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Malaysia

Uncertainty as Malaysia goes to the Polls

7 May 2018

By Ariane Combal-Weiss, Research Assistant, EU-Asia Centre

On 9 May Malaysians will elect the new Parliament and the new Prime Minister, after 9 years of Najib Razak-led governments. The results are far from being predictable. Despite robust economic growth and positive achievements during his term in office, PM Najib is embroiled in ongoing scandals and has to cope with the political return of his old mentor, former PM Mahathir Mohamad leading the opposition. There is also growing dissatisfaction linked to the rising costs of living. Two main coalitions are running for the Premiership the Najib-led Barisan National (BN) coalition and the Mahathir-led Pakatan Harapan (PH) coalition,[1] diverging on three main issues: ethnic divides, economics and relations with China. 

 

Najib vs. Mahathir – leftovers from a different era 

PM Najib Razak has governed Malaysia since 2009 and chairs Barisan National. The Najib family has long enjoyed a close relationship with the Premiership, as Razak’s father and uncle held the PM position. Najib Razak is known both for his tight grip on power and economic liberalisation measures. Despite the economic growth of the last years, his reputation has been tarnished by his involvement in the 1MDB scandal.[2] It led to rallies calling for his resignation. Among the measures he pledges to implement if his mandate is renewed on 9 May, he will increase the minimum wage to RM 1,500.[3] He also promised to create 3 million new jobs, improve public transports and provide more affordable housing.[4]

Against all odds, the 92-year-old Mahathir Mohamad, who retired from politics, comes back with the prime aim to oust Najib - other parties of the PH coalition and NGOs answered his call. Dr Mahathir Mohamad, currently chairing the PH coalition, has governed Malaysia during 22 years between 1981 and 2003 as the head of the Barisan National coalition. The “Father of Modernisation” passed many economic reforms and launched infrastructure projects. He is also known for his tight grip on power, as he sent to jails many activists. Previously mentor of Najib, he left the UMNO party in February 2016 to protest against 1MDB revelations. He then founded the Parti Pribumi Bersatu Malaysia (PPBM), as a member party of the PH led by his former Vice PM Anwar Ibrahim. While Mahathir had sent him to jail, they now seem to be fighting under the same banner. They both share a strong opposition to Najib and are angered by the government’s gerrymandering and attacks against activists. In a move to bar the opposition from challenging Najib’s position, the Registrar of Societies ordered the PPBM to temporarily disband for a month, as it had allegedly failed to provide paperwork to be officially registered. As a result, the PH parties will contest the election under the logo of Parti KeADILan Rakyat (PKR), represented by Dr Mahathir and PH coalition president Wan Azizah. While the opposition seems to have found in Mahathir an acclaimed leader, its fragmentation remains problematic. 

Playing on the impacts of the GST on the living costs, the PH intends to suppress it within 100 days. It promotes free education, civil service and youth mobility. Fighting against corruption ranks high in PH’s manifesto, building on Najib’s Achille’s heel. Besides resuming the investigation of the 1MDB, it proposes promoting civil servants according to their performance and experience. It also aims to ensure equal benefits from the outcome of Chinese investments. As regards housing crisis, the PH plans to build one million affordable homes across the country.

Najib Razak dissolved the Parliament on 6 April and announced the date of the election. It will take place on a weekday, which is likely to be an obstacle to a high turnout, thus favouring the ruling coalition BN. In addition, the large-scale redrawing of the electoral map conducted by Najib-controlled Election Commission (EC) has been strongly condemned by the opposition. While it is a widespread practice in Malaysian politics, gerrymandering reached an unprecedented level this time. The EC has been accused of redrawing the electoral map in favour of Barisan National, in order to create large districts in opposition strongholds and more seats dominated by Malay Muslim majority likely to back BN. Furthermore, the Parliament passed a law to curb the dissemination of fake news in mainstream and social media.[5] With a very vague definition of fake news, it makes room for arbitrary arrest and has been defined by Amnesty International’s Director for Southeast Asia and the Pacific James Gomez as “criminalising free speech”.[6]

 

Ethnic divides, a key factor in the election 

Both Mahathir and Najib have a common goal: win the hearts and minds of Malay-Muslim citizens. Just like the “Chinese tsunami” triggered a loss in the Chinese popular vote for the BN in 2013, a “Malay tsunami” is expected to favour the PH coalition.

