middle class were not worried about Prabowo’s human rights record or the ethical controversies surrounding Gibran’s nomination process in the Constitutional Court. They were not especially concerned about dynastic politics either. The issue of political dynasty and democratic regression were voiced by intellectuals and civil society activists. Yet, these only resonated in a limited circle, even among the educated.

THE JOKOWI EFFECT AND THE IMPACT OF SOCIAL ASSISTANCE

The 2024 Presidential campaign narrative was overshadowed by the electoral referendum on Jokowi’s approval rating. The dominant campaign theme revolved around two messages, namely, continuity of and change in Jokowi’s programmes. In mid-2022, almost two years before election day, Ganjar was the frontrunner in the presidential race, ahead of Prabowo and Anies.  He was widely seen as Jokowi’s natural successor, given the President’s endorsement in public at the time. Along the way, voters eventually split between those satisfied with Jokowi’s rule and wanted continuity of his programmes, represented by Ganjar and Prabowo, and those dissatisfied with Jokowi’s rule, who gravitated toward a new oppositional camp symbolized by Anies. The opposition camp always faced a daunting challenge in enlarging their electoral base. This was due to the high popularity of Jokowi, who had approval ratings consistently above 75%.

Once Jokowi shifted his endorsement to Prabowo after his eldest son was chosen to be the latter’s running mate, Jokowi supporters shifted dramatically to support Prabowo. This situation suddenly left Ganjar and PDIP in a dilemma. They started attacking Jokowi for political betrayal and for intervening in the electoral process and sidelining democratic and ethical principles. Yet, their strategy was counterproductive. Ganjar’s poll number started to collapse as voters observed a growing rift between Jokowi and PDI-P. They then started to follow the electoral cue from Jokowi to support Prabowo; who had now suddenly become the sole candidate promising continuity of Jokowi’s programmes.

Graph 2: President Jokowi’s Approval Trend

Graph 3: Three-way Candidate Poll Trend

The strong reaction from Ganjar and PDIP against Jokowi also highlighted their failure to develop a political persona and narrative unique and apart from Jokowi.  Without Jokowi’s brand, Ganjar’s poll number crumbled as he was left without a clear campaign message or identity. In contrast, Jokowi and Prabowo had their own political identity and electoral support base. The latter had developed over the past two elections to transcend each their own political party, PDIP and Gerindra respectively. Ganjar failed to develop an independent political persona which could appeal to voters outside his own party base. Even Anies had managed to develop a clear political persona as a smart and religious figure, not to mention his reputation as the icon of opposition to Jokowi’s regime.

With more than 200 million voters spread across the archipelago, reaching those voters directly presented a daunting challenge for any candidate in any election. Each presidential candidate therefore had to have a public identity that stood out without the need for him to visit all constituencies physically. Prabowo positioned himself as Jokowi’s successor at a time when eight out of ten voters approved of Jokowi. Prabowo and Gibran were less active compared to Anies and Ganjar when campaigning. Instead, they spent more time as Minister of Defense and Mayor of Solo than campaign. This lack of footwork was more than compensated for by a solid coalition strategy and an effective social media campaign. Using TikTok, Prabowo’s campaign team managed to reach and win over many young voters. One of the turning points in Prabowo’s social media campaign came after one of the presidential debates, which showed Anies and Ganjar jointly attacking Prabowo’s track record. Prabowo’s poor performance during the debate was then effectively reframed by his social media campaign team to create a perception of nasty bullying by his opponents. This then garnered widespread sympathy among voters who watched the debate clip on social media.[8] An outpouring of support could be seen in the millions of new followers which Prabowo gained on his personal social media accounts, such as Instagram and Tiktok. This shows that political campaign are not always about appealing to rational voters; affective means are often very effective.

During the campaign period, Anies’ and Ganjar’s camps criticized Jokowi for initiating massive government social assistance or bansos programmes such as direct cash assistance (BLT) to influence the electorates.[9] To verify this, we asked respondents and their families if they had ever received government assistance (basic food assistance, cash social assistance (BST), direct business assistance (BLU), family hope programmes (PKH), and so on). Graph 3 shows that 45.6% of respondents reported that they had received social assistance, while 51.7% said ‘no’. For those who said ‘yes’, we asked if they continued getting help on a regular basis. On this question, 53.7% said ‘yes’, while 43.9% said ‘no’. Nonetheless, the exit poll results showed that the effect of social assistance was not directly visible since the recipients were spread quite evenly among the three candidate’s supporters (Graph 4).

Graph 4: Whether respondents have ever received bansos? (%)

Graph 5: The electoral effect of bansos (%)

This was also true for the ten kilogrammes of rice assistance programme.[10] 66% of respondents said that they were aware of the programme. Of those who knew, 45% admitted to receiving it. However, there was no significant difference between those who received and those who did not receive the assistance in terms of their choice of candidate (Graph 5). Kompas exit poll results also revealed similar findings, in which social assistance programmes did not significantly increase Prabowo’s electability.[11] Meanwhile, Prabowo’s electability was higher among those who did receive direct cash assistance (BLT)[12] compared to those who did not receive it (Graphs 6a and 6b). Overall, the majority of voters who did not receive BLT assistance still voted for Prabowo.

Graph 6a: The electoral impact of 10-KG rice assistance (%)

Graph 6b: The electoral impact of Direct Cash Assistance (BLT)

This does not mean that social assistance had no electoral impact at all. Graph 7 shows that the social assistance programs had direct effect in maintaining and even increasing Jokowi’s popularity as well as his approval rating. We found a significant positive correlation between bansos, 10Kg rice assistance and 3-month lump sum cash transfer (or BLT) and Jokowi’s approval rating. Similar significant positive correlations were also found between Jokowi’s approval rating and people’s support for Prabowo. Apparently, the effect of bansos for Prabowo’s electability poll happened indirectly, by way of Jokowi’s high approval rating. But it did happen.

Graph 7: President approval based on the recipients of bansos, 10KG rice, and BLT

CONCLUSION

From the beginning of the election cycle, the 2024 presidential election zeitgeist and narrative were set by Jokowi, who was seen as the most influential political actor on the Indonesian electoral scene. His constantly high approval rating, above 75%, throughout the election cycle benefited Prabowo-Gibran as the candidate-pair who claimed a continuity of Jokowi’s programmes and legacy. Another major factor contributing to Prabowo’s landslide victory over his two opponents also rested on his own effective electoral strategy in recasting his old strongman image in the last two elections into a more friendly image of a “cuddly grandpa”; this attracted many Gen-Z and millennial voters through social media platforms like TikTok. The exit-poll analysis clearly shows an overwhelming support  from young voters, which made up more than half the electorate, towards Prabowo-Gibran. The 2024 election also saw a high young voters turnout, unlike in  previous elections. This young voters turnout and their support for Prabowo-Gibran was evident in the exit-poll.

Despite some incidents of electoral irregularities, various exit-poll analyses show that Prabowo’s commanding lead and one-round victory were simply too convincing for any electoral fraud allegation. Controversies surrounding the mobilization of the state apparatus and the utilization of bansos to overturn the landslide election result are difficult to prove due to weak evidence. The most dominant factor in explaining Prabowo’s victory lies in Jokowi’s high approval rating. In this sense, we could argue that the 2024 presidential election was a “referendum” on whether Jokowi’s legacy should be continued or not.

ENDNOTES


For endnotes, please refer to the original pdf document.

ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute   30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735   Get Involved with ISEAS.
Please click here: /support/get-involved-with-iseas/
ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed.   Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission.  
© Copyright is held by the author or authors of each article.
Editorial Chairman: Choi Shing Kwok  
Editorial Advisor: Tan Chin Tiong
Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha
Managing Editor: Ooi Kee Beng  
Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng  
Comments are welcome and may be sent to the author(s).

 

2024/31 “Islamist Figures and Their Limited Role in Indonesia’s 2024 Presidential Election” by A’an Suryana

 

Indonesia’s president-elect Prabowo Subianto (L) and vice president-elect Gibran Rakabuming Raka (R) wave to journalists after the plenary meeting of the general election commission (KPU) announcing the 2024 presidential election in Jakarta on 24 April 2024. Under the upcoming Prabowo Subianto government, which begins its term in October 2024, Islamists are expected to have greater room to manoeuvre. (Photo by ADEK BERRY / AFP).

EXECUTIVE SUMMARY

  • This article discusses the role of Indonesian Islamists in the 2024 Presidential Election. Their role merits discussion because they have been impactful during various episodes of Indonesia’s political history.
  • This article argues that unlike previous elections, the Islamists did not play a significant role in the run-up to the 2024 Presidential Election.
  • Their dwindling social and political influence can be attributed to state repression under President Joko Widodo’s regime and the shifting of political alliances among nationalists and religious elites.
  • However, under the upcoming Prabowo Subianto government, which begins its term in October 2024, the Islamists are expected to have greater room to manoeuvre.
  • Under Prabowo’s regime, they are expected to be under less social and political pressure, judging from Prabowo’s history of working together with Islamists.

ISEAS Perspective 2024/31, 29 April 2024

*A’an Suryana is a Visiting Fellow at ISEAS – Yusof Ishak Institute and is a lecturer at the Faculty of Social Sciences, Universitas Islam Internasional Indonesia.

Download PDF Version

INTRODUCTION

This article discusses the role of Indonesian Islamists in the 2024 Presidential Election. Although Islamists are generally peripheral players in Indonesian politics, they have had significant influence on Indonesia’s social and political conditions, due to their religious legitimacy and their skills in mobilising the masses.

