COMMENT | The incoming Malaysian government has prioritised fighting corruption and the institutional capture that often accompanies it.

All eyes are currently on the 1MDB scandal, but Malaysians would be wrong to think that it is only this scandal that has brought Malaysia to its current state, at least in relation to the plundering of its natural wealth.

Why? Let us look at the basic structure of Malaysia’s economy, which derives much of its prosperity from the country’s rich natural bounty.

The country has large stocks of metals, petroleum and natural gas. Oil and gas contributes about 15 percent of Malaysia’s GDP. It is also one of the world’s top producers of agricultural commodities, such as rubber, palm oil and timber. Palm oil alone makes up around six percent of the country’s economy.

But the importance of development that relies on resources has a cost: decades of rent-seeking activity by business and political elites. This, in turn, has encouraged corruption and weakened the country’s institutions.

The Federal Land Development Authority (Felda), once one of the region’s strongest vehicles for land reform, is now Felda Global Ventures, a publicly-traded entity dogged by allegations of corruption, favouritism and poor financial management.

Vested interests

There is always a tension between using natural resources for development and avoiding damaging pollution and irreversible environmental changes. Over the past two decades, Malaysia has lost almost one quarter of its remaining forest: an area the size of Ireland or Sri Lanka.

In September of last year, then-deputy environment, green technology and water minister James Dawos Mamit admitted that “There are many rivers in West Malaysia categorised as 'dead' due [to] pollution.” The government’s plans for the Langkawi archipelago threaten to overwhelm even basic sewage, and water and waste management infrastructure....