The euphoria that greeted the stunning electoral victory of Pakatan Harapan, led by the 93-year-old Mahathir Mohamad, a year ago over a discredited coalition in power for decades has given way to widespread disappointment amid unfulfilled promises and economic gloom.

Recent polls show plunging support for the “alliance of hope” government that saw off the Barisan Nasional government of Najib Razak in a surprise May 9 general election triumph that many hoped would signal a new dawn for Malaysian politics and governance.

But in the year since the multi-racial Pakatan Harapan came to power, Malaysia, Southeast Asia’s third-largest economy, has witnessed a slew of bad headlines, including a rise in sectarian tensions, a drop in foreign direct investment (FDI), a slide in the value of its currency against the dollar and a stock market downturn.

The malaise has continued despite Mahathir’s significant progress in delivering on key election pledges to address corruption and review billions of dollars of Chinese ‘Belt and Road Initiative (BRI)’ infrastructure investments, some of which he deemed to be unfair or unaffordable – a bold move given that China is Malaysia’s main trading partner and inward investor.

Recently-announced plans to combat corruption in government include the regulation of political lobbying; a requirement that politicians and officials declare their assets; and reform of the ministerial appointments process. Najib, meanwhile, is being prosecuted in connection with the alleged disappearance of $4.5 billion from the 1MDB state development fund.

The former premier has pleaded not guilty to corruption charges in a scandal that has come to symbolize the excesses of the former government. At the same, Mahathir suspended several multi-billion dollar Chinese projects and warned Malaysians and others in the region of the ‘debt trap’ risks of deals with China.

In Mahathir’s defense, the economy was slowing when he came to power, weighed down by heavy debt resulting largely from the United Malays National Organisation (UMNO)-led government’s liking for Chinese infrastructure finance. Commentators say Mahathir was likely unaware of the scale of the financial deficit prior to the election and may have overpromised.

Malaysian anxieties about the high cost of living had prompted his populist election pledge to repeal a goods and services tax, but the move, combined with the stalling of new investment from China, undermined efforts to reduce government debt – one forecast suggesting it will rise this year to 56 percent of GDP, the highest level since 1992. With finances straightened, other promised reforms such as the abolition of road tolls and the deferment of student loan repayments have been shelved, while state subsidies have been scaled back. Yet prices have remained high.

Frustrations are particularly marked among the ethnic Malay population – some 60 percent of the country’s ethnically-mixed population – especially those in poor rural areas. Malays, the majority community, also perceive that privileges and benefits accorded to them are under threat. These grievances have been exploited by the opposition, with UMNO and former rivals the Pan-Malaysian Islamic Party reportedly fanning religious and racial tensions. The opposition has claimed that Pakatan Harapan, which draws much of its support from urban, liberal Malays and Indian and Chinese minorities, has failed to uphold Islam and Malay rights. It has also been critical of non-Malays being given senior government jobs.

All of this has put Mahathir’s administration on the back foot. Pressure from the opposition and pro-Malay groups has led to a U-turn on joining the International Criminal Court and the adoption of a UN convention against racial discrimination as well as backtracking on the abolition of the death penalty. Actions that might have raised PH’s stock amongst Malays such as getting to the bottom of the 1MDB scandal, recovering some of the missing funds and bailing out both a fund supporting pilgrimages to Mecca and a land development agency, appear to have had little impact. The coalition has been defeated in three successive local elections since coming to power.

But while a March poll by the respected pollster the Merdeka Center showed that since the elections the government and Mahathir’s approval ratings had fallen by about half, some two-thirds of Malaysians were nonetheless prepared to give them more time. And there are signs that though the economy remains sluggish, investment prospects are improving and, critically, relations with China are recovering following the suspension of Chinese projects.

FDI commitments rose to about US$19 billion in 2018, a 48 percent increase, with much of it coming in the second half of the year. Mahathir, meanwhile, has managed to renegotiate a major China-backed project, the East Coast Rail Link, cutting the cost by a third to US$11 billion, and revived another, Bandar Malaysia, a US$34 billion transport and property development. Both are BRI projects that should become magnets for further overseas investment. China returned the favor by agreeing to increase its import of palm oil, a key Malaysian export, by some 1.9 million tonnes over the next five years.

Mahathir’s efforts to boost the country’s financial health have not been helped by weak commodity prices and the continuing trade war between the US and China, as many Malaysian exports to the latter are intermediate goods which are then assembled and shipped to America. But his move to challenge China over the terms of its investments was something of a gamble given Beijing’s contribution to the Malaysian economy.

Putrajaya is now confident that relations are back on track and that more Chinese investment will follow – although Malaysia’s formerly laissez-faire attitude to these flows looks to have toughened. Foreign Minister Saifuddin Abdullah recently signalled as much, telling Reuters that “agreements and arrangements have to be fair for both sides”.

Yigal Chazan is head of content at Alaco, a London-based business intelligence consultancy.