A case in point was their role in the anti-Ahok protests in the run-up to the Jakarta gubernatorial election in 2017. Despite being small in numbers, the Islamists rallied as the 212 Aksi Bela Islam Movement (Defending Islam Movement) and managed to mobilise Muslims from various backgrounds to stage a series of protests against Basuki Tjahaja Purnama (Ahok), former governor of Jakarta whom they accused of committing blasphemy against Islam. The protests, one of which was the biggest in Indonesian history, successfully prevented Ahok, who held a double minority status, a Christian and a Chinese Indonesian, from winning the election. At the same time, the protests also brought Habib Rizieq, the leader of the Islamic Defender’s Front (FPI) and a long-time fringe player in Indonesian politics, to the apex of his social and political status. The Islamists also played a significant role in instigating anti-Ahmadiyah and anti-Shia protests nationwide; these were rampant during the presidency of Susilo Bambang Yudhoyono (2004-2014).

“Islamists” in this article loosely refers to Islamic activists who operate outside the formal political structure. In other words, they do not occupy positions as leaders of political parties, councillors, legislators or state actors. Instead, they promote their ideas and interests through street protests and religious events. A substantial number of Islamists are leaders and members of FPI, Hizbut Tahrir Indonesia (HTI), and the Salafi movement.[1] According to scholar Greg Fealy, they aspire “to make Islamic law and values a central part of public life and the structure of the state.”[2] Unlike moderate Muslims, Islamists tend to support the establishment of Sharia law and reject the appointment of non-Muslim leaders in strategic leadership positions such as governorship or presidency (and vice-presidency). However, Islamists do not support acts of terror and, therefore, are distinct from extremist Muslims.

It is important to note that Indonesian Muslims are diverse in orientation. For the purpose of this research, the definition of Islamist used in this article excludes moderate Muslims of the modernist and traditionalist type (people who follow religious beliefs and practices of Muhammadiyah and Nadhlatul Ulama, respectively) as well as religious figures and organisations that support terrorism such as Jamaah Ansharut Daulah or other supporters of the Islamic State (ISIS).

Recent academic literature discusses Islamists resorting to populism or riding on blasphemy issues to gain religious legitimacy. Some scholars have argued that populism among Islamists arose due to deepening religious conservatism,[3] while others contend that this is instead due to experiences of social injustice.[4] Islamists have also used blasphemy to attain their objectives.[5]

This article seeks to expand the existing scholarship on the role of Islamists in Indonesian politics. This article will also discuss the future of Islamists in the post-Joko Widodo era as his term ends in October 2024. It argues that the Islamists’ loss in significance in the 2024 Presidential Election was mainly due to their social and political influence being weakened by state repression under Joko Widodo, and to shifts in political alliances among nationalists and religious elites.

REPRESSION OF ISLAMISTS UNDER JOKO WIDODO

The protests against Ahok in 2017 sharply increased Islamists’ political influence. The effective framing of the blasphemy case saw the National Movement to Safeguard the Indonesian Ulema Council’s Fatwa (GNPF-MUI) successfully mobilising thousands of Muslims to participate in the series of protests.

While the protests targeted Ahok, the ultimate aim of the Islamists was to undermine Joko Widodo’s popularity and power going into the 2019 Presidential Election.[6] Following the successful anti-Ahok protests, the Islamists formed the Persaudaraan Alumni 212 (the 212 Brotherhood Alumni) to sustain the momentum of the Aksi Bela Islam movement and uphold public support for them.

However, the political influence of the Islamists weakened when Joko Widodo began consolidating his power by controlling security apparatuses, building stronger ties with civil society, and expanding a coalition of parties to control seats in the parliament. Joko Widodo granted strategic security positions to at least two individuals with whom he had established relationships during his tenure as mayor of Solo between 2005 and 2012. Hadi Tjahjanto, the man Joko Widodo installed as the chief of the Indonesian military on 8 December 2017, was a military airport commander in Solo between 2010 and 2011, while Listyo Sigit Prabowo, chief of the Solo police between 2010 and 2012, was appointed as national chief of police on 27 January 2021.

Joko Widodo also obtained support from civil society by building partnerships with Nadhlatul Ulama, for example, by appointing Ma’ruf Amin, a senior NU cleric, as his vice-presidential candidate. Nadhlatul Ulama is Indonesia’s largest Muslim organisation whose moderate ideology stands in contrast to that of the Islamists. Good ties with NU is strategic as a vote-getter and the move proved hugely successful in the 2019 Presidential Election. Partnership with NU provided the government with an effective counterbalance to the power of the Islamists.

Joko Widodo also successfully expanded a coalition of political parties to have a firmer grip on the House of Representatives. At the beginning of his administration in 2014, he controlled 207 seats out of the total 560 seats in the parliament.[7] In 2022, he added more parties to the pro-government coalition, increasing the number of seats under his control to 471 seats – equivalent to 81.9 percent of the total seats.[8] He consolidated his power through a carrot-and-stick approach. On one hand, he offered governmental positions, including ministerial positions, to parties in exchange for their support.[9] On the other hand, he ensured that none of these positions were offered to opposition parties, including the Prosperous Justice Party (PKS). 

As Joko Widodo’s power base grew, the Islamists faced contrasting fates including legal prosecution. Their frontman, Habib Rizieq Shihab, was jailed for spreading fake news while another prominent figure during the 212 protest, Mohammad Al Khaththath, was arrested on treason charges. In addition, seven FPI executives were arrested on various charges including terrorism. Islamist organisations also became a target of state repression. HTI was banned in 2018, followed by FPI two years later. The criminalisation and the banning of these organisations weakened the Islamists, and explains their limited influence during the 2024 presidential campaign.

SHIFTING POLITICAL ALLIANCES

Another factor that has weakened the Islamists is the shift in political alliances. In the 2014 and 2019 presidential elections, Islamists had rendered their support to Prabowo Subianto. However, Jokowi successfully convinced pro-Prabowo Islamist supporters to switch allegiance to his camp. In 2014, only one Islamic party supported Jokowi, but the number increased to three in the 2019 election: the Nation Awakening Party (PKB), the United Development Party (PPP) and the Crescent Star Party (PBB). Some politicians who had been known to support Islamist causes also left Prabowo in favour of Jokowi, including Ali Mochtar Ngabalin, Kapitra Ampera, Yusril Ihza Mahendra and Zainul Majdi.[10] Their departure not only weakened the Islamists, it also made them vulnerable.

A political bombshell was dropped when Prabowo accepted Jokowi’s offer to join his administration and cast aside his Islamist allies while seeking political support from moderate Muslim figures and organisations such as Nadhlatul Ulama.[11] Islamists felt that Prabowo abandoned them, and called him “a traitor.”[12]

Going into the 2024 Presidential Election, support for Islamic parties was fragmented. The Prabowo-Gibran pair obtained support from PBB and the National Mandate Party (PAN), whereas the Anies-Muhaimin and Ganjar-Mahfud pairs received support from PKS and PPP respectively. As a result of the three-way race and the fragmented support from Islamic parties, identity politics became a non-viable weapon. This resulted in little demand among candidates to engage with the Islamists to mobilise the masses.

Initially, none of the presidential and vice-presidential candidate pairs sought support from the 212 Brotherhood Alumni. Anies-Muhaimin ultimately did, and on 21 November 2023, they signed an integrity pact with 212 on 14 December 2023. 

THE RISE AND DECLINE OF THE ISLAMIST POLITICAL BASE

The following paragraphs examine the loss in stature of some prominent Islamist personalities in the face of state repression and shifting political alliances.

Mohammad Al Khaththath,also known as Gatot Saptono, the Secretary General of Forum Umat Islam (FUI),played a prominent role as GNPF MUI’s secretary general during the protests against Ahok. However, after his arrest on 31 March 2017 on treason charges, he remained inactive. He was released in July 2017 at the request of his wife and an influential ulema. Mohammad Al Khaththath only appeared once in public on 10 October 2023 when he normatively called for the public and government to promote a peaceful election.[13]

Islamists who played a more active role, albeit with limited influence, in the 2024 Presidential Election were Habib Rizieq Shihab, Novel Bamukmin, Bachtiar Nasir and Yusuf Muhammad Martak. All, except Bachtiar Nasir, remain active in the 212 Brotherhood Alumni movement.

The controversial firebrand cleric, Habib Rizieq Shihab, was rather muted throughout the election.This founder ofFPI in 1998, who then expanded it into a national-scale organisation,   was known for leading his men in street protests for a variety of causes. Rizieq, who is now the chairman of the 212 Brotherhood Alumni’s governing board, is known for his combative and divisive sermons publicised at various religious and community events nationwide. His social and political career has experienced several ups and downs. He was imprisoned for provoking violence in 2008 and for defamation in 2003, but he enjoyed the peak of his Islamic activism career after successfully inspiring and mobilising people for the anti-Ahok protests between 2016 and 2017. His role made him one of the nation’s prominent political players as well as influential ulema. In 2018, a survey found that he was among the five most influential ulema in Indonesia.[14] His political career suffered a setback in 2020 after he was found guilty of spreading fake news and lying about the results of his Covid-19 test. He was released on parole in July 2022 which is to end in June 2024. During the 2024 Presidential Election campaign, he often appeared at religious events both offline and online. He appeared most frequently on the Islamic Brotherhood Television, the official media of the Front Persaudaraan Islam (Islamic Brotherhood Front), the organisation that replaced FPI. Perhaps bound by parole regulations, Habib Rizieq appeared less critical of Joko Widodo’s regime and mostly addressed general topics relating to the presidential election. He eventually expressed his support for Anies-Muhaimin. Unlike in past elections, Habib Rizieq did not organise or participate in any movement to support his preferred candidates.

Novel Bamukmin is the 212 Brotherhood Alumni’s deputy secretary general. He was active at FPI’s Jakarta chapter, but was fired from his position and had his membership revoked in December 2017, for internal insubordination. He joined the 212 Brotherhood Alumni in 2018 where he has since served as one of the executives in the Islamist organisation. He remained outspoken and often created social controversies through comments in the mainstream media. In 2023, he opposed the organising of Coldplay concert in Jakarta, accusing the music group of promoting Lesbian, Gay, Bi-sexual and Trans-Sexual (LGBT) interests.[15] He also often participated in street protests that promote the interests of FPI, and later, PA 212. Recently, he made public comments regarding the 212 Brotherhood Alumni’s political position in the 2024 Presidential Election. The organisation eventually supported the candidacy of Anies Baswedan and Muhaimin Iskandar. However, as explained above, the organisation’s power had weakened to such an extent that the candidate pair took their support reluctantly.

