Malaysian Prime Minister Najib Razak’s election win without the bulk of ethnic Chinese voters is set to pose the biggest test yet

Najib Win Masks Biggest Test After Malaysian Chinese Exodus

Malaysian Prime Minister Najib Razak’s election win without the bulk of ethnic Chinese voters is set to pose the biggest test yet for the pro-Malay affirmative action policies instituted by his father more than three decades ago. The May 5 ballot left Najib’s United Malays Nasional Organisation with 109 parliamentary seats, almost enough to govern without any of its 12 allies in the Barisan Nasional coalition, Election Commission data showed. At the same time, the alliance as a whole took just 47 percent of the popular vote, the lowest since 1969, when Sino-Malay race riots flared. With opposition chief Anwar Ibrahim — ally of the mainly ethnic-Chinese Democratic Action Party that expanded its seats – – planning protests tonight over electoral fraud concerns, Najib, 59, is calling for national reconciliation. To get that, he may need to temper the same preferential-contract and job rules that helped secure his victory among rural Malays.

“UMNO is looking strong, but it’s a false dawn,” said Edmund Terence Gomez, a professor at the University of Malaya in Kuala Lumpur who edited a book on the race-based programs. “They know they need structural changes, and if they don’t do it they will face serious consequences in the next election.” Gomez said the biggest change needed is the removal of policies that restrict certain government contracts to Malays and indigenous groups together known as Bumiputera, or “sons of the soil.” They make up about 60 percent of Malaysia’s 29 million people. Abdul Razak, Najib’s father and Malaysia’s second prime minister, initiated the preferences in the wake of the 1969 riots that killed hundreds.Arrest Threat

Anwar plans to proceed with tonight’s rally even as police threatened to arrest anyone who attends, Rafizi Ramli, an official with his People’s Justice Party, said by phone today. Anwar’s gathering is illegal because he didn’t apply for a police permit, state-run Bernama news service reported yesterday, citing Inspector General of Police Ismail Omar. He didn’t immediately respond to calls to his mobile phone.

Najib’s coalition won 133 seats, topping the 89 seats won by Anwar’s three-party opposition, which captured 51 percent of the popular balloting. Chinese parties in the government saw their seat total cut by more than half, leaving Najib’s Malay- based party with 82 percent of Barisan Nasional’s seats, up from less than half in the 1990s.

‘Big Mistake’

“We have to go to the center, not to the right,” said Saifuddin Abdullah, an unsuccessful UMNO candidate who attributed his loss to a drop in support in urban areas with more Chinese voters. It would be a “big mistake” for UMNO to take heart from the win stemming from its appeal to Malays, he said. The Barisan Nasional alliance should be transformed into a political party that people can join directly, without having first to choose one of its members, such as UMNO, he said.

Besides UMNO, the election night’s other success story was the Democratic Action Party, which saw its take jump by a third, to 38 seats. Najib said in a press conference that evening that his coalition had lost in one state because of a “Chinese tsunami.”

Yet with ethnic Chinese only accounting for about a quarter of the population, the national results show a broader wave turning against the governing coalition in an election that had a record turnout of 85 percent.

Urban Voters

“The Chinese tsunami is all nonsense — it’s an urban middle-class tsunami,” said Gomez, who has been writing about Malaysian politics and business for more than two decades.

About 71 percent of Malaysians lived in urban areas in 2010, up from 62 percent a decade earlier, according to the most recent government statistics.

Anwar, 65, a former deputy prime minister and UMNO member before he was fired in 1998, saw his alliance win a majority of the popular vote running on a platform criticizing affirmative action programs for feeding corruption.

Government-linked companies climbed after the election saw Najib returned to office, propelling a 4.8 percent jump in the FTSE Bursa Malaysia KLCI Index the past two days. The benchmark fell 0.1 percent as of 12:18 p.m. local time.

CIMB Group Holdings Bhd (CIMB)., a lender headed by the prime minister’s brother, Nazir Razak, gained 14 percent since the election as of yesterday’s close. Tenaga Nasional Bhd. (TNB), the country’s biggest power producer, advanced 7.6 percent. The ringgit has risen 1.8 percent against the dollar in the two days after the vote.

