Malaysia’s new Prime Minister Anwar Ibrahim seals a coalition for the long haul

Beginning as a firebrand Islamist student leader, co-opted into the ruling UMNO (United Malay National Organization) in 1982 by then Prime Minister Mahathir Mohammad, rising rapidly through the ranks to become the Finance Minister in 1991 and then Deputy Prime Minister in 1993 superseding his contemporaries and being hailed internationally as one who steered Malaysia through the Asian Financial crisis of 1998, regarded as a champion of reform, Anwar Ibrahim has seen many successes in life.

But those successes have also brought him trouble putting him into collision course with his biggest patron, Mahathir Mohammad, who then did everything to punish and remove him from the political scene of the country, jailed him on controversial charges of sodomy and corruption against him. It looked as if his political career was over and he was to languish in jail throughout his active life. However, through sheer grit and determination Anwar was able to come out from that difficult period and rise up like phoenix to become the 10th Prime Minister of Malaysia, prompting analysts from Bloomberg to comment: “Anwar Ibrahim, the almost man of Malaysian politics, finally clinched the country’s premiership after decades of waiting. Now, the reformist leader must make sure that he keeps the job”.

With multiple religious and racial fault-lines across the political landscape that opened up since the political crisis of 2020, and three Prime Ministers losing their job within two years over coalition politics, it is not surprising for analysts to have raised the question of Anwar’s survival in office. Even while he faces critical challenges in maintaining his unstable majority in a hung parliament with the support of graft-tainted UMNO and an uphill task in keeping his electoral promises of political reform and economic turnaround, he stands a better chance now to hold on to his job. His nemesis and the main obstacle to his political ambition, long time Prime Minister 97-year-old Mahathir Mohammad, who not only jailed him, but also reneged at the last moment in 2020 on a commitment he made to Anwar to hand over Prime ministership, is no longer a force in the Malaysian politics.

Mahathir was ‘packed off’ by the voters, even losing his deposit in the current election. The Mahathir-Anwar tussle has dominated and shaped Malaysian politics over the past four decades, “alternately bringing despair and hope, progress and regress to the country’s polity,” to quote Oh Ei Sun of the Pacific Research Center of Malaysia. Naturally Mahathir’s exit from politics opens up new possibilities for Anwar, but that alone does not guarantee that all his troubles are over. It only removes one formidable obstacle.

Anwar’s main rival, ex-premier and leader of PN (Perikatan Nasional – National Alliance) and the main opposition to the government, Muhyiddin Yassin, however, has questioned the validity of Anwar’s support, by scheduling a confidence vote on December 19, the first day of the new parliament. Anwar’s PH (Pakatan Harapan- Alliance of Hope), has the largest number of seats, 82, and with the support of BN which has won only 30 seats had a bare majority of 112 initially, but a day after he was sworn in, he claimed to have a supermajority of 148 out of 222 seats as more political groups joined his government.

The Malaysian King’s suggestion to form a unity government to tide over the constitutional crisis helped Anwar to stitch a broader coalition to maintain a two-thirds majority currently. More importantly, the vicissitudes he had passed through in his life had made him a pragmatic. The fissures and polarization within the Malaysian body politic also forced him to learn the strategy of balancing various interests and even accommodate some of his former detractors into a unity government that can hopefully bring political certainty and social harmony to deal with the more urgent issues of rising inflation, higher cost of living and providing people with overall good governance.

The unity government comprises his own PH (Pakatan Harapan – Alliance of Hope), BN (Barisan Nasional- Natiional Front) of which UMNO is the dominant party, GRS (Gabungan Rakyat Sabah- Sabah Peoples Alliance) and GPS (Gabungan Parti Sarawak- Alliance of Sarawak Parties). It also included Parti Warisan Sabah, Malaysian United Democratic Alliance and other independent lawmakers. This multi-layered coalition gives the appearance of a unity government but also makes it vulnerable to both inter and intra-party differences on critical issues and subject to uneasy demands from various groups. “Governing Malaysia is not going to be easy,” wrote Singapore’s The Straits Times, “The fact that Anwar’s rule is based on the king’s writ rather than the will of the people makes his coalition government even more vulnerable. His long years in politics including in government in the 1990s and the ordeal of being politically persecuted should make him a wiser leader. He could well be the right man at the right time for Malaysia.”

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Anwar’s Cabinet line-up, which he announced on December 2 and was sworn in on the next day, reflects his pragmatism and his inclination towards balancing act. It includes two deputy prime ministers – Barisan Nasional’s (BN) Ahmad Zahid Hamidi and Gabungan Parti Sarawak’s (GPS) Fadillah Y.

