Malaysia’s main challenge in 2009 will not be the global financial meltdown. Rather, it will be continued grandstanding between the ruling coalition and, since March 8th 2008, a much stronger opposition. The aftermath of March 8th, 2008 produced a lame duck Prime Minister with a lame duck government. The Prime Minister, Ahmad Badawi, instead of gracefully resigning for leading the United Front (Barisan Nasional) to its worst ever electoral results, stubbornly held on to the party presidency and Prime Ministership of the country.
However, members from within his party (United Malay National Organisation – UMNO) and the United Front were calling for his resignation. Simultaneously, the newly constituted opposition coalition – The Peoples Coalition (Pakatan Rakyat) led by the charismatic Anwar Ibrahim, was threatening to overthrow the ruling government through mass defection.
The lame duck Prime Minister, after intense pressure has agreed to step down in March 2009 as part of a transition plan. The current Deputy Prime Minister, Najib Tun Razak will then take over as the next Prime Minister when he is voted in at the next UMNO general assembly. Although, this plan was supposed to have improved confidence in the ruling government, the reverse has actually taken place as there exist serious doubts on the credibility of Mr. Najib as he has too many skeletons in his closet. Meanwhile, Anwar Ibrahim and the Peoples Coalition continue to threaten to topple the government.
The above situation has shifted the politicians and bureaucrats focus away from managing the country to gaining political mileage. Debates in parliaments have focused on scoring political points and not on critical issues, save a few. Policymaking has been reduced to blackmailing the citizens. A case in point was the presentation of the economic recovery plan by the Deputy Prime Minister who is also Finance Minister. The oppositions staged a walk-out of Parliament when the Finance Minister refused to answer their questions. The Deputy Prime Minister has since come under heavy criticism for providing a weak fiscal stimulus plan amounting to RM7 billion (approximately US2 billion) that is deemed to be insufficient and insinuations that it would only benefit the ruling parties cronies. However, the opposition’s proposal of RM50 billion (approximately US14.3 billion), led by the Democratic Action Party (DAP) is clearly a populist strategy. Among the recommendations were:
- RM 6,000 annual oil bonus to all families earning less than RM 6,000 a month or RM 3,000 annual bonus to bachelors earning less than RM 3,000 a month;
- Progressive reduction of corporate tax rate from the present 25per cent to 17per cent;
- Daily revision of petrol prices to take into account of changes in the international price of oil;
- Immediate reduction in gas prices as well as electricity tariffs, which was increased by 26per cent for businesses when the price of oil was USD 124 per barrel to reflect in the drop to around USD 50 per barrel; and
- An additional RM 2 billion wireless project to make all the major towns and cities in Malaysia wifi so that as many Malaysians as possible can be connected to the Internet.
While expansionary policies are a necessary response to the financial meltdown, the recommendations seem to focus on pleasing the public rather than sound economic deliberation. It is important to note that Malaysia has been running a fiscal deficit since 1998.
Sound policymaking in Malaysia may still be an illusion as Mr. Najib deals with the fallout from the by-election on January 17th, which threw serious doubt over his bid to be crowned Prime Minister. He also has to demonstrate to UMNO that he is not weak and will not give in to the demands of the non-Malay political parties in the National Front who now are themselves fighting for their political survival. At the same time, Najib must attempt to restore the peoples confidence in him in the light of serious allegations of foul-play and corruption. It is therefore unlikely, that the global financial crisis will be a priority for politicians in Malaysia for the year 2009.
This article first appeared in East Asia Forum.