Bachtiar Nasir, a Salafist, is a seasoned activist. He is an educator, ulema and the secretary general of the Council of Indonesian Intellectuals and Young Ulema (MIUMI). He became widely known after assuming the position of chairman and guarantor of GNPF MUI in 2016. He was mainly responsible for formulating the protest agenda, ensuring the protests received sufficient funding and making sure that the protests ran smoothly without major incidents. After stepping down in 2018, Bachtiar faced several charges including treason and money laundering. However, his cases have remained stagnant; the police has neither continued their investigation nor officially closed the matter. In the run-up to the 2024 Presidential Election, he attended some huge events such as Gontor Islamic boarding school alumni’s declaration of support for Anies and Muhaimin, and the biggest outdoor campaign for Anies-Muhaimin in Jakarta International Stadium in North Jakarta on 10 February 2024.[16] However, he did not partake in organising these events, in stark contrast to the central role he played in organising the anti-Ahok protests.

Unlike other Islamists, Yusuf Muhammad Martak, the chairman of the 212 Brotherhood Alumni’s advisory council, is quite new to Islamic activism. He comes from a family of businessmen who have an interest in politics. His uncle, Faradj Martak, donated his house to Soekarno, Indonesia’s independence fighter and the country’s first president.[17] He spent much of his career as a businessman. His social and political career began when he served as MUI’s treasurer in 2015. He later joined the 212 movement and remains active in it. Representing the movement, he demanded that the Indonesia Election Commission cancel Joko Widodo-Ma’ruf Amin’s victory in the 2019 Presidential Election for electoral fraud. In the recent presidential election, he was one of the executives in the campaign team for Anies-Muhaimin.

The above cases show that a majority of the Islamists, except for Yusuf Martak, are  ulema who are also capable of mobilising the masses. The Islamists had been able to collaborate militant or conservative causes, as demonstrated in the anti-Ahok and anti-Ahmadiyah protests. Such collaborations had boosted their political power. However, they played a limited role during the 2024 Presidential Election following state repression by the Joko Widodo regime and the shifting political alliances among political actors.

CONCLUSION

To conclude, this article has explained that Islamists failed to play a significant role in the 2024 Presidential Election due to repression under President Joko Widodo and the shifting of political alliances. This was further proven by the limited role some Islamist key figures played, such as Rizieq Shihab, Novel Bamukmin, Yusuf Martak and Bachtiar Nasir.

However, under President Prabowo Subianto, the Islamists are anticipated to have more room to manoeuvre. It is expected that they will no longer face stiff social and political pressure from the state given Prabowo’s history of working together with Islamists. It is unlikely that Prabowo will resort to social and political repression. Prabowo is a secular nationalist, and hence, uninterested in Islamic activism. He is nevertheless pragmatic, and working together with the Islamists to further his agenda remains on the table. Despite setbacks under President Joko Widodo, the Islamists will continue to have influence in Indonesian social and political spheres.

ENDNOTES


For endnotes, please refer to the original pdf document.

ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute   30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735   Get Involved with ISEAS.
Please click here: /support/get-involved-with-iseas/
ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed.   Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission.  
© Copyright is held by the author or authors of each article.
Editorial Chairman: Choi Shing Kwok  
Editorial Advisor: Tan Chin Tiong
Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha  
Managing Editor: Ooi Kee Beng   Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng  
Comments are welcome and may be sent to the author(s).

 

2024/30 “The Power of a Vote in Malaysia: Malapportionment Under UNDI18, AVR, and MA63” by Kai Ostwald

 

A university student talks with her mobile in front of the United Malays National Organisation (UMNO) banner at a campaign rally on the eve of the 15th general elections in Bera, Malaysia’s Pahang state on 18 November 2022. (Photo by Mohd RASFAN / AFP).

EXECUTIVE SUMMARY

  • While often overlooked, electoral boundaries can strongly shape political competition and policy priorities. In Malaysia, the long-dominant United Malays National Organisation (UMNO) manipulated boundaries in ways that amplified the power of votes in its stronghold areas. This created significant discrepancies in the number of voters across electoral districts—known as malapportionment—and is strongly associated with distortions to governance and disillusionment with the political process.
  • The 2019 UNDI18 constitutional amendment lowered the voting age to 18 and introduced automatic voter registration. This increased the size of the electorate by a remarkable 40% between the 2018 and 2022 general elections. More recently, Anwar Ibrahim’s unity government has pledged to increase the parliamentary seat share of East Malaysia’s Sabah and Sarawak from the current 25% to 35%, despite the states already being significantly over-represented. Both these developments worsen the malapportionment in the country, potentially causing further political distortions.
  • Against the backdrop of already high levels of malapportionment, the impact of UNDI18 on malapportionment is more modest than most narratives suggest, though it is responsible for creating a number of problematic mega-districts. By contrast, implementing the proposed seat increase for Sabah and Sarawak would substantially worsen state and district level malapportionment. While this may be justified, given East Malaysia’s unique position in the federation—as well as a newfound political agency—there is little obvious justification for the ongoing discrepancies within Peninsular Malaysia, particularly the under-representation of Selangor.
  • A dominant narrative in Malaysia, voiced by numerous political elites in recent months, holds that reducing malapportionment is disadvantageous for ethnic Malays. This however reflects assumptions that are no longer valid following demographic developments and changes to Malaysia’s party system since 2013. To the contrary, in terms of electorate size, there are substantial similarities in the seats won by the Malay-majority Parti Islam se Malaysia (PAS) and their arch-rival Chinese-majority Democratic Action Party, while on average the largest seats were won by the Malay-majority Parti Keadilan Rakyat (PKR) and Amanah.
  • In short, there is no empirical basis for the ethnic-focused narrative. Recognizing this would facilitate constructive discussions around addressing malapportionment, particularly in light of the significant political reordering that a seat increase for East Malaysia would produce.

* Kai Ostwald is Associate Senior Fellow with the Malaysian Studies Programme at ISEAS – Yusof Ishak Institute. He is also Director of the Institute of Asian Research at the University of British Columbia, and Associate Professor in UBC’s School of Public Policy and Global Affairs.

ISEAS Perspective 2024/30, 25 April 2024

Download PDF Version

INTRODUCTION


The size and shape of electoral districts can profoundly impact political outcomes. Malaysia is a case in point: the strategic manipulation of district boundaries over decades played a key role in sustaining the electoral dominance of the United Malays National Organisation (UMNO) and its Barisan Nasional (BN) coalition partners prior to their 2018 defeat. This was achieved primarily through malapportionment—the unequal distribution of voters across electoral districts—which amplified the influence of voters in the BN’s stronghold areas, allowing the coalition to consistently secure parliamentary majorities well above their level of popular support.[1] 

While Malaysian politics have evolved dramatically since 2018, manipulated electoral districts continue to shape political representation and competition. Three key questions stand out. First, the UNDI18 constitutional amendment (in 2019) significantly increased the size of the electorate and appears to have exacerbated malapportionment, although to what extent and effect is yet unclear. Second, the BN’s defeat in 2018 decoupled East Malaysia’s party system from the Peninsula’s and catalyzed demands for greater East Malaysian influence in federal politics, including via an increase in parliamentary seats from the current 25% to 35% — which the manifesto of Prime Minister Anwar Ibrahim’s coalition pledged to do. If implemented, this move would further increase malapportionment, but it is likewise unclear to what extent. Finally, given the broader fragmentation of the party system, it is uncertain whether previous patterns of who benefits and who is disadvantaged from malapportionment still hold.  

This Perspective addresses those questions and reaches several conclusions. Malapportionment, which entails myriad costly distortions to politics and governance, remains high and would increase significantly through the introduction of new East Malaysian seats. While the unique position of East Malaysia may justify that, the extensive malapportionment in Peninsular Malaysia is less defensible. Importantly, constituency-level demographic changes and new coalition compositions mean dominant narratives around who benefits from malapportionment are now outdated and flawed. Updating the underlying assumptions provides an opportunity to address the most problematic boundary distortions.

THE POWER OF A VOTE

Malapportionment arises when there are disparities in the number of voters across electoral districts. The figure below illustrates the effect through two hypothetical districts: District A has one voter, while District B has eight voters. Since each district has one seat in parliament, District A’s voter has significantly more power to shape parliamentary outcomes than does a voter in District B. In short, malapportionment amplifies the influence of voters in districts with relatively few voters, while diluting the influence of voters in districts with relatively many voters. As a result, the preferences of District A’s voter are overrepresented, which contradicts the normatively important “one person, one vote” principle. By creating incentives for political leaders to focus resources and policy decisions on over-represented voters, this dynamic creates extensive political distortions and fosters clientelistic behaviours.[2] On the side of voters, perpetual under-representation is associated with political disengagement.

