Possible ramifications of Sarawak election
(Reuters) – KUALA LUMPUR, March 2 — Polls in Sarawak, likely by the end of April, are a test for Prime Minister Datuk Seri Najib Razak as he gears up for the country’s 13th general elections to seek a mandate to execute economic reforms and strengthen his grip on power.
Najib took office shortly after his ruling Barisan Nasional (BN) coalition suffered record losses in 2008 national polls to the People’s Alliance opposition, led by former Deputy Prime Minister Datuk Seri Anwar Ibrahim.
Najib has gained traction by promising to put Malaysia back on investors’ radars and a strong win in Sarawak could boost his confidence to call a snap general election. National polls are due by 2013.
Following are scenarios for how the Sarawak polls could play out nationally:
BN WINS IN SARAWAK, POLLS LATE 2011, EARLY 2012
The opposition appears to have lost some of its momentum in recent months, as it contends with internal bickering and a poor showing in several by-elections. This could help BN secure a strong win in Sarawak where it now holds 63 of the 71 state legislature seats.
The benchmark stock index would react positively and gains could be buoyed in a pre-election rally that usually occurs two to three months before a general election.
Stocks that tend to rise in a pre-election rally are those with significant government ownership, such as Maybank , property developer UEM Land Holdings , lender CIMB Group Holdings , conglomerate MMC Corp. and plantation-to-power firm Sime Darby .
Najib and his deputy will begin a 7-month tour of Malaysia’s 13 states this month, in what analysts see as the final preparations for a general election.
National polls are likely be held after Najib tables a “pre-election” 2012 budget during the third quarter of this year.
The best case for BN in a general election would see it regaining the two-thirds parliamentary majority and control of at least two of the five states that it lost in 2008.
A strong mandate would give Najib fresh impetus to pursue promised economic reforms such as a twice-delayed goods and services tax.
OPPOSITION MAKES INROADS, POLLS PUT OFF
The opposition is unlikely to win control of Sarawak. A best case for it would be to deny the National Front its two-thirds control in the state legislature. That would increase pressure on the state’s long-serving chief minister, Tan Sri Abdul Taib Mahmud, a BN ally, to retire and with no clear successor, that could create a power vacuum which could re-energise the opposition nationwide.
A strong opposition showing in the state election could unnerve stock market investors because of the implications that might have for the BN’s general election prospects.
If the opposition was to make inroads in Sarawak, Najib might hold off calling a general election as he sought to rebuild support by slowing unpopular reforms such as fuel subsidy cuts.
