Malaysia Government Defeats Anwar to Extend 55-Year Rule

Malaysia Government Defeats Anwar to Extend 55-Year Rule
By Daniel Ten Kate - May 6, 2013 2:49 PM GMT+0800

Malaysia Prime Minister Najib Razak’s coalition extended its 55-year rule, sparking a rally in stocks and the ringgit even as Anwar Ibrahim’s opposition alliance vowed to contest some results.
Barisan Nasional won 133 seats in the 222-member parliament. Najib’s United Malays Nasional Organisation now holds 109, or 82 percent of the coalition’s seats, up from 56 percent previously, according to Election Commission data, as support for ethnic- Chinese component parties dwindled. Opposition leader Anwar Ibrahim's People’s Alliance took 89 seats.

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Malaysia's opposition leader Anwar Ibrahim questioned the fairness of the polls, telling reporters in Selangor, outside Kuala Lumpur, that irregularities “have cost us many seats.” Photographer: Sanjit Das/Bloomberg

UMNO’s increased standing in the ruling coalition may reduce the risk of a challenge to Najib’s party leadership, even as he fell short of a goal to secure more than the 140 seats won by the coalition in the last election. A victory margin that proved similar to 2008 may allow him to proceed with plans to narrow the budget deficit while focusing on delivering $444 billion of infrastructure and other investments by 2020.
“UMNO leaders know what’s good for them,” said Ooi Kee Beng, deputy director of the Institute of Southeast Asian Studies in Singapore. “If they realize how weak they actually are, they would see that Najib is their greatest asset. Without Najib they would have fallen.”
The currency strengthened 2 percent to 2.9725 per dollar as of 2:01 p.m. in Kuala Lumpur, poised for the biggest one-day jump since June 2010, according to data compiled by Bloomberg. The FTSE Bursa Malaysia KLCI Index (KLCI), which had lagged other Southeast Asian benchmarks this year, jumped as much as 7.8 percent to a record.

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Anwar Disputes
Anwar questioned the fairness of the polls, telling Bloomberg Television in a phone interview there were documented cases of electoral fraud. He didn’t specify what action the opposition would take, or speculate on his political future. Sivarasa Rasiah, an executive member of Anwar’s party, said it plans to contest as many as 30 seats.
The opposition’s options are limited aside from asserting political pressure for a commission to investigate, James Chin, a professor of political science at the Malaysian campus of Australia’s Monash University, told Bloomberg TV’s Haslinda Amin in Kuala Lumpur today. “If there is any commission to be set up, it can’t be in Malaysia because they will accuse them of being biased, so it will have to have some sort of international component,” he said.
Monitoring groups including Coalition for Clean and Fair Elections, known as Bersih, saw an “improvement in the conduct of the election” despite a number of “major issues,” according to their preliminary report. These included the use of phantom voters, stained ballot papers, indelible ink that could be washed off and the arrest of seven poll monitors.
Election Commission chairman Abdul Aziz said yesterday the commission was “satisfied” with the voting process.

Investment Surge
With the election over Malaysia is “likely to see a potential surge in investment,” said Wee-Khoon Chong, an Asian rates strategist in Hong Kong at Societe Generale SA. Fitch Ratings Ltd. expects “greater clarity on the government’s fiscal and economic policy program” after the vote, Andrew Colquhoun, head of Asia-Pacific Sovereigns, said by e-mail.
Idris Jala, Najib’s minister responsible for overseeing the country’s economic transformation program, said Malaysia’s pipeline of investment is “very healthy.” The country should have “very robust growth” following the election result, Jala, minister in the Prime Minister’s department in Najib’s Cabinet before the election, said in a Bloomberg Television interview with Haslinda Amin today.
Government-linked shares led the gains in the FTSE Bursa Malaysia KLCI with UEM Land Holdings Bhd. (ULHB) leaping as much as 17 percent and Malaysian Airline System Bhd. (MAS) rising as much as 26 percent. CIMB Group Holdings Bhd (CIMB)., a lender headed by the prime minister’s brother Nazir Razak, advanced as much as 14 percent.

Chinese Swing
Najib he attributed the coalition’s defeat in the state of Selangor and other areas to a larger than expected swing of ethnic Chinese voters against his government. “With the Chinese tsunami we couldn’t do anything in Selangor,” he told reporters after the vote.
Ethnic Malays make up about half of the population, while Chinese account for roughly a quarter and the rest are mostly ethnic Indians or indigenous groups. After 1969 race riots, Najib’s father, Abdul Razak Hussein, implemented a system of racial preferences for Malays as the country’s second prime minister that remains in place.
Najib said before the election that his gradual reform of the affirmative-action programs will assure stability and avert a slide in stocks and the ringgit that would accompany any opposition victory.

Urban Voters
The opposition Democratic Action Party, made up mostly of ethnic Chinese, boosted its seat total by a third to 38, according to Election Commission data. The main Chinese parties in the ruling coalition won nine seats, down from 23 in the 2008 election.
Barisan Nasional’s ethnic-Chinese parties now hold the fewest seats since 1969, according to Joseph Chinyong Liow, associate dean of the S. Rajaratnam School of International Studies in Singapore.
“It’s not necessarily only the Chinese who have swung against the BN,” Ong Kian Ming, an opposition candidate who won in Selangor, said of Najib’s coalition. “It’s more complicated -- a lot of urban Malays have swung against the BN as well.”

Najib’s Pull
Najib is more popular than his government. According to a Merdeka Center for Opinion Research survey his approval rating was 61 percent just before the election, while the poll of 1,600 voters conducted April 28 to May 2 found 50 percent of respondents had a positive view of his ruling coalition.
Najib’s coalition won nine of 12 states contested, recovering Kedah from the opposition, the Election Commission said. The opposition retained Selangor, Penang and Kelantan.
He led his coalition into an election for the first time since taking over as prime minister four years ago from Abdullah Ahmad Badawi, who stepped down after the coalition lost a third of its seats in 2008.
“We have to show to the world that we are a mature democracy,” Najib told reporters today in Kuala Lumpur. “Whatever happens, the decision of the people, the will of the people must be respected.”
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