Malapportionment illustrated

During its decades in power, UMNO systematically reshaped Malaysia’s electoral process in ways that provided it and its coalition partners fundamental advantages (Lim 2002, Ostwald 2017). This included reducing the size of electoral districts in areas where the coalition enjoyed strong support, allowing it to inflate its parliamentary seat share relative to its vote share. The effect of this cannot be overstated: in the 2013 general election, for example, malapportionment allowed the BN to secure a 20% parliamentary seat advantage despite losing the popular vote by 4%. By 2018, decades of manipulating electoral boundaries left Malaysia with unusually high levels of malapportionment by global standards (Ong, Kasuya, and Mori 2017).[3]

The Pakatan Harapan (PH) government that took power in 2018 pledged extensive reforms, including of the electoral process (Ting and Horowitz 2023). Among its successes was the UNDI18 constitutional amendment that lowered the voting age from 21 to 18 and introduced Automatic Voter Registration (Weiss 2022). The measures were implemented prior to the 2022 general election, increasing the number of eligible voters by over 40%. A disproportionate number of these new voters were registered to districts that already had a relatively high number of voters, exacerbating the disparity in district sizes. The figure below illustrates this by arranging Malaysia’s 222 electoral districts from smallest to largest (in terms of registered voters) for both the 2018 (dark grey) and 2022 (light grey) elections. Several things are striking. First, the range in district-level electorate size has grown even larger: the largest district (303k) in 2022 had over ten times as many voters as the smallest (28k). Second, the disparities are significant even beyond the extremes: the 75th percentile district (117k) in 2022 is almost twice as large as the 25th percentile (62k). Finally, the largest increases in electorate size appear to be in districts that were already disproportionately large.

UMNO’s defeat in 2018 fundamentally altered the political dynamic between the peninsula and the East Malaysian states of Sabah and Sarawak. Specifically, major East Malaysian parties that once belonged to the BN left the coalition post-election and leveraged their seats to play a stronger role in federal-level politics. Since 2018, this has included more prominent cabinet positions, including the current Deputy Prime Minister from the Sarawak-based PBB. Notably, the manifestos from the three major coalitions contesting the 2022 election all outlined intentions to empower East Malaysia through such things as greater revenue sharing from petroleum exploitation and political empowerment (Lee 2022). 

The PH manifesto—from current Prime Minister Anwar Ibrahim’s coalition—went furthest in offering Sabah and Sarawak a 35% parliamentary seat share, a significant increase from the current 25%. This reflects demands from East Malaysian political leaders, who see the increase as integral to fulfilling the original terms of federation under the 1963 Malaysia Agreement (MA63), as well as critical to ensuring that the peninsula’s domination of politics is kept in check. It is unclear whether, how, and when this rebalance might occur, but there are signs of growing momentum in its favour.[4]

Given the political difficulty of removing seats from peninsular states, the path of least resistance is likely through adding new seats in East Malaysia. Procedurally, this can be done through a two-thirds majority parliamentary vote, which is theoretically attainable given the supermajority that Anwar’s unity government currently holds.

Assuming the number of peninsular seats remains unchanged, East Malaysia would require 33 additional seats to reach the 35% seat target. At present, the seat split between Sabah and Sarawak is 45% and 55% respectively; the electorate split is similar at 46.5% and 53.5% respectively. Assuming the new seats are divided at that proportion, Sabah and Sarawak would receive 15 and 18 new seats respectively. That would bring Sabah’s total to 40 and Sarawak’s to 49 seats. Given that existing seats in Sabah and Sarawak already tend to be smaller than their peninsular counterparts in terms of electorate size, the proposed seat additions would further elevate malapportionment.

There is real and growing urgency to this question, given the complex sequencing challenge that arises due to the redelineation exercise currently in motion for Sarawak and on the horizon for Sabah (in 2025).[5] The key question is how many seats the Electoral Commission is basing the exercise on. If it is the current number, then a resource intensive redelineation exercise would have to be re-conducted following any Parliamentary approval of new seats. If it is an expanded number (for example, the promised increase to 35% of the total), then the exercise assumes Parliamentary approval that has not yet been attained. This has further implications for redelineation of state-level seats, which are likewise highly malapportioned.[6] 

THE SIZE AND SCALE OF MALAPPORTIONMENT

Both the UNDI18 increase in electorate size and the proposed MA63-related seat increase impact malapportionment in ways that affect political competition and representation. We now turn attention to systematically measuring the magnitude of those changes, which provides insights into their effects.

The starting point is inter-state malapportionment, in other words, the unequal distribution of seats across Malaysia’s thirteen states and three federal territories. The figure below illustrates this, comparing inter-state malapportionment in the 2018 election (light grey), 2022 election (medium grey), and under the potential MA63 plan that increases East Malaysia’s seat share to 35% (dark grey). The figure shows how many seats above or below a state has relative to its share of the total electorate. For example, in the 2018 election, Terengganu had approximately 5% of Malaysia’s electorate but only 3.6% of seats, making its voters underrepresented in parliament: based on its electorate size, it had 3 seats too few, as indicated by the -3 value. In short, the figure captures how over- or underrepresented states are, relative to the size of their electorate.

Three states stand out. Sabah and Sarawak are already significantly overrepresented in parliament relative to their electorate size: Sabah had approximately 7 seats above what the size of its electorate called for in 2022, while Sarawak had 11 more. Should the MA63 proposal be implemented, that would increase to a surplus of 20 and 26 seats, respectively. To put that into concrete terms, the mean number of voters per district would fall from 67,575 (in 2022) to 42,235 for Sabah, and from 62,680 (in 2022) to 39,655 for Sarawak, relative to 106,040 for peninsular seats. That may be justifiable given their unique position in the federation and the many features that continue to make them distinct. There is little clear justification, however, for Selangor being so vastly underrepresented: it had 14 and 17 seats too few in 2018 and 2022 based on its number of voters; this would climb to a deficit of 22 seats should the MA63 proposal be implemented.[7] That amounts to a mean number of 167,175 voters per district in 2022. In short, the weight of one East Malaysian voter would be approximately four times that of a voter in Selangor.

There is substantial malapportionment of federal seats within the states as well. The figure below captures the number of voters in each district (left columns are from 2018, right columns are from 2022) for each state and federal territory. As is clear, the UNDI18 reforms and natural population growth increased the size of nearly all districts, but the effect—visible both as a general upward shift and the greater dispersion of seats—is more pronounced in some states than others. The growth of problematic mega districts is also evident. In 2018, only two districts—both in Selangor—had more than 150,000 voters. By 2022, twenty-five districts were above that threshold, now including Kedah, Perak, Negri Sembilan, Malacca, Johor, and a majority of Selangor’s districts.[8]

An international comparison helps contextualize the scale of malapportionment in Malaysia. The primary measure for malapportionment is the percentage of seats that need to be shifted from over-represented districts (with relatively small numbers of voters) to under-represented districts (with relatively large numbers of voters) in order to achieve an equal apportionment of voters across districts (Samuels and Snyder 2001). In short, higher values denote greater malapportionment. The figure below compares malapportionment in several high-income democracies—which Malaysia seeks to join—and regional counterparts to Malaysia in 2018, 2022, and under the MA63 35% proposal.[9]

As anticipated, the UNDI18 reforms did increase malapportionment between 2018 and 2022, but against the backdrop of already very pronounced levels, this increase is modest in scale. Implementing the MA63 proposal without addressing existing malapportionment would have a far more substantial effect. Regardless, the primary conclusion is that under all three conditions, malapportionment in Malaysia is considerably higher than in counterparts, with the exception of Myanmar (which based its electoral districts primarily on colonial-era administrative boundaries). This is significant, given the evidence from around the world that malapportionment has pernicious effects on a range of important matters including governance, economic development, conflict, and voter motivations.

POLITICAL CONSIDERATIONS

Malapportionment in Malaysia is fundamentally a political issue. The founding 1957 Constitution called for constituencies to contain a nearly equal number of voters, with some deviation—limited to no more than 15%—to account for differences in population density, means of communication, and community composition. That limit was relaxed in 1962 and repealed entirely in 1973, paving the way for the current significant disparities. Indeed, each redelineation before 2016 saw the addition of new seats, typically allocated disproportionately to areas under the BN’s control (Chacko 2019).

This pattern of redelineation contributed to the BN’s dominance and supported a (generally unspoken) view that malapportionment provides additional assurance of Malay-Muslim political dominance. Consequently, reforms that mitigate malapportionment are sometimes cast as ploys to empower ethnic Chinese, particularly the DAP. For example, in mid-2019, UMNO’s president Zahid Hamidi suggested the DAP’s interests in redelineation were driven by a desire to gain more seats, which would be unfavourable to Malays.[10] More recently, former Selangor UMNO chief Noh Omar warned while campaigning for the PN that redelineation would be favourable to the DAP, would reduce the number of Malay-majority seats, and might even lead to a DAP prime minister.[11]

The narrative that the DAP would be the sole beneficiary of more equal apportionment is not reflected in more systematic analyses. That is because today’s malapportionment reflects not current party strengths and alignments, but rather party strengths and alignments at the time of previous redelineations, which were conducted under BN domination. The main implication is that parties that were historically associated with the BN tended to win smaller seats in 2022, while parties historically opposed to the BN tended to win larger seats. Given the comprehensive fragmentation of Malaysia’s party system relative to the era of BN dominance, that no longer cleanly aligns with current coalition structures.

The figure below shows the electorate size of districts won by major parties (or coalitions in East Malaysia) in 2022. The middle line of each box indicates the median district, while the upper and lower bounds of the box indicate the 25th and 75th quartiles, and the dots indicate outliers. For example, the median district won by UMNO had approximately 68k voters (54k and 79k respectively for the 25th and 75th percentiles), while its largest seat has 133k voters.

