| KUALA LUMPUR, March 15
KUALA LUMPUR, March 15 Malaysia's recent
pullback on fiscal reforms has fuelled talk that the government
of Prime Minister Najib Razak is gearing up for snap polls even
though the next general elections are not due until 2013.
Following are questions and answers on the possible timing
and the political and economic implications of an early general
election in this southeast Asian country.
(For a related analysis click on [ID:nSGE62E002])
WHY ARE EARLY POLLS LIKELY?
The end of fuel subsidy reforms as well as a delay in
tabling a Goods and Services Tax bill in parliament indicate a
reluctance by the government to impose measures that would have
an impact on poorer Malay voters, a critical vote bank for the
United Malays National Organisation, backbone of the ruling
coalition. This in turn signals a government that may be making
preparations for early polls.
SHOULD INVESTORS WORRY?
To some extent. Elections in Malaysia turned unpredictable
in 2008, when a three-party opposition alliance, now led by
former Deputy Prime Minister Anwar Ibrahim, scored the
country's biggest-ever election upset. It ended the
government's two-thirds parliamentary majority, and the
opposition wound up controlling five of 13 states. That
election result triggered a stock market sell-off.
Recent moves to halt fiscal consolidation imply Malaysia
thinks it can narrow its budget gap, which stood at a 20-year
high of 7.4 percent of GDP in 2009, purely on the back of
increased economic activity and higher oil prices.
Longer term, failure to implement fiscal reform leaves
Malaysia, Asia's third-most trade dependent economy, vulnerable
to external economic and commodity price shocks. State oil
company Petronas provides almost half of all government
WHEN COULD THE POLLS BE HELD?
The most probable timing now seems to be during 2011, for
* The government normally calls for polls only when
economic growth is in positive territory. Najib is aiming for
GDP growth of at least five percent this year after the economy
contracted 1.7 percent in 2009 MYGDP=ECI. The government
would need at least until the first quarter of next year for
the recovery to reach ordinary voters.
* Many of the reform pledges that Najib has made, covering
six core areas from fighting graft to improving urban
transportation, have deadlines at the end of this year.
* Elections in Sarawak. The state on Borneo island is a
National Front stronghold that provides the government with 30
of its 137 parliament seats. Sarawak is the sole state in the
country that holds state elections separately from national
polls. It must hold polls by June 2011.
* If the government held the next Sarawak state election
concurrently with federal polls it would stretch the
opposition's meagre campaign resources even more thinly.
* Alternatively, the government could call for state
elections in Sarawak either late this year or early next year,
in the hope that a strong showing would bolster confidence
ahead of national polls that would follow soon after.
But even if the government scores a landslide win in
Sarawak, it may not be willing to take a risk in far more
politicised mainland Malaysia where the Pan Malaysian Islamic
Party (PAS) is making inroads into its Malay voter base.
Petrol price hikes in 2006 helped the opposition Democratic
Action Party to an unprecedented six state seats in Sarawak
polls that year.
"I believe the Sarawak polls will be held separately before
the next general election because Sarawak is usually taken as a
rough barometer before the national polls are held," said
Shaharuddin Badaruddin, associate professor at Universiti
Teknologi Mara in Kuala Lumpur.
* Calling for an election later than next year also poses a
risk for the government due to the possibility of a rise in
religious and racial tensions. Ethnic Chinese and Indian voters
have shown no sign of returning to the National Front since
WHAT ARE THE INDICATIONS OF IMMINENT POLLS?
The following indicators will provide a rough early warning
that polls are coming in the next three to six months. None
have taken place so far:
* National Front component party leaders and state leaders
from the United Malays National Organisation (UMNO), the
lynchpin of the 12-party ruling coalition, will be summoned by
Najib to finalise their proposed list of election candidates.
* The country's Election Commission will also indicate
looming polls with a step up in its own logistical preparations
and a finalising of the electoral rolls.
* A run-up in the stock market. In the past, government
linked funds were asked to prop up the stock market several
months ahead of elections to create a feel-good factor for the
economy, though the extent of such rallies varies.
WHAT WOULD BE THE OUTCOME OF POLLS?
* While Malaysia's opposition has never been stronger in
the wake of what locals dubbed the 2008 "political tsunami",
the odds are still loaded in favour of the National Front.
The Anwar-led opposition has won seven out of nine
by-elections held since the 2008 elections and most of UMNO's
partners in the National Front are either paralysed following
the drubbing they received in 2008 or plagued by infighting.
Anwar is battling charges of sodomy in court, in what he
says is a repeat of a political conspiracy that saw him jailed
for six years after his sacking as deputy prime minister in
The government insists he will get a fair trial. One risk
is that a guilty verdict could energise and embolden the
opposition. Alternatively it could drive a wedge between the
reformers, ethnic Chinese and Islamists that comprise his
UMNO has 78 parliamentary seats. Adding in allied MPs from
its Borneo stronghold states of Sabah and Sarawak, its total
rises to 117 seats, enough for a simple majority in the
222-seat parliament even if all the coalition's ethnic Chinese
and Indian parties fail to win anything.
Najib however needs a two-thirds majority if he is to
legitimise his rule and avoid a leadership challenge, a fate
that befell his predecessor Abdullah Ahmad Badawi, who presided
over the 2008 election losses.
(Reporting by Razak Ahmad; Editing by Andrew Marshall)