Najib Razak, Malaysia’s prime minister. (Photographer: Charles Pertwee/Bloomberg)

Najib Predicts Better Win After 2013 Vote Scare, 1MDB `Mistakes'

Subscribe to Bloomberg | Quint
The Daily Newsletter
News & Stock Alerts

(Bloomberg) -- Five years after leading his party to its narrowest victory yet, Malaysia’s Prime Minister Najib Razak says he’s expecting a “better result” in an election that will pit him against his one-time mentor.

Najib, in his first interview with international media in more than three years, discussed the turbulent period which saw a scandal over a multi-billion dollar state investment fund spawn global probes. He now faces potentially his toughest fight in prolonging his coalition’s six decades in office, in an election that has become highly personal: A contest against the man who helped bring him to power in 2009, and a battle for the hearts of the country’s key voters, ethnic Malays.

Over the course of an hour in a room fringed with Malaysian flags at his party headquarters in Kuala Lumpur, Najib spoke about the May 9 election, the economy -- promising more income and business tax cuts if he wins -- the 1MDB fund furor and the question of his own political future.

Najib is seeking to preserve the unbroken rule by his United Malays National Organisation since independence in 1957. To cement his own position he may need to improve on his performance in 2013, when the UMNO-led Barisan Nasional coalition lost the popular vote for the first time while winning a slim majority of seats. One potential marker would be to regain the two-thirds majority in parliament that it ceded a decade ago.

“We are reasonably confident of a good result,” Najib, 64, said. “There is no movement for changing the government, I don’t see that. That’s not saying we will win with a huge majority, no I am not going to predict that, but I am going to say that we are reasonably sanguine about the result.”

Read more: Your Guide to Malaysia’s Election

Najib’s confidence is underscored by what he called “a motley collection of parties” that make up the opposition alliance Pakatan Harapan. The group is led by Mahathir Mohamad, 92, a former prime minister who has long championed the rights of Malays, while its biggest member -- the Democratic Action Party -- primarily appeals to ethnic Chinese Malaysians.

“I don’t see how they can work together,’’ Najib said.

Straddling the Malacca Strait, a key global route for seaborne trade and a gateway to the disputed South China Sea, Malaysia is a predominantly Muslim nation with an economy that is commodity-focused and can be vulnerable to swings in global oil demand. While Malaysia has sizable Chinese and Indian communities, ethnic Malays make up the bulk of voters -- and they have long been the backbone of UMNO.

Since 2013, Najib has worked to shore up their support, especially in rural areas, and now needs them more than ever to fend off Mahathir, with whom he fell out in spectacular fashion over the 1MDB scandal.

Mahathir, who governed Malaysia for more than 20 years and famously pegged the nation’s currency during the Asian financial crisis in the late 1990s, broke with UMNO in 2016 and formed his own party, effectively coming out of retirement to challenge Najib. He’s also seeking to capture the Malay vote, a group Najib has courted by boosting cash handouts to farmers, civil servants and low-income workers.

The election is tinged with issues around race and religion. Chinese voters deserted Barisan Nasional in 2013, hardening the coalition’s focus on retaining Malay support. Najib warned in late 2016 that Malays would be "beggars" and that Islamic institutions would fall should the opposition take power.

In the interview, Najib predicted the opposition bloc would struggle after losing a major Islamic party that helped its performance in 2013. He also said that urban and Chinese voters who went to the polls last time in the hope of bringing change are less motivated.

“Now today, they know it’s not possible,” Najib said. “So I think that euphoria has receded to a great extent.”

Still, it’s been a tricky few years for the prime minister, both at home and abroad. While economic growth hit 5.9 percent last year and inflation is under control, living costs are rising and discontent is bubbling over a goods and services tax introduced in 2015. The opposition has also focused on bread-and-butter issues, including in rural areas, saying Najib has failed to adequately boost incomes.

Then there is the furor over 1MDB, which since 2015 has been the subject of global probes into billions in lost funds. Najib himself faced allegations -- which he denied -- of misappropriating around $700 million which was channeled into his personal accounts before the 2013 election. He said the money was a donation from the Saudi royal family and most of it was returned. Malaysia’s attorney general later cleared him of wrongdoing.

Read more: Malaysia’s 1MDB Fund Spawns Worldwide Probes

Looking back, Najib said, 1MDB had governance issues but “you cannot just accuse somebody of being a thief or anything unless there is evidence.’’

“It’s been cleared, there’s been no wrongdoing -- I stand by it,’’ Najib said. He acknowledged “some reputational damage’’ both to Malaysia and his own government.

“I would have probably not had that kind of business model, probably I would make sure tighter supervision,” he said of 1MDB. “But we all learn from our mistakes.’’

Najib has since worked to strengthen his grip on UMNO, curtailing internal dissent and firing his then-deputy. “I believe in developing personal relationships within the party, so even in difficult times the party stood by me,’’ Najib said. “They couldn’t shake me, the support base is strong.’’

As the election approaches, critics have accused Najib of seeking to stifle his opponents. This month Mahathir’s party was barred from campaigning because it failed to supply the correct paperwork (although a court has now suspended the ban), while parliament passed a law against "fake news" that includes punishment of up to six years in jail.

Asked if the law could be used to limit dissent, Najib said Malaysia’s social media is “freer than many countries.’’

“You can criticize the government, you can say we disagree with the government, you can say don’t vote for the government, and that’s alright,” he said. “I mean, I can accept it.”

Najib spoke of his falling out with Mahathir, who has accused the prime minister of everything from theft to redrawing electoral boundaries to UMNO’s advantage. Najib said Mahathir presided over several district redraws and the recent changes were to “take into account some demographic changes.’’

“I think he’s obsessed about control, about calling the shots, in fact, when we were quite close together he even suggested establishing a council of elders,’’ said Najib. “Of course, you can imagine who’s going to chair the council of elders and a sitting prime minister after every cabinet, I suppose I would have to march to his office to get his consent.”

“He wanted me to do his bidding,” Najib said. Calls and a text message to Mahathir’s office on Wednesday seeking comment were not answered.

Tax Promises

Najib is pitching his campaign message around economic growth, emphasizing ongoing infrastructure projects and an expansion of handouts. But he said he had no plans to scrap the GST, arguing that a focus on consumption-based taxation would mean greater revenue. That should enable more reductions in income and corporate tax over the next five years, depending on oil prices and GST revenue.

“The first move has only started,’’ he said.

Najib said his coalition is focusing on big states like Sarawak, Sabah, Kedah and Johor that buoyed his support in 2013. The Borneo states of Sabah and Sarawak, known as "fixed deposits" for long supporting Barisan Nasional, accounted for about a third of the coalition’s seats in 2013.

Najib was careful on the topic of succession. Lee Hsien Loong, his counterpart in neighboring Singapore, has said he doesn’t intend to govern past 70.

“It’s part of your remit as a leader for you to groom your successor,’’ he said. “We will be doing that.’’ Still, he added, “currently I think we are just concentrating on the next five years to ensure that our transformation plan will succeed.’’

The contest with Mahathir has turned the election into a highly personal event. Mahathir spent years sparring with his neighbors and the likes of the International Monetary Fund while maintaining an iron grip on power at home, and some analysts have said he should not be underestimated.

Najib equally couched himself as a survivor, citing “hard times” from boarding school to his early days in politics.

“I may appear to be mild in my temperament but I have a strong resilience in me,” he said. “I don’t give up easily.’’

©2018 Bloomberg L.P.

Bloomberg
Follow All The Political News In India On BloombergQuint
Subscribe to Bloomberg | Quint
The Daily Newsletter
News & Stock Alerts