Former Rivals Unite in Malaysia Race to Form Next Government

(Bloomberg) -- Follow Bloomberg on LINE messenger for all the business news and analysis you need.

The race to form a government in Malaysia intensified rapidly late Friday, as interim Prime Minister Mahathir Mohamad’s party turned to the coalition it helped oust less than two years ago.

Mahathir’s party dropped him as its candidate for the premiership and picked its president, Muhyiddin Yassin. He will be backed by the Barisan Nasional coalition, which still counts former Prime Minister Najib Razak as a key figure -- the politician at the heart of a corruption scandal that brought down the previous administration.

Malaysia has undergone a week of extreme political turmoil, which saw the implosion of the government less than halfway through its term after a power struggle boiled over and Mahathir resigned. The king made him interim prime minister while trying to determine the candidate who has enough support to be the country’s next leader.

The politicking has paved the way for Najib’s coalition -- which ruled the country for over six decades until May 2018 -- to possibly regain a foothold and have a say again on how it should be run. Najib is being prosecuted for his involvement in the 1MDB state fund scandal where billions of dollars disappeared.

Anwar Ibrahim

In their way is Anwar Ibrahim, the man who was positioned to be Mahathir’s successor until this week’s twists and turns. Anwar forged an alliance with arch rival Mahathir to topple Najib’s Barisan Nasional and was victorious. He was less successful at getting Mahathir to hand over power to him as the 94-year-old kept avoiding setting a date to do so.

Former Rivals Unite in Malaysia Race to Form Next Government

A candidate needs the support of 112 out of 222 lawmakers to form the next government. Muhyiddin has about 96, while Anwar -- with the backing of what’s left of the Pakatan Harapan alliance -- has about 92. The remainder -- mainly regional parties from the Borneo states of Sabah and Sarawak -- haven’t declared their allegiances.

Key developments on Friday:

  • Malaysia’s king confirmed no one person commanded majority support. The sovereign had planned to contact leaders of political parties to give them a chance to present their nominations for prime minister.
  • Bersatu dropped Mahathir as candidate for prime minister, named Muhyiddin
  • Barisan Nasional opposition coalition, and Pan-Malaysian Islamic Party announced support for Muhyiddin as premier
  • Attorney-general Tommy Thomas -- who led the charge in prosecuting cases linked to the 1MDB scandal -- reported to have resigned

Familiar Face

Like Mahathir, a Muhyiddin premiership will mark the return of yet another familiar face in Malaysian politics. The 72-year-old was Najib’s deputy for six years and he was sacked in July 2015 after he called for greater clarity on the 1MDB investigations, undermining the former leader. He was later expelled from Najib’s party, the United Malays National Organisation or UMNO.

Born in Johor in the southern Malay peninsula just north of Singapore, Muhyiddin is a graduate of the University of Malaya and a career statesman who rose through the ranks of UMNO. After leaving the party, he and Mahathir formed Bersatu in 2016, and was he elevated to home affairs minister in the Pakatan Harapan coalition government after the polls two years later.

“Muhyiddin isn’t very dynamic like Mahathir,” said Ahmad Martadha Mohamed, a professor of government at Universiti Utara Malaysia, in Kuala Lumpur. “But he knows how to work around politics, he’s very seasoned.”

On Thursday, Mahathir said the party had discussed a Muhyiddin premiership and that he would respect the parliament’s decision, no matter who was chosen. “There are various possibilities that we discussed including the possibility that Muhyiddin might become the prime minister candidate,” he said. “If everybody chooses him then I am OK.”

New Twist?

To add to possibly twists, the MalayMail reported that Bersatu’s supreme council didn’t agree to nominate Muhyiddin as prime minister, citing Kadir Jasin, a member of the council. He reiterated his backing for Mahathir, adding that the decision by 25 party lawmakers to nominate Muhyiddin was done without consent.

Whoever emerges victorious will inherit an economy growing at the slowest pace in a decade, with Mahathir announcing a 20 billion ringgit ($4.7 billion) stimulus package on Thursday to counter the impact of the global coronavirus outbreak. The key stock index is also one of the world’s 12 worst-performers since the 2018 elections.

Anwar and Mahathir’s coalition won the 2018 election on a platform of fighting corruption, improving government accountability and promoting inclusiveness in multicultural Malaysia. After winning, Mahathir’s administration focused on rolling back an unpopular goods and services tax implemented by Najib.

Mahathir had earlier said he’ll hand power to Anwar when the country is in good footing. Doubts began circling late last year when Mahathir, speaking at a forum in Doha, didn’t give a definitive time frame on when he’ll step down or whom his top choice would be.

‘No Ambiguity’

Anwar, who cut a deal to become the country’s next prime minister ahead of 2018 polls, said in September there’s “no ambiguity” about a handover of power, adding that “this is a transition government.” In an earlier interview earlier that month, he indicated the handover should happen around May this year.

After the elections, Mahathir curbed fiscal spending to rein in government debt and limited cash handouts given during Najib’s tenure. As growth eased and costs of living continued to rise, voters got impatient with an administration that was perceived as slow in fulfilling campaign pledges and mired in internal bickering that’s reminiscent of the Asian financial crisis in the late 1990s, when Anwar was ousted as Mahathir’s deputy and arrested for sodomy.

After leaving the ruling coalition this week, Mahathir said he wanted to build a “government that doesn’t side with any party.” But he refused to work with UMNO -- Najib’s party in the opposition alliance, the same group Mahathir once led and defected from.

“It depends on who he hates more,” Wong Chin Huat, a political scientist and professor at Sunway University, said of Mahathir. If “UMNO insists on coming in as a party, then his hands would be tied. However, if he thinks that blocking Anwar is more important, then he could compromise.”

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.