(Bloomberg) -- Mahathir Mohamad claimed his opposition alliance was heading for a surprise election win that would end the ruling coalition’s 61-year grip on power in Malaysia.
The election commission showed Mahathir’s four-party Pakatan Harapan coalition leading Prime Minister Najib Razak’s Barisan Nasional alliance with nearly half of the seats counted. Unofficial results showed Mahathir’s bloc with a wider lead.
“From our unofficial counting, they are lagging far behind and the likelihood is that they will not be forming the government,” Mahathir, 92, told reporters in Kuala Lumpur on Wednesday night. “People must know what is their duty and they must do what is right according to the constitution and the laws of this country.”
An opposition victory would represent a monumental shift in a nation that hasn’t seen a transfer of power since independence in 1957. Mahathir, who served as Malaysia’s leader for more than two decades, effectively came out of retirement and joined the opposition in a bid to oust Najib, who has faced corruption allegations and rising discontent over a goods-and-services tax.
Investors were expecting a win for Najib. The iShares MSCI Malaysia ETF based on the nation’s stocks dropped as much as 2.6 percent to the lowest since February.
Ahead of the vote, the benchmark FTSE Bursa Malaysia KLCI Index closed near a record high reached in late April. The ringgit has outperformed all its emerging Asian peers this year, gaining 2.5 percent against the dollar. Markets were closed on Wednesday for the election.
Mahathir has pledged to set term limits for prime minister and reduce its power, while promising to scrap the GST within 100 days in power. He would be expected to serve as interim prime minister only until Anwar Ibrahim, the de facto leader of the opposition, can take over.
Both Najib and Mahathir, who have traded insults during the campaign, sought to court the support of the ethnic Malays who make up around 60 percent of all voters. Mahathir’s alliance also includes Malaysia’s largest ethnic Chinese party.
One wild card is a splinter group known as the Pan-Malaysian Islamic Party, or PAS, which may hold the balance of power in case neither party secures a majority. PAS ran with the opposition coalition in the 2013 election, but formed an informal alliance with Najib’s government after he backed moves to broaden the power of Islamic courts.
Unofficial results showed the opposition gaining seats in Johor, which Najib dominated in 2013, as well as the Borneo states of Sarawak and Sabah.
The opposition bloc has highlighted bread-and-butter issues while also keeping the spotlight on a money-laundering scandal involving state fund 1Malaysia Development Bhd., which has implicated Najib. He has denied any wrongdoing.
Najib had said in an interview last month that he was confident of a better showing than 2013. In that election, his Barisan Nasional coalition won 133 constituencies -- roughly 59 percent of parliamentary seats -- in its worst performance ever.
Mahathir is known for pegging the ringgit during the Asia financial crisis in the late 1990s and for public attacks on western institutions like the International Monetary Fund. On the campaign trail he hinted he might be less welcoming of foreign investment, including from China, if he’s back in power.
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