The distribution is striking. On the peninsula, small seats were won primarily by UMNO and Bersatu, despite them being bitter rivals in 2022 campaigning. This reflects Bersatu’s status as essentially an UMNO-clone party, at least initially comprised primarily of former UMNO elites with existing ties in over-represented areas. By contrast, PAS’s median district had 106k voters (83k and 116k at 25th/75th percentiles), significantly larger than their bumiputera rivals and reflective of their historical position as an opposition party. In fact, excluding a small number of outlier mega districts, PAS and DAP districts are quite similar in terms of size, especially in comparison to the smaller UMNO, Bersatu, or East Malaysian districts. On the high end of the distribution are PKR and Amanah districts, both of which are not only historically oppositional to the BN, but also primarily Malay-oriented. This underscores a related key point: (typically large) urban districts are now often more diverse—and more Malay—than in earlier decades, further undermining the narrative that malapportionment is primarily an ethnic issue. In fact, when controlling for party and geographic factors, an OLS regression analysis finds no evidence for an independent effect of ethnic composition on district size.[12]

Two overarching conclusions emerge from this brief study. Malapportionment in Malaysia, which was already high from a comparative perspective, increased modestly through the 2019 UNDI18 constitutional amendment and would grow significantly greater if a proposed seat increase for East Malaysia is implemented. Given the many pernicious distortions associated with malapportionment, this is a concern for issues ranging from governance to development and political polarization. Even if the unique relationship between West and East Malaysia justifies the aforementioned increase, there is no clear justification for the considerable inter- and intra-state malapportionment on the peninsula. That leads to the second conclusion: given the fragmentation of Malaysia’s party system, the simple race-based narratives around malapportionment and redistricting are no longer empirically substantiated. On the contrary, a Malay-Muslim party such as PAS has potentially as much to gain from reducing malapportionment as does its Chinese-majority rival DAP. Given that the obstacles to reducing malapportionment are ultimately political rather than technical, updating assumptions about the potential effects of reform could generate the cross-party support to see it through.

REFERENCES

Bhavnani, Rikhil. 2021. “The effects of malapportionment on economic development”. PLoS ONE, 16(12): e0259150.

Chacko, Danesh Prakash. 2019. “Winning Elections by Rigging Borders? Barisan Nasional’s Brazen, and Failed, Attempt”. In Hutchinson and Lee (eds), The Defeat of Barisan Nasional: Missed Signs or Late Surge? Singapore: ISEAS – Yusof Ishak Institute.

Chai, James. 2022. “Bigger Constituencies, Lesser Political Clout”. ISEAS Fulcrum, no. 175.

Daxecker, Ursula. 2020. “Unequal votes, unequal violence: Malapportionment and election violence in India”. Journal of Peace Research, 57(1): 156-170.

Lee Hwok Aun. 2022. “Malaysia’s GE-15 Manifestos: Wading Through a Flood of Offerings”, ISEAS Perspective, no. 113.

Lee Hwok Aun. 2023. “Will UMNO’s Mutant Electoral Map Bite Pakatan Harapan?” ISEAS Fulcrum, no. 177.

Lim Hong Hai. 2002. “Electoral Politics in Malaysia: ‘Managing’ Elections in a Plural Society”. In Croissant, Bruns and John (eds), Electoral Politics in Southeast and East Asia, Singapore: Friedrich Ebert Stiftung.

Ong Kian Ming, Yuko Kasuya, and Kora Mori. 2017. “Malapportionment and Democracy: A Curvilinear Relationship”. Electoral Studies, 49: 118-127.

Ostwald, Kai. 2017. “Malaysia’s Electoral Process: The Methods and Costs of Perpetuating UMNO Rule”. ISEAS Trends, no. 19.

Ostwald, Kai. 2023. “The Politics of Malapportionment and Electoral Reform in a Dominant-Party Regime”. In Ting and Horowitz (eds) Electoral Reform and Democracy in Malaysia, Copenhagen: NIAS Press.

Ostwald, Kai, and Constant Courtin. 2020. “Malapportionment in Myanmar’s Elections: A Slumbering Menace”. Contemporary Southeast Asia, 42(2): 145-173.

Samuels, David, and Richard Snyder. 2001. “The Value of a Vote: Malapportionment in Comparative Perspective”. British Journal of Political Science, 31(4): 651-671.

Tindak Malaysia. 2023. “Persempadanan untuk Sarawak”, available at: https://www.tindakmalaysia.org/persempadanan/sarawak_redelineation

Ting, Helen, and Donald Horowitz (eds). 2023. Electoral Reform and Democracy in Malaysia, NIAS Press.

Washida, Hidekuni. 2019. Distributive Politics in Malaysia: Maintaining Authoritarian Party Dominance. Routledge.

Weiss, Meredith. 2022. “Can Youth Save Malaysia’s Democracy?” RSIS Working Paper, no. 337.

Wong Chin Huat. 2018. “Constituency Delimitation and Electoral Authoritarianism in Malaysia”. The Round Table, 107(1): 67-80.

ENDNOTES


For endnotes, please refer to the original pdf document.

ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute   30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735.  
Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/
ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed.   Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission.  
© Copyright is held by the author or authors of each article.
Editorial Chairman: Choi Shing Kwok  
Editorial Advisor: Tan Chin Tiong
Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha  
Managing Editor: Ooi Kee Beng  
Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng  
Comments are welcome and may be sent to the author(s).

 

2024/29 “Indonesian Mainstream Media in the Digital Age: Corporate Convergence, Low-quality News and Staff Exploitation” by Sofie Syarief

 

News as a business, especially in its most traditional press and broadcast models, has been suffering from shrinking readership and viewership, and thus becoming less profitable. Photo of man reading a newspaper taken in Jakarta on 19 December 2022 by ADEK BERRY / AFP.

EXECUTIVE SUMMARY

  • News as a business, especially in its most traditional press and broadcast models, is suffering from shrinking readership and viewership, and thus becoming less profitable. The digital revolution has ushered significant changes into Indonesia’s mainstream media landscape.
  • In response to the rise of digital media, mainstream outlets have implemented various strategies to remain relevant and competitive. Corporate mergers in the already highly oligopolistic media industry have created a less hospitable environment for smaller players. The bigger players are better able to create multi-media platforms to reach their audiences.
  • Faced with diminishing advertising revenues, the media conglomerates have been forced to cut costs in the creation of news content, such as in their consolidation of production facilities and pooling of resources, to be shared across their respective array of multiple platforms for distribution. One significant consequence of such consolidation efforts has been the cutting of jobs for journalists.
  • These changes have raised questions about a likely decline in the quality of journalism and news content. There seems to be a trend towards acquisition of news from common sources, with less scope for independent investigation or in-depth analysis and commentary. Responsible and good quality journalism is a matter of public interest, but it would be an uphill journey to muster the political will or funding to deliver the desired policy interventions.

* Sofie Syarief is a former Visiting Fellow at the Media, Technology and Society at ISEAS –Yusof Ishak Institute Singapore and a PhD student at Goldsmiths, University of London, UK.

ISEAS Perspective 2024/29, 18 April 2024

Download PDF Version

INTRODUCTION

Indonesia’s mainstream media landscape has always been oligopolistic and capital-intensive. The diversity of content needed to cater to its diverse citizenry has never been satisfactory due to the fact that the industry is controlled by a few powerful conglomerates (Nugroho, Putri and Laksmi, 2012). Contrary to earlier expectations that the growth of the internet would threaten the power of media moguls (Couldry and Curran, 2003), Indonesia’s digitalisation in the early 2000s enabled a select number of conglomerates to further consolidate the industry into a small number of multi-platform companies (Tapsell, 2017). The country’s media industry is currently controlled by eight politically-connected individuals – viz., Perindo Party chairman Hary Tanoesoedibjo’s MNC Group, Nasdem Party chairman Surya Paloh’s Media Group, Golkar Party politician Aburizal Bakrie’s Visi Media Asia, Minister of State Owned Enterprises Erick Thohir’s Mahaka Media, ex-minister Chairul Tanjung’s Trans Corp, Jakob Oetama and PK Ojong’s KG Media, EMTEK founder Edy Sariaatmadja’s SCMA Group, and Lippo Group heir James Riady’s B Universe (previously Berita Satu) (Syarief, 2022). But even these powerful conglomerates have had to adapt to more powerful trends disrupting the industry. This paper discusses how Indonesia’s media conglomerates have had to make significant adjustments to their business models in order to meet disruptive challenges from the digitalisation of media consumption and the rise of Big Tech social media platforms. 

Traditional media is no longer the primary source of regular daily news for digitally adept Indonesians.[1] According to the Reuters Institute 2022 Digital News Report,[2] roughly 88 per cent of surveyed respondents regard online media—including social media—as their news source. In addition, social media platforms are the news source of choice for 68 per cent of the population. At the same time, the percentage of respondents who indicated television and print media as their preferred news sources were 57 per cent and 17 per cent, respectively. Juxtapose these numbers with the estimation that 70 per cent of Indonesia’s online population is under the age of 35, most of whom are using social media platforms daily (Sinpeng and Tapsell, 2020), and we see an ageing population of traditional media consumers.

The rise of the digital has disrupted the traditional revenue model of the mainstream media industry. In 2021,[3] television—the most popular medium in the country—held the top spot as the preferred platform for advertising. Meanwhile, other forms of traditional media, such as print media and radio, only accounted for 5.5 per cent and 0.4 per cent of all advertisement spending, respectively. Moreover, the challenges for print media have been even more significant; as subscriptions and paywalls became increasingly important for these media outlets to generate revenue, they had largely not been successful in making the transition to online due to their inability to garner enough subscriptions—only 19 per cent of Indonesians are willing to pay for online news.[4]

This overall decline in consumer and advertising in traditional media happened mainly due to digitalisation. The grip of Google and Meta in the digital world was apparent by 2017 when both companies accounted for 84 per cent of global digital media investments.[5] This number was naturally followed by both receiving large shares of digital advertising, driving down the significance of the advertising middlemen, including the media. It also shifted the economic value of news from production to distribution almost entirely. While convergence enabled elements of the Indonesian mainstream media, such as news producers, to also become news distributors in the early wave of digitalisation, a massive reallocation of revenue from news/content creators to platform owners started to occur. Digitalisation saw search engines and social media becoming the go-to places to find news (Whittaker, 2020). Increasingly, mainstream media outlets in Indonesia have felt compelled to align themselves with the playbook of these giant digital platforms.

The challenges of digitalisation for Indonesia’s media conglomerates led to a significant shift within journalism, and financial rewards moved from the producer to the distributor. Given shrinking advertising dollars and the growing preference among the younger generation to consume their news via social media sites, Indonesia’s media conglomerates were compelled to transition from the production of longer, in-depth journalism to shorter-form content that could be more easily digested online. 