Brain Drain

“Taking on corruption is a priority,” Stanley Thai, the ethnic-Chinese owner of medical glove-maker Supermax Corp., told Bloomberg Television after the election. Thai, who has seen Supermax shares fall 3.4 percent since he said in an interview published April 26 that he’d vote for the opposition, called this week for Najib to assure transparency in awarding contracts. Otherwise “brain drain will continue,” he said.

Even so, the prime minister is unlikely to move against the majority of his party and revamp the affirmative-action policies, predicted Chua Hak Bin, an economist at Bank of America Corp. Chua, a Malaysian who has lived and worked in Singapore since the Asian financial crisis in 1998, returned to cast his ballot in the election.

“There may be some compromises such as more Chinese schools and affordable housing not just for Bumiputera but for all races and the low-income,” Chua said.

National Reconciliation

Najib said after the election that UMNO would make changes at the right time, without elaborating. He called for “national reconciliation” while blaming the opposition for making race an issue, and said he’d implement moderate policies.

“Barisan Nasional has a lot of resilience as a political party, despite the fact that we have been in existence for 55 years,” Najib told reporters on May 6, after his coalition won for the 13th straight time. “Not many political parties can claim that kind of record.”

The Malaysian Chinese Association, the main party representing ethnic Chinese in the government, said it wouldn’t take up any Cabinet posts after its poor election showing.

“Voting the Chinese out of the state and federal government won’t help solve dissatisfaction,” Chua Soi Lek, the party’s president, said in a May 6 statement. He added Najib would “continue to look after the interest of the Chinese.”

Three MCA central committee members in a statement today called on Chua to resign immediately because of “his failure to address the political sentiments of the Chinese community.”

‘Racist Outlook’

The opposition rejected the government’s analysis of the election outcome and said Barisan Nasional’s reduced majority stemmed from a push for change that transcended race.

“So long as he wants to polarize and racialize this phenomenon, then they themselves are guilty of a racist outlook and they are incapable of any national reconciliation,” Lim Kit Siang, who founded the Democratic Action Party, told reporters on May 6, referring to Najib. “It’s not a Chinese tsunami; it’s a Malaysian tsunami.”

While Najib considers policies for a second term, the opposition’s future is also undetermined. Anwar, who disputes the results, will struggle to keep the Malay-dominated Pan- Malaysian Islamic Party in the opposition after it lost seats in the election, according to Bilveer Singh, a professor of political science at the National University of Singapore.

With UMNO and the opposition DAP the biggest winners, “This is a very potent mixture that could destroy the country: two dominant, racialized political parties that are on a head-on clash,” Singh said. “Nobody will win. The ground is electrified along racial lines.”

To contact the reporters on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net; Shamim Adam in Singapore at sadam2@bloomberg.net

Will it be new era in Malaysian politics?

Malaysian voters woke up the morning after the 13th general election (GE) wondering whether they had entered a new era in the country’s politics — and whether this new phase is something to be cheered or worried about.

4 HOURS 31 MIN AGO

Malaysian voters woke up the morning after the 13th general election (GE) wondering whether they had entered a new era in the country’s politics — and whether this new phase is something to be cheered or worried about.

Those who wanted to see continuity and stability were pleased the ruling Barisan Nasional (BN) back in power, albeit with a reduced majority. Now, they expect Prime Minister Najib Razak to fulfil his long list of promises of political and economic transformation made during the hustings.

Those who wanted change must have been disappointed that they were getting essentially more of the same. But is it so?

Mr Najib’s BN entered the GE on the defensive; he vowed to regain the two-third majority lost in 2008 when the much-vaunted political tsunami swept the country in favour of the opposition. The Anwar Ibrahim-led Pakatan Rakyat (PR) appeared on the march to take over federal power in Putrajaya. As it turned out, that 2008 tsunami was stopped in its tracks, with the BN winning 133 seats over the PR’s 89 and the mandate to form the government.

Mr Najib even won back one of four states lost in 2008 — Kedah. In the eyes of many BN supporters, he had rescued the BN ship from sinking. The immediate impact of the results is to put the country back on the road of political stability and economic certainty.

MISSES

But the BN’s 133 seats is a step down from 140 and short of the psychologically significant two-third majority crucial for constitutional amendments. Winning back Kedah may be good for the BN’s morale but Kedah is not Selangor, which is rich, industrialised and politically and economically strategic.

