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Malaysian Coalition Extends 55-Year Rule; Opposition Disputes Outcome

Malaysian Coalition Extends 55-Year Rule; Opposition Disputes Outcome
Malaysian Prime Minister Najib Razak (C), his wife Rosmah Mansor (L) and deputy Prime Minister Muhyiddin Yassin celebrate the Barisan Nasional (National Front) coalition electoral victory on May 6.

Monday, 06 May 2013 06:03 AM

KUALA LUMPUR, Malaysia Malaysia Prime Minister Najib Razak’s coalition extended its 55-year rule even as it bled support from Chinese voters, retaining a parliamentary majority in election results disputed by opposition leader Anwar Ibrahim.

Stocks surged and the ringgit climbed the most in almost three years after Najib’s Barisan Nasional coalition won 133 seats in the 222-member parliament. Anwar’s People’s Alliance had 89 seats, according to Election Commission results.

Najib had sought to secure more than the 140 seats won by his coalition in the last election to avoid a potential internal party challenge later this year that may unsettle investors. While he fell short of that goal, a victory margin that proved similar to 2008 may enable him to proceed with plans to narrow the budget deficit while focusing spending on $444 billion on infrastructure investments by 2020.

“This strengthens Najib’s position,” Rahul Bajoria, a Singapore-based economist at Barclays Plc, said by phone today, adding the victory is positive for stocks and the ringgit. “He should be able to hold onto his job.”

The currency strengthened 1.4 percent to 2.9900 per dollar as of 9:27 a.m. in Kuala Lumpur, poised for the biggest one-day jump since June 2010, according to data compiled by Bloomberg. The FTSE Bursa Malaysia KLCI Index, which had lagged other Southeast Asian benchmarks this year, jumped as much as 7.8 percent.

Investment Surge

“We are likely to see a potential surge in investment,” said Wee-Khoon Chong, an Asian rates strategist in Hong Kong at Societe Generale SA. He called the election “another milestone for the country for the people to voice” their desire for a better government.

Before today, the ringgit had jumped 1.7 percent since Najib dissolved parliament on April 3, the best performance after the South Korean won among the 11 most actively-traded Asian currencies tracked by Bloomberg.

Fitch Ratings “looks forward to greater clarity on the government’s fiscal and economic policy program following Sunday’s elections,” Andrew Colquhoun, head of Asia-Pacific Sovereigns, said in an e-mail.

Anwar questioned the fairness of the polls, telling reporters in Selangor, outside Kuala Lumpur, that irregularities “have cost us many seats.” He declined to concede or speculate on his political future.

Anwar Disputes

“We have appealed to our supporters to maintain calm, ensure there’s peace, and to voice their protests clearly very loudly,” Anwar told reporters today. Sivarasa Rasiah, an executive member of Anwar’s party, said it plans to contest as many as 30 seats that it lost by narrow margins. “We will explore all legal and political avenues,” he told reporters.

Najib urged everyone to accept the results and called for national reconciliation. He attributed the coalition’s defeat in the state of Selangor and other areas to a larger than expected swing of ethnic Chinese voters against his government.

“With the Chinese tsunami we couldn’t do anything in Selangor,” Najib told reporters after the vote.

Ethnic Malays make up about half of the population, while Chinese account for roughly a quarter and the rest are mostly ethnic Indians or indigenous groups. After 1969 race riots, Najib’s father, Abdul Razak Hussein, implemented a system of racial preferences for Malays as the country’s second prime minister that remains in place.

Chinese Voters

Najib said before the election that his gradual reform of the affirmative-action programs will assure stability and avert a slide in stocks and the ringgit that would accompany any opposition victory.

The opposition Democratic Action Party, made up mostly of ethnic Chinese, boosted its seat total by a third to 38, according to Election Commission data.

As in the 2008 election, among the biggest losers in the Barisan Nasional ruling coalition were ethnic-Chinese parties, which now hold the fewest seats since 1969, according to Joseph Chinyong Liow, associate dean of the S. Rajaratnam School of International Studies in Singapore.

“It’s not necessarily only the Chinese who have swung against the BN,” Ong Kian Ming, an opposition candidate who won in Selangor, said of Najib’s coalition. “It’s more complicated -- a lot of urban Malays have swung against the BN as well.”

‘Common Grounds’

Najib’s minister responsible for overseeing the country’s economic transformation program said Malaysians should move beyond their differences after the election.

“I hope we have become more mature in Malaysia to accept the results as they are and say how can we move forward toward nation building, where both sides agree on societal and national development, expound on common grounds and find a way to manage disagreements,” Idris Jala, minister in the Prime Minister’s department in Najib’s Cabinet before the election, said in a Bloomberg Television interview with Haslinda Amin today.

Malaysia’s pipeline of investment is “very healthy” and the country should have “very robust growth” following the election result, he said.

Najib’s position should be secure even though Barisan Nasional, led by the United Malays Nasional Organization, failed to make further inroads from the 2008 election, said Ooi Kee Beng, deputy director of the Institute of Southeast Asian Studies in Singapore.

Najib’s Pull

“UMNO leaders know what’s good for them,” he said today by phone. “If they realize how weak they actually are, they would see that Najib is their greatest asset. Without Najib they would have fallen.”

Najib is more popular than his government. According to a Merdeka Center for Opinion Research survey his approval rating was 61 percent just before the election, while the poll of 1,600 voters conducted April 28 to May 2 found 50 percent of respondents had a positive view of his ruling coalition.

Najib’s coalition won nine of 12 states being contested, recovering Kedah from the opposition, the Election Commission said. The opposition retained Selangor, Penang and Kelantan.

Monitoring groups including Coalition for Clean and Fair Elections, known as Bersih, saw an “improvement in the conduct of the election” despite a number of “major issues,” according to their preliminary report. These included the use of phantom voters, stained ballot papers, indelible ink that could be washed off and the arrest of seven poll monitors.

Anwar’s party yesterday raised similar concerns, saying in statements that indelible ink could easily be removed, pencils were used to mark ballots in some areas and its observers were asked to leave one polling station.

Anwar Seat

Najib led his coalition into an election for the first time since taking over as prime minister four years ago from Abdullah Ahmad Badawi, who stepped down after the coalition lost a third of its seats in 2008. After inheriting a country in recession, the 59-year-old has overseen 13 straight quarters of economic growth above four percent.

Anwar held the Penang seat he won in a 2008 by-election, according to Election Commission data. His wife, Wan Azizah Wan Ismail, had won the seat three times while he was ineligible for office due to convictions for having illegal sex with a man and interfering with police inquiries. The sodomy conviction was overturned in 2004.

Anwar’s ideologically disparate coalition includes the Pan- Malaysian Islamic Party, whose members advocate Islamic criminal punishments. The group united around a platform aimed at eliminating graft and ending racial preferences for Malays.

Within his alliance, the Pan-Malaysian Islamic Party took 21 seats and Anwar’s People’s Justice Party had 30.

“We have to show to the world that we are a mature democracy,” Najib told reporters today in Kuala Lumpur after yesterday’s vote. “Whatever happens, the decision of the people, the will of the people must be respected.”

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Malaysia Prime Minister Najib Razak’s coalition extended its 55-year rule even as it bled support from Chinese voters, retaining a parliamentary majority in election results disputed by opposition leader Anwar Ibrahim.
Monday, 06 May 2013 06:03 AM
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