This article first appeared in Forum, The Edge Malaysia Weekly on August 30, 2021 - September 5, 2021

One morning, I got an email greeting from the Inland Revenue Board for “Hari Kebangsaan & Hari Merdeka 2021”. Since I shall be 75 this month, it reminded me that the only certainties in life are death and taxes.

I was too young in school to understand the significance of Merdeka Day on Aug 31, 1957, in Malaya, but on Sept 16, 1963, I was a teenage schoolboy present at the Jesselton (today Kota Kinabalu) town padang to welcome Malaysia Day. Now, many years later, I still remember vividly how glorious it was to be independent and free to set our own future.

Merdeka means freedom and independence. Freedom from colonialism meant that we became free to choose, but we must choose wisely. Today, the generation born at the time of Merdeka are already retiring. Those who fought for our independence have faded from the scene. Those who built the country post-independence must now reflect on whether we have done well, or have we left the new generation with more problems? Merdeka Day is as good a time as any to take stock of the meaning of Merdeka and nationhood.

Condivergence is a term I coined to signify the simultaneous convergence and divergence of complex systems. Nations are open giant complex systems, because a complex change today is the only constant. Nothing stands still, and given the complexity of everything today, we can take nothing for granted.

Who would have predicted that in the last fortnight, the mighty Americans would be leaving Afghanistan, defeated by the Taliban? Or that investors in the Chinese stock market would lose over US$1 trillion (RM4.2 trillion) from regulatory announcements on tech platforms? Or that we would have a new prime minister, the fourth since 2018?

Malaysia today is far different from the time of Merdeka on Aug 31, 1957. To paraphrase Charles Dickens, we are enjoying the best of times, and the worst of times.

In 1957, Malaya was fundamentally a colonial economy based on exports of rubber and tin. Malaya was the largest dollar earner in the declining British Empire. After the Second World War, the British Labour Government decided that it could no longer hold onto the empire and decided to allow India and other colonies to become independent members of a British Commonwealth. On Sept 16, 1963, Sabah, Sarawak, Singapore and Malaya converged to form Malaysia, but Singapore diverged to form an independent city-state in 1965.

Today, Malaysia is a modern, diversified economy with agriculture production down to 8.2% of the economy, whereas manufacturing and electrical engineering exports account for half of the total exports while services account for 55% of GDP. Malaysia managed to increase its per capita income from US$227 in 1961 to US$11,217 in December 2019 — very close to the threshold of the World Bank’s high-income status of US$12,535.

In terms of world GDP ranking, Malaysia is 35th in the world at US$402 billion, just behind Hong Kong and just ahead of Singapore — both in the high-income status with GDP per capita of US$53,230 and US$66,457 respectively.

Our export orientation has made us one of the most open economies in the world with a trade-to-GDP ratio averaging over 130% since 2010, with 40% of jobs related to exports (World Bank). With a population of 32.7 million, Malaysia is ranked 43rd in the global population ranking, but 27th in terms of Global Competitiveness (World Economic Forum 2019). Malaysia was ranked as high as 16th in 2016. Our constitutional monarchy has served us well. For a small country, we do punch above our weight.

The country is blessed with diversity in population, a lot of natural resources and biodiversity, good geographical location, advanced infrastructure, a lot of human talent and warm weather without extreme volcanic or typhoon threats. Investments in education and health have meant that even though we have been devastated by the pandemic, our dedicated frontline workers in health and security have shown that they are equal to the best in the world.

In the last 50 years, thanks to affirmative action policies, we have successfully reduced extreme poverty and created a strong middle class, but inequality remains high relative to other East Asian countries. The World Bank overview for Malaysia states that there is widespread perception of the poor being left behind. The government has gradually removed broad-based subsidies and focused more on targeted measures to support the poorest 40% of the population (B40). This group was particularly badly hit by the pandemic shock of 2020.

Taking a 30,000ft picture of Malaysia therefore shows a country located in a high-growth zone of the world, at the junction of the busiest trade routes, living in peace and security. This is a far cry from many other former colonies in Africa and Middle East, whose borders are now crumbling with civil conflict, refugees, burdened by fractious politics, failing governance, and now, devastated by the pandemic.

