Malaysian By-Election Ominous For Government

Deeper loss a wakeup for Anwar’s ruling coalition

On July 6, Malaysia’s ruling Pakatan Harapan coalition lost a Penang State Legislative Assembly by-election by a landslide 58.63 percent to 41.37 percent, a wider margin for that seat than when the coalition came to power in 2022 just 20 months before. It is an ominous sign because Penang is arguably the ruling coalition’s securest stronghold, with a bustling electronics-based manufacturing economy boosted by a recent burst of incoming foreign direct investment and a population dominated by the ethnic Chinese, who make up 41.3 percent of the population against 40.7 percent ethnic Malays and 8.9 percent Indians.

In the greater scheme of things, the loss, in which opposition Perikatan Nasional candidate Abidin Ismail defeated Pakatan Harapan’s Joohari Ariffin by a significantly increased majority of 4,267 votes, makes little difference to Anwar Ibrahim, the prime minister, as his coalition rules the Penang state government by a comfortable margin. But Joohari was a well-qualified local with a doctorate while his opponent, a member of the rural Islamist Parti Islam se-Malaysia, didn’t finish high school, a fact frequently highlighted during campaigning. All of the government’s senior colleagues and cabinet members campaigned in the by-election, while none of the Malay nationalist opposition leaders appeared, leaving mid-level leaders to go to the hustings. The Sungai Bakap seat at play had long been an UMNO seat prior to 2008 and strategists hoped the result would reflect UMNO’s return to power. That appears to have backfired. 

The ethnic Malay votes that Anwar needs to stay in power when federal elections are called by 2027 went overwhelmingly against the ruling coalition, according to post-polls analysis. The Chinese, who also support Anwar, delivered a disappointing turnout of fewer than 50 percent – not bothering to show their support, a sign of malaise or disappointment with the ruling coalition’s performance. Worse, when Anwar’s ally Lim Lip Eng, a Democratic Action Party MP, morosely informed a crowd of 3,000 of the results at a dinner while counting was going on, they cheered and clapped.

Anwar later blamed a rise in targeted diesel prices for the loss as the government cut subsidies just before the by-election, a sound economic decision if a painful political one. Economics Minister Rafizi Ramli, who was largely responsible for the unpopular lifting of the subsidies, was picked to run the campaign, which has since come to be regarded as a tactical mistake. Rafizi is also being held responsible for a deeply unpopular plan in which the US-based multinational investment firm BlackRock Global Infrastructure Partners (GIP) takes 30 percent of a consortium to manage the country’s airports alongside the government's investment arm Khazanah Nasional and the Employees Provident Fund (EPF) – both entities under the jurisdiction of the finance ministry led by Anwar.

Critics say disenchantment with Anwar, who is nonetheless increasingly burnishing his reputation internationally, has been growing as the economy stagnates and as inequality has widened, largely because of the Covid-19 pandemic but compounded by Anwar’s lack of cohesive economic programs beyond the undeniable burst of FDI, much of it the prime minister’s doing as he cruises foreign capitals in search of investment. As the quarterly analytical publication Global Asia noted recently, the Malaysian Investment Development Authority in 2023 recorded that Penang alone attracted investment of RM13.67 billion, creating 14,000 jobs, with the country attracting approved investments of RM329.5 billion in 2023, 23 percent more than in 2022 and a record figure. Foreign investment was the driver at 57.2 percent of the total, the office said. 

Although the economy has performed at a moderate 4.2 percent clip in the first quarter, driven by stronger private expenditure and a positive turnaround in exports, with headline inflation remaining moderate at 1.7 percent, it doesn’t feel that way to voters. The modest inflation bump reflects increases in water tariffs in February and a services tax for high-usage electricity in March, both of which joined the removal of the diesel subsidies as major consumer irritations. According to Bank Negara, the country’s central bank, the share of Consumer Price Index (CPI) items recording monthly price increases rose to 44.2 percent during the quarter.

From the time he took power after three decades in the political wilderness including two stints in prison on trumped-up charges, Anwar has taken to heart the counsel of his advisers who urged him to sell his “Malaysia Madani” policy overseas, an acronym that stands for sustainability, care and compassion, respect, innovation, prosperity and trust, while leaving his cabinet to their own devices. But that has meant that in the months since he came to power, the government, apparently under the lead of his cabinet while he goes on worldwide diplomatic and investment-seeking missions, has disappointed its most loyal followers by clamping down on the press and taking tough action on dissenting speech, continuing if not hastening the Islamization of the educational system and government, done little or nothing about corruption, made common cause with the deeply corrupt United Malays National Organization, and failed to carry out any the significant reforms promised prior to forming the government.

With the indicted but still free UMNO President Ahmad Zahid Hamidi as Anwar’s deputy prime minister, the ruling coalition remains wedded to UMNO in a marriage of convenience whose dissolution it can’t risk for fear of igniting a green Islamic wave from the opposition waiting in the wings to take over should it stumble and which didn’t pay off in this race. Although he was admired both domestically and internationally during his years in the wilderness as a liberal, moderate Muslim, he stunned his followers by announcing in June of 2023 that he had met with the leadership of JAKIM, the Department of Islamic Development Malaysia, to ask them to help draft a national development policy framework. Bringing religion into aspects of government was something not even Najib Razak, the former prime minister, dared to do. “This is of grave concern as steps like involving JAKIM in government policy can never be rolled back,” a source said.

“The Unity government remains in power “not because they are the better alternative but because the alternative is worse,” one of his critics said. Pakatan Harapan – and the country’s urban moderates – experienced a serious fright when Parti Islam se-Malaysa – PAS – burst out of its traditional rural corner in the poverty-stricken northeast of the country to take 49 seats in the Dewan Rakyat, or parliament, the single biggest block of seats. Parti Pribumi Bersatu Malaysia, the nationalist party formed from the rump of a collapsing UMNO and headed by nationalist former UMNO Vice President Muhammad by nationalist former UMNO Vice President Muhyiddin Yassin, brought the total opposition seats to 79.

“The current government is an UMNO government,” said another of his disillusioned former longtime adherents. “It exists to advance the interests of UMNO and help UMNO to regain power. Perhaps Anwar has concluded that he can’t win the all-important Malay vote on his own so the best way forward is to work with UMNO to achieve this.”

None of the 10 priorities set by the Pakatan Harapan government in its 2022 election campaign has been met. Combating corruption, arguably its most important priority, has been greeted with the reappointment of the controversial anti-graft chief Azam Baki, who himself faced criticism amid concerns over questionable stock market investments. Law enforcement agencies are instead going after perceived enemies of the government. “Saving the lost generation in education” has been met with a renewed commitment to the Islamization of education instead of seeking to prepare students for technological progress which is sorely needed in a nation seeking to move up the high-tech ladder. A belated announcement that the government would seek to train 60,000 engineers was met with criticism that public university positions are reserved for ethnic Malays.

“The clock is ticking,” said a longtime political analyst. “If Anwar doesn’t pull a rabbit out of the hat, not only will he lose decisively in the next elections, Malaysia will see a hung parliament like in 2022 and this time, the fragmentation will be worse.”