Najib Razak, Malaysia’s prime minister, speaks during the Asia-Pacific Economic Cooperation (APEC) CEO Summit in Da Nang, Vietnam. (Photographer: SeongJoon Cho/Bloomberg)

Najib Calls Malaysia Vote With Party's 60-Year Rule at Stake

(Bloomberg) -- Malaysian Prime Minister Najib Razak called an election that will determine whether his ruling coalition can continue its six-decade run in power in the face of rising living costs and lingering corruption allegations.

The dissolution of parliament will take effect on Saturday, Najib said in a televised address from the administrative capital of Putrajaya. The Election Commission will announce the date of the election within 10 days of receiving official notice on the dissolution of the legislature, said Chairman Mohd Hashim Abdullah. The vote must be held in the next two months.

Najib Calls Malaysia Vote With Party's 60-Year Rule at Stake

“If BN wins again, we promise we’ll do our best to undertake an even bigger transformation that’s inclusive and comprehensive for the people and the country,” Najib said on Friday, referring to his ruling coalition Barisan Nasional. “We have delivered and we will continue to deliver.”

It will be Najib’s second election since he became prime minister in 2009. His main opponent is Pakatan Harapan, a four-party alliance led by 92-year-old Mahathir Mohamad, Malaysia’s longest serving premier who defected from Najib’s party in 2016.

Najib, 64, has fended off corruption allegations that surfaced in 2015 surrounding the state-owned investment fund 1MDB, and if anything has strengthened his position by ousting internal critics and splintering the opposition alliance. Buoyed by an economy growing at the fastest pace in three years, Barisan Nasional is favored to extend its unbroken hold on power since independence in 1957.

Najib can point to increased economic optimism, with the central bank raising its 2018 growth forecast to as high as 6 percent. Inflation is also projected to slow. And it appears the public isn’t focused on the 1MDB scandal: Just six percent of young Malaysian adults cited it as a top concern in a survey last year by the Merdeka Center for Opinion Research. Najib has denied wrongdoing.

The ruling coalition also enjoys key advantages including control of the mainstream media and favorable electoral districts, according to Francis Hutchinson, coordinator of the Malaysia Studies program at Singapore’s Institute of Southeast Asian Studies. A law passed this week made it a crime to maliciously create and distribute false information, which the opposition sees as an attempt to curb free speech.

“At this stage it looks likely -- although not categorically -- that Barisan Nasional will carry the day,” Hutchison said ahead of Najib’s announcement.

In 2013, Najib’s coalition managed to retain power despite losing the popular vote for the first time since 1969 -- largely due to how the vote was distributed. A December survey by the Merdeka Centre found that changes in electoral boundaries mean Barisan Nasional is likely to regain a two-thirds majority in parliament even though its share of the popular vote may shrink, the Malaysian Insight reported.

Race continues to play a key role in Malaysian politics. As of last year, about 60 percent of 14.8 million registered voters were Malay, with 22.7 percent Chinese and the rest Indian and other ethnic groups. Najib’s United Malays National Organisation has long kept in place policies that restrict certain government contracts and jobs to Malays and indigenous groups together known as Bumiputera, or “sons of the soil.”

While Najib’s coalition has members of each major ethnic group, it predominately appeals to Malays -- he blamed a “Chinese tsunami” for the weak 2013 result. UMNO has since sought to consolidate the Malay Muslim vote, wooing the Pan-Malaysian Islamic Party, or PAS, away from the opposition.

That has hurt Pakatan Harapan, whose biggest member is dominated by ethnic Chinese lawmakers. Mahathir was chosen as the bloc’s interim prime minister candidate in part to win over Malays until leader Anwar Ibrahim is released from prison on sodomy charges.

“Mahathir has plenty of supporters in Malaysia, and the opposition’s decision to run him as a figurehead is about neutralising fears based on race and religion,” Amrita Malhi, a visiting fellow at the Coral Bell School of Asia Pacific Affairs in Canberra, said in an email.

Najib Calls Malaysia Vote With Party's 60-Year Rule at Stake

Rising living costs are a key issue the opposition is focusing on to win the 112 seats needed to form a government (it won 89 seats in 2013). Inflation in 2017 accelerated to the fastest pace in nine years after Najib introduced a goods-and-services tax (GST) and curbed subsidies for goods like petroleum, cooking oil and sugar -- a process underway since 2010.

Pakatan Harapan last month pledged to abolish the 6 percent GST within its first 100 days in power. It also vowed to prevent future prime ministers from serving more than two terms.

Najib has sought to mitigate the impact of higher prices with generous cash handouts for workers, and increased subsidies and social assistance after two years of cuts. He also mandated longer maternity leave for private employees, funding for Chinese villages and investment schemes for low-income Indians.

Higher economic growth doesn’t guarantee success. Past election results show little correlation with headline economic indicators, according to Kim Leng Yeah, professor of economics at Malaysia’s Sunway University Business School and an external member of Bank Negara Malaysia’s Monetary Policy Committee.

“Overall, the people are better off, but the economic prosperity is not distributed evenly,” Yeah said. “This disconnect means that the ruling party cannot bask in the current glowing performance of the economy.”

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