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Emerging Markets vs. Sharia Law

Adam Minter is a Bloomberg View columnist. He is the author of “Junkyard Planet: Travels in the Billion-Dollar Trash Trade.”
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It’s easy to overlook Brunei, a country smaller than Delaware located on the north side of Borneo, population 412,000. But there’s a reason the kingdom’s neighbors recently started watching it closely. By embracing a stringent variant of Islam, the government of Brunei increasingly represents the region’s deepest anxieties about its own future.

On December 23, officials from the Ministry of Religious Affairs in Bandar Seri Begawan, the capital of Brunei, stopped by local restaurants with a stern request: take down your Christmas decorations. According to the Borneo Bulletin, which confirmed the operation with the local Shariah Enforcement hotline, as well as staff at one of the restaurants, proprietors were informed that the decorations were “against Islamic beliefs.” Four days later, the Religious Affairs Ministry affirmed in a press release that “public displays” of Christmas cheer -- or any other non-Islamic religious festival -- were, in fact, prohibited under sharia.

It's no surprise that Southeast Asian news outlets finally began to pick up on the issue last week. The region has experienced extraordinary growth over the past 15 years -- if the 11 nations and 600 million people comprising Southeast Asia were a single country, they’d now enjoy the seventh largest economy in the world -- that was prompted in part by spillover from China’s boom and relative political stability across the region. But, above all, it benefited from a general diminishment (or downplay) of ethnic, racial and religious tensions.

That’s no small accomplishment. Southeast Asia is home to a panoply of religions, including Buddhism, and and various forms of Christianity. In the 12th century, Islam arrived in the region, and today is the dominant faith, with roughly 240 million followers amounting to around 42 percent of the region’s population (and 25 percent of the total world Muslim population). For much of the region's history, tensions between these communities were an unavoidable fact of life.

Although the region has now managed to reach some religious equilibrium, it’s always been a tenuous arrangement -- that is to say, the example of Brunei’s sharia system has long hovered over the region. And in a region as closely-knit as Southeast Asia, what happens in one country more often than not finds an echo, if not an analogue, in its neighbors. For example, long-standing tensions between fundamentalist Buddhist sects and Muslims in Thailand, Sri Lanka, and Myanmar turned into actual anti-Muslim violence in Myanmar back in July, causing shockwaves across the region.

Meanwhile, Brunei-type Muslim suspicions of Christmas have long-standing antecedents across the region, including the notorious 2000 Christmas Eve bombings of churches in Indonesia. Since then, tensions have dropped off. But here and there, the problem re-emerges. In majority-Muslim Malaysia, for example, Christmas 2014 featured shopping malls filled with Christmas decorations, photo-ready Santas -- and a very public discussion, initiated by fringe religious groups, about whether or not Muslims are allowed to say “Merry Christmas” to Christians. That discussion was swiftly brought to a close when senior members of the Malaysian government (to their credit) went out of their way to publicly wish their compatriots a merry Christmas.

The imperative wasn’t just political and moral -- it was also economic. Malaysia is keen to develop into a knowledge-based economy, expanding beyond its traditional role as an agricultural, natural resource and manufacturing hub. Doing so, however, requires retaining and attracting talent -- something that Malaysia has struggled to do in recent years, according to a 2011 World Bank report on Malaysia’s Brain Drain.

Most of those who have left are non-Muslim, eager to seek out better economic opportunities, and leave behind what the report characterizes as “social justice” issues. It turns out the best and brightest aren’t much interest in living in country that doesn’t respect religious pluralism -- much less shopping mall Santas. The government knows that, and though Malaysia faces significant challenges in achieving its economic goals (many if not most, self-inflicted), there’s at least a bare recognition that turning its back on pluralism won’t help its cause.

In contrast, Brunei’s luxury-loving Sultan, who rules by edict, seems to have missed that point. The problem is, far more than Malaysia, his country is in need of some economic diversification. Oil and gas revenues currently account for roughly two-thirds of the country’s GDP, and ninety-three percent of government revenues. But those oil and gas reserves are uncertain, and in an age where oil is selling at $40 per barrel, Bruneians can be excused for wondering why all that revenue didn’t buy a more sustainable economic model.

It’s not for lack of trying. In 2008, the government issued Wawasan Brunei 2035, a long-term plan to turn the country into a kind of mini-Singapore where the “accomplishments of its well-educated and highly skilled people” are recognized. Of course, doing so means attracting and retaining well-educated professionals -- something that Brunei was finding difficult even before the Sultan imposed sharia in May 2014. Likewise, tourists: between 2002 and 2013, Brunei as the only Southeast Asian nation to experience no growth in tourist arrivals.

Will sharia help either cause? The December Christmas crackdown certainly won’t -- and that’s just a small part of the phase one of the sharia roll-out. Phases two and three, expected this year and in 2016, will introduce corporal punishment, and executions (including by stoning). Meanwhile, following some of his Middle Eastern counterparts, the Sultan has been quite upfront that sharia is -- from his absolutist perspective -- one way to deal with those “who wish to see internal strife or to instigate conflict and do not respect their leader or government,” as he put it in a February 2014 speech.

Of course, it remains possible that Brunei may yet become a mini-Singapore by attracting the Islamic banking and investment firms that are already active in the region. But such a scenario assumes that those institutions would pass over Malaysia and Indonesia, countries that also support Islamic finance and are home to much larger Muslim populations. That seems unlikely. Instead, Brunei is likely to become more economically isolated, all the while serving as a useful, cautionary tale for Malaysia, Indonesia, and other countries in the region tempted to turn their backs on pluralism’s material successes.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Adam Minter at aminter@bloomberg.net

To contact the editor on this story:
Cameron Abadi at cabadi2@bloomberg.net