Wednesday, 8 May 2013

Malaysia's worrying national election

Malaysia's ruling National Front coalition retained its 56-year hold on power by winning a simple majority of 112 seats in the 222-seat national parliament in polls May 5, the country's Election Commission said. Prime Minister Najib Razak will now return to power for the 13th time.

Financial markets were anticipating the National Front victory, Australia & Zealand Banking Group Ltd. said in an April 30 report. The Malaysian ringgit bounced 1.7 percent on news of the victory. Unfortunately, the election seems to have solved nothing, and may only exacerbate Malaysia’s serious internal problems. 

Prime Minister Najib Razak - AP
As was expected, opposition leader Anwar Ibrahim has refused to concede defeat. He said, "It is an election that we consider fraudulent and the Election Commission has failed." But despite small-scale protests and reports of voting irregularities, the election results are unlikely to be overturned.

The election was the closest in Malaysia’s history and much of the support Mr Najib lost in the catastrophic 2008 election has not been regained. The opposition needed only 112 seats out of 222 to take power. They did not quite get to this marker in the end, but the ruling party secured only 133 seats showing just how close the race actually was.

Various polls put the opposition party in the lead right up until voting day. Surges of support from youth groups and from many urban sectors convinced the opposition that it would win the latest elections. It was not to be. However, as this pivotal election shows, there is a split occurring in Malaysian society could create new obstacles for the ruling party.

A barely hidden secret of racial division reared its head over the past week. Ethnic Chinese living in rural Malaysia voted heavily for the opposition party citing many discrimination grievances. The Chinese, which are the second largest in Malaysia at about 25 percent, feel a succinct disenfranchisement with political policies generally favouring Malays over other ethnic groups and reflected their criticisms with their votes.

The idea that Malaysia is ruled by a healthy mix of ethnic groups has been essentially destroyed. Ethnic Malays now dominate the ruling party while minorities have sided almost entirely with the opposition.

On top of this there is a growing cleft between the rural sectors who prefer the status quo and the urban middle class who want to experience change from a regime with over 50 years at the helm. Malaysia is a complex country where poor, undeveloped rice paddies and rubber plantations are only a short drive from the extremely first-world Kuala Lumpur.

Such diametric livelihoods are clashing ideologically and politically more often. Mr Najib touched on this fear saying, “This worries the government, because if it's not handled well, it could spark tension.” Huge numbers of the population now live under a political regime they did not vote for, and discontent could rise as a result.

Suspicions that Chinese and Indian citizens will continue to be side-lined politically have also not disappeared. With the re-election of a party facing growing public opposition, the country’s ethnic minorities might struggle even more to have a voice.

Tension between ethnic groups in Malaysia has been going on for decades, all the way back to Malaysia’s independence from Britain in 1957, if not longer. And yet even with the current political climate following the upheaval of the 2008 elections, the ruling party was always going to be difficult to unseat after being in entrenched control for over half a century.

What kept Mr Najib in power for a further five year term can be somewhat explained by the rise in economic optimism over the past few months. Jobs are being found and inflation is easing. Foreign investment is now showing higher flows than either Thailand or Vietnam and wages are also increasing. This, along with hand-outs of cash to buy support for the ruling party probably cleared the way for the National Front’s success.
Malaysian voters wait in a line to cast their ballots
 at a polling station in Pekan, Pahang state - Photo: AP

And yet Mr Najib’s party is still not in the same powerful position as in years past. Without a historically significant majority the party will find it difficult to steamroll unpopular policies and will have to find concession with the opposition as its rivals grow in influence.

Many Malaysian’s point to political nepotism and endemic corruption at the highest government levels as driving their changing political alliances. Continuing urbanisation, economic growth, civil liberalisation, and rising incomes have fostered a new group of voters looking for change in the status quo or until the ruling party loses more power or steps down altogether.

What is worrying about this outcome is the distraction it might cause. Malaysia has enjoyed a relatively high degree of stability over the years, from which has flowed important economic growth. As the schism between urban and rural, young and old rips further apart, the country could be forced to concentrate on internal unrest rather than in strengthening the economy.

This could in turn spark a negative feedback loop frightening foreign investors away, which will only encourage more unrest as the economy inevitably contracts.

As with all political parties with an overwhelming majority rule, their decisions are streamlined due to lack of vocal opposition regardless of that policy’s individual popularity. This makes it simpler to steer a country in the preferred direction. If such a political system begins to drop towards greater equilibrium, then the resulting rapidly evolving societal dynamics have the potential to cause some instability, depending on how the ruling political party handles the criticism.

This will be the greatest focus for the National Front’s next term. If Malaysian politics continues its recent trend to equalised polarisation, the economy could temporarily suffer. The democratic process will have to be masterfully handled.

What greatly worries investors is the uncertainty around whether Malaysia will be as successful as Japan or if Indonesia’s disruptions between 1998 and 2004 will be more of a guide.

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