Malaysian police arrested almost 600 people on Saturday who were protesting in the capital against the country's Internal Security Act (ISA), a measure that allows imprisonment without trial. The protest involving around 10,000 people was the biggest since a march to demand rights for ethnic Indians in this Southeast Asian country of 27 million people in November 2007. Most of those detained have been released although the top lawyer for opposition leader Anwar Ibrahim remains in custody. Anwar faces what he says are politically motivated charges of sodomy, a re-run of a case, following his dismissal as deputy prime minister in 1998, which imprisoned him for six years. The new case has drawn scrutiny of Malaysia's legal system. Why protest against ISA? The ISA, descended from British-era laws, was used against an ethnic Chinese communist insurgency from the 1940s. Although now largely used against suspected militants, critics fear it could be used again to stifle dissent. Saturday's rally was less about ISA than to show Anwar's political strength. The ISA has been used against politicians accused of fomenting racial discord, a sensitive issue in a country where the majority is ethnic Malay but with significant ethnic Chinese and Indian minorities. The ISA, coupled with sedition laws and licensing requirements for newspapers, equip Malaysia's government with a formidable arsenal to clamp down on dissent. When Najib Razak was appointed the new prime minister in April, he released Indian rights activists from ISA detention and pledged to review the law, but has yet to act. The opposition, which has painted the son of Malaysia's second prime minister as a hardliner, says the weekend clampdown shows Najib will not allow any challenge to the government that has ruled this Southeast Asian country for the past 51 years. By showing a firm grip on law and order issues, Najib can placate Malays and his United Malays National Organization (UMNO) party, which is the linchpin of the ruling coalition. Will the protests spread? Malaysia does not look set to be the next Thailand. Despite use of repressive measures, the government has survived largely by delivering economic growth, strong leadership and by making opportune alliances to stay in power. Even the furore whipped up over the Anwar trial, and by the recent death of an aide to an opposition legislator after being questioned by a government body, does not appear to have generated mass support for opposition rallies. That said, Saturday's protest sends a signal that Anwar remains the biggest threat to the government and the opposition is willing to risk mass arrests to stay in the public eye. How will the crackdown affect economic reforms? Strong economic growth has kept the country's minorities, especially the richer Chinese population happy, while affirmative action programs for ethnic Malays have reduced inequalities. Since the 1998 Asian financial crisis, however, Malaysia has underperformed regional rivals in attracting foreign investment. Malaysia's relatively low-cost economy, built on cheap migrant labor, is facing competitive challenges from China and neighboring Southeast Asian nations, and the global economic slowdown has slashed exports by 30 percent. Najib has moved to dismantle some affirmative action programs, effectively stealing opposition policies, to boost investment, though he risks a backlash from Malays who fear losing privileges. What could damage Najib and economic reforms? Najib's political survival depends on strong economic growth returning before elections due by 2013. For that, he is largely dependent on an upturn in the world economy. Growth was planned at 6 percent a year for the five years to 2010 but has hit that level in only one year. Reforms announced so far are not going to have a significant impact on growth in the short term and Malaysia's economy is set to contract by 5 percent this year, its biggest annual decline since the 1998 Asian crisis. Oil company Petronas accounts for almost half of revenue but the prospects of widening the tax base or some type of goods and services tax appear to be slim. With Najib's government still on the backfoot after the 2008 elections gave the opposition unprecedented gains, prospects for meaningful budget reform look dim at the moment. Since his June announcement opening up some sections of the economy, Najib has also unveiled populist measures and backed off from politically risky energy price hikes.
