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Najib chases 'ultimate' win as party faithful get budget goodies

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Malaysian Prime Minister Najib Razak has targeted budget spending at his coalition's most loyal voters, seeking to limit any damage from more than a year of political turmoil as talk turns to a potential early election.

[KUALA LUMPUR] Malaysian Prime Minister Najib Razak has targeted budget spending at his coalition's most loyal voters, seeking to limit any damage from more than a year of political turmoil as talk turns to a potential early election.

The premier allocated more funds for his cash handout program to the poorest 40 per cent of Malaysians, promised civil servants a bonus and introduced extra assistance for farmers. He pledged more roads, bridges and better electricity and water supply for rural regions, and sought to woo younger voters with discounts on outstanding student loans and access to cheap housing in urban areas.

After weathering funding scandals and attempts to topple him for a good part of his second term as premier, Mr Najib must balance a slowing economy with keeping voters happy ahead of an election that could come as soon as March. While the opposition is fractured, it has sought to lure ethnic Malays from Mr Najib's coalition amid discontent at rising living costs and disillusionment over allegations of graft surrounding the premier.

Mr Najib's United Malays National Organisation leads the Barisan Nasional coalition, which has ruled since independence in 1957 with the support of ethnic Malays in the predominantly Islamic nation.

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"As we approach the next general election, it is really difficult to say whether it will be smooth sailing for Najib," said Ahmad Martadha Mohamed, dean of the college of law, government and international studies at Universiti Utara Malaysia.

"The budget aims at specific target groups that have been the main supporters of Umno for a long time. Giving a lot of incentives to these people is crucial to ensure stable and continued support for Umno and BN."

Tax Relief

While Mr Najib's term runs until mid-2018, some senior Umno officials told Bloomberg News last month a vote could come as soon as March. Mr Najib has been quick to deny media reports that cited him as ruling out an early election.

Speaking for more than two hours on Friday in a speech that took shots at his foes and praised allies for standing by him, Mr Najib announced giveaways from tablets for 430,000 teachers to money for muezzins - those who call Muslims to prayer - and mosque caretakers.

There was tax relief for working parents who enrolled preschoolers in early education classes and higher allowances for village heads.

"Najib is making sure every constituency gets their - albeit tiny - share of the pie, so that cumulative effect of all those albeit small amounts of vote switch will favour the incumbent government," said Oh Ei Sun, an analyst at the S Rajaratnam School of International Studies in Singapore and Mr Najib's political secretary from 2009 to 2011.

At the last election in May 2013, BN lost the popular vote for the first time for its worst result yet. Mr Najib on Friday made more overtures to ethnic Chinese and Indian voters who deserted the coalition then, providing funds for vernacular schools and loans to hawkers and small business owners from the minority groups. 

Still, he was unambiguous on who needed to be kept happy. Umno has for decades propagated policies that provide favourable access to education, jobs and housing for Malays and indigenous people, known collectively as Bumiputeras.

"In a nutshell, the agenda of empowering Malays and Bumiputera will continuously be upheld," Mr Najib said.

The premier needs a strong election win to dispel doubts on his ability to lead given scandals surrounding political donations and the finances of state fund 1Malaysia Development Bhd. Even as senior party figures publicly pledge support, some have privately expressed concern he will become a liability.

Some of the biggest initiatives were reserved for the civil service, which employs 1.6 million people, or about 11 per cent of the labour force. Around 79 per cent of the civil service was made up of Malays as of the end of 2014, and over 11 per cent from indigenous Bumiputera groups.

Opposition Walkout

Cabinet members denied it was an election budget, with Minister in the Prime Minister's Department Abdul Rahman Dahlan saying it was an inclusive approach and "we do this every year".

Sports Minister Khairy Jamaluddin added "we don't know when the election is going to be".

Opposition lawmakers walked out during Mr Najib's budget speech after holding up placards referencing Malaysian Official 1, or MO1, a US Department of Justice description of a politician who it said controlled accounts that got hundreds of millions of dollars in diverted funds from a state company.

Mr Najib has acknowledged funds went into his accounts before the 2013 election but said the money was a donation from the Saudi royal family and most was later returned.

"Who is MO1, that was not answered," said Lim Kit Siang, a leader of the opposition Democratic Action Party.

"Corruption problems were not mentioned. The prime minister paints a pretty picture" but questions remain, he told reporters.

While Mr Najib avoided mentioning election timing in the budget speech, he urged his coalition to stay united and "close ranks".

Malaysians "will continue to be safeguarded" he said. The Barisan Nasional government will have the "ultimate victory in the 14th General Election".

BLOOMBERG

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