Given the personal and commercial ties that bind Singaporeans to Malaysia, few countries matter to Singapore as much as Malaysia does. What are the likely results of the upcoming General Election (GE14), and what effects would this have on the Malaysian economy and cross-strait ties? We held a talk on Monday 16 April with Mr Manu Bhaskaran, Director, Centennial Group and Chief Executive, Centennial Asia Advisors, and Mr Song Seng Wun, Director and Chief Economist, CIMB Banking. The session was moderated by Associate Professor Simon Tay, Chairman, Singapore Institute of International Affairs. Here’s a look at what came up during the discussion.
Snapshot: The Malaysian Economy is doing “Okay”
Owing to a timely rise in commodity prices, the implementation of a goods and services tax (GST) and an upswing in the global economy, the Malaysian economy is performing better than expected. This has enabled the government of Prime Minister Najib Razak to issue vouchers and subsidies to rural voters in a bid to offset price inflation. Overall, the state of the economy is unlikely to feature as a key factor in GE14, despite the opposition’s attempts to point fingers at the 1Malaysia Development Berhad (1MDB) case and other issues.
Prediction: Likely BN will Win a Comfortable Majority
The ruling Barisan Nasional (BN) is expected to win a comfortable majority of 135-140 seats, or just short of a two-thirds majority. BN has an overwhelming advantage going into the 2018 election, such as the extensive redrawing of political districts, the unexpected six-fold increase in postal voters since 2013, and BN’s ability to target key voters in rural areas. BN’s reputation with rural voters has been tarnished by the Federal Land Development Authority (FELDA) graft scandal, but FELDA settlers are still likely to vote BN, with the opposition finding it difficult to make headway in these communities.
The departure of Parti Islam Se-Malaysia (PAS) from the opposition coalition means there will be three-way fights in many constituencies, which favours BN. In conjunction with the leadership vacuum in Pakatan Harapan (PH), voter fatigue among opposition supporters, and the tendency of the electorate to cast votes along ethnic lines, an opposition win is unlikely.
Two further scenarios were also presented. There is a small chance of a BN winning a supermajority, given the factors above. A more unlikely but still possible scenario is a narrow victory for either BN or PH, leading to a hung parliament. But this would require an extraordinary campaign by former Prime Minister Dr Mahathir Mohamad to swing voters away from BN in the Malay heartland.
The Post-Election Economy and Singapore-Malaysia relations: Good in the Short Term, Worrying in the Long Term
Given the likelihood of a BN victory, the election is expected to be good for the economy in the short term. The reaffirmation of BN’s leadership will lead to a boom in investments, while PM Najib will feel comfortable enough to attempt reforms such as cutting red tape.
However, the long term prospects for Malaysia’s economy are uncertain. The three pillars necessary for stability are strong institutions, national consensus and the presence of an incentive structure. These pillars have steadily eroded over the past few decades, and a BN victory will not reverse these trends. The election may also lead to further irrelevancy for the non-Malay components of BN, alienating Chinese and Indian Malaysians. Lastly, if opposition supporters feel that there is little chance of seeing change via the ballot box after disappointments in 2013 and 2018, they could turn to nastier and more violent forms of political activism.
However, Singapore-Malaysia relations are expected to thrive after a BN win. Singapore and Malaysia have cultivated their best-ever relationship under PM Najib, and a BN victory would give him the mandate to pursue more joint projects. Yet the aforementioned questions about Malaysia’s stability cast some doubt on the longevity of this gilded age.