The main ethnic group in Malaysia the Malay Muslim has a strong grip on political and bureaucratic powers. It has yet to come to terms with an economically dominant Chinese community, who represents 23.2% of the total population. Affirmative action policies, the so-called bumiputra policies, have been providing Malay Muslim ethnic group with preferential access to cheaper housing, education, business and employment. While racial divides have always influenced Malaysian politics, politicians are capitalising on them more than ever. Mahathir exploits fears of the clout of the economically dominant Chinese community to appeal to rural ethnic Malay voters.[7] In a bid to win the support of the Malay-Muslim electorate, Najib has been strongly condemning the Rohingya genocide in Myanmar.  

 

Rising living costs fuelling dissatisfaction 

Candidates give a fierce battle on economics. Najib can play on the successful track record on the economic front, as growth has been maintained and industrial production holds up.[8] He planned to achieve high-income status by 2020 and to attract investments in high technology, knowledge-based industries and services. He introduced cuts to government subsidies for petrol, diesel and sugar, and loosened restrictions on foreign investment and reduced preferential measures for ethnic Malays in business. In addition to these expenditure cuts, the introduction of the Goods and Services Tax (GST) in 2015 helped ease the public debt and government deficit. [9] Yet, it also triggered a significant rise in living costs, prompting dissatisfaction among citizens, who don’t feel the economic growth.

Concerns over rising living costs[10], distribution of economic gains and unequal access to public healthcare have sparked protests, especially among the urban population.[11] This plays into Mahathir’s hands, who challenges Najib’s success in economy.

Economic slowdown is expected this year as a result of waning Chinese demand and rising household debt servicing costs. This shows the significant dependence of Malaysia on external trade and on China in particular.

 

Relations with China, a decisive battleground 

China has been Malaysia’s main trading partner for the past nine years[12] and the first source of investments. Chinese FDI has been multiplied by four between 2012 and 2017.[13] They cooperate on many joint projects, such as the China-Malaysia Qinzhou Industrial Park and Sabah Gas Pipeline. The bilateral relationship was upgraded in 2013 to a Comprehensive Strategic Partnership. Both countries also maintain strong military ties, as they undertook joint military exercises in 2015 and 2016.[14]

Malaysia-China economic and trade ties are further boosted by the Chinese Belt and Road Initiative (BRI). Malaysia has been an enthusiastic advocate of the initiative from its outset and is one of the founding members of the Asian Infrastructure Investment Bank (AIIB).[15] The key BRI project in Malaysia, the East Coast Rail Link (ECRL), is expected to be a game changer for Malaysia, connecting its industrial heartland to the less-developed east coast of the peninsula.[16] Another example of Malaysia’s entrenchment in the BRI includes a Digital Free Trade Zone (DFTZ) launched in March 2017 and mainly steered by the Chinese e-commerce company Alibaba.[17] 

Malaysia has developed an a la carte relation with China and deploys a hedging strategy. On the one hand, maximising benefits from China’s trade and investment flows lies at the cornerstone of Najib’s political legitimacy to govern the country. In line with this pragmatic economic approach, Najib visited China two months after taking office in April 2009 as the first country to visit outside ASEAN. Conversely, China is seen as backing Najib, in the wake of the 1MDB scandal that tarnished his legitimacy. End 2015, a few months after the scandal was revealed, China made two investments linked to 1MDB, which helped ease the investment fund’s debt burden, and eventually Najib.[18] Many fear Beijing use FDI and its involvement in the 1MDB affair to have political leverage to keep Kuala Lumpur on its side on the South China Sea issue. 

In the meantime, Malaysia remains cautious. It tries to guard against any long-term strategic risks associated with China’s rise and tries to prevent China from becoming a predominant power.[19] As such, it maintains military links with Western powers. As a result, while Malaysia is protecting its claims and raises concerns over Chinese militarisation in the Spratly, it also plays it safe and bets on its position as a key conduit of China-ASEAN relations.

China’s incursion in domestic politics also builds on the presence of ethnic Chinese in the Malaysian populations. Beijing has been promoting Chinese education in Malaysia through donations to local Chinese primary schools. The Chinese Ambassador to Malaysia called on Chinese Malaysian to support the BN coalition government.[20] The vote on 9 May will be decisive for Malaysia’s future relation with China. Mahathir advocates resetting Malaysia’s ties with China that he considers as being only one-sided and tying Malaysia to China. He pledges to put Chinese investments under tighter control and to ensure that Chinese companies in Malaysia hires locals. His outspokenness on China’s increased presence has been seen as an attempt to appeal to Malay electorate.

