5-3-2024 (KUALA LUMPUR) In the heart of Kuala Lumpur, a peculiar spectacle has unfolded – a Malaysian tycoon, Vincent Tan, has issued an impassioned plea to the public, beseeching them to halt their boycott of Starbucks outlets across the nation. This fervent appeal has cast a spotlight on the intricate web of crony capitalism that has long permeated Malaysia’s political and economic landscape, a system that has eroded public trust and bred a deep-seated cynicism towards the machinations of the elite.
As pro-Palestinian sentiments swell in the Muslim-majority nation, sales at Starbucks Malaysia have taken a substantial hit, plummeting by a staggering 38% in the fourth quarter of 2022. Tan, whose Berjaya Food company holds the license for the coffee chain’s operations in Malaysia, has vehemently argued that the boycott is “unnecessary,” asserting that the franchise is “100% Malaysian owned” and employs a local workforce. However, his desperate attempt to invoke nationalism rings hollow when one delves into the murky depths of his own controversial crony ties.
Critics contend that Tan’s claim of local ownership is a mere technicality, as the brand’s revenues ultimately flow back to the parent company in Seattle, perceived by many as complicit in the ongoing Israeli-Palestinian conflict. In a society where neutrality is often equated with acquiescence, Tan’s plea for impartiality has fallen on deaf ears. As academic James Chin astutely observed, “For Malaysians, if you choose not to pick a side and claim to be neutral, to them, you are supporting the cursed by God.”
Tan’s urgent attempts to mitigate the boycott’s impact reveal not only economic anxiety but also shed light on his modus operandi – a business empire forged not through competitive entrepreneurship but rather through cozy deals and government largesse. He epitomizes the crony capitalism that has long plagued Malaysia’s political economy, a system that has fostered distrust and skepticism towards the motives of the elite.
Tan’s ascent to prominence can be traced back to the 1970s, when he began as a humble used-car salesman and resurrected distressed companies. In the midst of the 1985 recession, his B&B Enterprise was one of ten selected conglomerates granted access to easy credit to restructure ailing firms, a privilege extended despite B&B’s history of defaulting on loans. This preferential financing catalyzed Tan’s foray into corporate gambling, as he acquired the McDonald’s fast-food franchise in Malaysia in 1988 and obtained the lucrative lottery license for Big Sweep through his company Pan Malaysian Sweeps.
However, Tan’s biggest break came in 1995 when then-Prime Minister Mahathir Mohamad essentially gifted him the gambling outfit Sports Toto for a mere RM28 million, a move that was widely criticized for its lack of transparency and perceived enrichment of an UMNO crony. Sports Toto proved to be Tan’s golden goose, significantly boosting his Berjaya Group’s fortunes to the extent that by 2022, its market capitalization exceeded RM4 billion – an enormously profitable gambling concession obtained for peanuts due to political connections.
Tan’s ties to the ruling party UMNO intensified in the 1990s as corporate patronage peaked under Mahathir’s administration. The former premier even went so far as to name Tan his “favourite businessman” for achieving success through government largesse, and Tan’s loyalty was richly rewarded. He spearheaded ostentatious projects like the RM1.2 billion Berjaya Times Square mall in the midst of the 1998 Asian Financial Crisis, embodying the excesses of crony capitalism and flaunting his ties with Mahathir to obtain bank financing despite the economic turmoil.
It was an open secret that Tan bankrolled Mahathir’s political activities, earning him access and favors in return. Author KS Jomo aptly described Tan’s Berjaya Group as “among the most obvious beneficiaries of Dr. M’s patronage.” However, Tan and Mahathir share more than just a patron-crony bond; they also harbor less savory anti-Semitic tendencies, which contradict Tan’s plea for neutrality on the Israel-Palestine conflict.
In his statement, Tan highlighted Starbucks Malaysia’s local workforce and community contributions, but to critics, these gestures seem like superficial corporate social responsibility washing. With a large Muslim workforce, Starbucks Malaysia pays below-average industry wages, particularly in its supply chain, and its contributions appear paltry compared to the billions in revenues channeled back to the parent Starbucks Corp, fueling perceptions that the brand enriches Americans, not Malaysians.
This exemplifies how crony capitalism breeds public distrust. After decades of witnessing political patronage corrupt governance, Malaysians cynically dismiss elites evoking social causes as publicity stunts when profits are threatened. That Tan’s own past financial successes stemmed from cozy state handouts, not competition or community uplift, renders his pleas now hypocritical to citizens. His awards from Mahathir affirming Tan’s “social contributions” carry ironic weight today.
The Malaysian Anti-Corruption Commission (MACC) has also recently sharpened its focus on several controversial bailouts from the Mahathir era, further undermining the anti-corruption credentials of political elites like Vincent Tan. Ongoing probes revolve around deals linked to Mahathir’s sons and former finance minister Daim Zainuddin, including the circumstances surrounding Petronas acquiring debt-laden shipping assets from Mirzan Mahathir in 1998 when Dr. Mahathir was both Prime Minister and held direct purview over the state oil company. The conflict of interest and rationale behind the RM1.79 billion bailout of Tajudin Ramli’s stake in Malaysian Airlines are also under scrutiny. Mahathir has taken to social media to express grievances over what he sees as selective prosecution, while current premier Anwar Ibrahim accuses Mahathir of nepotism and abuse of power during his tenure. The MACC’s investigations into past cronyism provide relevant context when examining the anti-corruption credentials of political elites like Vincent Tan today.
Tan’s urgent attempts to placate boycotters highlight the inherent risks in crony business models – when profits depend on public perception, they remain fragile without authentic goodwill. Tan personifies Malaysia’s rentier capitalism, where politically-linked tycoons reap easy wealth through government largesse, not innovation or ethos. This systemic cronyism has decayed public trust to the extent that when capitalism confronts activism, a firewall of cynicism engulfs corporate social responsibility efforts. No firewall protects profits, however, hence Tan’s desperate appeal to boycotters rings hollow.
His statement exposes contradictions between proclaimed neutrality and alleged covert prejudice, selective outrage, and opportunism, all of which undermine his posture of corporate conscience. Malaysia needs systemic reform to open markets, foster competition, elevate ethics, and diversify its economy beyond commodities and crony gambling. Without genuine change, tycoons with troubled legacies will struggle to convincingly invoke goodwill when their profits conflict with the public interest.
