April 11 (Bloomberg) -- After Malaysia’s leaders locked up more than 100 dissidents in 1987, Lim Guan Eng found himself in the same prison as Muslim politicians whose party advocated Islamic punishments like stoning and amputation.
Lim, an ethnic Chinese member of a party pushing for a secular government in the Muslim-majority country, began interacting with members of the Pan-Malaysian Islamic party, known as PAS, for the first time. Following months of lengthy discussions on theology and politics, he realized they could work together even while disagreeing on Islamic law.
“When they detained us, they forced us to live together, and we found that we have the same stand on many issues,” Lim said last month in an interview. “It is a friendship formed in bondage of iron, of pain, of suffering. When you suffer together and you don’t give in, that is an unbreakable bond.”
Anwar Ibrahim’s resurgent three-party opposition alliance is banking on those relationships to overcome ideological differences and end the 55-year reign of Prime Minister Najib Razak’s ruling coalition in the coming weeks, a scenario that is unsettling investors. A previous attempt by opposition parties to unite fell apart in 2001, and they’ve yet to state publicly who will be prime minister if they defeat Najib.
“If they win the election, God knows what kind of a common policy they’ll have, how they’d work out the Cabinet lineup,” said Clive Kessler, emeritus professor at the University of New South Wales in Sydney who has been writing about Malaysian politics for half a century. “It’s a coalition that is in fact simply a no-competing-against-one-another-on-election day pact. Whether or not that’s a viable government is a huge question.”
The opposition’s platform is centered on lowering prices of utilities and cars, giving cash handouts to senior citizens, breaking monopolies and fighting corruption. It plans to pay for the policies by eliminating graft and wasteful government spending that Anwar has said amounts to about 20 billion ringgit ($6.6 billion) per year.
“It doesn’t look like there’s a lot of reforms in that package,” said Santitarn Sathirathai, a Singapore-based economist at Credit Suisse Group AG, referring to the opposition’s manifesto. “A lot of things tend to be a bit populist, which may not go so well with the markets.”
Brokerages from CLSA Asia-Pacific Markets to RHB Investment Bank Bhd. have warned of a market sell-off if the opposition wins on concerns over government stability and changes to investment projects approved under Najib. Anwar has said his coalition may renegotiate government contracts for toll-roads and power generation if they are found to be flawed.
The benchmark FTSE Bursa Malaysia KLCI Index extended gains after reaching a record yesterday, rising 0.5 percent as of 10:33 a.m. local time. For the year, it has underperformed its regional peers, some of which have gained more than 13 percent.
Public satisfaction with Najib’s 13-party Barisan Nasional, also known as National Front, has fallen to 48 percent over the past year, according to a Merdeka Center for Opinion Research survey of 1,021 voters conducted Jan. 23 to Feb. 6 on the country’s peninsula. The same survey showed dissatisfaction with Najib rising to 32 percent, the highest since he took power in 2009, about a year after the last election.
Barisan Nasional is seeking to extend its winning streak in a May 5 election, building on a legacy of success helped by opposition parties that competed against each other for decades. That changed in 1999 after Anwar was fired by former Prime Minister Mahathir Mohamad and later jailed for corruption and sodomy. The sodomy conviction was overturned in 2004.
PAS, Lim’s ethnic Chinese-majority Democratic Action Party known as the DAP, and two parties that later merged under Anwar’s leadership, united at the time to form the Barisan Alternatif. The bloc won 22 percent of seats in the 1999 election, up from 8 percent in the previous vote.
The coalition unraveled two years later when the DAP left shortly after the Sept. 11, 2001, terrorist attacks because it disagreed with PAS’s push to create an Islamic state with Shariah law. In the 2004 election, Barisan Nasional won 90 percent of seats for its biggest-ever parliamentary majority.
The opposition regrouped informally before the 2008 vote and won 37 percent of 222 seats, denying the ruling coalition a two-thirds parliamentary majority for the first time in three decades. Afterward, the DAP, PAS and Anwar’s People’s Justice Party formed the Pakatan Rakyat, or People’s Alliance.
While its manifesto avoids mentioning Shariah law, Pakatan Rakyat won’t stop PAS from advocating its implementation nor the DAP’s push for a secular state, Anwar said in a Feb. 19 interview. The coalition agrees to respect rights to freedom of religion and speech guaranteed in the constitution, he said.
“Any change to be introduced must be achieved through a consensus,” Anwar said.
The opposition’s ability to work together since 2008 in state governments in Selangor and Penang -- the two states where all three parties are represented -- shows they can focus on fiscal responsibility and effective governance, according to Ong Kian Ming, a DAP strategist. Pakatan Rakyat’s parties are becoming more diverse and focusing on policies that don’t hinge on race or religion, he said.
“We are not at each other’s throats every day, although there are areas where we disagree,” Ong said. “At the federal level, if we take power, we’ll find the same spirit in wanting to cooperate.”
Even so, in opposition, Pakatan Rakyat has failed to name a shadow Cabinet, and PAS has yet to say it will back Anwar as prime minister if it wins. PAS and DAP clashed earlier this year over whether Christians can use the word “Allah” for “God” in Malay-language Bibles.
PAS only wants to implement Shariah law for criminal matters in states where it controls a majority, and views hudud punishments as fairer than current laws that allow for hanging and caning, President Abdul Hadi Awang said in an interview. The push to defeat Barisan Nasional has helped unite the opposition, he said.
“We are more focused this time around compared with previous years,” Hadi Awang said at his party’s Kuala Lumpur office on March 19. “We will respect each other.”
PAS wants to wait until after the election to announce who it supports as prime minister, Hadi Awang said. Lim, now the DAP secretary-general and currently Malaysia’s only ethnic Chinese state leader, said Anwar is the “sole candidate.”
“On experience in running government matters, Anwar is far ahead of anyone,” Lim said. “He will be able to bring everyone together.”
For Lim, his experience in detention in the 1980s under the Internal Security Act along with other political leaders, including members of governing parties, is now helping to smooth over the DAP’s differences with PAS. When tensions rise in the coalition, he’ll often call up Mohamad Sabu, PAS’s deputy president who was also jailed at the time.
“You cannot win power alone -- you can only win it together,” Lim said. “Either you win in concert or you lose separately in disarray. The choice is very clear.”
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