Muhyiddin Yassin’s Malaysian Quagmire

Political analysts question government’s survivability

By: Murray Hunter

The scramble for the Malaysian prime ministership, won by Parti Pribumi Bersatu President Muhyiddin Yassin, is being regarded by some quarters as the ultimate act of political betrayal, with Muhyiddin taking leadership from Mahathir Mohamad, who created the party the premier now heads. 

From other quarters, the Muhyiddin ascendancy is seen as an opportunity to put aside the long-running rivalries between Mahathir and his onetime protégé, Anwar Ibrahim, escape the ineptness of the former Pakatan cabinet and move on. 

Today Muhyiddin stands as a one-man government responsible for all ministries as he attempts to put together an effective cabinet while satisfying those who supported his bid for power. This is not an easy task as many of the old, deeply corrupt UMNO stalwarts want to return to power and the old ways of doing things. Asia Sentinel has been told that even wives of politicians have been lobbying for their spouses at coffee mornings and lunches while claiming their husbands aren’t greedy or ambitious. Even hints of blackmail are being used. 

Muhyiddin has to deal with this and the fact that some of the most senior UMNO politicians are facing charges and court cases. Former Prime Minister Najib Razak, whose overwhelming corruption played a major role in costing the Barisan Nasional its majority in the May 2018 election, is on trial on allegations of looting the 1Malaysia Development Bhd sovereign wealth fund of US$4.6 billion, the biggest scandal in the country’s history, and faces many other allegations, as does Ahmad Zahid Hamidi, the deputy prime minister, who faces 47 charges involving the theft of the equivalent of US$27 million from a government program. In all, 10 of the party’s top officials are either under arrest or facing a long list of charges including bribery, money laundering, breach of trust and corruption.  

Earlier, as UMNO considered joining the coalition being put together by Mahathir that foundered and caused the current upheaval, it was leniency for UMNO members that ended Mahathir’s participation. The 94-year-old Mahathir refused to go along. The party is said to be continuing to ask for leniency for at least some of the 10 lawmakers although the newly appointed attorney general, former Federal Judge Idrus Harun, is said to be advising Muhyiddin to let the law take its course.  

Insiders say Muhyiddin is firm about not having politicians facing charges in his cabinet lineup. However, he has to accommodate his own Bersatu supporters who were loyal to him throughout his grab for power. Sabah’s Heritage Party (Warisan), and Sarawak’s Gabungan Parti Sarawak (GPS), also want places within the cabinet. He has perhaps 115 MPs supporting him at best – just three more than the 112 needed to keep him in power – and perhaps 30 cabinet positions to hand out amid demands from the United Malays National Organization, which is asking for eight cabinet posts and two more for the Barisan Nasional component parties, the Malaysian Indian Congress and the Malaysian Chinese Association. 

Former Deputy Prime Minister Ahmad Zahid Hamidi is said to be demanding to return to his top position despite his arrest for bribery, money laundering, breach of trust and corruption although publicly he has said he would resign from any cabinet position.

In addition, Muhyiddin’s own Bersatu is split into three factions, most of them contemptuously referred to by the general public as “frogs” for leaping from the Pakatan Harapan coalition. They are the original 12 that took part in the 2018 election victory plus 11 UMNO MPs who crossed over to join the new Perikatan Nasional government, and 11 former Parti Keadilan Rakyat MPs led by Azmin Ali, the lieutenant who led the revolt against Anwar. Parti Islam se-Malaysia, or PAS, the rural Islamic party, is seeking its own place with cabinet positions and the federal implementation of shariah law. If anyone of these factions pulls out, Muhyiddin’s loose coalition will collapse, which he has sought to delay with a two-month postponement in seating Parliament.

The economy is floundering. Key indexes like Bursa Malaysia have been in almost free fall, complicated by global concerns over the Covid-19 coronavirus, which now has infected at least 93 in the country and is destroying tourism arrivals, which contributes almost 15 percent annually to GDP. The ringgit is also falling sharply, as are exports. 

