In 2015, Malaysian Prime Minister Najib Razak found himself in the middle of a controversy. It was alleged that Najib diverted money — close to $700 million — from the state-owned business development firm 1MDB into a personal account. Najib has denied any misconduct in relation to 1MDB, and Malaysia’s Attorney General cleared him of any wrongdoing over the transfers.
Despite the years of scandal, Najib’s party, the dominant one in Malaysian politics since the 1940s, is in position to win next year’s parliamentary elections.
How did that happen?
First, Malaysians don’t think about the 1MDB matter much anymore, having “priced it in” over time, says Ibrahim Suffain, director of the Kuala Lumpur-based Merdeka Center for Opinion Research. Second, in case some people are still unsure what to think, Najib’s government is proposing a 2018 budget that includes what analysts describe as handouts for regular folk.
Budget items include income tax cuts, scrapping of tolls collected on four major highways and certain sales tax exemptions. Expect also an increase in affordable housing. Boosts in infrastructure, such as roads in the farther-flung provinces, would further spark enthusiasm.
Those more populist elements of the budget put Najib’s party United Malays National Organisation (UMNO) in easy striking distance of an election win, analysts say.
A win next year would extend power for the man who has pushed Malaysia to become a higher-income country with more foreign investment — while earning a reputation for stiff crackdownsagainst anti-government protesters.
“Prime Minister Najib Razak’s self-declared ‘mother of all budgets’ has been loaded with vote-getting goodies,” Saleena Saleem and Amalina Anuar write in a November 28 paper for the S. Rajaratnam School of International Studies at Nanyang Technology University in Singapore. “As such, the budget represents the government’s last opportunity to demonstrate to the electorate how it intends to address the bread-and-butter issues that are topmost concerns for a sizable portion of the Malaysian population.”
Is the budget safe?
The proposed budget of $68.9 billion, a 7.1% increase over this year, would satisfy credit ratings agencies and be affordable as the International Monetary Fund among others forecast an economically strong 2018 partly plus recovery in commodities prices, the two scholars say.
Malaysia depends largely on exports of crude oil, natural gas and palm oil. Price recovery means economic stability for the Southeast Asian country as a whole.
Fight for control of the narrative
The budget will help shore up support for Najib’s party in Malaysian cities where it otherwise might lose votes to the opposition Pakatan Harapan alliance, analysts say. The opposition may also be split between the Islamist Party and remaining coalition, Suffain predicts. The split would give UMNO an advantage even without its budget.
“Previous by-election results in Sungai Besar and Kuala Kangar in peninsular Malaysia in June 2016 already demonstrate that the incumbent government is in control of the narrative,” Saleem says in an interview. “Voters have the tendency to forget past issues and instead focus on the tangible benefits that they get to experience in the present.”
The opposition is proposing a budget that gets at good-governance issues as well as offering direct benefits such as abolition of a goods-and-services tax plus a reinstatement of fuel subsidies. But Najib’s party has made its budget case clearer than the opposition has to Malaysia’s 31 million people, some of whom may know relatively little about the opposition’s alternative, Suffain says.
“It is more challenging for the opposition,” says Song Seng Wun, an economist in the private banking unit of CIMB in Singapore. “It’s a question of how much inroad they can make if the incumbent is concentrating on the urban votes.”