Malaysia's opposition banks on new economic deal

[April 29, 2013]  KUALA LUMPUR, Malaysia (AP) -- With less than a week to general elections, Malaysia's opposition alliance is banking on the promise of bold change to end the governing coalition's 56-year rule. It says a new economic playing field will strip away decades of race-based policies that it believes bred corruption and hampered growth

The three-party opposition alliance led by former Deputy Prime Minister Anwar Ibrahim says it cannot be business as usual in Malaysia, where affirmative action policies that favor majority ethnic Malays in business, jobs and education have polarized the country and suppressed its economic competitiveness.

Despite posting robust economic growth in the past decade, the opposition says the cost of living has surged in Southeast Asia's third largest economy, outpacing rise in wages. The country is lagging behind many of its Asian peers such as Taiwan and South Korea, as its race-based policies fueled a brain drain abroad. Corruption is endemic, and the government ran a budget deficit for the last 15 years, swelling the national debt.

Anwar's People's Alliance promises a more competitive merit-based system and a clean break from what it calls a corrupt past if it wins May 5 national polls.

Its election manifesto says it will end monopolies in sectors such as telecommunications, rice and sugar that kept prices high. It will review suspicious government concessions, abolish highway tolls, cut taxes to lower car prices and free up civil liberties.

"This election offers a possibility of a political transition of power. The campaign will come down to who can deliver more genuine and fundamental reforms and who will give them a better deal," said Bridget Welsh, a political science professor at Singapore Management University.

Anwar's alliance surged into political prominence in 2008 elections when it won more than a third of seats in the federal parliament and gained control of several states. It was the biggest blow for Prime Minister Najib Razak's National Front coalition since independence from Britain in 1957 and was spurred by discontent about corruption and racial and religious discrimination.

The keystone of the opposition policies is reform of preferential treatment started in 1971 to lift Malays, who account for 60 percent of Malaysia's 29 million people, from poverty after race riots. The policies are credited with enlarging the Malay middle class and putting 20 percent of corporate wealth in Malay hands, but the opposition says the system has been abused to enrich the well-connected elite and distorted the economy. Many contracts go to businesses with links to the ruling party, which has created a powerful culture of cronyism and a nexus between politics and business.

Najib, 59, who is seeking his first mandate at the polls since becoming prime minister in 2009, has taken on the reform mantle to counter the opposition.

He has embarked on a series of economic and government transformation efforts to revamp his coalition's image, including abolishing security laws widely considered repressive, wooing investment from abroad and bolstering public welfare including cash handouts for civil servants and the poor.

With his battlecry of "1 Malaysia," Najib also trimmed affirmative action policies but is restrained by hardliners in his ruling Malay party. He has pointed to the National Front's stewardship that turned Malaysia from an agricultural backwater into a modern, stable nation.

Malaysia's focus on heavy industries and manufacturing in the 1980s drew multinational corporations to its shores but it has since lost out to neighboring countries as a low-cost manufacturing base. Government spending in the last decade helped bolster growth as foreign investment ebbed.

A 2011 World Bank report said Malaysia's brain drain was intensifying with more than one million of its citizens, mainly ethnic Chinese, living in Singapore and other countries largely due to higher wages, unhappiness over poor governance and lack of meritocracy. It warned the outflow of skilled people could bog down Malaysia's economy.

Najib insists his government is on a reform path, with Malaysia on track to become a developed nation by 2020. He has warned an opposition win would bring economic ruin and political chaos.

"Certain politicians are talking about change but what is it you want to change? Do you want to change from peace and harmony to a country full of conflict and violence? Do you want to change the economic success that we have achieved?" he said at a mammoth political rally last week.

The concern resonates with some voters, who fear differences among the three parties in the opposition alliance may hinder their ability to govern nationally.

The alliance comprises Anwar's multi-racial People's Justice Party, the Democratic Action Party dominated by ethnic Chinese and the conservative Islamic Party. The three parties first worked together in 2008 by agreeing not to contest the same seats. They have deepened their alliance since then, unveiling a common election manifesto for the first time and setting aside differences over the Islamic Party's ambition to set up an Islamic state.

Unlike the 13-party National Front dominated by Najib's ruling Malay party, the three opposition parties are equals in the alliance.

Anwar, a former deputy premier and finance minister who was sacked in 1998 and subsequently jailed for sodomy and corruption, was credited for bringing the parties together after his release from jail in 2004. Anwar, who says the charges were politically motivated, made a political comeback in a by-election after 2008 polls.

Anwar, 65, says weeding out corruption, fixing economic distortions due to race-based policies and better economic management can save the country billions of dollars a year. His alliance is hoping the momentum in 2008 polls will catapult them into federal power, eyeing support from about a third of new voters among 13.3 million people eligible to vote on Sunday.

The political threat has caused anxiety in Najib's camp, which has embarked on an extensive publicity blitz. Welsh estimated the coalition spent 100 million ringgit ($33 million) on advertisements on websites such as Yahoo, mass media, billboards and sending millions of text messages to voters' mobile phones.

Banners of Najib and his achievements flutter along streets in Malaysia's cities and rural villages. "Who says change is good for you?" declares one of dozens of full-page advertisements in mainstream newspapers, citing turmoil after revolts in Middle East nations.

Most analysts, however, believe Najib's coalition has the upper hand due to deep pockets and support in predominantly rural constituencies that are the key to a large number of Parliament's seats.

Anwar has pointed to his alliance's track record in the last five years in Penang and Selangor, two of the country's most industrialized states. Government contracts have been awarded through open tenders rather than behind closed doors, and state officials have to declare their assets. Fiscal prudence has also reversed state budget deficits while the poor in Penang have received cash handouts and water is subsidized in Selangor.

In northern Penang state, an industrial hub also famed for its beaches and cultural heritage, the opposition has embarked on an ambitious 6.3 billion ringgit ($2.1 billion) project to build Southeast Asia's first seabed tunnel linking Penang island to the mainland part of the state and three highways to alleviate daily traffic snarls.

The record is more mixed in two poorer northern Malay-majority states that are reliant on federal funds, but opposition officials said corruption is minimal in the state government administration. The four opposition states jointly contribute about 36 percent to gross domestic product.

"The last five years, if anything, is an indication of our ability to govern and to do well without corruption, that things will not crumble," said opposition strategist Rafizi Ramli, who helped draw up the election manifesto and is also a candidate.

"Our biggest achievement is to give hope to the people that there can be a credible alternative to the National Front, that there can be a better Malaysia," he said.

[Associated Press; By EILEEN NG]

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