We have to count our blessings that as part of Asean, the group is projected to become the fourth largest economic entity by 2030, with a population of 600 million and US$6.7 trillion in GDP — larger than either Germany or Japan individually by then. We have a young population that is highly mobile and tech-oriented, and could play a critical role in leading the world in innovation in green and inclusive products. Positioned properly, Asean could become a major global pivot, deciding the fate of the Great Powers. Malaysia looks poised to be in a sweet spot of global opportunity.

Against these positives are also areas of concern. Politics is now highly volatile and contentious, with very narrow electoral margins, reflecting the fact that social opinions are polarised over a whole range of issues. Much of these relate to race and religion, but also to education, the quality of life and the meaning and identity of being Malaysian. We are rightly proud of our history and our present, but it is to the uncertain future where the biggest contentions lie.

At the heart of the current debate is: What is the future of Malaysia that all Malaysians, irrespective of ethnicity, religion, age or gender, can identify with?

We must be honest that the issues of identity, culture, religion and statehood are now universally debated, not just in Malaysia. The great United States of America today seems disunited with very polarised debates over race and class. So are former colonies in Africa, like South Africa, Nigeria, Libya and Ethiopia.

Tribal differences threaten the integrity of nations from Afghanistan to Myanmar. Each nation-state confronts the tensions of modernity, in which technology, climate change, geopolitical rivalry, demography, urbanisation and social justice are all changing so fast that no single country is able to cope satisfactorily with such change.

In this age of pandemic, no one feels secure. Public aspirations have exceeded the ability of governments to deliver, causing distrust and confusion. We lament the loss of leadership, forgetting that we have perhaps not groomed enough young men or women to replace the present generation.

In the past, migration was an option, but today, migration has reached a scale in which domestic politics is not so welcoming everywhere and racism is now an open issue worldwide. Each of us needs to confront our own problems before blaming others.

I have fortunately a library of Malaysiana books that I can browse through with great nostalgia to console myself that we have been here before. I have nothing but admiration for our leaders, thinkers and doers who fought for Merdeka, who faced the uncertain future with confidence and humility.

Re-reading Bapak Malaysia Tunku Abdul Rahman Putra Al-Haj’s book, Looking Back, reminded me of how lucky we were to have a leader who had “first-class human wisdom, modesty and yet self-confidence, his outward-going friendliness to peoples of all classes, races and creeds, his shrewd understanding of his fellow-men, his readiness to be tough when necessary, and his absolute sincerity as a servant of great causes”.

This was the assessment of Bapak Malaysia by Malcolm Macdonald, the last governor-general of British Malaya, in his foreword to Tunku’s book.

The Merdeka generation of leaders struggled with the issue of cultural identity. In his opening address for the 1965 conference on the “Cultural Problems of Malaysia in the context of Southeast Asia”, then deputy prime minister, and later, prime minister Tun Abdul Razak Hussein recognised that “Malaysia is a melting-pot of the most important cultural traditions in human history. Therefore the challenge that faces the leadership of this country today is the development, and harmonisation of these various cultures, so that we can evolve a truly national culture” (Takdir Alisjahbana, Xavier Thani Nayagam and Wang Gungwu eds, 1965).

By 1970, after the May 13, 1969, protests erupted, the defining articulation of the nation’s problems was by Tun Dr Mahathir Mohamad’s 1970 book, The Malay Dilemma: “Now, as before, the Malays seem to be teetering between the desire to assert their rights and arrogate to themselves what they consider to be theirs, and the overwhelming desire to be polite, courteous and thoughtful of the rights and demands of others. Deep within them there is a conviction that no matter what they decide or do, things will continue to slip from their control; that slowly but surely they are becoming the dispossessed in their own land. This is the Malay Dilemma.”

We have to admit that Mahathir’s words are still relevant today. The Malay community has moved increasingly to the urban areas, and it has become more religious. Although the New Economic Policy has succeeded in creating a bumiputera professional class, the creation of a bumiputera entrepreneurial class is still a work in progress. Without more bumiputera entrepreneurs in technology and innovation, the gaps in income and wealth inequality cannot be addressed by traditional fiscal or monetary policies.

