Najib Calls Malaysia Election With Five-Decade Rule on Line; The KLCI index has gained 82 percent during Najib’s three years as leader as of yesterday’s close, about three times less than benchmarks in Thailand, Indonesia and the Philippines.

Najib Calls Malaysia Election With Five-Decade Rule on Line

Malaysian Prime Minister Najib Razak dissolved parliament in preparation for elections that will determine whether his ruling coalition extends its unbroken hold on power since independence in 1957. Under Malaysian law the contest must be held within 60 days of the dissolution of the legislature. The Election Commission will meet in a few days to announce a date for the poll, spokesman Sabri Said said in a text message. “The ultimate power of choosing the government lies in the peoples’ hands,” Najib said in a televised address. “Over the past five decades we’ve achieved stability and prosperity in this country. I hope we’ll continue this tradition.”

The 13-party Barisan Nasional coalition, which won the 2008 national vote by its slimmest margin, faces a resurgent opposition alliance led by former deputy prime minister Anwar Ibrahim. The prospect of an even closer election result has helped make the FTSE Bursa Malaysia KLCI Index one of the worst performing Asian benchmarks this year. The gauge fell as much as 3.1 percent today, the most since October 2011. “We expect the Barisan Nasional coalition to have less seats in the aftermath of the 13th general election, but not enough to lose their majority,” said Anand Pathmakanthan, head of Malaysia research at CLSA Asia-Pacific Markets. “If you talk to most investors, their best case scenario is that Najib stays as well because they can’t see what comes after.” The KLCI index has gained 82 percent during Najib’s three years as leader as of yesterday’s close, about three times less than benchmarks in Thailand, Indonesia and the Philippines.Stocks Fall

The index fell 1.2 percent to 1,664.33 as of 11:56 a.m. local time. The ringgit, Asia’s fifth-worst performing currency this year, was little changed.

Najib said all government-controlled state assemblies are also dissolved. The ruling coalition lost control of five of the country’s 13 states in the 2008 election to Anwar’s People’s Alliance. The government later regained control of Perak state following defections.

Members of Najib’s Cabinet applauded him today when he arrived in Putrajaya, the administrative center outside Kuala Lumpur, to chair a weekly meeting, state-run Bernama news agency reported. Today is the fourth anniversary of his tenure as prime minister.

Najib, 59, leads the coalition to the polls for the first time. He came to power in 2009 after Abdullah Ahmad Badawi stepped down as prime minister following the narrower election win a year earlier.

Corruption Perceptions

Najib is more popular than his government, according to the Merdeka Center for Opinion Research. His approval rating slipped to 61 percent in February from 63 percent in December, a survey of 1,021 voters conducted Jan. 23 to Feb. 6 on the country’s peninsula showed. By contrast, 48 percent of respondents said they were “happy” with the government.

Barisan Nasional has struggled to reverse perceptions of entrenched corruption and sufficiently address concerns over higher living costs, according to Ibrahim Suffian, a political analyst at the Merdeka Center. More voters under 40 years of age are now accessing news reports online, he said, and “the government narrative isn’t always dominant anymore.”

“Economic growth was pretty strong at the end of last year and we can see some improvement in the numbers, but not nearly enough to significantly boost the government’s chances,” Ibrahim said by phone.

Economic Growth

Malaysia’s economy has expanded by more than 5 percent for each of the past six quarters through the end of 2012, buoyed by domestic demand and investment.

Najib leads a “weak government” and isn’t himself the problem, former Prime Minister Mahathir Mohamad said in an interview in August. Mahathir won five straight elections as leader before stepping down in 2003.

The prime minister is seeking to capitalize on goodwill from cash payments and other pre-election sweeteners announced in the government’s 2012 and 2013 budgets. He raised salaries of civil servants, including police and the armed forces, on March 12, costing the government 1.5 billion ringgit ($483 million).

The government has also been distributing a second round of 500-ringgit cash handouts to low-income households among the nation’s 29 million people as the election draws near.

‘Election Mood’

“Malaysia has been in the election mood for the past two years,” James Chin, professor of political science at the Malaysian campus of Australia’s Monash University, said in a telephone interview with Bloomberg Television’s Rishaad Salamat today. “What we are seeing is the tail end of a very, very long campaign. My guess is that the majority of Malaysians have already made up their minds on who to vote for.”

Barisan Nasional, which means National Front in Malay, currently controls 137 seats in Malaysia’s 222-member parliament, with Najib’s United Malays Nasional Organisation its biggest component.

Anwar, 65, leads an ideologically disparate and multi- ethnic opposition that includes one party with mostly ethnic Chinese and another whose members support the implementation of Islamic law. His alliance holds 75 parliamentary seats.

Anwar spent six years in prison until 2004 on corruption and sodomy charges that he says were politically motivated. The sodomy charge was eventually overturned, and he was cleared of a second charge of having sex with a man in January last year.

Anwar Confident

The opposition will win the election with a majority of more than 10 seats, Anwar said in a March 8 interview in Kuala Lumpur.

“I don’t want to sound over confident, but I believe looking into the trend now it will be a comfortable majority,” he said.

Anwar has pledged to revamp racial preferences for the ethnic Malays and indigenous people, and trim the budget deficit through cost savings if he wins power. His coalition also wants to raise the minimum wage, lower oil and electricity prices, and increase cash handouts to the elderly and students.

Najib has rolled back some preferences for ethnic Malays and indigenous peoples to encourage investment, including doing away with a requirement that foreign companies investing in Malaysia and locally listed businesses set aside 30 percent of their equity for this group. The policy of favoring ethnic Malays was put in place by his father, Abdul Razak Hussein, who was the country’s second prime minister.

$444 Billion

Najib in 2010 worked with the private sector to identify $444 billion of projects from mass rail to oil storage to be implemented this decade to boost incomes. The program attracted 212 billion ringgit of investment commitments since it started in 2010 from companies such as Carrefour SA (CA) and General Electric Co. (GE), according to data released last month by the government’s Performance Management and Development Unit.

Anwar backed mass demonstrations last year and in 2011 that were organized by the Coalition for Clean and Fair Elections, or Bersih, to demand changes to the country’s voting laws. At one of the gatherings in April, police arrested more than 500 people for defying a ban on street protests introduced by Najib a month earlier.

The Election Commission has acceded to some of the demands, such as updating the electoral roll to reflect deaths and using indelible ink for the first time to mark voters’ fingers to prevent double counting. Bersih’s call for a minimum 21-day campaign period hasn’t been met.

Anwar served as deputy prime minister from 1993 to 1998 under Mahathir, who ruled Malaysia from 1981 to 2003. He was removed from office and tried in 1998 for abuse of power and having sex with a man, which is an offense in Muslim-majority Malaysia and carries a maximum sentence of as much as 20 years in prison.

To contact the reporters on this story: Barry Porter in Kuala Lumpur at bporter10@bloomberg.net; Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: