Brunei Darussalam

Prosperity based on the buoyant oil prices has helped Brunei overcome the fear that had plagued it in the late 1990s, when lower oil prices and recession had reduced national expenditure. Another cause for rejoicing was the occasion of Sultan Hassanal Bolkiah's sixtieth birthday in mid-July 2006. The increased oil revenue allowed the Sultan to announce a pay rise for all civil servants. Some had not seen any salary increases for twenty years. Civil servants enjoy benefits such as heavily subsidized housing, free medical care, and no income tax and consumption tax. Being an Islamic state, the government charges no interests on loans extended to the people.

As the third-longest reigning monarch in the world after the Thai and British monarchs, the sixtieth birthday celebrations were organized elaborately from 1 July to 18 August 2006. The celebrations included all Bruneians as well as international heads of state and governments.

Brunei Darussalam has also been active in forging regional political ties. Foreign Minister Prince Mohammed visited China, while the Sultan himself visited Malaysia to attend the tenth annual consultation meeting with Prime Minister Abdullah Ahmad Badawi. Brunei increased its international profile by announcing that it will send a hundred soldiers with the Malaysian contingent to participate in the United Nations Interim Force in Lebanon (UNIFIL). This shows Brunei Darussalam's increasing confidence in engaging in international affairs. Brunei also held discussions with ASEAN leaders during the year.

The government focused vigorously on sustaining the local economy as well as slowly preparing Brunei to evolve its own representative form of government. The historical revival of the Legislative Council in 2004 and the reorganization of the Cabinet in May 2005 ushered in a new generation of leaders.

On 23 February 1971, parliamentary rule was finally reinstated in Malaysia. To make way for this, the NOC became the National Security Council, while the NCC and the NGC were suffused into the National Unity Council. The latter's task was to advise the prime minister on the issues that were being banned from public debate, and to conduct research into race relations (Comber 1983, p. 83). The first exercise of the new parliament was to debate the Constitutional (Amendment) Bill, and for seven days, MPs had their say on this vital document (ST 24 January 1971). On 3 March, the lower house passed this main pillar for Malaysia's political restructuring with a vote of 125 to 17. The opposition was split, with all parties except for the DAP and the PPP supporting it. What the bill did was to place certain issues considered dangerously sensitive beyond political challenge. These concerned citizenship, the national language and the use of other languages, the special position of the Malays, legitimate interests of non- Malays, and the sovereignty of the sultans (ST 4 March 1971).

Ismail argued that the passing of the bill itself did not guarantee political peace in the future. How much longer democracy would live depended, he said, “on how the Opposition political parties behave and [on] the response from the public”. He made a pledge in parliament that day on behalf of the Alliance:

On 27 May 1961, Prime Minister Tunku Abdul Rahman made the first public reference to the Federation of Malaysia at a Singapore press luncheon, setting off speculation and criticism throughout the region (Memo 23 February 1962). The idea was not new, but where British strategic considerations and local political developments were concerned, the time for it now seemed ripe. The incorporation of Singapore into Malaysia, along with Sabah, Sarawak and Brunei — the last of which eventually chose to stay out — offered the best chance to save the island from a communist takeover (Lam and Tan 1999, pp. 55–56).

The term “Malaysia” had in fact been in use before any talk of independence for such a polity had been advanced. For example, the classic study of the colony by Rupert Emerson from 1937 was titled “Malaysia”.* Incidentally, “Malaysia” was also the name preferred by UMNO when the matter was discussed within the Alliance before independence. In a memorandum to the Reid Commission written on 25 September 1956, the Tunku stated that it was the MCA that wanted the new country to be called “Malaya” (CO 889/6, ff 219-239 — Stockwell 1995, p. 307).