Businesses are suffering liquidity problems, SMEs finding it difficult to remain solvent, inflation is increasing the cost of living, properties around urban areas up for sale with no buyers, oil revenue slumping, palm oil prices declining by 28.6 percent since the start of 2020, and rubber trees being taken out of the ground, as the crop is almost not economically viable anymore. 

On top of this, there is still anger in the community questioning the Yang di-Pertuan or king’s judgment to appoint Muhyiddin premier. This along with media reports that Muhyiddin has not been congratulated by foreign leaders on becoming prime minister, his delay in recalling parliament, and his perceived delay in forming a cabinet are putting slurs on his legitimacy. 

Since becoming prime minister, Muhyiddin has said little, adding to uncertainty. However, his appointment of Idrus Harun shows his style of leadership, and hints that he values expertise and integrity in the people around him. Muhyiddin is a politician who doesn’t talk a lot and holds his cards closely to his chest. He knows a balanced cabinet to stall off future challenges by UMNO, and keep WARISAN and GPS support is needed. 

The 72-year-old Muhyiddin, said to be in relapse from pancreatic cancer, has been in politics for over 40 years, served under three prime ministers, been deputy prime minister, minister for agriculture, home affairs, youth and sports, defense, domestic trade, international trade, and education. He was also the chief minister of Johor. Muhyiddin is considered astute, knows all the political actors extremely well, and knows how government works. 

He also knows that people will perceive his administration as a Malay-only government, and will be expected to form a credible cabinet to counter these perceptions. PAS leader Abdul Hadi Awang may not be in the cabinet, choosing to remain outside as DAP leader Lim Kit Siang did in the last government. This would help Muhyiddin look more moderate, although Hadi will be free to make public comment, which could embarrass his government.    

There is also the possibility that elements within UMNO may contrive situations that create an unstable government. This would create conditions for UMNO with PAS supporting a takeover government at some point. Muhyiddin must cultivate allies to protect the continuing existence of his government. 

Whatever cabinet he pulls together will have a daunting job. The world may be headed for recession. Bank Negara will most probably revise down its economic growth forecasts again this year. With the country slowly shutting down with fear of the Covid-19 virus, people’s everyday ability to live will be further strained. Salaries are not rising with inflation. The budget deficit, already projected at 3.2 percent, is expected to blow out much further as revenue drops from a slowing economy. 

The economy needs to be flushed with cash to improve liquidity, so the economic cycle doesn’t stall. The pressure to reestablish the unpopular goods and services tax that Pakatan Harapan voided, at a lower rate will be overwhelming, especially if the government wants to reward its electoral supporters with handouts before the next general election, due in three years. 

Malaysia’s position as a low-cost manufacturer has largely disappeared. There is a mismatch between graduates and available jobs, leading to 10 percent youth unemployment. Graduate skills have declined so much that alumni are ill-equipped to create innovation-based businesses. Former education minister Maszlee Malik’s education fiasco has set higher education back further. As minister, he never identified the problem of there being too many university places available for the number of available jobs in the economy.

The banking sector has long created an artificial credit squeeze by being too prudent in lending policies. Bank Negara’s recent lowering of interest rates will do nothing to encourage more lending. It won’t get liquidity back into the hands of SMEs. Restructuring of the banking system won’t solve this problem. The cash cycle needs speeding up to put liquidity back into the economy so it can grow. Suppliers and customers need to pay each other much quicker to increase economic activity. 

The Malaysian economy is business-friendly, but markets these businesses operate within are over-regulated. Much of this over-regulation, like a requirement for special import permits (APs), were designed to assist rent-seeking Malays get rich. These barriers to doing business and business monopolies urgently need breaking down, although with UMNO members in the cabinet, that may be difficult. 

GLCs and state economic development corporations in many areas are competing against privately owned SMEs. Regulation and government-owned businesses have been a bedrock of corruption for years. The Pakatan Harapan administration, which came to power vowing to right these failings, ignored them, while flopping miserably in managing the economy. The cabinet and Mahathir actually escaped criticism for these failings. 

Don’t expect the Muhyiddin administration to be a liberal one. He is famous for his 2010 comment that “I am a Malay first.”