(Bloomberg) — Anwar Ibrahim, the near-man of Malaysian politics, has finally secured the country’s premiership after decades of waiting. Now the reformist leader must ensure that he continues his work.
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It will not be easy in a country where there have been four prime ministers in four years. Former finance chief Anwar is likely to have a shaky majority and his government will rein in his nemesis, the corruption-ridden United Malaysian National Organization. This could prove to be a hindrance in making policy and could easily bring down his government.
Anwar, 75, will also have to steer an economy in its most fragile state of recovery at a time of rising inflation and the cost of living. He will also come under pressure from an opposition dominated by an increasingly popular Islamist hardline party.
The election has opened “many religious and racial cleavages” in the political landscape, said Tan Teng Boo, CEO and general manager of Capital Dynamics Asset Management Sdn. in Kuala Lumpur. Anwar’s biggest job “will be to make sure these mistakes don’t explode.”
Read more: Anwar Ibrahim becomes Prime Minister of Malaysia after decades of waiting
Here are some of the challenges facing Anwar and his administration in the coming months:
The first test will be who gets what under the power-sharing formula in Anwar’s new government. Anwar should satisfy the majority of the Malays and the UMNO while keeping the traditional coalition partners happy. He may see a bloated cabinet because he wants to make sure each of the different parties has a role to play.
“Malaysia’s new cabinet should not be as big as the previous cabinet,” said Awang Ajman Awang Pawi, an associate professor at the Academy of Malaysian Studies at the University of Malaya. “Anwar needs an efficient and reliable cabinet.”
Anwar’s coalition, Pakatan Harapan, has named two deputy prime ministers in its manifesto, one from the underdeveloped but resource-rich state of Borneo. A UMNO leader such as Ismail Sabri Yacoub, a former prime minister, or Hishammuddin Hussein, a former defense minister, could also be nominated as deputy prime minister to keep the party within Anwar’s government.
The centre-left Democratic Action Party, which has the largest number of MPs in Anwar’s bloc and supports minorities, can lag behind cabinet deliberations to ensure unity and counter the polarizing narrative that it is anti-Malay. During its brief time in the federal government, the DAP controlled the Finance and Transportation Departments.
UMNO, the hub of the former ruling bloc Barisan Nasional, is beset by internal strife and attempts are being made to oust its chief, Ahmad Zahid Hamidi, who is also the boss of Barisan. The politician pushed for the quick poll, which saw BN lose significant ground in Malaysia-dominated areas and was instrumental in pushing the coalition to become part of Anwar’s government.
UMNO is holding its General Assembly on December 21, which could see Zahid lose his job, an event that would cause anxiety for Anwar. Zahid’s potential replacement may not be willing to cooperate with Anwar’s alliance.
Keeping UMNO in government will also depend on what kind of cabinet positions and policy input Anwar delivers.
When it first entered government, Anwar’s multiracial coalition went after UMNO leaders in a crackdown on institutional corruption. It investigated the troubled state fund 1MDB, which led to former Prime Minister Najib Razak starting his 12-year prison sentence for his involvement this year.
With UMNO likely to be included in the new government, this would likely push for a royal pardon for Najib, which could anger Anwar’s constituents and allies. Any acquittal of UMNO chief Zahid, who is accused of corruption related to his foundation, would cause the same problems.
And if Zahid goes to jail, he could be replaced by a leader who doesn’t want to work with Anwar.
agreement on reforms
Anwar may have to compromise his coalition’s manifesto and pledge to implement reforms to preserve his unity government. While he won’t face any obstacles in fulfilling welfare-focused promises — which sound similar to those of his rivals — the pledge to end racial and religious discrimination may not hold up very well.
The majority of Malaysian and indigenous communities enjoy “special status” under the constitution, which has translated into government policies that favor preferential treatment in areas such as public sector jobs, housing and higher education.
In 2018, Pakatan Harapan had to backtrack on a decision to ratify a major UN anti-discrimination treaty following protests from UMNO and an Islamist party, which at the time raised concerns that momentum was stalling.
The Malaysian economy will grow at a slower pace of 4% to 5% in 2023 compared to more than 7% this year, while economists expect the central bank to continue raising interest rates to curb inflation. This could lead Anwar to take an increasingly populist stance and UMNO’s more generous promises of cash aid to help the country’s poorest.
“It’s a recognition that the focus should be on the economy and the social fabric,” said Bridget Welsh, an honorary research associate at the University of Nottingham Asia Research Institute Malaysia. “More attention will be paid to social safety nets and the vulnerabilities of different communities.”
UMNO has pledged to ensure that each family earns no more than 2,200 ringgit ($490) a month, meaning the government will raise incomes to ensure they reach that threshold. If the Anwar government takes such action, it could delay its fiscal consolidation plan and draw the wrath of credit rating agencies.
The new government will soon have to present its 2023 budget, and this could be its first confidence test. It is unclear whether the Anwar government will make significant changes to the spending plan presented in October.
Read more: Seven charts show the state of Malaysia’s economy ahead of the election
fight against the Islamists
Parti Islam Se-Malaysia, or PAS, won the most seats in the election, received Malaysian support from UMNO to remain scandal free and focus on strengthening the Muslim faith.
As the largest opposition party, PAS is likely to campaign to restrict the open sale of alcohol in Malaysia and close betting shops. This could strain Anwar’s soft agenda and force his government to offer more religious policies in education and the civil service, a strategy used by former leader Mahathir Mohamad in the 1990s.
The goal of the PAS has long been to transform Malaysia into an Islamic state. Over the years, it has pressured the federal government to allow the imposition of strict Islamic laws in the eastern states of Kelantan and Terengganu. With the largest number of seats in parliament, PAS could join former Prime Minister Muhyiddin Yassin’s party and even pressure some UMNO lawmakers to try again to seize power.
Read more: Divisive Islamists loom over Malaysian politics after big win
With help from Ravil Shirodkar.
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