Mahathir Ouster Restores Old Regime in Malaysia Power Shift

(Bloomberg) -- Mahathir Mohamad failed in his bid to return to power in Malaysia, as the king approved a government dominated by Malay-majority parties in a monumental shift from the multiracial coalition that took power after a shocking election win two years ago.

Muhyiddin Yassin, 72, was named prime minister on Saturday by the country’s monarch to end a six-day tussle for power after Mahathir suddenly resigned on Monday due to bickering in his former coalition. The new ruling alliance consists of defectors like Muhyiddin who aligned with the Barisan Nasional coalition that lost power in 2018 after running the country for six decades.

“I only hope that all Malaysians welcome the decision that has been announced by the palace today,” Muhyiddin, who was home minister in the previous government, told reporters outside his home.

Mahathir said late Saturday that he had statutory declarations of support from 114 lawmakers, which gave him the edge over Muhyiddin to be premier. For a majority in the 222-member parliament, 112 seats are needed. The king had spoken to lawmakers earlier in the week and party leaders on Saturday, and alliances were shifting right until Saturday morning.

”I have prepared a letter to be delivered to the king that will explain the current position and the support of the 114 members of parliament who gave me their support,” he said in a statement. “I hope the King will accept the letter and my explanation.”

Muhyiddin is due to be sworn in at 10:30 a.m. on Sunday. The lack of a solid majority could quickly open him up to a no-confidence vote, or prompt him to call a snap election.

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The developments late Saturday suggest the week of political turmoil may not be over. Malaysians were shocked by the implosion of a reformist government whose victory in 2018 was hailed as new milestone for transparency, free speech and tolerance among various racial groups, including Chinese and Indians. The parties in the new government support a more conservative agenda, including measures to promote the interests of the Malay majority and a stricter version of Islam.

“The biggest challenge for the new government is to make sure that although it is a Malay-Islam centric government, it will not affect the previous agenda to bring the country together,” said Sivamurugan Pandian, a professor of political sociology at Universiti Sains Malaysia.

‘Double-Edged Sword’

Before linking up with Mahathir to create a predominately Malay party ahead of the 2018 election, Muhyiddin spent most of his political career as a senior member of the United Malays National Organization, or UMNO, the core party of the previous regime. He came under fire in 2010 by stating he was “Malay first.”

Muhyiddin’s immediate task will be shoring up an economy growing at the slowest pace in a decade: Even amidst the political jockeying this week, Mahathir announced a 20 billion ringgit ($4.7 billion) stimulus package to counter the impact of the global coronavirus outbreak. The key stock index is one of the world’s 12 worst-performers since the 2018 election.

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While it’s positive to have clarity on the political situation, the tussle for power is unlikely to end, according to Stephen Innes, chief market strategist at AxiCorp Financial Services Pty.

“This is a double-edged sword,” he said. “I think this brings closer the potential for a snap election.”

Mahathir Miscalculation

In a sign of the difficulty Muhyiddin might face passing key policies, the Sarawak State Parties Coalition said it won’t be part of the coalition even though it supported him “to save Malaysia from political instability without sacrificing the interest of Sarawak.” Malaysia’s biggest state is often crucial to forming a stable government.

The turn of events amounts to a major miscalculation for the 94-year-old Mahathir, who has run Malaysia for nearly a quarter century in two stints. Only days ago he was seen as the favorite to return to power, and on Saturday morning he claimed he could form a government with the support of Anwar Ibrahim, his long-time rival and coalition partner.

Mahathir’s refusal to work with the United Malays National Organisation, or UMNO, appeared to doom him. The party threw its support behind Muhyiddin, boosting his numbers.

The outcome marks yet another disappointment for Anwar, who had a deal after the last election to take over from Mahathir as prime minister. But Mahathir didn’t want to commit to a timeline to transfer power, increasing tensions that prompted the coalition to collapse.

Win for Najib

One winner may be former Prime Minister Najib Razak, the politician at the heart of a corruption scandal that brought down the previous administration. He stands accused of orchestrating a scheme that laundered billions of dollars in public funds around the world, drawing in Hollywood movie stars, Monet paintings and banks such as Goldman Sachs Group Inc.

This week saw the resignation of Attorney-General Tommy Thomas, who was appointed by Mahathir to prosecute cases related to 1MDB. Najib denies wrongdoing, and Goldman has previously said it would “vigorously contest” the charges.

Born in Johor, a state neighboring Singapore, Muhyiddin served six years as deputy prime minister under Najib. He was critical of Najib’s handling of the 1MDB state fund scandal in which billions of dollars disappeared, and he was dismissed from the post in 2015 before being expelled from the party.

--With assistance from Liau Y-Sing, Philip J. Heijmans, Anuradha Raghu and Yantoultra Ngui.

To contact the reporters on this story: Yudith Ho in Kuala Lumpur at yho35@bloomberg.net;Anisah Shukry in Kuala Lumpur at ashukry2@bloomberg.net

To contact the editors responsible for this story: Shamim Adam at sadam2@bloomberg.net, Daniel Ten Kate

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