With just 48 hours to go there is still considerable uncertainty as to the outcome.

 

 



[1] Pakatan Harapan coalition is made up of Mahathir Mohamad’s Malaysian United Indigenous Party (PPBM), Democratic Action Party, Anwar Ibrahim’s People’s Justice Party (PKR) and National Trust Party (AMANAH).

[2] Najib has been accused of looting $731 million in the 1 Malaysia Development Berhad (1MDB), a government investment fund. The fund was set up by Najib in 2009 to promote economic development. As of today, he has always denied any wrongdoing.

[3] Shannon Teoh, “Minimum wage hike, S$20.3m grants for Malaysian workers if BN wins polls: PM Najib”, The Straits Times, 01/05/2018. URL: https://www.straitstimes.com/asia/se-asia/minimum-wage-hike-rm60m-grants-for-malaysias-workers-if-bn-wins-election-pm-najib

[4] “Angry urban Malaysians chip away at PM Najib's dominance”, The Straits Times, 02/05/2018. URL: https://www.straitstimes.com/asia/se-asia/angry-urban-malaysians-chip-away-at-pm-najibs-dominance

[5] The offenders will be sentenced to up to six year prison and/or fined $123,000.

[6] Amnesty International, “Malaysia: “Fake News” Bill Hastily Approved Amid Outcry”, 03/04/2018. URL: http://www.amnesty.my/malaysia-fake-news-bill-hastily-approved-amid-outcry/

[7] Tashny Sukumaran, “Religion, Race, Politics: What’s Causing Malaysia’s Great Divide ? “, 27/08/2017. URL: http://www.scmp.com/week-asia/society/article/2108367/religion-race-politics-whats-causing-malaysias-great-divide

[8]  Malaysia Economic Outlook, FocusEconomics, 24/04/2018. URL : https://www.focus-economics.com/countries/malaysia

[9]  The federal government debt was reduced from 53% of the GDP in 2013 to 50.7% in 2017. Source: International Monetary Fund, Malaysia, IMF Country Report No. 18/61, March 2018.

[10] 2% in 2016.

[11] “Angry urban voters chip away at Najib’s dominance”, Free Malaysia Today, 02/05/2018. URL: http://www.freemalaysiatoday.com/category/nation/2018/05/02/angry-urban-voters-chip-away-at-najibs-dominance/

[12] Hazwan Faisal Mohamad, “Bilateral trade value between China-Malaysia increased this year”, New Straits Times, 14/12/2017. URL: https://www.nst.com.my/business/2017/12/314351/bilateral-trade-value-between-china-malaysia-increased-year

[13] . Chinese FDI increased from 33.7 million US$ in 2012 to over 1,415 million US$ in 2017. Source: ASEAN Secretariat - ASEAN FDI Database as of 31 October 2017.

[14]  Nile Bowie, “Malaysia’s election a de facto vote on China”, Asia Times, 26/04/2018. URL:  http://www.atimes.com/article/malaysias-election-a-de-facto-vote-on-china/

[15] Nile Bowie, “Malaysia’s election a de facto vote on China”, Asia Times, 26/04/2018. URL:  http://www.atimes.com/article/malaysias-election-a-de-facto-vote-on-china/

[17] Nyshka Chandran, “Alibaba's 'Digital Free Trade Zone' has some worried about China links to Malaysia”, CNBC.COM, 15/02/2018. URL: https://www.cnbc.com/2018/02/12/concerns-over-alibaba-led-digital-free-trade-zone-in-malaysia.html

[18] Nile Bowie, “Malaysia’s election a de facto vote on China”, Asia Times, 26/04/2018. URL:  http://www.atimes.com/article/malaysias-election-a-de-facto-vote-on-china/

[19]  Cheng-Chwee Kuik, “Malaysia’s China Policy in the Post-Mahathir Era: A Neoclassical Realist Explanation”, RSIS Working papers, N° 244, 30/07/2012. URL: https://www.rsis.edu.sg/wp-content/uploads/rsis-pubs/WP244.pdf

[20] Chan Xin Ying, “China-Malaysia Relations: The Three Dilemmas of Malaysian Chinese”, RSIS Commentary, N°152, 21/08/2017. URL: https://www.rsis.edu.sg/rsis-publication/rsis/co17152-china-malaysia-relations-the-three-dilemmas-of-malaysian-chinese/#.WuGiIyOLQch