The political economy of Malaysia therefore faces a trade-off between politics and economics that is universal to all emerging markets in an open global market. If you undertake taxation or any measure that is tougher than your competitors, then expect either capital or talent outflows.

If these outflows are too fast, then expect a financial crisis, but even a slow and steady outflow would weaken competitiveness relative to others. In the last 40 years, Malaysian outward migration has been mostly of better educated professionals and entrepreneurs, whereas inward migration has been low-skilled workers for the plantation, construction and home-care sectors.

The problem with the import of low-skilled workers is that it keeps wage rates down and does not encourage Malaysian youth to enter the manufacturing and service sectors. Companies, irrespective of whether they are foreign or local, are reluctant to upgrade their technology and move up the value chain because it is cheaper to lobby the government to allow cheap labour to be imported.

This is at the heart of the question of whether Malaysia can break out of the middle-income trap. Without higher wages and higher skills, the economy faces low productivity growth, growing inequality and declining competitiveness.

This is a threat because even though Malaysia is located within the Asean growth zone, the country’s relative position within Asean is changing rapidly. The economies of Indonesia, Vietnam and the Philippines are growing at roughly the same rate as Malaysia and are also attracting more foreign investments because of their larger markets and cheaper labour. Thus, by 2030, all three would overtake Malaysia in economic size and competitive power — that is, unless our economic policies change dramatically to upgrade our productivity. And that means our education policies will have to change.

There is, however, a larger demographic and religious issue in the future. According to statista.com projections, Christianity will remain the largest religious group by 2060 (32% of world population) but Islam will see the fastest growth to reach possible parity by 2060. If that is the case, many more states will be Muslim-majority countries. But numbers do not mean parity in terms of power if the Muslim-majority countries are not economically strong.

Herein lies the dilemma of Islam-majority countries. The strong ones like Saudi Arabia and the Gulf states owe their wealth to natural resources, such as oil and gas. But these markets are controlled by the advanced countries, which also make the Middle East vulnerable to foreign intervention and conflicts.

According to the 2019/20 Global Islamic Economy Report, although there are 1.8 billion Muslim consumers around the world, only two of the 57 Organisation of Islamic Cooperation (OIC) countries are in the top 25 global economies, with 224 million OIC people malnourished. Malaysia tops the Global Islamic Economy Indicator’s ranking, followed by the UAE, Bahrain, Saudi Arabia and Indonesia. To maintain leadership, Malaysia must stay ahead of the other Islamic competitors.

But few can deny that Malaysia has reached this position because of the significant contributions of the minority non-Muslim population and foreign investors. In effect, the future of this country hinges on how the Muslim majority in Malaysia fosters cooperation and unity with all towards uplifting the country as a whole. As one of the non-Muslim minority, I am personally confident that Malaysia can be one of the few Muslim-majority countries to make it to advanced country status without relying only on oil and gas.

But coming back to Mahathir’s Malay dilemma, how can the minority be secure if the majority is also insecure? Our constitutional democracy means that the majority of this country will always rule, which I firmly believe in. No minority can hope to usurp the rights of the majority but the majority must also have the responsibility to look after the rights of the minority. That is the social contract of all strong and stable nations. One for all and all for one.

When I visited Alhambra in Spain, it struck me that Muslims ruled Spain for over 780 years (711-1492), with the flowering of Islamic civilisation in which Christians, Jews and other minorities worked to build arts, science and architecture. This lasted longer than the current Christian period from 1492 to the present (529 years).

To sum up, Merdeka has given us choices over our future. Given the global uncertainties, isn’t it time to recognise that more of the same may not prepare us (and future generations) for a more volatile and perhaps riskier future? Isn’t it time for us to sit down, majorities and minorities alike, to have a conversation about how we want to chart the future together as a nation?

The Jata (coat of arms) Negara Malaysia says “Bersekutu Bertambah Mutu”, which simply means unity is strength. Our unity has come from diversity. Time for a diverse national conversation to renew our strength and confidence in each other.

Instead of shouting slogans against or across each other, let’s listen more, respect each other and begin to discuss our common fates together, for better or worse. And then we work and sacrifice together for true Merdeka for our children and generations to come.

Tan Sri Andrew Sheng comments on global issues from an Asian perspective. The views expressed are personal to the author.

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