Chairman’s Note

Private and Confidential
For SIIA Corporate Members and Advisors
March 2023

Politics in Malaysia

Several of our members have asked our views about the political developments in Malaysia following the 2022 general elections and the swearing in of Anwar Ibrahim as Malaysia’s 10th Prime Minister on November 24, 2022.

The SIIA has hosted a number of Malaysian politicians since then. I also visited Kuala Lumpur and was at the Dewan Rakyat (Parliament House) for meetings with political figures on 23 February 2023, the day before the Budget was presented. This note draws on these engagements as well as further research to share views on the current political situation in Malaysia. Please note that this information is provided on a confidential basis to you, as our member and friend.

1. Hope v2.0: There is considerable anticipation about Anwar’s premiership, given the long period he has been waiting in the wings and the man’s charisma. After the “Sheraton Move” back-room manoeuvres in 2020 toppled the Pakatan Harapan (Alliance of Hope) coalition government, some see Anwar’s premiership as offering a second chance for reform. But in evaluating the actual results, there is no clear mandate for the government or for reform.

2. Stability?: Optimism cannot cover the election outcome – this is the first hung parliament in the country’s history. No party or alliance has sufficient seats to rule on its own, and a Royal urge for a ‘unity’ government was needed. Malaysia has had three prime ministers in as many years – and concerns persist that the Anwar administration will also be short-lived. Even those who believe the situation is stable for now agree that much depends on the state elections coming up within the year.

3. State Elections and Campaigning Mode: Six state elections are upcoming in Kedah, Kelantan, Terengganu, Penang, Selangor and Negeri Sembilan. The first three states are held by Parti Islam Se-Malaysia (PAS, or Malaysian Islamic Party) and they are expected to retain their stronghold handily. The others are held by component parties of the alliance led by Anwar – the Democratic Action Party (DAP) in Penang and the Parti Keadilan Rakyat (PKR, or People’s Justice Party) in the other two. While it is too early to conclude, most believe their level of support will possibly come down. Some believe that Selangor may be vulnerable. If so, this would erode confidence in the Anwar camp. Given this, PM Anwar remains in a mode of campaigning, as opposed to a focus on governing.

4. Wooing ‘Green’ Voters: In the 15th General Election (GE15) in 2022, the PKR did not do well among Malay Muslim voters compared to the Parti Pribumi Bersatu Malaysia (Bersatu, or Malaysian United Indigenous Party), led by Muhyiddin Yassin, and PAS which won 43 parliament seats. Many see a potential ‘green wave’ of Islamisation. As such, a priority for PM Anwar is to win over votes from Malay-Muslims, to show that a PKR-UMNO coalition can be competitive. To that end, he is giving emphasis to issues and occasions that matter to this segment of society; much of his first months in office has been spent attending Friday prayers across the country, often adopting more traditional dress (even combining suits with a Malay songkok when abroad), and meeting with Muslim scholars and intellectuals. However, while courting the Malay Muslim vote, Anwar will have to draw limits, especially compared to those in opposition who have played up strongly pro-Malay-Muslim views like the ‘Malay Proclamation’.

5. Compromise: Although the Anwar government has held together, campaign promises for reform are in abeyance. Instead, compromises are what is keeping the current ‘unity government’ in place. The clearest is with UMNO’s current president Ahmad Zahid Hamidi. Other compromises are with East Malaysian parties who have gained influence from the situation. On the flip side, the DAP (which won more seats than the PKR), has moderated its public profile and roles in the cabinet. This reflects a caution against upsetting the Malay-Muslim ground, unlike the first Pakatan Harapan government in which DAP held the Finance Ministry.

6. Corruption: There was public expectation for corruption to be addressed. Anwar has been outspoken on the issue since his time as Deputy Prime Minister (DPM) in the 1990s and corruption was emphasised by the PKR and allies in campaigning. Yet he has appointed UMNO’s Zahid as DPM, despite corruption charges on 47 counts of money laundering and criminal breach of trust. At the same time, the Anwar government has proceeded to bring charges against ex-PM Muhyiddin Yassin. He has responded by accusing Anwar of “organised political persecution” and questions may arise about the politicisation of the prosecution process.

7. East Malaysia’s Influence: Sabah and Sarawak have increased their political presence and influence significantly. Seri Fadillah Yusof from Sarawak was appointed as DPM – the first East Malaysian appointed at that level. This signals a continuing change in power dynamics in favour of the two East Malaysian states, both being courted by the different coalitions based in peninsular Malaysia. With this political leverage, revenues and development plans should increase.

8. Anwar’s Cabinet and Circle: Within the cabinet, Anwar’s ‘unity’ government is saddled with the compromises made to bring it to power, and ministries are allocated to different component parties. Within the economic policy sphere, Anwar trusts only himself with finance and some suggest that there is distance from Minister of International Trade and Industry, Tengku Zafrul Aziz, and even more so from Minister of Economic Affairs, Rafizi Ramli. In contrast, two substantial ministries – Education and Health – are helmed by first time MPs, said to have personal ties to the PM.

9. Growth Prospects: Last year, Malaysia saw GDP growth at 8.7%, exceeding expectations and signalling a recovery from the pandemic. But growth forecasts for 2023 are more muted at 4-5%, given the challenging global macroeconomic environment context. Analysts suggest Malaysia faces hurdles to grow its economy further or faster without reform and innovative economic plans. There are moreover social issues of income inequality and urban poverty that increased during to the Covid-19 lockdowns. Yet, at present, the current politics of compromise and the on-going ‘campaign’ mode of the PM himself offers little short-term prospect that decisions and steps are moving forward on these issues. In this regard, while the Anwar government is not falling apart, it is neither moving quickly forward.

I hope this note is of interest. Once again, I ask that you keep this confidential. I will not be writing on this in public with the same candour and the SIIA continues to enjoy good access to the different parties and personalities in Malaysia. If you wish to discuss the matter, we would be glad to hear your views.

Yours sincerely,

Simon Tay
Chairman