Malaysia's Budget and the Election

Malaysian Prime Minister Najib Tun Razak is expected to table a national budget Friday that will be bulging with takeaways for prospective voters in an election that keeps receding into the future.

It is likely to include relief for first-time homebuyers and some aid for senior citizens, as well as yet more benefits for civil servants, the great preponderance of whom are Malays, Najib’s core constituency, as well as some additional assistance for people in the kampungs, or rural Malay villages. It has been estimated that there are almost no Malay families without a family member either in the civil service or the military.

The election now appears likely to be pushed back to sometime after the Lunar New Year, which begins on Feb. 10. November is unlikely, analysts say, because roughly 30,000 prospective Malay voters will be in Mecca on the hajj. Najib also has said he won’t call elections because the opposition Pakatan Rakyat coalition has announced that it will not call its own in the states it controls.

That apparently is because Selangor, the state surrounding the city of Kuala Lumpur, thought to be one of the opposition’s major strongholds, could be in play. The Bersih election reform NGO complains it’s because the Barisan Nasional, or ruling national coalition, has registered tens of thousands of suspicious new voters, some with scores living at the same address. The Barisan says it’s because Parti Keadilan Rakyat, which opposition leader Anwar Ibrahim heads, is badly organized and hasn’t been able to efficiently run the state government it won in 2008.

There may be truth in both claims. But in any case it probably means at least another five months of fevered politicking in a country increasingly exhausted, racially divided and tired of ceaseless maneuvering between the two forces.

The electioneering is taking place in a polarized and difficult political setting that law enforcement officials should be attempting to control and either can’t or don’t. There are growing instances of both opposition and Barisan Nasional partisans burning and stamping and urinating on the pictures of their opponents, in the Barisan’s case pictures of opposition leader Anwar Ibrahim and his partners from Parti Islam se-Malaysia, or PAS, Nik Aziz Nik Mat and Hadi Awang, and Lim Kit Siang and Lim Guan Eng from the Democratic Action Party.

The respected Economist Corporate Network, the UK-based magazine’s global briefing service for business executives, in August predicted that the Barisan would be returned to power although its majority would be reduced again. In 2008, when the Barisan was returned to power with a dramatically diminished majority, it spelled the end of Abdullah Badawi’s political career.

Would a similar result spell the end of Najib’s political career as well? There has been long-standing speculation that Muhyiddin Yassin, appointed deputy prime minister when Najib took over in 2009, has long coveted the job, and any weakness on Najib’s part would let slip the dogs of internal politics. Last month, unknown people widely distributed posters in Johor and Penang states asking for Najib to step down and make way for Muhyiddin to be prime minister even before the elections are called. No one has taken responsibility for the posters.

According to a poll taken between Sept. 1-16 poll by the University of Malaya Centre for the Study of Democracy and Politics, Najib’s popularity has fallen from 61 percent to a still-respectable 58 percent since April while that of the Barisan Nasional has fallen from 40 percent to 32 percent during the same period, although the opposition approval figures are far below either of them.

UMNO continues to be hobbled by a long series of scandals and corruption eruptions. The government has sought to limit the damage not by going after those exposed by various entities as corrupt, but instead by seeking to neutralize and discredit the whistle-blowers. The Companies Commission has brought charges of money laundering against Suaram, the human rights NGO that has been the motive force behind the French investigation of bribery in the 2002 purchase of two submarines and the lease of a third. Cynthia Gabriel, the director of Suaram, was called in for questioning today on the charges.

The leaders of Bersih, the NGO that is demanding election reform, have been sued for RM117,000 for damage to a police car which was overturned in the aftermath of a reform rally in April. The government said the organizers of the rally didn’t adequately protect the police car—an interesting construct, since usually the police are there to protect the crowd.

The most recent to feel the government’s hot breath are Rafizi Ramli, the strategy chief for the opposition Parti Keadilan Rakyat, and Johan Mohamad, a former Public Bank clerk, for leaking explosive details of an equally embarrassing scandal involving Malaysia’s National Feedlot Corporation, controlled by the husband of Shahrizat Abdul Jalil, the head of the women’s wing of UMNO. The scandal became known as Cowgate, in which more than RM100 million from a government soft loan were allegedly squandered on personal trips, fancy cars, condominiums in Singapore and Kuala Lumpur and largely failed in its mission to establish an operation to slaughter tens of thousands of cattle annually following Islamic religious practices.

Chinese voters abandoned

The Barisan seems to have largely abandoned the Chinese vote. Political infighting and scandal have reduced the Malaysian Chinese Association to a shambles. Despite the fact that it remains in the Barisan, the MCA has lost most of its clout. As a result, the Barisan has largely written off the major cities where Chinese votes are concentrated, to concentrate on the kampungs in the belief that since ethnic Malays make up 60.3 percent of the population, they will deliver a national majority for the coalition. In 2008, about 45 per cent of Malays voted for opposition parties. The Chinese percentage of the population has shrunk to 22.9 percent from 45 percent in 1957, partly because of Chinese migration to Singapore, Australia and other countries, and partly because ethnic Malay fertility rates are 40 percent higher than those of ethnic Indians and 56 percent higher than Malay Chinese, whose total fertility rate at 1.8 live births per adult woman, has fallen below replacement.

