Malaysian conflict: impact on the economy
1) A group of 200 intruded into the state of Sabah in Malaysia, claiming the land based on an ancient agreement.
2) A battle to regain control on Borneo Island that the sultanate lost more than 100 years ago erupted as a consequence. This happened just weeks before elections in both countries and before Philippines President Benigno Aquino finishes a peace deal conclusion with a Muslim separatist group that the Malaysian Prime Minister Najib Razak helped to broker.
3) Relations between both counties highly fragile. Aquino, on a visit to nearby Mindanao island yesterday, said the incident was starting to hurt relations with Malaysia. The Kirams had “dragged” the nation into the dispute, he said. “Our relationship was getting better and better and then this came along,” Aquino said, referring to Malaysia. “It could be a wasted opportunity.”
4) Malaysian security forces found the bodies of 13 Philippine Muslims who invaded the eastern state of Sabah last month as they continued searching for more than 200 insurgents following an aerial and ground assault. Earlier yesterday, Fatima Kiram, the wife of self-proclaimed Sulu Sultan Jamalul Kiram, said his 214 followers in Sabah survived the barrage and are receiving support from Filipinos who live in the state. “The mopping-up and search operation will take some time,” Hussein said, adding that no Malaysian security forces had died in the latest operation. “The area is quite big.
1) Short run strong negative effect on tourism and related services into Sabah and Borneo. While the fighting is limited, the US has told its citizens to avoid the region.
2) Kuala Lumpur stock market will continue underperformed, as compared to its regional peers, for several days (this month), due to uncertainty perceived by investors regarding the final outcome of the conflict.
3) Most analyst say this will be a razor for the ruling coalition, ruling party Barison Nasional (BN). But not enough for them to lose the general elections.
4) Victory of the oppoistion becomes more likeable: 30%
5) Unease in palm oil producers, as Sabah accounts for 30 per cent of Malaysia’s total palm oil output and the commodity – used in food production and the manufacture of detergents – and is one of the country’s top commodity exports.Current official version: Developments in Sabah aren’t significant enough to affect the supply-demand balance in the palm oil industry, Plantation Industries and Commodities Minister Bernard Dompok said at a conference in Kuala Lumpur March 5. However, Indonesia has already evacuated 600 workers from the area.
6) It is too early to say to what extent production will be affected.