ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter
Malaysia in transition

Malaysia's parties dangle populist policies ahead of election

Electoral promises sideline economic reforms with aid targeted toward low-income groups

Najib Razak, Malaysian prime minister and president of ruling party Barisan Nasional, speaks during the launch on April 7 of his party's manifesto for the upcoming general elections.   © Reuters

KUALA LUMPUR -- Campaigning for the upcoming election in Malaysia has gathered pace, with the ruling party dishing out billions of dollars-worth of electoral promises in an attempt to better the opposition's manifesto.

Prime Minister Najib Razak's ruling coalition Barisan Nasional has unveiled plans for the next five years which target its supporter bedrock -- the ethnic Malay in rural districts and lower income groups. Najib, who is under pressure to improve BN's electoral record of 2013 when it won 133 out of the 222 parliamentary seats, is seeking a third term in office as he struggles to shrug off criticism related to a scandal over the mismanagement of funds at sovereign wealth fund 1Malaysia Development Berhad, which he once controlled. He has denied any involvement, even as associates have become targets of fraud investigations in other countries.

"This election is not about Najib Razak against the head of opposition," Najib told his supporters on Saturday night, after on Friday announcing the dissolution of parliament to make way for the election. "It is about who can deliver a better future for each of you," he continued as he presented a manifesto entitled "Make my country great with BN," mimicking U.S. President Donald Trump's "Make America great again" 2016 election tagline.

The electoral commission is due to set the voting day, expected to be in late April or early May, in the coming days. Nearly 15 million voters, or half of the country's population, will go to the polls.

Oppostion coalition Pakatan Harapan, led by former Prime Minister Mahathir Mohamad, had earlier published its manifesto, promising to cancel the BN policies it deemed unpopular, including the goods and services tax. Mahathir, 92, who stepped down in 2003 after 22 years in office, also wants to review infrastructure projects that BN awarded to foreign companies. He claims that his former protege Najib has undermined Malaysia's sovereignty by selling stakes in several key development projects to Chinese interests.

Najib fired back, saying that PH's election promises are a "recipe for disaster." PH's policy plan to abolish the GST, which was introduced in 2015 to offset a drop in oil revenue, and replace it with a sales tax and savings from fiscal wastage reduction, would force the government's cap on the budget deficit from 2.8% to 4% of gross domestic product, according to calculations by Hong Leong Investment Bank.

Even so, BN's plan of dishing out cash to those on low incomes could hamper the government's effort to narrow the deficit to zero by around 2023. Among those who stand to receive additional cash incentives are rural farmers who work and live on state plantation Felda. These Felda settlers -- about 112,000 households and who make up a quarter of the electorate -- will get 5,000 ringgit ($1,291) in special incentives and a debt waiver under a 300,000 million ringgit fund.

Further, such ostentatious offer -- to be disbursed soon after the elections and supposedly funded by GST revenue -- dispels the notion of reform, according to Lee Hwok Aun, Senior Fellow at Singapore's Institute of Southeast Asian Studies.

"BN is riding on [people's aid known as] BR1M to bait votes and negate anti-GST sentiment, plain and simple," said Lee, referring to cash handout program.

PH is targeting the same group of settlers, promising to write off the debts they took on for replanting and share purchases in Felda Global Ventures, a Felda associate which has lost about two thirds of its share value since it listed in 2012. Another of PH's similar policies is to push up the minimum wage from the current 1,000 ringgit to 1,500 ringgit in five years' time, a move that may not be popular with private sector employers.

Both the ruling party and the opposition have also vowed to review the 1963 agreements governing the special rights of Sabah and Sarawak, two less developed but crucial electoral states in Borneo island.

To allay complaints about the rising cost of living, the government is creating a new income category for annual cash handouts, which will increase to up to 2,000 ringgit for households earning 4,000 ringgit and below. CIMB Research warned that such new spending commitments were unlikely to improve the target to cut the deficit from 2.8% in 2018.

Besides these lower income groups, the ruling party is also appealing to the pro-opposition middle income group, promising to double the current tax waiver rate of 5,000 ringgit for health expenses.

Malaysia's former Prime Minister Mahathir Mohamad at a news conference on April 5 following the temporary deregistration of his party, Parti Pribumi Bersatu Malaysia, due to missing documentation.   © Reuters

Regardless of the opposition's threat to cancel some mega projects, Najib has pledged to build more under a long-term plan through 2050 to develop Malaysia into one of the top-20 economies globally. He said the country was committed to constructing the high-speed railway connecting Kuala Lumpur with Singapore and the nearly 700 km East Coast Rail Line project currently being built by Chinese companies.

Economically, these programs -- whichever party implements them -- were likely to boost consumption in the short term, but were not likely to have a material impact and could be offset by inflation, said ratings agency Moody's Investors Service on Monday.

Political analysts are predicting another election victory for BN, which is benefiting from its strong campaign war chest and party machine which includes the pro-government media, as well as 1.6 million civil servants and their immediate families.

The opposition, which is relying on its traditionally strong urban votes and the popularity of Mahathir, is struggling to fight as a coalition after Mahathir's party, the Parti Pribumi Bersatu Malaysia, was temporarily dissolved last week by the authorities, due to some missing registration paperwork.

A win for the ruling party would provide certainty for investors but might impede institutional reforms, including tackling corruption and tweaking the pro-Malay affirmative action policies -- which are heavily weighted in favor of ethnic Malays and prevent the most able people from rising in society -- wrote Capital Economics in a note on Friday.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends July 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more