In fact, the BN’s support had actually eroded: Many state assembly seats were lost to the opposition; the BN retained Trengganu only by a close margin; indeed in four states — Terengganu, Perak, Kedah and Negri Sembilan — the BN did not win with a two-third majority.

Further, four ministers, three deputy ministers and two chief ministers — Johor’s Ghani Othman and Malacca’s Ali Rustam — lost their fights. But the opposition also suffered an erosion of support, with several Parti Islam SeMalaysia (PAS) and Parti Keadilan Rakyat (PKR) leaders losing.

In other words, Mr Najib may have won his first electoral mandate to lead, but on balance, the BN’s victory may not be as sweet as it should have been. Indeed, former Finance Minister Daim Zainuddin has warned his political career could come under pressure among UMNO members.

CHINESE OR URBAN TSUNAMI?

Mr Najib implicitly blamed the limited victory on what he called the “Chinese tsunami” — ethnic Chinese voters deserting the BN in droves for the PR. In other words, the nationwide tsunami of 2008 had become a tsunami by Chinese voters against the Chinese-based parties in the BN, especially the Malaysian Chinese Association (MCA) and Gerakan in the peninsular. MCA leaders lost half the seats they won in 2008, raising the prospect of no Chinese representation in the next Cabinet.

The Chinese tsunami even swept aside Johor’s Mentri Besar Ghani Othman, who had valiantly tried to stand in its way; the Democratic Action Party’s (DAP) Lim Kit Siang could not be stopped as the emergent opposition leader in a state that was UMNO’s historical bastion. Yet, the Chinese tsunami was not strong enough to capture Johor, though it set the stage for the PR to make further inroads here in the next GE.

But some Malaysian commentators and opposition leaders argue that it is a mistake to view this opposition tide as a “Chinese tsunami”. The DAP, which gained most, could not have done it without the support of its Malay and Muslim allies in Mr Anwar’s PKR and the Islamist PAS. Mr Lim could not have won his huge majority against Mr Ghani on the back of the Chinese alone in Gelang Patah.

DAP leader Lim Guan Eng and Mr Anwar said the PR made gains in many Malay majority areas, such as Kelantan, Terengganu and Selangor.

This means there must have been Malay support for the DAP in a display of cross-ethnic support reminiscent of the 2008 tsunami. Indeed, the PR as an opposition coalition is all about cross-ethnic political collaboration outside the BN framework.

And the Chinese tsunami may well have been a tsunami of urban voters involving all races who wanted change. Notably, overall, while the PR lost the election in terms of seats won, it actually pipped the BN in the popular vote.

NATIONAL RECONCILIATION

In the wake of this mixed outcome, Mr Najib called for a process of “national reconciliation” to contain the trend towards polarisation. It is not, however, clear what this would entail.

While it suggests an attempt to close what he saw as a growing ethnic divide, he has yet to clarify what he means by national reconciliation — who are the groups to be reconciled. If it is to include political parties, will it involve, for instance, the MCA, Gerakan and the DAP within the Chinese community on the one hand, and UMNO, the PAS and the PKR for the Malay community, on the other?

Will voters who support them be happy? National reconciliation will inevitably also mean Malay unity talks involving the PAS and the PKR. While it will be easier between UMNO and the PAS, it will not be so with the PKR. Will key UMNO leaders, including former Premier Mahathir Mohamad, accept a reconciliation with Mr Anwar?

In the meanwhile, Mr Anwar has reconsidered his plan to retire, saying his work is not done yet, given the electoral outcome. He had earlier stated he would quit should he not succeed in his Putrajaya mission. Will Mr Anwar’s continued presence make national reconciliation easier or more difficult?

Mr Najib’s immediate priorities, apart from charting national reconciliation, will be to form his new Cabinet and prepare the ground for the next big election — UMNO’s own later this year. Will there be rumblings against him, or will he be endorsed without question as the leader who will take UMNO, the BN and the whole country towards the vision of a developed state by 2020?

ABOUT THE AUTHOR:

Yang Razali Kassim is Senior Fellow with the S Rajaratnam School of International Studies, Nanyang Technological University. He has been following the just-concluded general election.

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.

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