That has put racial politics at the front and center of the campaign and made for periodic bouts of ugly rhetoric, particularly from the Malay supremacy NGO Perkasa, and its leader, Ibrahim Ali, who has made flame-throwing speeches that come close to inciting violence. The still influential former Prime Minister Mahathir Mohamad is the patron of Perkasa and has backed their inflammatory rhetoric publicly and in his blog.

UMNO has also sought to exploit the presence of Parti Islam se-Malaysia in the opposition coalition over a long-standing provision in the conservative Islamic party’s platform to institute hudud, or Shariah law, which includes harsh punishment for certain crimes, including theft, adultery, alcohol consumption, fornication and apostasy. The allegations that PAS would institute hudud are designed to impel urban ethnic Malays, who tend to be more liberal, from voting for PAS. The party’s newly elected moderate leaders deny they have any intention of doing any such thing.

The racial and electoral tensions have had a negative effect on investment, with foreign direct investment, a crucial Najib goal, actually falling on an annual basis. Net FDI is forecast to be down 5.8 percent in US dollar terms in 2012. As a percentage of gross domestic product, net FDI is expected to be off by 1.9 percent for 2012.

There have been reports that top Chinese businessmen have delayed investments until after the election because of concerns about the political climate. That situation continues despite protestations of confidence from the prime minister and UMNO cadres. One particularly alarmist contact – an ethnic Malay businessman – said he and sizeable numbers of others, particularly Chinese ones, intend to book flights out of Kuala Lumpur after voting on the day the election is called because they fear a breakdown in law and order should it appear that the opposition is close to gaining an edge in the 222-member lower house of Parliament

If there were actually to be a hung parliament, chaos could be expected in the Dewan Rakyat, or parliament. Intensive horse-trading would take place in which both sides would resort to pouring money to safeguard or secure the loyalty of the minority parties and lure members away from the other party. In particular, the Barisan-affiliated parties in Sabah and Sarawak are especially thought to be open to swapping sides. The chief ministers of both states have been implicated in massive – a word that is often overused, but in this case may be inadequate – corruption.

In particular, Abdul Taib Mahmud, the long-serving chief minister of Sarawak, has been implicated in looting the state of billions of dollars from resource extraction and salting the money away in Swiss banks as well as Australian, British, Canadian and US real estate. In Sabah, records show that the chief minister Musa Aman, steered more than US$90 million from timber sales into a Zurich, Switzerland account. If Anwar is close to tipping the balance in the Pakatan Rakyat’s favour, a source said in KL, he will attempt to entice the two to change sides, partly through guarantees of immunity from prosecution and through an increased portion of the oil and other revenues on East Malaysia resources that are now collected by the federal government. The two states get 5 percent of the royalty but have lately been clamouring for up to 20 percent.

Parti Keadilan remains riven with factions largely stemming from the frustrated opportunists who left UMNO in 2008 and 2009 to join Anwar for a new avenue to power. Anwar continues to be constantly harried by lawsuits and attacks. But at the same time he appears to be manoeuvring deftly to keep the coalition ready for a projected election.

A lot of money has been lost betting against UMNO. In the 1980s, the party was split among factions backing Musa Hitam, Tunku Razaleigh Hamzah and Mahathir. Going into the 1986 general elections, the party then as now was saddled by major controversy including the Bank Bumi scandal, in which the state-owned bank was forced to recapitalise after having lost US$1 billion through its Hong Kong-based subsidiary, Bumiputra Malaysia Finance. Mahathir himself had been exposed as the architect of a disastrous attempt to corner the tin market, which lost another US$500 million. The Cooperative Central Bank, established to help smallholders, was exposed as nearly insolvent because of nonperforming loans made to 19 UMNO politicians which had not been serviced in years.

Nonetheless, when the dust settled in the wake of the election, the Barisan Nasional had won a clear and convincing victory and Mahathir was still in charge. UMNO in particular traditionally has had the nuts-and-bolts ability to use government services to get its voters to the polls. There are continuing – and credible – allegations that the Barisan has been registering large numbers of illegal aliens from Indonesia to pad the Malay vote. The party has also always been able to use its coffers to pay for the sandwiches, the buses, the polycarbonate for poverty-stricken voters’ roofs, the little bribes to its rural Malay constituents. There It retains that capability and it will use them.

That doesn’t put Pakatan Rakyat out of the picture. Sources in the business community say that businessmen, either sensing an opportunity or covering their bets, are opening their wallets to the opposition, giving them for the first time the ability to play the same kind of Moneyball. The opposition won in five of Malaysia’s 13 states in 2008 and with the power of incumbency and ability to dish out projects and contracts, businessmen doing commerce in these states are more willing to open their wallets for the opposition parties this time around.

On balance, it is inevitable to escape the conclusion that political instability will continue – until the election if the Barisan wins handily, and well afterward if it’s close as the jockeying for power continues on both sides. Over the next few months, politics as it is practiced in Kuala Lumpur will not be for the faint-hearted.