Malaysia’s Nervous View of the Future

Five days into Malaysia’s new political era, the country is waking up to the fact that the future for the ruling Barisan Nasional coalition is probably worse than the already dismal final election outcome makes it seem. The outlook for investors will probably also generate a certain amount of strain and nervousness in coming months.

Although some are concerned that racial tension could boil over because of the wholesale departure of Chinese and Indian support from the Barisan, that is probably not as acute as many think although it could increase in coming months. Ethnic Malays voted against the government as well, although the swing, from 63 percent to 58 percent, was much smaller.

Although the Barisan retained 140 of the 222 seats in the parliament, it won only 51.1 percent of the popular vote, and actually ran behind the three opposition parties on the mainland. It lost the three most urbanized and industrialized states – Perak, Penang and Selangor. It was saved partly by gerrymandered constituencies long-rigged in its favor, and partly by Sabah and Sarawak, which voted solidly for the status quo, and partly by its ability to use the resources of power – a universally docile mainstream press, the money to transport voters to the polls, and, critics charge, outright cheating.

What it means is a long period of jockeying for power inside the United Malays National Organisation, the leading ethnic party in the coalition, with an improbably rejuvenated figure – former Prime Minister Mahathir Mohamad, who worked against Prime Minister Ahmad Abdullah Badawi, his hand-picked successor – possibly playing a kingmaker role as the party’s elder statesman.

In addition, the opposition parties – Parti Keadilan Rakyat, or the People’s Justice Party and particularly the largely Chinese Democratic Action Party and the fundamentalist Malay Parti Islam se-Malaysia – have started out taking no prisoners. In Penang, where the DAP wrested control from Gerakan, the fourth party in the ruling coalition, newly installed Chief Minister Lim Guan Eng initially said the government planned to scrap the local components of the New Economic Policy, the affirmative action program that has given ethnic Malays a wide variety of special treatment ranging from educational opportunities to government jobs, government contracts and government housing.

That prompted a warning from Abdullah Badawi that the DAP could be provoking racial tension. “Do not marginalize the Malays,” he told the national news agency Bernama. “I want to ask Lim Guan Eng, ‘What are his plans for the Malays in Penang? What are his plans for the Indians in Penang?’”

Growing pains are also showing across an opposition coalition with dissimilar aims and philosophies – a quasi-socialist Chinese party, the DAP; a fundamentalist Malay Islamic one, PAS; and a cross-cultural one dominated by urban Malays, Keadilan. In the state of Perak, which was won by the opposition 31 seats to 28, the DAP briefly walked out on the swearing-in ceremony for Perak’s PAS secretary Mohamad Nizar Jamaludin, to protest the fact that while the DAP won 18 seats and PAS won only six, Mohamad was named the chief minister.

Malaysian law states that a Malay must be made chief minister in any state although that can be waived by the sultan, who makes the appointment. Later, despite concerns over PAS, which advocates Sharia law for Muslims, the DAP returned and Lim Kit Siang, the leader of the party, issued an apology. Keadilan then threatened to pull out of the Perak coalition government because eight of the 10 executive council posts will go to the DAP.

Within UMNO itself, the party seems to be governed by uncertainty. “Mahathir’s phone is ringing nonstop,” said one party insider, as UMNO members line up to pay allegiance to a strongman whose time, many thought, was over. “UMNO members don’t know what to do. Many of the senior government servants are loyal to Mahathir and they see this as the destruction of Malaysia. UMNO cells or Malay cells may sprout that will call for Malay rights to be protected against the usurping Chinese.”

In the state of Perlis, infighting has reportedly already started, with UMNO factions tussling to take the post of chief minister.

Although immediately after the election many observers expected Abdullah Badawi to lose his position as prime minister, it now appears he may hang on in a weakened state until UMNO party elections in August, although they could be brought forward. Najib Tun Razak, the deputy prime minister, who himself is under considerable criticism for allegations of wrongdoing, is considered the most likely challenger, although another name has surfaced – that of Tengku Razaleigh Hamzah*, the royalist onetime finance minister who once led a splinter group in a vain attempt to challenge Mahathir for power and who retains little grassroots support.

Economically the country should continue to do well. Some of the Barisan’s cherished development projects, especially in the five states now ruled by opposition parties, are likely to come to be subjected to harsh scrutiny for favoritism or corruption. Gunshy private investors in planned development and infrastructure projects, particularly those with ties to the government, are likely to turn risk-averse. Nonetheless, GDP should continue to roll along, given that the country is in the middle of a commodity upswing, particularly for palm oil, although some analysts expect prices to begin to turn down in the second half of 2008. Malaysia remains a net crude oil exporter, although that is expected to end around 2011. Inflation was a major issue in the election, particularly food inflation, but it is hardly out of control if official figures are to be believed.

The government, in an effort to regain public support, may step up spending on public health, education and housing for ethnic minorities. Because of these concerns, as well as a continuing spectacular scandal in the country’s judiciary, Chinese support for the Barisan fell to 35 percent from 65 percent. Indian support dropped to 47% from 82 percent.

One major issue will be fuel prices. Anwar Ibrahim, the Keadilan leader and de facto leader of the opposition, promised a cut. But with crude skyrocketing to over US$110 a barrel, it is difficult to see how fuel subsidies can be sustained, let alone increased, without blowing a major hole in the budget. If anything, the government should raise fuel prices during Abdullah Badawi’s lame-duck reign to get consumer outrage out of the way before his successor takes over. But that isn’t likely.

The government may also have lost another asset – a complacent press – to the Internet. Although all major newspapers are owned by the pro-government political parties, independent Websites, particularly Malaysiakini and Malaysia Today, which were critical of the government, were read across the country and drew massive numbers of hits prior to and during the election, as they did during opposition marches in November and December.

Given the new dynamics, the government’s options appear limited, and the opposition will be feeling its way. Analysts say that leaders of the three opposition parties are determined to cooperate to prove they are ready to run replace the Barisan. Certainly, the era of absolute Barisan rule appears to be over, and one more Asian government that was a democracy in name only may now have to start acting like one.

*We inadvertently misnamed Tengku Razaleigh earlier. Asia Sentinel apologizes for the error.