Insight: Malaysia opposition sees state model guiding path to power

ARCHIVES 2013

By admin-s On Apr 22, 2013

(Reuters) – “It would be a model to say that if we are financially prudent, with a little money we can do a lot of things,” said Tony Pua, a leading opposition parliament member. “There’s a lot more we can do with the federal budget.”

Lim Guan Eng, the hyperactive chief minister of Malaysia’s Penang state, is not the type to miss a good photo-opportunity, so there were plenty of witnesses when he handed over the keys to his government Mercedes ahead of a May 5 general election.

Integrity is a central battle cry for Malaysia’s disparate three-party opposition as it pursues its best chance of ending 56 years of rule by the Barisan Nasional (BN) coalition.

“The official cars should not be misused for our own personal use,” Lim, a 52-year-old ethnic Chinese, told reporters as his administration shifted to caretaker status this month. “This is the integrity held by the state administration.”

Five years after the opposition took control of four state governments, northwestern Penang will be Exhibit A in its case that it can make Southeast Asia’s third-largest economy cleaner and more competitive.

Malaysia’s second-smallest state topped the state investment league for the first time in 2010 and again in 2011, bolstering its position as a hub for high-tech manufacturers such as Intel and Honeywell.

Overall investment doubled in 2008-12 compared with the previous four years, a powerful rejoinder to the BN’s claims that the opposition cannot be trusted to run the economy.

The BN, or National Front, led by Prime Minister Najib Razak, points to a 73 percent slump in Penang’s investment last year and mounting traffic congestion in the state, which also draws tourists to its beaches and the colonial elegance of its capital Georgetown, as evidence Lim’s touch is wearing thin.

But the opposition hopes Lim’s reforms to tackle corruption linked to laws favoring majority ethnic Malays will resonate with a bulging younger generation of voters angry at graft and less attached to race-based politics.

Polls suggest a narrow win for the BN, which lost the two-thirds parliamentary majority that allowed it to change the constitution for the first time in 2008.

POTENTIAL SHAKE-UP

The “Penang model” also highlights risks to investors from an opposition victory, which promises to unravel five decades of cozy relations between the government and business in what would be the biggest shake-up since independence from Britain.

Led by former Deputy Prime Minister Anwar Ibrahim, it says it will review suspicious contracts and cancel some, including a controversial $800 million rare-earths plant built by Australia’s Lynas Corp. Its manifesto also pledges to break up “monopolies” in certain sectors.

“We wouldn’t want to take any action that would destabilize the market, but at the same time it doesn’t mean they can get off scot-free, no,” Lim, who will campaign nationwide, told Reuters in an interview. “The imperative should be there are no crony-driven contracts.”

Major firms and tycoons seen as having close ties with the United Malays National Organization (UMNO), the dominant party in the ruling coalition, could suffer.

“On individual stocks, (it would be) disastrous, I should think,” said Gerald Ambrose, managing director at Aberdeen Asset Management in Kuala Lumpur, adding that the overall stock market had likely priced in some risk of an opposition win.