Anwar’s leadership team comprises 28 ministers, which is till now leaner than the recent Cabinet teams helmed by Ismail Sabri Yaakob and Muhyiddin Yassin, as the list of deputy ministers has yet to be announced. Most of the important ministries are divided between the PH and the BN, indicating the important role that the latter might play in the policy-making despite its lesser seats. Some of the appointments are also controversial, especially of Zahid Hamidi, Chairman of BN and the President of UMNO against whom there are criminal graft charges dating back to his time in the discredited administration of former Prime Minister Najib Razak, who is serving a 12-year prison sentence for corruption. Zahid is facing 47 charges of criminal breach of trust, corruption and money laundering over the use of funds in a charity foundation linked to him, and a decision is expected in January. It was he who pushed for snap polls that saw BN lose significant ground in Malay-dominated regions and was instrumental in pushing for the coalition to be part of Anwar’s government despite significant opposition from some other senior members of UMNO.

That means Zahid’s own position is not very secure within the UMNO and in a situation where the party finds its interests affected may force him to quit the President’s position. UMNO’s General Assembly is to take place at the end of this month where rising dissatisfaction could lead to an internal party vote to withdraw support for Anwar as PM. Anwar stressed that in his unity government, the issues of good governance, easing the people’s burden and economic development will be the top priorities.

Despite the Chinese-based multiracial Democratic Action Party (DAP) winning the largest number of seats, 40 out of 82 within the PH coalition, it did not feature strongly in this Cabinet. The first PH government under Mahathir (from 2018 to 2020) was even bolder in rewarding the DAP, whose Lim Guan Eng was named finance minister. This time its secretary-general Anthony Loke was given the transport ministry and Hannah Yeo the youth and sports portfolio, less important ministries.

For one, Anwar himself kept the finance ministry as a sign of his comeback to his old position which he occupied before he was removed by Mahathir in 1998, and to complete the unfinished business of setting the economy right. For another, he had to take into the fact of extreme polarization in the Malaysian society, indicated by the success of two very ideologically opposed political parties in the recent elections – DAP, representing secular and multi-racial interests and the PAS (Parti Islam se-Malaysia), the latter not only winning the largest number of seats as an individual party (49) and a component party of the opposition PN, but also represents a more conservative and dominant Malay community’s interests and privileges based on race and religion.

DAP stands in the other end of the spectrum and is perceived to be anti-Malay. Even while Anwar’s election pledges included elimination of racial and religious discrimination, he had to keep the DAP under low-key fearing a backlash from the Malays if DAP were given prominent role in the policy-making of the government.

Such balancing can act both ways: help him to keep the coalitions intact by getting the necessary political stability to concentrate on priority areas of tackling the economic woes that ordinary people are facing in the post-Covid recession. But this can also go against him, as his core supporters might find him compromising on his election pledges of a government free from corruption, elimination of racial and religious discrimination and affirmative action based on need rather than on race. Race, which remains a big factor in multi-ethnic Malaysia’s politics, in the form of “Ketuanan Melayu” (Malay supremacy or pre-eminence) could perhaps pose the trickiest challenge for Anwar. Ethnic Malays, who make up just over half the population, enjoy special protection under the constitution.

Since the 1970s, successive governments have given them privileged access to jobs, business opportunities and education. UMNO’s main policy since its founding in the 1940s has been to protect that status. Now the PN, the main opposition to Anwar’s government, an alliance comprising PAS and Bersatu, a Malay-based party of politicians who broke away from UMNO, has emerged as the main champion of Malay rights and privileges. PN, which won 73 seats will be a formidable opposition to Anwar’s government, not only opposing any move to curtail Malay rights and privileges but also will make attempt to promote the cause of Islam.

As the biggest opposition party, PAS is likely to campaign to limit the open sale of alcohol in Malaysia and to close gambling outlets. This could put pressure on Anwar’s moderate agenda and force his administration to offer more religious policies in education and the civil service, a strategy used by former leader Mahathir Mohamad in the 1990s. PAS’s long-stated objective has been to turn Malaysia into an Islamic state. For years, it has pressured the federal government to allow it to implement strict Islamic laws in the eastern states of Kelantan and Terengganu.

Notwithstanding Anwar’s image as a reformist leader over two decades and his attempt to present his own Keadilan party’s vision of a reformist, multi-racial and multi-cultural Malaysia to the Malays, he had only a very limited success. In this election, despite the inclusion of 6 million young voters after the government enabled automatic voter registration and lowered the voting age to 18 from 21, PKR lost instead of gaining seats, dropping from 48 to 31. Anwar’s daughter Nurul Izzah, an MP since 2008, lost a seat the family has held for nearly 40 years to a rival from PAS, which gained enormously in this election, emerging as the largest individual party in the parliament.

