Party Vote Leaves Malaysian Leader a Weakened Winner

October 20, 2013, 5:48 PM

Party Vote Leaves Malaysian Leader a Weakened Winner

ABHRAJIT GANGOPADHYAY

KUALA LUMPUR, Malaysia — Allies of Prime Minister Najib Razak fought off challenges from conservatives in high-stakes party elections on Saturday night, leaving Mr. Najib in firm control — at least for now — over the United Malays National Organization. Prime Minister Najib Razak, who wasn’t contested in Saturday’s party elections, has made a series of moves to the right after a weak showing in national elections in May.But while Mr. Najib, who wasn’t contested as his party’s leader, kept allies in key party roles, he has been weakened, as shown by his recent tacks to the right to appease his conservative wing, analysts said.

And one conservative challenger who scored a large vote tally despite losing his bid to win one of three vice presidency slots — Mukhriz Mahathir, the chief minister of the northern state of Kedah — emerged as a potential formidable foe to Mr. Najib going forward.

The internal elections of UMNO are held every three years. The UMNO is Malaysia’s largest political party that is at the core of 14-member National Front coalition that has ruled Malaysia since independence from Britain in 1957. About 150,000 UMNO members voted through an electoral college, in which each of 191 party districts got to pick one person per contested post. The voting was held across the country.

The poll is politically significant because the party president is, by default, the premier of the country. The party’s deputy chief is the deputy prime minister.

While those spots weren’t contested, six people battled for three vice president spots.

The current vice presidents,  Home Minister Ahmad Zahid Hamidi, Defense Minister Hishammuddin Tun Hussein and Rural and Regional Development Minister Mohd Shafie Apdal were pitted against Mohd Ali Rustam, a former chief minister of the western state of Malacca; Isa Samad, chairman of the state-run plantation company Felda Global Ventures Holdings Bhd., and Mr. Mukhriz. The incumbents won.

Among the challengers, Mr. Mukhriz, cornered most of the votes, winning in 91 out of 191 UMNO districts, compared to Mr. Samad and Mr. Ali Rustom, each of who won in seven districts. The voter-getting success of Mr. Mukhriz, who is the youngest son of Mahathir Mohamad – the former prime minister and Malay rights champion whose 22-year often-autocratic rule transformed agrarian Malaysia to one of the most industrialized economies in the region — suggests the strong support that Mr. Mahathir still enjoys within the party ranks.

“Mr. Mahathir will be Mr. Najib’s number one opposition and source of headache,” said Amir Fareed, director at political risk consultancy KRA Group.

Conservatives have rallied in the wake of the UMNO’s weakest showing ever in national elections in May, when hundreds of thousands of urban voters — mostly the ethnic Chinese minority — deserted the ruling coalition in protest of its policies favoring ethnic Malay Muslims.

Strong backing from the rural Malay Muslims — UMNO’s traditional voting bloc — saved the day for the ruling coalition.

Doubts, however, arose over Mr. Najib’s leadership. Since then, Mr. Najib has reversed himself on several policy reforms, such as deciding to throw his support to additional preferential treatment for ethnic Malays in jobs and housing.

James Chin, a senior visiting fellow at Singapore’s Institute of Southeast Asian Studies, adds, “Reforms died on 5th May when non-Malays did not support him [Mr. Najib] despite his all-out efforts to get their support.”

Analysts said Mr. Najib’s departure from his reformist agenda since the May elections was aimed at shoring up his support among ethnic Malays ahead of the party polls.

“This group had to be “rewarded” said Mr. Amir of KRA.

Mr. Najib is unlikely to return to his early calls for reform out of fear of invigorating the right wing, analysts said, as the Muslim-majority democracy undergoes a growing racial polarization.

“On the surface, it looks like [Mr. Najib] is in total control over his party — winning uncontested [with] no challenge to the leadership,” said Mr. Amir of KRA Group.

But because Mr. Najib didn’t need to mount a defense of his policies and leadership at the party elections, he lost an opportunity to reconnect with UMNO voters, and energize and excite his support base, Mr. Amir said. That could encourage a challenger to step forward.

Saturday’s poll also marked the end of a week-long election that saw Najib loyalist Youth and Sports Minister Khairy Jamaluddin scoring a sweeping victory to continue the head of the influential youth wing — a post often viewed as a stepping stone for future premiership — while the women’s wing incumbent Shahrizat Jalil also won by a large margin.

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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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