Malaysian minister flags living costs as concern ahead of polls

[KUALA LUMPUR] The cost of living is a key concern among Malaysian voters, according to a member of Prime Minister Najib Razak's cabinet, setting the stage for it to be a major campaign topic in polls expected within months.

There is a "general expectation" among the public that elections will be held in 2017, Trade Minister Mustapa Mohamed said in an interview on Friday in Hanoi, adding it is up to Mr Najib to decide the "best moment to strike."

The ruling coalition has been working hard to improve communications with voters even as it's been aided by a divided opposition.

The Barisan Nasional coalition led by Mr Najib's party is seeking to extend 60 years of uninterrupted rule in a ballot that must be held by mid-2018.

The opposition is looking to play up discontentment over living costs ahead of the vote, having failed in smaller elections to get traction from a controversy over the finances of a troubled state fund and allegations of graft surrounding Mr Najib.

Inflation reached an eight-year high in March before easing in April, while consumer sentiment has been below the level of optimism since mid-2014. "People are worried that the dollar is not stretching as far as it used to," Mr Mustapa said. "People remain unhappy about GST," he said, referring to a consumption tax implemented two years ago.

While there's no backtracking on the 6 per cent tax, there's better understanding on what the levy is and why the country needs it, Mr Mustapa said. Mr Najib has called the GST a "savior" of government finances as oil prices plunged.

ECONOMIC PICKUP

Things are looking up for the Malaysian economy with a report on Friday showing growth last quarter was at the fastest pace in two years. The ringgit has climbed more than 3 per cent against the dollar this year, after depreciating almost 8 per cent in the last quarter of 2016.

At the 71st anniversary celebration this month of his United Malays National Organisation, Mr Najib called on the party to stay united and urged members to avoid complacency even as the opposition descends further into disarray.

The opposition has failed to capitalise on gains made in 2013, when it won the popular vote for the first time. There has been infighting and the severing of ties between some parties, increasing the odds of multi-cornered fights at the next elections which would benefit UMNO politicians.

"We cannot underestimate them," Mr Mustapa said of the opposition, adding it was a lesson they had learned from 2013. Still, "there appears to be divisions. They are not as united as we are."

PAS PROSPECTS

The main Islamic opposition party known as PAS had already shown interest in backing Mr Najib on some policies. Mr Najib received a further boost this month after PAS said it will sever ties with its opposition ally the People's Justice Party. Mr Mustapa is the UMNO chief for Kelantan, a state controlled by PAS.

"At the highest level perhaps there's been some discussion but obviously there are challenges at the grassroots level after having been involved in this ferocious fight the last 40, 50 years," Mr Mustapa said, speaking of the potential for closer ties with PAS."It's kind of tough to forget the past. At this point in time we don't foresee an alliance in the same way that we are Barisan Nasional. I don't see PAS being a big part of Barisan Nasional."

More than 80 per cent of Kelantan's 1.8 million people are ethnic Malays, which UMNO counts as its support base. It is the poorest state in the nation by nominal gross domestic product per person, according to government statistics.

"We see some shift in people's perception about Barisan Nasional, some changes," Mr Mustapa said. "We're not there yet, we need to work harder to be able to take over the state from PAS."

BLOOMBERG