On earlier elections, PAS was never able to muster more than 23 seats against the current tally of 49. Keadilan is now a smaller component of PH than the mainly ethnic Chinese Democratic Action Party, which won 40 seats. This makes the new government vulnerable to the charge that it is dominated by ethnic Chinese interests, and all the more dependent on UMNO to show that Malay interests are sufficiently represented. Anwar has often talked about slimming down Malaysia’s bloated state-owned enterprises and reduce the risk of corruption. But doing that he risks opening himself to accusations of attacking the very sector which in the past has given Malays more opportunities. Any reform that will impinge on the political and economic interests of the Malays, therefore, will face stiff opposition from not only PN but also from Anwar’s own coalition partner, UMNO.

After a wait for more than 20 years, when he has got the top job of the country at the age of 75, he himself may not like to lose it by taking any controversial step or touching on the raw nerve of Malay interests. The dynamics of coalition politics will limit the space for reform of structural issues of Malaysian politics, at least for the time being till the government consolidates its position. Anwar has already guarded himself from immediate criticism by outlining the priority of his government – unity, reconciliation and economic recovery from looming recession and high cost of living, a task which has urgency in view of the hardships ordinary people are facing and one on which there is consensus among the coalition partners.

As the country is still struggling from the effects of Covid, economic recovery also is going to be a difficult challenge. Malaysia’s economy is set expand at a slower pace of 4% to 5% in 2023, compared with more than 7% this year, while economists expect the central bank to continue to raise interest rates in a bid to tame inflation. That could prompt Anwar to take an increasingly populist stance and adopt UMNO’s more generous promises of cash aid to help the country’s poorest, giving more attention to the social safety net and to the vulnerabilities of different communities.

The earlier PH government was accused of neglecting bread and butter issues like jobs and food prices and giving more attention to reforms. Anwar will have to reverse that process and turn more on welfare measures to placate the vulnerable communities. That will put a great burden on the available revenues. Businesses are also feeling the squeeze of a weak ringgit and a manpower crunch. While unemployment rates have declined, more than one-third of tertiary-educated workers are considered underemployed in terms of skill. But the bigger picture is that Malaysia needs a long-term economic plan that can break it out of the middle-income trap.

Without a pro-growth economic reform agenda, Malaysia may find itself deeper in the middle-income trap – a phenomenon where previously fast-growing economies stagnate and fail to rise into the ranks of high-income countries, as defined by the World Bank. Malaysia’s per capita GDP has remained roughly the same since 2017. Doubts on lasting political stability would have consequences for the country’s economic performance. Escaping the middle-income trap will require a boost in productivity and greater innovation-driven growth. This clearly requires coordinated policies and economic reforms.

The roll-out of several populist economic policies pledged in PH’s election manifesto, including abolishing the Goods and Services Tax (GST), stabilising petrol prices and giving petrol subsidies, weakened Malaysia’s fiscal capacity further. Besides formidable headwinds in the near term like higher raw material prices, constraints on input supply and labour, and growing global recession risks, policies will need to overcome structural weaknesses of the economy, such as the public revenue’s dependence on the oil and gas sector. There is no quick fix for all these issues and requires time and enabling environment to undertake structural reforms in the economy. Anwar may not get the time to do all that, as people would expect him to perform within the shortest possible time. Any lop-sided measures to show quick results cannot bring economic recovery that would satisfy the aspirations of the people. The road to legitimacy of Anwar’s leadership through economic recovery will also be quite slippery.

Despite all the formidable challenges and the likelihood of his government being undermined by the quick sand of Malaysian politics, Anwar is the best bet the Malaysians can have in the prevailing circumstances, who can bring semblance of political and economic stability the country needs badly. His regional and international standing is also quite high demonstrated by the rich tributes he has received from leaders all over the world.

Prime Minister Modi has congratulated him and in a tweet said he looks forward to working closely together to further strengthen India-Malaysia enhanced strategic partnership. Now that Mahathir, who irritated India by raising the Kashmir issue at the UN, has become irrelevant and the other two Islamist Prime Ministers following him out of power, another irritation in the relationship between the two countries is likely to be removed – the extradition of Dr. Zakir Naik, the wanted fugitive on charges of terror financing, hate speech, inciting communal hatred and money laundering. Anwar may find his presence and preaching in the country as a threat to own vision of a reformist, multi-racial and multicultural Malaysia.

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