(Bloomberg) -- Malaysia is holding a general election on May 9, and the outlook is promising for Prime Minister Najib Razak -- despite an uncomfortable past few years. Rising living costs have been blamed in part on a goods and services tax introduced in 2015. And a scandal over the finances of the state-owned investment fund 1MDB, which was created under Najib, included allegations that hundreds of millions of dollars flowed through and around the fund and into personal accounts, including those of Najib and his family. (He denies wrongdoing.) Still, Najib is arguably in his strongest position since his narrow victory in the 2013 ballot, with economic growth at a three-year high and a divided opposition having turned to the 92-year-old former prime minister, Mahathir Mohamad, for leadership.
1. How long has Najib been in charge?
Najib, 64, leads the party called United Malays National Organization, or UMNO, which has held power since independence in 1957 and is the most important member of the coalition that has ruled the country for 44 years. He became prime minister in 2009 and led the coalition -- known as Barisan Nasional -- to victory in 2013. However, Barisan Nasional secured its lowest number of parliamentary seats and experienced its first-ever loss of the popular vote, stoking optimism among opposition parties for the next election, which had to be held before August.
2. What happened to that optimism?
It’s fizzled since Anwar Ibrahim, Najib’s fiercest critic and principal challenger, was jailed for sodomy in 2014. Anwar, 70, has denied the charges, saying they are politically motivated. He continues to wield influence on his People’s Justice Party from behind bars, but his imprisonment hastened the implosion of the opposition coalition which he had almost single-handedly held together. His supporters are pushing for Anwar to be prime minister once he’s freed, should the opposition win. He is scheduled to be released June 8, though he’s unable to contest elections because of a five-year ban from politics.
3. Who leads the opposition in Anwar’s absence?
Mahathir, Malaysia’s longest-serving premier and the one-time mentor of Najib, has been on a campaign to topple the prime minister. Once so dominant in Malaysian politics that he was referred to as “Dr. M," Mahathir has struggled to gain traction for his new party -- Parti Pribumi Bersatu Malaysia, or the Malaysian United Indigenous Party -- which is trying to win over UMNO’s base of ethnic Malays. Anwar was a sworn enemy of Mahathir, who first put him in prison almost two decades ago, but the two have allied in a bid to oust Najib. The opposition coalition -- known as Pakatan Harapan, or Pact of Hope -- has put forward Mahathir to serve as prime minister until Anwar is eligible, which is by no means a formality: Anwar would first need to receive a royal pardon and to win a parliamentary seat.
4. What other obstacles does the opposition face?
On April 5, Mahathir’s party received a 30-day ban from campaigning from a Ministry of Home Affairs department for failing to meet a deadline to submit documents. Mahathir plans to appeal the ban. Malaysia also just passed a law to fight fake news with prison sentences, a move that human rights organizations and opposition parties say may be used to stifle free speech ahead of the election. Najib says fake news damaged the ruling party’s campaign in the 2013 poll.
5. Has the 1MDB scandal hurt Najib’s chances?
Probably not. A Malaysian inquiry cleared Najib of wrongdoing. And, while multiple probes continue, he hasn’t been identified as a target in any of them. Just six percent of young Malaysian adults said 1MDB was a top concern for them, according to a survey by the Merdeka Center for Opinion Research last year. Five percent said Najib’s integrity was a concern.
6. Why has UMNO’s popularity held up for so long?
The party deployed populist policies years before Europe and the U.S. caught on, including spending billions annually on cash handouts and other aid for lower-income Malaysians. Race also plays a part: UMNO was set up to champion the needs of the ethnic Malays that make up about 69 percent of the population. (Chinese are 23 percent and Indians 7 percent). And a Merdeka Center for Opinion Research survey last year showed that Malay rights still top the list of important issues for Malay voters. Najib in December repeated his 2016 warning that Malays would be "beggars" in their own lands and that Islamic institutions would fall should the opposition take over. That said, ethnic and political discord trail far behind economic concerns as priorities for voters, according to the Merdeka Center.
7. What are the main economic concerns?
Rising costs. Inflation reached an eight-year high in 2017 and voters are worried that the ringgit is not stretching as far as it used to. There also remains widespread unhappiness over the new consumption tax implemented, which the opposition has promised to repeal. The government is focusing on tackling the issues of affordable housing and youth unemployment. And in his most recent budget, Najib ordered up tax cuts for 2018. The opposition has pushed for greater freedom of speech and checks on abuses of power following a government crackdown on dissent that has seen media executives, activists and even a cartoonist detained under sedition laws.
8. Are voters getting behind Najib?
The dissatisfaction that stoked unfavorable opinion polls in 2015 and street protests over 1MDB in the capital, Kuala Lumpur, seems to have dimmed. And Najib heads into the general election with a trump card up his sleeve: rising wages. Meantime, the opposition has struggled to make a serious dent in Barisan Nasional’s rural support bases to which Najib has pledged billions of dollars for infrastructure. Strongholds include the oil-rich Sabah and Sarawak states that delivered about a third of parliamentary seats in 2013 and without whose support Najib might have lost power. Ominously for his critics, the opposition coalition is at risk of losing its hold on Selangor, the most populous state, because it won’t cooperate with the country’s largest Islamic party. The government’s proposal to redraw electoral boundaries in Selangor could also damage the opposition’s chances in the state.
The Reference Shelf
©2018 Bloomberg L.P.