Johor could manage without Malaysia, but Malaysia without Johor would collapse

The corruption in the Malaysian body politic runs deep and is even getting to be too much for the Malay Royal families. The 1MDB scandal may be the last straw. The Royal families are very keen to distance themselves from the shenanigans which the Prime Minister is now enmeshed in. So much so that the spectre of secession has been raised.

BBCMalaysians are no strangers to money politics but the high-profile players and the amount of funds allegedly involved in the so-called “1MDB scandal” have gripped the nation.

It stems from Prime Minister Najib Razak’s strategic state fund called 1Malaysia Development Bhd (1MDB) set up in 2009 when he came into office. The fund is meant to turn Kuala Lumpur into a financial hub. It started to attract national attention when it missed payments for the $11bn (£7.1bn; €9.9bn) it owes to banks and bondholders.

Former Prime Minister Mahathir Mohamad has said the fund has taken on too much debt and lacks transparency. He has also criticised Mr Najib’s family’s “lavish” lifestyle, which has been regularly discussed in the local press.

Then the Wall Street Journal (WSJ) reported it had seen a paper trail that allegedly traces close to $700m from the troubled fund to Mr Najib’s personal bank accounts. Mr Najib is now facing calls to prove his assets are legal.

The Southern state of Johor with its proximity to Singapore is exposed daily to the differences between what Singapore has achieved and what Malaysia has not. So much so that the Crown Prince has now followed his younger brother’s warning shot from June this year to remind the politicians in Kuala Lumpur that if the accession agreements of 1948 are breached then Johor could well decide to secede from the federation.

the 13 states in the Federation of Malaysia

The States of Sarawak and Sabah would follow Johor’s lead and while actual secession is probably a long, long, way away, this is the first time in a long while that I can remember secession being used as a threat – and being taken with some semblance of seriousness. There is even analysis to show that Johor could well go it alone

Malaysia Chronicle: His Royal Highness the Tengku Mahkota of Johor has stated that if Putrajaya breaches the terms behind the Federation of Malaya, Johor as a state may be forced to secede.

His Royal Highness also took great pains to echo the feelings of misery felt by millions and declared that the Royal family was “not a part of this current mess”.

From an economic point of view, how would Johor fare if it were to go its own way? Would it be better off or worse off?

Firstly, if Johor were to become an independent nation, it would probably be a monarchy, governed like an Emirate, as opposed to a Constitutional Monarchy. Some argue that given the experience of countries the last 10 plus years, monarchy as a form of Government may actually hold better prospects than democracy for young democracies with weak law enforcement.

From an economic point of view, Johor would (be) really well positioned. It would probably have extensive rail and tunnel links with Singapore and the flow of goods between Johor and Singapore will be more like the flow of goods between England and France. There would probably be at least two to three high speed rail links into Johor from Singapore creating a megapolis, albeit between two different countries.

As an independent state, Johor will need its own central bank. This will enable financial intermediation and ensure greater economic progress. But it would probably need to be capitalised with a loan of about US $10 billion. From then on, the Johor as an independent country will be responsible for management of its own domestic and external trade. ……

…… Johor as an independent developed state could easily hold a population of 10 million ten years after independence, which means that its GDP is a staggering USD $400 billion; comparable to the entire GDP of Malaysia. …….

Malaysia without Johor would mean a country sharing a border with Negeri Sembilan, Malacca and Pahang. Some parts of this border cuts through virgin jungle and Johor would be required to protect its border, much the same way as the Malaysia – Thai border is protected.

But this would probably mean the demise of Malaysia as a country. Johor can survive without Malaysia, but can Malaysia survive without Johor? Malaysia will probably enter into a severe economic recession and end up as a failed state should Johor secede.

The Malaysian government is not amused, but the general disgust with government ministers and the ruling party is now quite high. Even Mahathir, the former Prime Minister, has seen it as necessary to criticise the present regime.

Interesting times and a possible Balkanisation of Malaysia.

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