Malaysia’s Succession Struggle 2019: Economic Slowdown and Instability?

Malaysia’s Succession Struggle 2019:

Economic Slowdown and Instability?

KB Teo

SYNOPSIS

Malaysian politics is engulfed in controversy and uncertainty.  The vicious succession to PM Mahathir within the ruling Pakatan Harapan (PH) coalition threatens to worsen. The economy is slowing rapidly and foreign investments have fallen sharply.  Unless the succession issue is quickly resolved, instability threatens.

COMMENTARY

Malaysian politics is currently in turmoil.  In November 2019, factional infighting within the  Parti Keadilan Rakyat (PKR) broke out. The PKR is the second largest component of the ruling multiethnic (PH (Coalition of Hope), led by PM Mahathir Mohamad, 94.  He was Malaysia’s leader from 1981 to 2002, the longest on record. It also includes the Chinese-based Democratic Action Party led by Lim Kit Siang and his son, Finance Minister Lim Guan Eng.  The latter has corruption charges pending against him in relation to the purchase of a bungalow in Penang. The prosecution, controlled by the Attorney General, dropped the charges against Lim.

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The PH coalition surprisingly won the May 2018 Malaysian General Elections (GE14), ousting the corrupt Barisan Nasional (BN) administration of Premier Najib Razak.  Najib is implicated in the 1MDB scandal, the largest of its kind in the world. It has debts of USD 11.73 billion. About USD 700 million was reportedly transferred to Najib’s private bank accounts.  The US Justice Department claimed that USD 4.5 billion was stolen from the 1MDB. The BN had ruled Malaysia continuously for 61 years.

In November 2019, Anwar Ibrahim, 72 (leader, PKR), was challenged by his deputy, Azmin Ali, 55.  Azmin is very ambitious. He has the political support of Mahathir. There was apparently a “promise” made by Mahathir to make way for Anwar to become Prime Minister midway through the HP’s term of office.  Reports indicate that Mahathir has since denied making such a promise. Mahathir has deliberately been coy about a power transfer dateline. Anwar has, however, publicly expressed strong confidence that he will become Malaysia’s next leader by June 2020.

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There are, however, clear benefits for Malaysia if Mahathir sets a timeline for the succession.  One, it will stop the political uncertainties in Malaysia, which risk descending into an all-out war.  Two, it will enable Mahathir to focus on fixing the slowing economy.  

In 2019, the economy is expected to grow by only 4.7%.  Manufacturing is slowing rather quickly. The Purchasing Managers’ Index has stayed below 50, signalling contraction.  Since early 2019, the RAM Business Confidence Index has been sluggish. The high cost of living contributed to PH’s defeat in the Pulau Piai by-election.

There are media reports suggesting that Mahathir may have political ambitions for his 54-year old son, Mukhriz.  Najib has also accused Mahathir of seeking to make Muhkriz the next prime minister of Malaysia. The latter’s brother, Mokhanzani, according to Forbes magazine, is reportedly one of Malaysia’s top ten  billionaires. He is among the top ten richest tycoons in Malaysia. Mukhriz is the Menteri Besar (Chief Minister) of the northern Kedah state.   But Mahathir claimed that his sons are rich because of their own efforts.

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The PKR factional infighting already has negative results for the PH coalition.  In June 2019, it lost decisively in the Tanjung Piai by-election back to UMNO. UMNO deputy president Mohamad Hasan voiced concern that PKR leaders continue to quarrel over the prime minister’s post.  

Mohamad Hasan said it was unfortunate that there had been no discussions on urgent economic issues including the ringgit’s drop in value and rising debt.  Billions of ringgit in foreign investment has left Malaysia’s Stock Exchange. Its performance in 2019 is among the worst in the world. The amount of foreign investment which left Malaysia in 2019 was reportedly more than RM10 billion.  The Malaysian economy is evidently slowing.

Anti-corruption promises lay at the heart of Pakatan Harapan's 2018 election win.  A priority is its pledge to get to the bottom of the 1MDB scandal. As much as USD 4.5 billion went missing.  Jho Low, a financier accused of orchestrating the theft, remains at large. In October 2018 the U.S. Department of Justice announced that Jho had agreed to forfeit nearly USD 1 billion in assets allegedly bought with the fund's money. Instead, Malaysia's attention has shifted to former Prime Minister Najib Rasak, who has pleaded not guilty to 42 criminal charges charges ranging from money laundering to abuse of power. 

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The new Mahathir administration faces many political challenges. There are three key issues that the administration must address before the next General Election in 2023. These are the Malay Agenda/Bumiputra Policy; political Islam; and the timeline for transition of power from Mahathir to Anwar Ibrahim.  Mahathir needs to clearly signal that Anwar will be his successor. Only then will the economic slowdown slacken and the political uncertainty subside.

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KB Teo is a former diplomat with the Singapore Ministry of Foreign Affairs.  He attended the UN General Assembly as part of the MFA delegation.