Malaysia’s Top Two Pols Go Toe to Toe

On July 26, at a gala reception honoring the 76-year-old former Malaysian Prime Minister Abdullah Ahmad Badawi, Prime Minister Najib Razak and his deputy, Muhyiddin Yassin, sat down together for a jovial get-together as the cameras flashed. A short distance away at another VIP table, Najib’s equally jovial wife, Rosmah Mansor, sat next to Muhyiddin’s wife Noorainee Abdul Rahman.

But, according to people at the luncheon, the smiles were only for the camera. Not a word was spoken among the four, an indication of the growing tension that has paralyzed politics in the country and begun to affect the economy as confidence in the currency has waned to a 17-year low, driving up the cost of imports and contributing to voter irritation.

Muhyiddin left the luncheon and later went to a United Malays National Organization meeting in the Kuala Lumpur suburb of Cheras, where he unloaded on Najib, saying that “If the parliament is dissolved tomorrow, we won’t win the general election.”

He told the UMNO members that Najib must answer charges in the Wall Street Journal and The Sarawak Report on how nearly US$700 million linked to the troubled 1Malaysia Development Bhd. state investment firm ended up in his own bank accounts, that Najib must stop bashing former Prime Minister Mahathir Mohamad, that he had advised Najib to quit as chief investment adviser to 1MDB and that the Auditor General’s interim report on the scandal must be released.

“It is clear that now there is open warfare,” said a source who attended the dinner and who said the other guests were astonished at the clear animosity between the two couples and their refusal to speak to each other. “It is clear that Muhyiddin has made his move.”

Update: It appears Najib may make his own move. The Malaysian Insider is reporting that Muhyiddin will be dropped from the cabinet along with four other ministers to make sure the cabinet is composed entirely of loyalists. Two other UMNO ministers – vice-president and Rural and Regional Development Minister Mohd Shafie Apdal and Domestic Trade, Cooperative and Consumerism Minister Hasan Malek are also on the block. The others are G. Palanivel, who has been stripped of the presidency of the Malaysian Indian Congress, a Barisan Nasional component, and Idris Jala, the government efficiency unit chief executive.

Utusan Malaysia, the UMNO-owned Malay language broadsheet, refused to carry Muhyiddin’s statements. Later, a blog written anonymously by Najib’s political secretary Muhd Khairun Aseh said that if Muhyiddin disagreed with the party on the 1MDB issue, he must step down as deputy party president and vice premier. This is taken as an indication that Najib will fight to the political death, partly because his wife, who is considered to be stronger than he is, will not allow him to quit. Some sources have told Asia Sentinel that she is pushing a cabinet reshuffle that will find Muhyiddin on the outside looking in.

This all illustrates the growing bitterness between rival camps in Malaysia. Muhyiddin has been making oblique statements for several months. Former Prime Minister Mahathir Mohamad has been trying to marshal enough cadres to overthrow Najib within the party. Mahathir has reached out to ex PM Abdullah Badawi, who still controls a handful of supporters in UMNO. Badawi has rebuffed the overtures so far, likely because Mahathir ousted him from the premiership in 2009.

The final analysis – at least for now – seems to be that against the widespread belief that the scandal would drag down both the party and Najib, he remains in the saddle unless there is some new black swan event.

“The camel is staggering, the camel’s legs continue to look shaky, but so far the camel’s back is not broken,” one academic told Asia Sentinel.

One of the swords that hangs over Najib, and there are many, is the interim report of the auditor general on 1MDB, which has been held up for mysterious reasons – probably because it contains seriously damaging information – and a series of other domestic moves against him. He has weathered extremely critical international reports in both the Wall Street Journal and the New York Times, describing them as agents of unnamed foreign powers trying to bring down a democratically elected government.

Part of the problem is that Muhyiddin inspires little confidence. As with Mahathir, he is a Malay nationalist first and has profited financially from the rentier system. His patron is Mahathir, who most believe is hardly out to reform the party. He is out to reinstall the system of patronage and money politics that now he rails against. And, said another political analyst, “They are also afraid that if Muhyiddin moves up, [Home Minister Ahmed Zahid Hamidi] may move up, and he is loose cannon. They will not allow that.”

Last week the country’s leading financial paper The Edge Financial Daily described in minute detail how hundreds of millions of dollars from 1MDB fund, allegedly were stolen, leading him to suspend the paper and leading to dismay in the business community. His own brother, Nazir, condemned the suspension of the papers, along with Tony Fernandes, perhaps the country’s most successful independent entrepreneur. Tong Kooi Ong, the owner of The Edge Group, and Ho Kay Tat, the publisher, remained defiant, saying they would continue to print material on 1MDB on websites they own such as the popular Malaysian Insider, virtually daring him to shut them down.

The issue that is probably more troubling than the latest of a long string of political scandals is the implementation in April of a 6 percent goods and services tax that has hit lower-income citizens very hard.

“You go out to the kampungs [villages], they don’t understand this scandal,” said the head of a think tank. “They are worried about the GST.” Although the government had said the new tax regime would boost government revenues and ameliorate the government’s high fiscal debt, its implementation has been met with irritation and confusion with manybusinsses driving up prices among the uncertainty. Some consumers have said the price of rice has gone up by as much as 40 percent. “A Kit-Kat chunky bar is RM5,” said a consumer. “Just two months ago it was RM3.”

Certainly street protest, of the kind that boiled over in the 1990s when Mahathir ousted then-Finance Minister Anwar Ibrahim, is largely absent, and what protest there is, is generated more by the goods and services tax than a complicated and so far unresolved pretzel palace of an investment fund that awaits a definitive investigation. The opposition, still reeling from the breakup of Parti Islam se-Malaysia or PAS into moderate and fundamentalist wings, hasn’t come together as a viable political force although having shed the fundamentalists it is likely to be stronger in the long run. But they appear unlikely to generate anything serious before elections which must be called in 2018 at the latest, giving UMNO time to resolve its own problems.