MEDIA CONVERGENCE

In addition, digitalisation paved the way for platform convergence. In responding to the fragmentation of advertising revenue from solely traditional media to traditional and online media, large media corporations have shifted their businesses into multi-platform companies by buying up smaller online outlets or creating new ones (Tapsell, 2017). This enabled them to disseminate their news publications via multiple content platforms, each usually containing similar information. In most cases, these common outlets are merged into one large newsroom for editorial, content or business purposes.

One of the most significant examples is MNC Media, Indonesia’s largest television network, which is a part of a multinational conglomerate known as the MNC Group. It is owned by tycoon and chairman of the Perindo Party Hary Tanoesoedibjo. MNC Media has been integrating its newsrooms since 2016, essentially merging the news-gathering divisions of their four television channels (RCTI, MNCTV, GTV, and iNews) into one large division. The news gathered by this division is then supplied to all MNC television channels, including their digital platforms (e.g. Okezone.com, Sindonews.com, and iNews.id). On one hand, this approach can be seen as efficient. But on the other hand, this practice essentially removes a significant number of media-related jobs. This creates a single low-cost news-gathering pipeline that produces news which then can be aired—and, by extension, sold to advertisers in various media outlets, be it national, local, or digital.

By creating an umbrella company for these various channels, deciding what news to cover and what needs to be aired or published becomes easier and more efficient as only one director of news is needed for all of these media channels. Other than having an integrated newsroom for all video-format channels, MNC created a one-for-all newsroom for their online text-based outlets, called MPI (MNC Portal Indonesia). In contrast, the Kompas Gramedia Group, owned by late journalists Jacob Oetama and PK Ojong, has been approaching the idea of convergence differently and is creating a system of content sharing among all media outlets under their corporation without actually merging the newsrooms.

Regardless of the means to achieve convergence, at the end of the day, when large corporations with large numbers of outlets streamline their news gathering and production processes, there is always the possibility that this comes at the expense of a diversity of content and perspectives. Newsroom integration decreases the diversity of perspectives that the different outlets used to have. One prevalent example of this is the practice of deploying one journalist to cover a particular event and then asking said journalist to send brief articles to the company’s online media sub-team, longer articles to their print media sub-team, as well as requiring them to do live reports for their radio or television broadcast media, sometimes without adequate training or preparation.[6]

In Indonesia, media convergence has also paved the way for mainstream media corporations to penetrate other businesses outside the media industry, such as acquiring communications and network infrastructure. Many among the eight key players in the Indonesian media landscape (Syarief, 2022) now possess their own television companies, online streaming services, internet service providers, telecommunications companies, other communication infrastructures, or all of the above.[7]

Such convergence of the media industry and the imperative to cut costs has led to massive lay-offs and the closing down of outlets. Within the past three years, several media companies have resorted to either of the two approaches. Koran Sindo (the only print newspaper of Hary Tanoesoedibjo’s MNC Group) ceased their operations on 15 April 2023, while Republika (owned by the current Minister of State-Owned Enterprises, Erick Thohir), Suara Pembaruan (owned by Lippo’s Berita Satu), Koran Tempo (part of the TEMPO Media Group), and Indopos (part of the Jawa Pos Group) closed down their print division to go fully digital.[8] Meanwhile, mass lay-offs have been carried out by various outlets such as Net TV (owned by the Indika Energy Group, a conglomerate focusing on mining), Berita Satu TV (part of the Lippo Group), and Kumparan (supported by venture capital investments from Djarum’s GDP and Go-Jek’s Argor). AJI, the Alliance of Independent Journalists, estimated that there were nearly 1,000 journalists, mainly from mainstream media, who were laid off in 2023 alone.[9] While the COVID-19 pandemic has had significant impact on the overall health of the media industry,[10] it has also been used as a cover for lay-offs due to business restructuring.[11]

Another common way of cutting costs within the media industry is to get rid of expensive news, especially if it is deemed as not bringing in enough of an additional audience. Indonesian news consumers are now seeing less and less investigative journalism and local news. Specifically for television channels, documentary programmes have generally been slashed. For example, Kompas TV and Trans 7 are currently the only two outlets with specific documentary programmes, and even so, the quantity of such documentaries has been reduced significantly over the past decade. Within the larger television industry, the common practice is to replace expensive programmes with non-news features, social media trends, as well as commentary programmes (especially talk shows designed to be heated debates) that are largely cheaper to produce and that attract more emotional responses from the audience. This approach is useful in boosting viewership and social media engagement, including clicks from clips that get uploaded on other platforms after the shows conclude on television.

THE DUMBING DOWN OF CONTENT: THE USE OF CLICKBAITS

One notable shift in Indonesia’s journalism landscape has been the prioritising of news that is more likely to generate clicks and engagement, even if it deviates from traditionally important news topics. This includes the rampant production of clickbait and sensationalist news articles—from which the traffic is then used as part of the sales pitch by these media companies to advertisers. A dataset of clickbait in the Indonesian language (William and Sari, 2020)[12] actually shows how this is used among 12 online media websites—eight of which are mainstream media outlets, the focus of this paper. As shown in figure 1, all outlets are not immune to the use of clickbait, but some utilise it more than others.

Source: Adapted from William and Sari (2020)

While clickbait is used to simply attract more traffic for most media, it is worth noting that for Kompas Gramedia, the largest media conglomerate in Indonesia and owner of Kompas.com and Tribunnews.com, clickbait may also be used to offset the cost of their ‘good’ journalism such as lengthy investigative pieces[13] and expedition features[14] in Kompas, or Kompas TV’s documentary programmes. While Kompas Gramedia is generally seen as one of the most trustworthy media groups in Indonesia,[15] one of their subsidiaries, Tribunnews.com—consistently in the top three of most visited media websites in Indonesia,[16] has been heavily criticised for their tendency to publish low-quality clickbait articles. According to the media studies and monitoring institute Remotivi, it would seem that Tribunnews.com has been tasked by their parent company (Kompas Gramedia) with “stealing” as many clicks as possible while the rest of the members of the group are instructed to practice responsible journalism.[17] What Tribunnews.com is essentially doing is producing sensationalist news with bombastic titles and headlines, from celebrity gossip to coverage of government policies. The consequences of this can be unexpected. Remotivi observed that during a series of terror attacks in Indonesia in the first half of 2018, Tribunnews.com’s publications ended up glorifying terror to muster clicks.

As views and clicks have become the new currency for online news media, TikTok has also become a platform of choice for the dissemination of news content. As of 2022, 90 per cent of Indonesia’s top news media publishers have routinely been uploading news content on TikTok, placing the country’s media on the top list of TikTok adoption followed by Australia (89 per cent), Spain (86 per cent), France (86 per cent), the UK (81 per cent), and the US (77 per cent).[18]

However, this trend has mainly put an emphasis on virality rather than quality. The general belief is that young people are more interested in entertaining news, or news stories that are packaged in more entertaining ways.[19] This comes from the industry’s own analysis of their broad social media reach/view reports, essentially showing that entertaining news and news packaged in a more accessible and entertaining manner are generally seen by more people without any further information on the consumers of the content. By combining the need of online media outlets to muster clicks and the tendency of reformatting news for social media, we now have the propensity of trivialising important stories.[20]

OTHER TUSSLES WITH BIG TECH

The latitude for Indonesian media conglomerates to produce independent content is further crimped by the powerful influence of Big Tech companies. The most notable policy from Alphabet’s Google to make sure they always have a say in the content that flows over news platforms is the creation of the Google News Initiative (GNI).[21] Funding from GNI is often worded as “no strings attached”.[22] However, what these programmes generally do is assist news media in developing digital skills, offering them various resources such as training, tools, as well as funding and sponsorship, allowing Google to act as a media patron (Fanta and Dachwitz, 2020). While these partnerships have helped many local media outlets develop digital business models and increase their revenue or even combat disinformation, the initiative essentially pushes news media outlets to produce content tailored for specific platforms, such as YouTube, using technical and content practices aimed at aligning headlines with Google’s search ranking algorithms. This makes it difficult to “sell” news that does not conform to these specifics.

Furthermore, as Google’s power over the media industry strengthens, digital media outlets in Indonesia are now facing harsh realities in trying to defy their playbook. In an attempt to protect digital news outlets from losing advertising revenue to online aggregators, the Indonesian government, as well as Indonesia’s Press Council and media associations, had been drafting a regulation, initially called the Publishers’ Rights, aimed at providing a level playing field between domestic news industries and digital platforms. In this draft, tech giants are deemed to be benefitting from using and displaying news content without providing proper compensation to publishers.[23] This move has been rejected by Google on the grounds that the regulation is unworkable because it will give power to non-governmental agencies to determine what content is allowed to appear online and which publisher is allowed to earn revenue from advertising, without seriously addressing the initial complaints from the news outlets.[24] Meta shared the same sentiment, threatening to block news content from Indonesia on all their platforms, such as Facebook and Instagram.[25] The draft was finally passed on 20 February 2024 as a presidential decree titled “Responsibility of Digital Platform Companies to Support Quality Journalism”. It necessitates the establishment of an independent committee to ensure the fulfilment of digital platform companies’ obligations to “give (their) best effort” in facilitating and commercialising news by press companies, providing fair treatment to press companies, and designing news distribution algorithms that support quality journalism. However, as much as it forces the cooperation and profit sharing between digital platforms and press companies, the decree does not spell out how and in what proportion these cooperation and profit-sharing arrangements will occur.[26] Moreover, a mere one day after the decree was signed, Meta said that it had no obligation to pay for news content posted by Indonesian publishers voluntarily.[27] While more details may emerge in the next six months during the formation of derivative regulations, it is quite apparent that everyone involved in the drafting of the decree are opting to be very cautious, so as not to offend these companies.