By 3 June 1961, Singapore's PAP had accepted the Tunku's merger proposals (TS–IAR14/1/2). That same week, however, Singapore UMNO, Singapore MCA and the defeated SPA formed an alliance reminiscent of Malaya's successful consociation. This greatly upset the PAP, which was in an unstable state despite its electoral victory. According to B. Simandjuntak, it was this turn of events that precipitated the emergence of the splinter party, the Barisan Sosialis Party (BSP). With Dr Lee Siew Choh as president and Lim Chin Siong as secretary-general, this new grouping came into being on 17 September 1961 (TS–IAR/14/1/3) to become the PAP's most effective opposition (Simandjuntak 1969, p. 117). Within hours, 35 of the 51 branch committees, 19 of the 23 organizing secretaries and “about 70 per cent of the PAP's rank and file” defected. The split cut through the party all the way down to stationery and furniture being ferried away from PAP offices. The ease with which its departing left-wing managed to floor the party left a deep and lasting impression on remaining members (Milne and Mauzy 1990, p. 57).

In mid-March 1969, Education Minister Khir Johari, who was director of election operations for the Alliance, presented the manifesto for the upcoming general elections to a committee of which Ismail was a member. The rather uncontroversial themes chosen were “higher standard of living for all” and “national unity” (MM 11 March 1969). Ismail subsequently campaigned in Johor for the 10 May general elections, calling for a strong and united government led by one party, and warning against the possibility of a coalition government, using Indonesia as a bad example to follow. When campaigning in aid of Chinese Alliance candidates running for the parliamentary seat of Muar Pantai and the state seat of Bandar Maharani, Ismail called for the Democratic Action Party (DAP) to be driven “back to Singapore so that it will not create confusion in the minds of Malaysians”, and said that the opposition party's slogan of “Malaysian Malaysia” was a Singaporean invention.

He did extremely well in his constituency of Johor Timor, winning 9,639 votes against his PMIP opponent's 2,419 (ST 12 May 1969). The Alliance Party, however, suffered a string of setbacks, and given the rising tension that followed wildly jubilant demonstrations in Kuala Lumpur organized by the opposition, a request was made by Razak to Ismail for the latter to return to his former post of Home Affairs Minister. Serious trouble was in the air. Ismail realized that the government faced a potential crisis, and was therefore willing to grant Razak his request on condition that the Tunku agreed to it.

He wrote a letter at 5p.m. — less than two hours before actual rioting broke out — to Eric Griffiths-Jones, the chairman of Guthrie Corporation, suggesting that the latter should not expect him to come to London the coming week. Ismail informed him that the Alliance's majority had been badly reduced: “Tun Razak had strongly pleaded that I join the government. I told him to ask the Tunku and if he wants me I have no alternative but to accept. Tunku very likely to ask me.” (Letters 13 May 1969).

Razak obviously trusted Ismail, and the latter's retirement at a relatively early age for health reasons was evidence that he did not harbour any high political ambitions of his own.

Shortly before Independence Day, the Tunku asked Ismail to become Malaya's first ambassador to the United States of America. He also wished him to double as Malaya's first permanent representative to the United Nations. It was thought important for Malaya to cultivate strong ties with the major power in the world. The United States furthermore represented “modern capitalism” in which Malaya's leaders placed their trust, in contradistinction to the purportedly “old capitalism” that had colonized the region. Ismail agreed to go, but only if it was for a year.

The choice, the Tunku told him, was between Razak and him, and frankly, Razak was badly needed as his deputy. Ismail's friends and relatives were appalled and saw the posting as a silently executed banishment. That thought did not seem to have crossed his own mind, however, and he actually felt satisfaction at being offered a position through which he could work at making “our newly independent country […] known abroad”.

Ismail left on 15 July 1957 for the United States to acquire accommodation for the Washington embassy as well as the New York mission. He managed to purchase three buildings in Washington “to conform to our status” and also to secure a lease for an office in New York. Rushing through the chores of the trip, he thought it fortunate that he was now acting as a cabinet minister with the right to negotiate, and could therefore close deals quickly.

