April 18 (Bloomberg) -- Malaysian Prime Minister Najib Razak, whose coalition faces its biggest challenge in 55 years, said the election offers a choice between a reforming government that’s boosted growth and a fractious opposition that could bring “catastrophic ruin” for the country.
“Change, if not managed in a way, can lead to a disastrous outcome,” the 59-year-old leader said in an interview yesterday in Putrajaya, the country’s administrative center outside of Kuala Lumpur, ahead of May 5 polls. “Countries that have been going through Arab Spring, now many people are saying it’s Arab Winter, because the dividends for the change they expected have been very disappointing.”
The ruling Barisan Nasional coalition is battling a revitalized opposition led by former Finance Minister Anwar Ibrahim. Najib is under pressure to regain some of the ground lost in the last poll in 2008, when the coalition had its closest victory since independence from Britain in 1957. Both have pledged to tackle corruption, with Anwar demanding an end to cronyism and monopolies in what he called a peaceful “Malaysia Spring” in 2011.
Barisan Nasional, also known as the National Front, is fielding new candidates in one-third of parliamentary seats in a bid to woo voters who cite entrenched corruption and living costs among their most pressing concerns. Former Prime Minister Abdullah Ahmad Badawi and Economic Planning Unit chief Nor Mohamed Yakcop are among veteran politicians making way for fresh blood.
“When Najib uses language like this, it shows he’s getting defensive and moving into attack mode,” said Bridget Welsh, associate professor of political science at Singapore Management University. “He appears to be painting it in black and white as a zero-sum game. The opposition is also pro-markets and pro-investment.”
Both sides have similar policies and the election result is likely to be very tight, she said.
Najib, who took over mid-term in 2009 and is facing voters for the first time as leader of the 13-party coalition, said he would abide by a loss.
“We are all a strong believer in the democratic process,” he said. “It’s the will of the people that decides.”
He described the People’s Alliance, led by Anwar, 65, as a “fractious, ideologically-incompatible collection of parties.” The alliance includes one party with mostly ethnic Chinese and another whose members support the wider implementation of Islamic law.
The opposition’s promises would be “horrendous for Malaysia in terms of results,” Najib said. “The market, the currency, would take a very sharp decline.”
Anwar has pledged to roll back racial preferences for the ethnic Malay majority, cut oil, electricity and water charges, abolish road tolls and subsidize higher wages.
Brokerages from RHB Investment Bank Bhd. to Citigroup Inc. expect a closer result than in 2008. The FTSE Bursa Malaysia KLCI Index closed at a record high yesterday, though it remains Southeast Asia’s worst performing stocks benchmark this year, rising 1.1 percent. The KLCI index dropped 0.2 percent as of 3:49 p.m. today.
The ringgit has rebounded 1.8 percent since Najib dissolved parliament on April 3 and traded at 3.0322 to the dollar today.
A change in government could result in some short-term market weakness, Choo Swee Kee, who oversees 700 million ringgit ($231 million) as chief investment officer at TA Investment Management Bhd. in Kuala Lumpur, said yesterday. “Ultimately whoever forms the government will still implement pro-business policies. It should not have major disruption to business.”
Anwar described Najib’s comments as an attempt to “strike fear” in the financial community and “a desperate and irresponsible act” to paint the opposition in a bad light. “It is most unbecoming of Najib to use his position as caretaker prime minister to make such rash statements calculated to spook the public and agitate the market,” Anwar said in an e-mailed statement today.
Najib is more popular than his government. According to a Merdeka Center for Opinion Research survey his approval rating was 61 percent in February, while the poll of 1,021 voters conducted Jan. 23 to Feb. 6 found 48 percent of respondents were “happy” with the government.
The prime minister said he’s “cautiously optimistic” that Barisan Nasional can reclaim a two-thirds majority in parliament and recapture some states, without naming them. In 2008, the coalition lost control of five of the 13 state assemblies, later regaining power in Perak after defections from the opposition.
The People’s Alliance now holds 75 of 222 parliamentary seats, while Barisan Nasional has 137, according to the Malaysian parliament website. Anwar predicted a minimum 10-seat majority for his alliance during a March 8 interview.
Najib was a teenager when riots erupted between Muslim Malays and ethnic Chinese in Kuala Lumpur in 1969. His father Abdul Razak Hussein became prime minister the following year and responded with a program to reduce Chinese dominance in business by giving preferential treatment to Malays and indigenous people, collectively known as bumiputeras.
As leader, Najib has adopted “1Malaysia” as his slogan, rolling back some aspects of the government’s affirmative action policies and replacing them with a more meritocratic approach.
“We believe that affirmative action is necessary, but we have made it fairer in terms of its implementation,” he said.
The Merdeka Center’s February survey found 34 percent of ethnic Chinese voters, who make up about a quarter of the population, were satisfied with Najib’s performance, the lowest since May 2009.
“I’m trying to engage them,” Najib said. “The Chinese community doesn’t like uncertainty and instability.”
Najib is seeking a mandate to complete government and economic transformation programs he started three years ago, overseen by Idris Jala, a former Malaysian Airline Systems Bhd. chief executive officer. Private investment has since tripled, rising 25 percent last year to 139.5 billion ringgit, according to government data.
He still has initiatives from his first term in office outstanding, including implementing a goods and services tax and further cutting state subsidies to narrow the budget deficit.
“I am aware that more needs to be done,” he said. “I believe with a strong mandate, I can continue to do reforms to make Malaysia a fully matured democratic and economically competitive nation.”
Since taking charge, Najib has streamlined bureaucracy and opened up more industries to foreign investors. His government identified $444 billion of private sector-led projects to help champion this decade, ranging from oil storage to a mass railway.
“I would like to accelerate reforms but I believe it’s better for us to manage change, rather than change that is unleashed in an uncontrolled manner,” Najib said.
In the lead up to polls, Najib has announced increased cash handouts for low-income families and higher pensions for civil servants, military and police.
Najib, an industrial economics graduate, inherited a country in recession when he took over in April 2009.
The economy has weathered the global slowdown, expanding more than 4 percent in each of the 13 quarters to the end of 2012, helped by domestic demand and investment, according to data compiled by Bloomberg.
The budget deficit narrowed from 6.6 percent of GDP in 2009 to 4.5 percent last year, and is expected to shrink to 4 percent this year, as the government seeks to balance the budget by 2020, according to a report last month by the government’s Performance Management and Delivery Unit, or Pemandu.
“Under Barisan Nasional, we’ve always had a current account surplus,” Najib said. If the opposition “were to deliver all their populist but reckless policies it would lead to an immediate current account deficit, which means they’d be borrowing to pay for salaries and subsidies.”
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