CONCLUSION

What needs to be addressed, then, is the urgency of finding new economic models that will allow mainstream media to thrive without compromising their journalistic quality. As it stands currently, large media companies might no longer serve the best interests of both the public and the media industry. Moreover, the Indonesian media’s dependency on advertising needs to be revisited, while other schemes such as public funding warrants serious consideration. Although public funding for journalism organised by the state might be a long shot—as Indonesia’s power structure might skew the outcome of it (Tapsell, 2020), limited public funding such as subscriptions or memberships needs to be promoted and woven into the media industry in order to ensure the media’s commitment to the public interest and, at the same time, create an avenue for media diversification by allowing small, independent media companies—with no chance of competing in the capitalistic media landscape—to flourish.

BIBLIOGRAPHY

Couldry, N. and Curran, J. (eds) (2003) Contesting media power: alternative media in a networked world. Lanham, Md: Rowman & Littlefield (Critical media studies).

Dwyer, T. (2010) Media convergence. Maidenhead: McGraw Hill/Open University Press.

Fanta, A. and Dachwitz, I. (2020) ‘Google, the media patron: How the digital giant ensnares journalism’. Otto Brenner Foundation. Available at: https://www.otto-brenner-stiftung.de/fileadmin/user_data/stiftung/02_Wissenschaftsportal/03_Publikationen/AH103_Google_EN.pdf.

Nugroho, Y., Putri, D.A. and Laksmi, S. (2012) Mapping the landscape of the media industry in contemporary Indonesia. Jakarta: CIPG and Hivos. Available at: https://cipg.or.id/wp-content/uploads/2015/06/MEDIA-2-Media-Industry-2012.pdf.

Singer, J.B. (2004) ‘Strange bedfellows? The diffusion of convergence in four news organizations’, Journalism Studies, 5(1), pp. 3–18. Available at: https://doi.org/10.1080/1461670032000174701.

Sinpeng, A. and Tapsell, R. (2020) ‘Sinpeng, Aim, and Ross Tapsell. “From Grassroots Activism to Disinformation: Social Media Trends in Southeast Asia.”’, in A. Sinpeng and R. Tapsell (eds) From Grassroots Activism to Disinformation: Social Media in Southeast Asia. Singapore: ISEAS Yusof Ishak Institute, pp. 1–18.

Souisa, H.Y. (2017) ‘Regulating Convergence: Challenges for Contemporary Media in Indonesia’, Asian Journal of Media and Communication, 1(1), pp. 35–50. Available at: https://doi.org/10.20885/asjmc.vol1.iss1.art3.

Syarief, S. (2022) ‘The Media Landscape in Indonesia: The More Things Change, the More They Stay the Same’. ISEAS, Perspective No. 2022/77. Available at: /articles-commentaries/iseas-perspective/2022-77-the-media-landscape-in-indonesia-the-more-things-change-the-more-they-stay-the-same-by-sofie-syarief/.

Tapsell, R. (2017) Media power in Indonesia: oligarchs, citizens and the digital revolution. London: Rowman & Littlefield International, Ltd (Media, culture and communication in Asia-Pacific societies).

Tapsell, R. (2020) ‘The media and democratic decline’, in T. Power and E. Warburton (eds) Democracy in Indonesia: from stagnation to regression? Singapore: ISEAS Yusof Ishak Institute (Indonesia update series), pp. 210–227.

Whittaker, J.P. (2020) Tech Giants, Artificial Intelligence, and the Future of Journalism. S.l.: Routledge.

William, A. and Sari, Y. (2020) ‘CLICK-ID: A novel dataset for Indonesian clickbait headlines’, Data in Brief, 32, p. 106231. Available at: https://doi.org/10.1016/j.dib.2020.106231.

ENDNOTES


For endnotes, please refer to the original pdf document.

ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute   30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735.  
Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/
ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed.   Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission.  
© Copyright is held by the author or authors of each article.
Editorial Chairman: Choi Shing Kwok  
Editorial Advisor: Tan Chin Tiong
Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha  
Managing Editor: Ooi Kee Beng   Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng  
Comments are welcome and may be sent to the author(s).

 

2024/28 “Thailand’s Ageing Society and Young Thais’ Changing Views and Expectations” by Panarat Anamwathana

 

Patients taking part in a group exercise while waiting to see doctors at Siriraj Hospital’s clinic for the elderly. Bangkok Post Photo/SEKSAN ROJJANAMETAKUL (Photo by Seksan Rojjanametakul/POST TODAY/Bangkok Post via AFP).

EXECUTIVE SUMMARY

  • Thailand is facing a historically low birthrate which could negatively impact the country’s economy in the near future.
  • According to recent surveys, the main causes of low fertility are people’s aversion to the high costs of care and pessimistic outlook on Thailand’s economic and political future.
  • Traditional cultural values also encourage adults and children to take care of their parents, making the working population even less likely to start families to add to their current care responsibilities. At the same time, young people are expecting that the responsibility of care will be shifting from private citizens to state-funded social welfare.
  • The government’s proposed solution is to increase access to fertility services. These measures are unlikely to fully reverse the trend of falling birthrates, as they do not address the root causes of the problem, namely the burden of care, and economic and political uncertainty.

* Panarat Anamwathana is Visiting Fellow at the Regional Social and Cultural Studies Programme at ISEAS – Yusof Ishak Institute.

ISEAS Perspective 2024/28, 15 April 2024

Download PDF Version

INTRODUCTION

One of the most imminent problems facing Thailand today is its rapidly ageing population. Depending on measurements, Thailand is either the oldest or second oldest country in Southeast Asia, with Singapore being the other contender.[1] Thailand’s birthrate has been steadily dropping for decades, hitting a record low at 1.16 children per woman in 2023.[2] According to the World Bank, Thailand is currently experiencing its highest age dependency ratio since 2000 at 44%.[3] That same year, the Thai labour force shrank for the first time, showing a higher number of retirees (aged 60-64) than new entrants (aged 20-24).[4] Indeed, demographer Prof. Dr. Kuea Wongboonsin estimates that if the current trend persists, Thailand’s population will be halved within the next 60 years. In 2083, the projected number of children will have fallen from 10 million to 1 million, the working population will decrease from 46 million to 14 million, and the number of elderly rise from 8 million to 18 million.[5]

This would have profound negative effects on Thailand’s economic outlook, from labour shortages, rising healthcare and pension costs, and falling productivity and aggregate demand. Thai scholars and economists have identified demographics as one of the factors affecting the country’s slow growth.[6] Similarly, the World Bank has forecasted that Thailand’s economy will only grow 3% over the next two decades, the lowest in ASEAN, due to low levels of private investment and the ageing population.[7]

The new government under Prime Minister Sretta Thavisin has described this demographic change as a “crisis,” and is proposing various health-related policies to increase fertility rates. This paper argues that these measures are insufficient to alleviate the crisis, and do not adequately address the main causes of the problem. According to surveys from 2023, major concerns behind people opting to be childless are the pessimistic outlook for Thailand’s economic and political future, coupled with the high costs of care driven by cultural expectations of filial obligations. At the same time, younger generations of Thais seem to worry less than their predecessors about who would take care of them in old age, reflecting a shifting perception of familial obligations and expectations of state support. A more effective means to increase fertility rates would be for the Thai state to meet young people’s higher expectations of government assistance, expand social welfare, as well as work to improve their perception of Thailand’s economic and political prospects.

WHY IS FERTILITY DECLINING?

People of child-rearing age in Thailand currently are the older Gen-Z (aged 18-27) and Gen-Y or millennials (aged 28-43).

Their decision to refrain from having children is primarily driven by political and economic concerns and is closely related to their pessimistic outlook on Thailand’s future.

These sentiments are clearly presented in opinion polls from late 2023. In a September survey conducted by the National Institute of Development Administration (NIDA), only 44% of childless adults in Thailand indicated that they want children someday. Among the 334 respondents who do not want children, the primary reasons cited by 38.32% were the reluctance to incur child-rearing expenses, and concerns about the social and political environment’s negative impact on their children. The second most common reason (37.72%) is that they do not want the burden of childcare, while 33.23% indicate a preference for maintaining their current lifestyle and personal freedom. Other respondents cite concerns about their own parenting abilities (17.66%), prioritisation of careers (13.77%), and health issues (5.39%) as contributing factors.[8] Other scholarly studies offer similar findings: the additional costs of having a child are the main reasons young people do not want children, coupled with poor economic outlook, demanding jobs, unemployment, and the spread of COVID-19.[9]

Childcare expenses stand out as one of the most important deterrents, which is unsurprising given the extremely high cost of raising a child in Thailand. In 2022, a Bank of Thailand study showed that the cost of raising a child from birth to finishing an undergraduate degree in Thailand was roughly 1.6 million baht per person, roughly 6.3 times higher than GDP per capita.[10] Furthermore, the “child penalty” on wages is significant, especially for women. While the gender wage gap in Thailand has been decreasing over the past few decades, workers with children experience salary setbacks. A 2019 study from the University of the Thai Chamber of Commerce found that, on average, men and women with children respectively earn 17% and 22% less than their childless counterparts. The main reason for this is the time constraints associated with raising young children.[11] It is thus understandable that many young people choose not to have children, as doing so would not only increase their expenses but also negatively affect their earnings.

The other main deterrent to having a child is people’s pessimism towards Thailand’s future. This sentiment is reflected in a separate poll from December 2023 from NIDA, which surveyed Thai people on their expectations of quality of life and political landscape. Regarding political stability, 45.65% of respondents anticipate that the situation would “still be chaotic,” 28.40% predict “things to be more chaotic,” and only 14.34% responded that it would be “less chaotic.” Thai people’s outlooks on the country’s economic future are mixed, with 35.65% anticipating improvement in 2024 and 31.22% responding that the economy will “remain bad.” Similarly, while 31.98% of respondents believe that their quality of life will improve in 2024, 31.76% feel that it will “remain bad.”[12] If young people perceive bleak economic and political prospects for themselves and the nation, they will likely refrain from having children. While these data offer meaningful insights into why Thai fertility is declining, they do not paint a complete picture. There is an additional cultural factor to this demographic change.

