You are here

COMMENTARY

Najib can still turn the tables on the opposition

His well-executed reforms such as GST and his China Connection can turn out to be game changers

BT_20180411_NAHNAJIB11_3389378.jpg
The British-educated PM Najib can rewrite the history books if he capitalises on his track record of being a reformist and push for more progress.

Kuala Lumpur

NAJIB Razak has an opportunity to reinvent himself. The Malaysian Prime Minister's reputation took a battering after billions of dollars were siphoned from sovereign wealth fund 1MDB. Still, a general election in a few weeks will likely give him a fresh mandate that he can use to secure a much-coveted legacy as a reformer.

Coalitions led by Mr Najib's United Malays National Organisation (Umno) have run the country since independence in 1957. Mr Najib himself has been in power for almost a decade. In the 2013 election, the ruling Barisan Nasional (BN) coalition retained a parliamentary majority but lost the popular vote. Since then, Najib has been engulfed by allegations of corruption related to 1MDB which he has strenuously denied.

For most Malaysians, however, these woes have been overshadowed by more prosaic worries. The US$300 billion economy of roughly 30 million people is growing at a decent near-6 per cent overall, but not everyone is benefiting. According to pollster Merdeka Center, economic concerns, such as rising prices and jobs, rank tops for voters.

sentifi.com

Market voices on:

Incredibly, BN still has the upper hand. That is thanks, in part, to a split in the opposition, where the main charge is now led by 92-year-old Mahathir Mohamad, who was prime minister for over two decades with the incumbent party before switching.

He hopes to woo away the ethnic Malay, Muslim population that make up Malaysia's majority but is unlikely to win over enough of them. Mr Najib has also promised more generous handouts to Malaysia's poorest and will benefit from redrawn constituency boundaries. A last-minute push to curb "fake news" might help his re-election bid too.

Even so, a win by Mr Najib could be economically beneficial if the British-educated son of Malaysia's second prime minister can fight established interests and embrace the ambitious reforms he articulated when he first came to power. One goal was to reduce the role of the Malaysian state in business.

Back in 2010, the Prime Minister called for an end to "rent-seeking and patronage" and promised to reduce state involvement in "activities that compete directly with the private sector".

There have been efforts to improve governance at sovereign fund Khazanah Nasional and oil and gas group Petronas. There has also been some stake sales - including shares in hospital operator IHH Healthcare and, less successfully, palm oil group Felda Global.

Yet such entities continue to crowd out private investment, reduce competitiveness, and hold back faster growth. Government-linked companies and funds own shares worth almost US$130 billion in the top 30 firms, roughly 40 per cent of their market capitalisation.

More progress is needed if Malaysia wants to hit its lofty target of becoming a high-income economy by 2020. The threshold is a gross national income of US$12,236 per capita. According to the World Bank, Malaysia was at US$9,660 last year.

Mr Najib can set the tone for the course ahead by separating his own role as prime minister from that of finance minister. Bringing in clear rules to govern party funding would also help reduce the rent-seeking he described, and help push Malaysia further up the transparency league tables.

Ultimately, the extent of Najib's desire to change his legacy will dictate his willingness to push against vested interests and reform. It is easier to promise favours to win voters when a government has a large hand in business. ThePM has shown himself capable of reform, as with the introduction of the goods and service tax and moves to roll back some perks for ethnic Malay and indigenous people, known as "bumiputra", replacing them with more targeted subsidies. But efforts to pull back the long arm of the State will face resistance.

China - a growing influence in Malaysia, after helping to mitigate the financial fallout around 1MDB - may also be happy with the status quo. Surrounded by neighbours less friendly with Beijing, Malaysia sees itself as a South-east Asian gateway for China. That is starting to pay off, with significant state-led and private investments in recent months, including Alibaba's move to set up a regional distribution hub in the country.

The sale of a stake of just under 50 per cent in Proton, Malaysia's national car brand, to China's Geely in 2017 offers some hope the government will offload even larger iconic assets - perhaps Malaysia Airlines, banks or even shares in Petronas, which has some listed units. Not everyone is happy about closer ties to the People's Republic, however. If elected, Mahathir pledges to review Chinese investment in everything from flats in Johor state to the East Coast Rail Link.

There are also political risks to Mr Najib if he pushes for change. But if he can battle the status quo to reform and adroitly handle the Beijing connection, that will pull many more Malaysians up the economic ladder and, perhaps, help him win a more flattering write-up in the history books. REUTERS

READ MORE: May 9 face-off between Najib and former premier Mahathir

Powered by GET.comGetCom