Can Malaysia’s new government deliver?

Jayant Menon, Free Malaysia Today

The ouster of the Barisan Nasional (BN) coalition government in Malaysia was not only unexpected, it was amazing. Even the winners could hardly believe that they had won, while the losers took an ungraciously long time to accept defeat. With probably the worst gerrymander in history, the incumbents technically required only 16.5 % of the vote to win, but still lost.

The new Pakatan Harapan coalition government faces many challenges but arguably the biggest challenge is actually governing as a coalition. None of the constituent parties have ever been part of federal government,although various members have, not least the returned Prime Minister Mahathir Mohamad. Some have formed state governments before but that’s not quite the same thing. Holding a coalition together takes more than experience in government. This is especially true when the defining motivation for their coexistence as a coalition is convenience. Their main bond is that they opposed BN for various reasons, which brought them together to contest the 2018 elections.

Pakatan Harapan has already been through a few permutations prior to its current configuration, itself a reflection of the difficulties of staying intact. Although the parties are broadly left-of-centre, the roles of race and religion, for instance, varies in prominence across them. There is no doubting that the diversity across these parties is vast and multi-dimensional, and could pose problems going forward. How will differences across party platforms be resolved when it comes to policy making? Who will anchor the coalition, and how will the others react?

There are no clear cut answers to these questions but the difficulties that can arise are exemplified by the current problems faced by the National Unity government in Sri Lanka, which came into power in 2015 in an almost equally unexpected way. It is another coalition of convenience that, despite its promise, has faltered and a return of the previous government now looks likely.

The situation in Sri Lanka is not an isolated case. The Arab Spring toppled many dictatorial regimes in the Middle East, and the political void it left behind was in some cases filled by coalition governments, of which the constituent parties often made for strange bedfellows. The difficulties that these coalition governments have faced are well known and continue today.

The astonishing political change in these countries, as in Malaysia, occurred in the face of mounting economic and social problems. Youth unemployment is three times the average at more than 10 per cent, while 25 per cent of university graduates remain unemployed 6 months after graduating despite employers complaining about difficulties sourcing talent. This points to a skills mismatch that has its roots in a deteriorating education system that is underfunded and wrought with distortions. Malaysia has long been a net exporter of skills despite being a net importer of labour.

Malaysia has also been a net exporter of capital since 2005, with mixed results on investment on both the domestic and foreign fronts. It will need to stem capital flight and revive both domestic and foreign investment if it is to generate the kind of growth that creates good jobs for younger generations.

Although official statistics point to falling income inequality, the level overall and levels within Malaysia’s different communities remain high. Other indicators also point to rising wage and wealth inequality, as well as rising social marginalisation and exclusion. Unless these disparities are addressed, social and political stability will be at risk.

Financial corruption and the corruption of Malaysia’s institutions such as the judiciary, the police, the press and even the anti-corruption agency must be addressed. Financial and institutional corruption feed off each other. Recognising the enormity of the task, the newly elected government has created the Committee on Institutional Reforms, while the Council of Eminent Persons will focus on economic issues. Malaysia’s new leaders understand that institutional reform must accompany economic reform to deliver systemic change, even if vested interests and inertia must first be overcome.

These challenges can be met if the coalition works together as an effective government. The magnitude of the challenges will require wide-ranging reforms, and this will test the integrity of a loosely bound coalition. Implementation of such policies will require support from the bureaucracy, which is not only politicised but has only known one master for 61 years.

But if strong and persuasive leadership will allow Pakatan Harapan to withstand this test and deliver, the prize will be great. The nexus between race, religion and politics may have finally be broken, and meritocracy could return in place of money politics and patronage.

Although the change in government in Malaysia was a truly remarkable event, it marks the start, not the end, of a journey towards a new beginning. Once the euphoria fades, the new government will be judged not by how much better it may be compared to its predecessor, but by how far it gets in meeting the heightened expectations of the people who put them in power. It is only when these expectations are met that a new future will truly be possible for Malaysia.

Jayant Menon is Lead Economist in the Economic Research and Regional Cooperation Department at the Asian Development Bank.