He was nevertheless surprised on his return on 21 August to Kuala Lumpur to discover that the cabinet had approved the acquisition of only two buildings. Since the cabinet happened to be meeting the same afternoon that he arrived, Ismail hastily rushed over to the sitting and managed to gain approval for the third building. Ismail would gripe over the fact that certain members of the cabinet had thought his purchases excessively expensive, especially when he was aware of how much higher sums other countries were then spending on their new American embassies.

Since the departure of Vietnamese forces from Cambodia in 1989, no Southeast Asian country has been subject to the threat of crossborder armed attack. Thus, the Association of Southeast Asian Nations (ASEAN) has maintained its proud record of having no member in violent conflict with another. The ASEAN norm of settling inter-state disputes peacefully has continued to be upheld.

In the larger East Asia region, however, there remain potential causes of inter-state conflict, or at least of regional instability, which thus concern Southeast Asia. As frequently noted, there are three specific potential flashpoints — the South China Sea, the Korean Peninsula, and the Taiwan Straits.

The disputes over conflicting claims to all or parts of the South China Sea have become quiescent partly because of ASEAN's success in getting China to negotiate on the issue with the member-states as a group. This process culminated in the adoption in 2002 of an informal code of conduct that commits the parties to settle disputes peacefully, guarantee freedom of navigation and over-flight in the area, and exercise “self-restraint”. The parties are also to undertake certain confidence-building measures and cooperate in a number of areas. However, although such measures and cooperation have been carried out, the fact that the conflicting sovereignty claims have not been resolved can still cause trouble and instability in the future.

Another issue that has region-wide and even global repercussions involves North Korea's possession of nuclear weapons and its capacity to make, test and deliver them. North Korea carried out a nuclear test explosion in October 2006, and although Pyongyang has agreed to return to the Six-Party Talks there is no guarantee that the forum will succeed in bringing about a nuclear-free Korean peninsula. Apart from its general destabilizing and threatening effect, a nucleararmed North Korea might compel — or give an excuse to — Japan to arm itself with offensive, even nuclear, weapons, a development that would inevitably provoke a strong backlash from China and others.

It has long been noted that politics is most unpredictable, and it has been shown within ASEAN members' politics. The truism that politics is most unpredictable has been demonstrated by the happenings in some of the member states of ASEAN. Whilst some countries demonstrated commendable continuity and stability in 2006, the military coup in Bangkok on 19 September 2006 took many observers by surprise even though it brought a measure of stability to Thailand, which had been roiled for months by demonstrations against Prime Minister Thaksin Shinawatra. A return to political normalcy however is still awaited. Over in Malaysia, the controversy caused by the attacks of former Prime Minister Dr Mahathir Mohamad against his successor, Prime Minister Abdullah Ahmad Badawi, continued to agitate domestic politics.

Other ASEAN members such as Vietnam and Laos installed new leaders, whilst in Singapore, elections in May 2006 returned Prime Minister Lee Hsien Loong to office. The Philippines, Cambodia, and Brunei made quiet and steady progress. Myanmar slowly rolled along with its constitutional conference process, whilst Indonesia, under President Dr Susilo Bambang Yudhoyono enjoyed stability and social concord. However, the country had to grapple with the haze problem which was affecting neighbouring countries. In 2006, Vietnam was the star in the region, with its rapid and high economic growth, its accession as 150th member of the World Trade Organization (WTO) and as host of the Asia-Pacific Economic Cooperation (APEC) Summit.

On the broader regional front, major milestones included the holding of the ASEAN and the East Asia Summits in Cebu, and the progress on drafting the ASEAN Charter and the advancement of the target year to 2015 of the establishment of the ASEAN economic community. Relations with all ASEAN dialogue partners progressed well. For instance, the United States signed a Trade and Investment Framework Agreement with ASEAN in mid-2006. Talks with India on a free trade agreement (FTA) are progressing albeit slowly. With China, relations hit a new high, with the hosting of the China-ASEAN Summit in Nanning in late 2006.

Brunei Darussalam

There are many promising developments on the horizon, some occurring during the forecast period, some a bit after the end of 2008 which would exert positive influences on Brunei's near and longer term development prospects. Based on the International Monetary Fund's, World Economic Outlook Database in September 2006 and the author's own estimates, growth forecast in Brunei Darussalam for the period will range between 2 and 4 per cent for 2007–2008.

