From the Economist Intelligence Unit ViewsWire
Following Prime Minister Abdullah Badawi’s decision to dissolve parliament on February 13th, Malaysia’s Election Commission has called a general election for March 8th. Although Mr Abdullah’s popularity has suffered in recent months amid rising inflation and social discontent, the ruling Barisan Nasional (BN) coalition hopes to win a new electoral mandate before economic conditions deteriorate and opposition parties manage to forge an effective alliance. This tactic is likely to succeed: the Economist Intelligence Unit expects the BN to retain its two-thirds parliamentary majority, although the coalition is unlikely to trounce the opposition as comprehensively as it did at the last election, in 2004.
The BN has called an early election not because its position has strengthened in recent months, but because it fears that its position will weaken further before its current term expires in May 2009. Malaysia’s economic environment remains generally positive, but it is likely to weaken in the months ahead. The government has struggled to keep commodity-led price increases in check, and has been forced to take measures to end an embarrassing shortage of cooking oil. The government also needs to raise fuel prices to cut its unsustainably high fuel-subsidy bill, which is likely to lead to a sharp rise in the consumer price index. In January it also became clear that the US may be heading into a serious slowdown, hitting Malaysian exporters harder than previously expected.
Politically, one incentive for the government to call an election in March is to take advantage of a weak and divided opposion. Although the three main opposition parties—the multi-racial Parti Keadilan Rakyat (PKR), the left-wing, predominantly ethnic-Chinese Democratic Action Party (DAP) and the conservative Islamic Parti Islam sa-Malaysia (PAS)—showed a united front campaigning for electoral reforms in recent months, talks aimed at hammering out seat-allocation pacts for the election have made slow progress. Another incentive for an early election is to ensure that the BN’s greatest potential adversary, Anwar Ibrahim, a former deputy prime minister, cannot take part. Mr Anwar, who was convicted of corruption in 1998 and released from jail in 2004, is prohibited from standing for political office until April 2008.
The BN is also increasingly worried about rising social discontent. The authorities were surprised late last year by demonstrations in favour of electoral reform and by separate protests, organised by the Hindu Rights Action Force (Hindraf), citing discrimination against the country’s ethnic-Indian population. Meanwhile, high-profile political scandals including allegations of judicial corruption and the murder trial of a top aide to the deputy prime minister have contributed to a drop in the government’s approval ratings.
On March 8th the BN is likely to score another decisive electoral victory. But the ruling coalition is unlikely to achieve a landslide as spectacular as in 2004, when it won 198 out of the total of 219 parliamentary seats. This year, 222 are seats are up for grabs, so the BN only needs to win 149 seats to secure a two-thirds majority in the next parliament. We expect the BN to lose around 10-20 seats, but it will retain its two-thirds majority even if it loses 50 seats.
The most crucial aspect of the election will be how ethnic Malays vote and how many of them support opposition parties rather than the United Malays National Organisation, the largest component of the BN coalition. Although Malays make up 60% of the population, they account for over 80% of registered voters in some parliamentary constituencies. Pro-Malay gerrymandering also magnifies their electoral influence. In the 2004 election, the BN won less than 65% of the popular vote but captured 90% of parliamentary seats, including nearly all the seats in eight of the country’s 16 states and federal territories. If voters in these states vote the same way next month, the BN will be guaranteed more than half of the seats in the next parliament even before the results from the rest of the country are taken into account.
The extent to which the BN can retain its parliamentary dominance will also depend on its ability to drum up the support of Malaysia’s ethnic-minority communities. This support has been diminished by fears of marginalisation and creeping Islamisation. Regaining the traditional support of the ethnic-Indian community is a high priority. The government was shocked by the dissatisfaction among the Indian population that erupted into the open on November 25th 2007, when some 30,000 demonstrators protested in Kuala Lumpur in defiance of police orders. The protest indicated the declining appeal of the main ethnic-Indian party, the Malaysian Indian Congress, which is part of the BN. Without the support of the Indian community, the BN’s hold on marginal constituencies could be at risk–although the recent demonstrations also strengthened support for the BN among conservative Malays, who oppose any change in the government’s pro-Malay policies.
In recent weeks the government has used a mixture of inducements and threats to bolster its support among Indians. Examples of the latter include the detention of Hindraf members thought to be the organisers of the demonstration in November, who may be held without trial for two years under the Internal Security Act. The police have also opened investigations into Hindraf’s funding activities and a possible link with terrorist activities. At the same time, however, the government has tried to appear openly concerned about the problems facing ethnic Indians. Mr Abdullah has pledged to combat poverty, while in January another top official promised that the government would ignore gender, colour and creed when recruiting civil servants. This implies a radical, if unlikely, change from the current policy of favouring Malays.
The opposition parties’ chances of winning more seats in the next parliament will depend on their willingness to unite. Since his release from prison in 2004, Mr Anwar has failed to bridge the ideological divide between the DAP and PAS. (The two parties fell out in 2001 because PAS refused to renounce its intention of imposing Islamic law.) However, following a political rally in November 2007 organised by Bersih, an umbrella group of political parties and lobby groups campaigning for electoral reforms, the opposition has begun to show signs of greater cohesion. Extensive Internet coverage of the Bersih demonstration has helped to raise the profile of the opposition parties, which have limited access to other media. With no time to lose, Mr Anwar will now try to solidify a strategic political alliance between his party, the PKR, and other opposition parties.
After the election
Assuming that the BN wins another parliamentary majority, what will be the policy focus of the next government? Despite the rise in discontent among Malaysia’s ethnic minorities, social policy will continue to favour ethnic Malays. This, along with the growing trend of referring court cases relating to Islam to sharia courts, is likely to fuel concerns about creeping Islamisation, which in turn could spark more protests and demonstrations by Hindraf or Chinese activists.
On the economic front, an electoral victory would enable the BN to implement a much-needed hike in fuel prices and in electricity and gas tariffs. The government might also sanction another increase in civil-servant pay to boost consumption and hence partially offset weakness in the external sector—although the pay rises would fall far short of the 7-35% awarded in 2007. Finally, the new government will focus its attention on attracting investment into regional hubs, and will start drafting the next five-year plan, the Tenth Malaysia Plan (2011-15).
Malaysia's government is likely, just, to win next month
From the Economist Intelligence Unit ViewsWire