Prime minister likely to be re-elected despite state investment fund affair
Malaysian premier Najib Razak, who has been in power for nearly a decade, looks set to triumph in next month’s parliamentary elections, having apparently survived an alleged financial scandal that shook public and investor confidence in his government and set off multiple investigations around the world.
In what some suggest will be one of the most controversial elections for some time, the prime minister, who came to office in 2009, is predicted to overcome a challenge from the opposition Pakatan Harapan coalition. The alliance is led by Najib’s 92-year-old former mentor Mahathir Mohamad, who resigned from the main governing coalition party, the United Malays National Organisation, in the wake of the 1MDB scandal that came to light three years ago.
Mahathir has sought to make political capital from what US justice department civil lawsuits have described as the alleged misappropriation of more than $4.5 billion from 1Malaysia Development Berhad, a state investment fund set up to pay for new social and economic developments in the country. The premier launched 1MDB in 2009 and served as chairman of its advisory board until 2016 when the body was dissolved. Both Najib and the fund have repeatedly denied any wrongdoing over 1MDB, and Malaysia’s attorney general Mohamed Apandi Ali has also cleared the prime minister of any alleged offense relating to the affair.
Nonetheless, Mahathir, who led the country for 22 years, is scathing of his erstwhile protégé. His decision to come out of retirement to run for office again, he says, was prompted by a desire to oust Najib. The architect of Malaysia’s rapid economic growth, Mahathir will significantly bolster the opposition, which, ironically, he hounded while in office. If he triumphs in the May 9 poll, he says he will hand over the reins of power to another former protégé, popular opposition politician Anwar Ibrahim, currently in prison for what rights groups see as a politically motivated sodomy conviction, his second such prosecution. With Anwar out of the running – he is due to be released on June 8 – Mahathir is viewed as posing the biggest threat to Najib.
Pakatan Harapan’s prospects of victory, however, seem to have been weakened by apparent government attempts to sway the elections in their favour, including electoral boundary changes that benefit the ruling Barisan Nasional coalition; a ban on “fake news”, seen as a bid to restrict criticism; preventing Mahathir’s party from campaigning for 30 days over a bureaucratic issue; and holding the elections on a weekday, making it harder for hundreds of thousands of expats working in neighbouring countries – many of them opposition supporters – to get time off to vote.
But perhaps more significantly, Mahathir’s electoral hopes have been undercut by fading Malay concern over the alleged multi-billion dollar fraud, despite 1MDB-linked transactions being under investigation in six countries, including the US, Switzerland and Singapore. In September a survey of attitudes among young Malays by the independent pollster Merdeka Center, in conjunction with a youth voter registration NGO, showed that less than 10 per cent rated the 1MDB affair and questions over Najib’s integrity as top concerns. When the 1MDB story first broke, it shook public and investor confidence in the country’s leadership.
It seems then that Najib, who is aiming to secure a third term in office, has weathered the 1MDB storm. While international investigations are still ongoing, the intense scrutiny that followed the affair appears to have subsided, with the premier also given a degree of respite by promising economic developments. The ringgit is presently one of Asia’s best-performing currencies. And in April the World Bank raised the country’s growth forecast for this year to 5.4 per cent, predicting that it would achieve high-income status by 2024.
But many ordinary Malays have yet to experience these economic gains. The young, as last year’s survey showed, are far more concerned about inflation than corruption. The main election battle will be fought over the rising cost of living, with Pakatan Harapan pledging to both abolish a major public grievance, a 6 per cent sales tax, within its first 100 days in office and increase basic pay, while the ruling coalition is promising to hike up the national minimum wage, provide debt relief to farmers and create three million new jobs.
Barisan Nasional, which has ruled the country since independence in 1957, lost the popular vote in the 2013 elections for the first time since 1969, but still managed to secure a two-thirds majority because of the gerrymandering of election districts. Its victory over an opposition bloc led by Anwar predated the 1MDB scandal. A survey in December by the Merdeka Center forecast that Barisan Nasional’s share of the popular vote will decline further, but the pollster said the coalition could still regain its majority, pointing to divisions within the opposition and the new electoral boundary changes. The latter provoked an outcry among government critics, who saw the move as an attempt to rig the election.
While a Najib victory will likely come under scrutiny given concerns over the fairness of the vote, a renewed mandate will provide the continuity and stability that many investors in the region seek. As the premier is keen to cultivate economic ties with China – Malaysia’s biggest FDI investor – Chinese-linked investments, part of Beijing’s Belt and Road infrastructure initiative, will likely be given renewed impetus. Mahathir said he would review them if elected, reflecting concerns over projects undermining economic sovereignty.
However, some economists warn that growth may be constrained, arguing that a new Barisan Nasional government might drag its feet over reforms and curbs on corruption as it will be preoccupied with retaining the loyalty of its supporters and keeping an emboldened opposition at bay.
Yigal Chazan is an Associate at Alaco, a London-based business intelligence consultancy.