Last Wednesday saw the shock results of the Malaysian elections with a historic election victory for Dr. Mahathir Mohamad, who at 92 is set to become the world's oldest elected leader. Former Malaysian Prime Minister Najib Razak, suffered a stunning election defeat to his former mentor, who came out of retirement to form a new coalition the Pakatan Harapan (PH) or Alliance of Hope.
Below is a commentary piece that our GCP member, Klareco, has put together, offering insights into the news.
Malaysia's Opposition Pulls Off Surprising Election Win
Top things you need to know about the Malaysian election results 2018
One of the most hotly contested elections in Malaysia's history ended on Wednesday (9 May 2018) with Najib Razak's Barisan Nasional (BN) coalition suffering its first ever defeat since the country's independence. This included electoral losses for four ministers, in a major political upheaval likely to reverberate deeply across the country's political landscape.
Najib’s vanquisher is his former mentor, Dr. Mahathir Mohamad, whose newly-formed coalition, the Pakatan Harapan (PH) or Alliance of Hope won the historic election. Dr. Mahathir has achieved the seemingly impossible – he has overthrown his allies of over 60 years – and, at 92 years old, has become the world's oldest elected leader. This age of political shocks and upended assumptions has now reached South-East Asia.
Who is Dr. Mahathir?
Governments around the region will need to recalibrate their relationship with Dr. Mahathir. There is no doubt that the opposition's surprising gain can be attributed to him. His assumption as the opposition’s leader has been a game-changer. He made people feel that a transition of power is possible. Under his previous rule, he is credited for transforming Malaysia into one of the Asian economic tigers of the 1990s. Prestigious projects such as the Petronas Twin Towers demonstrated the extent of his ambitions. His authoritarian, but pragmatic, policies won him popular support at home. The future of the stability of the coalition is in question as Dr. Mahathir is 92 years old. But in a deal struck with his former foe, Anwar Ibrahim, Dr. Mahathir will pass the reins on to him after two years. The new government has stated that it will not take revenge but will instead focus on restoring the rule of law.
It is early days and changes are expected, given the PH manifesto which has promised to retract several of Najib’s policies, including the highly unpopular Valued Added Tax (VAT). However, it is in the best interest of the new government to ensure that business continues uninterrupted and to build on the current strength of the economy.
Holiday - The two-day public holiday for Thursday and Friday, which starts the weekend early means that there will be no trading until Monday – a tactical move to stabilise the transition period, and to avoid subjecting the market to knee-jerk reactions. In the short term, markets are expected to be slow as people will be less willing to spend, given the political and socioeconomic instability around the transition.
Role of the Media
Most of the Malaysian media did not highlight discontent during the election-cycle leading many to believe that the incumbent would return to power. As expected, alternative and online news channels, social media and blogs have taken the lead as information sources, as timely updates and objective perspectives were not forthcoming. Social media was used extensively to capture voters and the social media blitzkrieg continued until the last stretch of election campaigning.
This election cycle saw both familiar and new tactics being put into play. Social media's ability to transcend space and its alternative hue made it an effective tool to reach out to first-time and young voters.
When the opposition overturns 60 years of BN-led rule, it is natural to assume Malaysia has chosen a new direction. Yet, a new administration being formed by a man who held senior government office continually between 1976 and 2003 (between 1981 and 2003 as Prime Minister) could hardly be described as revolutionary in policy terms. Expect to see concerns about policy uncertainty fading as the incoming government clarifies its position.
Health of the Economy - Fundamentally, the economy is healthy. The key promises in the PH manifesto – targeted fuel subsidies and the removal of VAT – if implemented, will push up the deficit, which is a concern for the bond market as 40-50% of the market is foreign funded. The Ringgit might consequently take a hit. But from a long-term perspective, the economy is robust enough to sustain itself and these may just be temporary shocks.
Cabinet Portfolios Unassigned - Cabinet portfolios remain unassigned as there is no designated shadow cabinet. Key political leaders from PH-led states will most likely make their way to Putrajaya and may be reassigned to their new roles. Organisations under ministerial umbrellas will now face an unprecedented transition of power, and it will be interesting to see if their functions are retained or revised according to PH interests.
Megaprojects - The direction of megaprojects or plans initiated by former Prime Minister Najib - such as the Tun Razak Exchange – may see heavy PH intervention. The same will apply to bodies such as 1Malaysia Development Berhad (1MDB), the Federal Land Development Authority (Felda), Transformasi Nasional 2050 (TN50), the 37-kilometre LRT3 and developmental programmes under Najib's 1Malaysia mantra.
Board Membership - Multiple local organisations and corporates have BN politicians on their directorial boards. These organisations and corporates will have to decide on potential new appointments to the board, and what influence that brings.
One of the biggest reasons for Dr. Mahathir's comeback has been bread and butter issues, as well as the incumbent's corruption scandals. For months, ordinary Malaysians in the rural areas have been beset by high costs of living and high inflation. Former Prime Minister Najib's introduction of a VAT-style goods and services tax has been very unpopular, making day-to-day life more expensive. Reducing the cost of living was at the core of both coalition's manifestos.
Najib's alleged role in the 1MDB scandal, where US$2.6 billion of a government fund was embezzled – with some US$681 billion allegedly transferred into Najib's own bank account – has been a key part of the opposition's message in trying to move voters against BN. This appears to have swayed voter sentiment against BN.
Sentiment on the Ground - Malaysia's political landscape has been shaken to its core with these results. But sentiment on the ground is optimistic. Many supporters took to social media, and in the streets of Malaysia's capital, Kuala Lumpur, they waved opposition flags. Many described the mood at a public gathering in the city as ‘euphoric'. In media interviews, many people have said they thought they would not live to see this day.
By any measure, these are historic and exciting times in Malaysia.