Over the forecast period, oil and gas will continue to be the main contributors to GDP with government revenue contributing over 40 per cent to GDP, and 75 to 90 per cent to revenues. With the completion of upgrades and repairs to the production facilities, oil production increased from 2005 and will continue to be on a steady if not upward trend in the forecast period of 2007–2008. This is a positive, given the currently high prices of petroleum in the world economy. Inflation has been under control, averaging below 1.5 per cent in recent years (2000–2005) and is not expected to be a dampener on growth in 2007 and 2008. Because of high oil prices, the fiscal and the current account balance position of the Bruneian government has also been in strong positive territory and is expected to remain so during the forecast period. Tax revenue increased by 29.5 per cent to B$7.9 billion in 2005 compared to 2004. The current account balance is estimated to be above 70 per cent of GDP for 2007–2008.

Southeast Asian economies have weathered recent challenges in the global economic environment well, partly helped by the strongest global economic growth in years. As the regional economies move into 2007, the global economic headwinds are increasing as the U.S. economy slows and as the risks of a disorderly unwinding of global imbalances increase. Fortunately, Southeast Asia appears to also have some positive internal factors that can help mitigate risks emanating from the global environment.

Global Environment Likely to Be Less Supportive of Regional Growth Prospects

There are several reasons to believe that global demand for Southeast Asian exports will decelerate as we move into 2007. First, there are clear signs of a global economic slowdown. The latest OECD (Organization for Economic Cooperation and Development) lead indicators point to slower growth in at least the early part of 2007 in almost all the major developed economies. Although there is no strong consensus on just how much the U.S. economy will slow down, it is quite clear that the U.S. housing boom is ending in a way that will hurt U.S. growth: the risks are clearly to the downside in the United States whereas growth in Europe and Japan will probably decelerate by less. A crucial variable here is global demand for electronic components since this is the single most important export for most Southeast Asian economies: available lead indicators point to only a manageable moderation in demand, not a significant fall.

Second, the lagged impact of tighter monetary policies as well as of higher energy prices is still only just feeding through to global economic activity.

I feel greatly honoured to write a Foreword for this very long awaited book on the life of the very famous son of Malaysia, the late Tun Dr Ismail bin Dato’ Haji Abdul Rahman Yassin.

Undoubtedly this volume will become good source material for students of the modern history of Malaysia. I do not wish to repeat what is already written about the late Tun in this book — about his education, his well-known character as a man of integrity, his common sense approach to problems be they big or small, easy or difficult, and above all, his sacrifice, especially of his health for the country. All these are set out in details that leave no one with any doubt that the late Tun was not only a pragmatic and wise person but also one who was very meticulous, especially when it came to questions of law and politics.

I had the privilege of coming into contact with him when I joined the Attorney General's Chamber in Kuala Lumpur in 1963. I must have gradually won his confidence because he later constantly consulted me whenever law and politics came into conflict. He would want to know what the law was on any given problem that he had to deal with. The Attorney General then, the late Tan Sri Abdul Kadir bin Yusof, being a political Attorney General with membership in the Cabinet, was a very busy person. That was why the job of advising the late Tun fell on me as the Solicitor General for the country. Through constant interactions between me, him and Tan Sri Abdul Kadir, I came to enjoy the confidence of these two wonderful persons.

Subsequent to the May 13 riots, the late Tun Abdul Razak, the then Deputy Prime Minister, called me and my colleague the late Tan Sri Hashim Yeop Sani, to the Prime Minister's Office, the late Tunku Abdul Rahman Putra's residence at Jalan Dato’ Onn. There were a few senior Ministers present. I need not repeat who they were, because these are mentioned in this book. The Ministers were discussing how to deal with the riots. From the top of Jalan Dato’ Onn, we could hear gun shots being fired and we could see smoke bellowing from selected spots in the city and nearby suburban areas.