“WHO WILL TAKE CARE OF YOU IN YOUR OLD AGE?”: A CULTURAL SHIFT

When young people say that they will remain childless, they are often asked, “Who will take care of you in your old age if you do not have children?” However, Thai youths do not seem to be concerned about this question, which signifies a shift in young people’s perception of their duties and relationship to their families, as well as their changing expectations of the state.

This question is asked with the assumption that children would take care of their parents when they grow old. It is rooted in the Asian concept of filial piety. The traditional Thai value of katanyu katavedi has no direct translation in English but it conveys a deeper meaning of gratitude towards parents for their sacrifice and hard work, and implies an obligation to reciprocate. It is thus a reasonable expectation of the older generation that their children be katanyu katavedi and care for them financially, physically, and emotionally in their old age.

It has been remarked that Thailand “got old before it got rich”; the country’s GDP per capita is far lower than that of other ageing societies in Asia like Japan and South Korea.[13] Without readily available social security that requires a high GDP and the expectation of katanyu katavedi, parts of Thailand’s rapidly ageing society might not have thought about how to take care of themselves in their old age. The elderly’s plan after retirement was simply to rely on their children or the young people in their families. It is estimated that in Thailand, one working person is responsible for the care of 6 elderly people.[14] This has put further financial strain on the working population and offers further insights into the findings of NIDA’s surveys. Adding expenses for children on top of these financial obligations has been almost unthinkable, making many people less likely to have children.

Furthermore, many young Thai people have started to move away from this traditional expectation. Some young people have begun questioning katanyu katavedi. For instance, they argue that as it was their parents’ decision to have children, they should not be obligated to repay them, causing much alarm and confusion among the older population, who in turn label such questioning as “ungrateful.”[15] Furthermore, due to economic demands and competitive labour markets, many parents have had to leave their children in the care of grandparents in the countryside or babysitters in urban areas, further weakening katanyu katavedi. However, this does not mean that young people intend to abandon caring for their parents. Rather, much of the working population do not have the same anticipation to be cared for in their old age, lifting the obligation of katanyu katavedi from the children they may or may not have. This can be interpreted as the import of the Western conceptualisation of family and parental relationships, in which parents tend to encourage children to be independent, sometimes as soon as they are of legal age. Young Thais have begun to plan for their childless retirement, with options for retirement and pension plans, care homes, and elderly communities becoming more available.[16] This independent retirement plan aligns with young people’s mixed outlook for Thailand’s economic and political future. They do not need to incur the financial costs of children or worry about the negative impact of society on their children, while making arrangements to take care of themselves in their old age.

Yet, the issue of katanyu katavedi bears more social weight than just a generational shift away about familial relationships, but also informs us of what young people expect of their societies and governments. Some have argued that katanyu katavedi was a means for the state or society to push the responsibility of social care to private citizens. In an ideal world, katanyu katavedi would not be obligated as there would be an adequate system of social care and safety net for the old, sick, and vulnerable. Indeed, while no government policy can be a substitute for loving familial relationships, it can alleviate some of the burden on the working population and perhaps encourage them to have children if they environment was emotionally less obligatory and financially less stressful.[17]

STRATEGIES FOR INCREASING BIRTHRATES

The best approach to Thailand’s ageing demographic is for the Srettha government to alleviate care expenses, and enhance public confidence in the nation’s economic and political future. The Thai state is however promoting measures that do not engage with the root causes of the problem and which are likely to be insufficient.

The Ministry of Public Health (MOPH) has announced that increasing Thailand’s fertility rate as one of its top 12 priorities and one of the “national agendas.” Dr. Cholnan Srikaew of Pheu Thai Party, the Minister of Public Health, has stated that the government aims to increase the birthrate to 2.1.[18]

To assist in this national agenda, the government’s 13th National Economic and Social Development Plan[19] (2023-2027) includes three slightly vague measures to assist in this national agenda: First, to create an “enabling environment” to have children by offering financial assistance to raise and care for children. Second, to change the attitude and values of people to recognise that “all births are important,” as well as to support diverse forms of family. Third, to give comprehensive support to those who decide to have children, such as fertility services and offering assistance to promote the growth and development of children.[20]

The Thai state appears to be making progress in the latter two measures. The MOPH launched a “Give Birth, Great World” campaign and announced that it is setting up fertility clinics at public hospitals to promote having children, and offer consultancy services and infertility treatment.[21] There are currently 800 fertility clinics in Thailand, but most are concentrated in urban areas. The MOPH aims to expand this number and establish at least one state-funded fertility clinic in every province.[22] It has announced that it will provide cheaper and easier access to reproductive technology for single people who want to be parents, or couples who have trouble conceiving, such as intrauterine insemination (IUI) and in-vitro fertilisation (IVF). The government is also working on legislation to make these services available to members of the LGBTQIA+ community.[23] Thailand is on track to pass a marriage equality bill within the year, expanding the definition of “family” and making it easier for people of diverse sexualities to have children.[24]

While these efforts are commendable, especially to make fertility services more accessible to a wider range of people, they are unlikely to reverse the trend of falling fertility rates. It is true that these services might be beneficial to certain subsets of the population, such as older individuals or those who are struggling to conceive, but the main concerns for people who decide against having children are not health related, and thus these measures do not address the causes of the fertility crisis. The government should instead focus on the first strategy of its development plan to create an “enabling environment” by alleviating some of the burden of care and improving the country’s economic and political stability.

This argument has been echoed by academics. For instance, Assoc. Prof. Napaphorn Atiwanichayapong argue that “social factors in all aspects” that have accumulated for many years are now the causes for declining fertility, including political instability and a highly competitive capitalist environment that has produced a poor economic outlook. To make young people more optimistic about society and their futures, the government will need to make “comprehensive” changes to Thailand and many of its systems.[25]

Expanding social welfare programmes and state-mandated benefits for both child and elderly care would directly address many of the deterrents to having children. In March 2024, the Thai parliament accepted a proposal to expand maternity leave to 180 days and paternity leave to 90 days. In the same session, however, it rejected a labour protection bill that would limit working hours to 40 per week, increase minimum wage to match inflation, allow for 15 days of leave per year for familial care, and mandate that workplaces accommodate breastfeeding mothers.[26]  Increasing the minimum wage could have been the first step towards alleviating the financial strain on the working population, as well as improve their outlook for their own well-being. Similarly, the 15-day leave especially could have helped the Thai labour force care for their aging parents and family members. After the vote, many Thai netizens expressed their frustration with the Thai state for campaigning for people to have more children but remain unwilling to expand social welfare or assist working mothers. Some even say sarcastically that “extinction” seemed like a good option if the state failed to provide necessary benefits, while others imply that not having children is an appropriate punishment for a state that cannot protect or help its people.[27] Thai parliament’s actions are seemingly out of step with young people’s changing perception that the state should expand social welfare to support vulnerable members of society, rather than relying on personal obligations such as katanyu katavedi.

Another possible avenue would be to enhance public’s confidence in Thailand’s economic and political future. As it is, the Sretta government has inherited a stagnant economy due to the COVID-19 crisis, low exports, diminished private investment, and tourism spending below initial projections.[28] The government is still struggling to overcome legal and political hurdles  to deliver its flagship stimulus policy of giving certain Thai citizens 10,000 baht (roughly 280USD) in digital wallets.[29] At the same time, political tension in Thailand escalated after the coalition government was formed under Sretta.[30] More charges are being brought against activists and academics.[31] Move Forward Party, the main opposition party that won the most votes in the 2023 general election, faces dissolution by the constitutional court.[32] Expanding medical access is largely insufficient to increase birth rates in the face of such low levels of confidence in the economy and  political instability.

CONCLUSION

Without a doubt, Thailand will face an economic crisis if the trend of falling birthrates is left unchecked. However, the Sretta government does not seem to fully grasp the root causes of this problem. Their proposed policies of making fertility care more accessible, while commendable and could make a difference to the lives of poor or LGBTQIA+ people, are largely going to be ineffective in increasing fertility to meet its current goals. The majority of people are not deciding to be childless because they have no access to fertility treatment, but because they cannot afford the additional expenses of childcare and because they feel pessimistic about their future.

Understanding the cultural context and changes in expectations towards familial relationships and the state’s obligations towards its citizens is a good first step. Poll data and academic studies all concur that expanding social welfare to assist in the costs of caring for both infants and the elderly would alleviate some of the burden borne by Thailand’s working population. The state should also work to convince young people that it can improve the Thai economy and political stability, and create a good environment for future children. Without these measures, Thailand can expect the falling fertility rate to only worsen.

ENDNOTES


For endnotes, please refer to the original pdf document.

ISEAS Perspective is published electronically by: ISEAS – Yusof Ishak Institute   30 Heng Mui Keng Terrace Singapore 119614 Main Tel: (65) 6778 0955 Main Fax: (65) 6778 1735.  
Get Involved with ISEAS. Please click here: /support/get-involved-with-iseas/
ISEAS – Yusof Ishak Institute accepts no responsibility for facts presented and views expressed.   Responsibility rests exclusively with the individual author or authors. No part of this publication may be reproduced in any form without permission.  
© Copyright is held by the author or authors of each article.
Editorial Chairman: Choi Shing Kwok  
Editorial Advisor: Tan Chin Tiong
Editorial Committee: Terence Chong, Cassey Lee, Norshahril Saat, and Hoang Thi Ha  
Managing Editor: Ooi Kee Beng   Editors: William Choong, Lee Poh Onn, Lee Sue-Ann, and Ng Kah Meng  
Comments are welcome and may be sent to the author(s).