10th June 2023 – (Kuala Lumpur) Malaysia’s prime minister Anwar Ibrahim is battling to steer the country’s economy out of rough waters as it charts an uncertain course through global economic headwinds and domestic political turbulence.
The economy grew 5.6% in the first quarter, beating expectations. But economists warned growth would slow sharply as exports weaken, inflation rises and government debt mounts. The outlook hinges on Anwar winning voter support after forming a unity government last November.
Anwar’s Pakatan Harapan coalition enjoys a parliamentary majority but needs to cement backing from ethnic Malays, the majority, ahead of polls in six states. Victories, especially in Malay-majority states now ruled by the opposition Perikatan Nasional, would spur confidence. Defeats may seriously damage Anwar’s standing and ability to implement reforms.
Anwar has focused on reining in government finances but “there is no one thing that we can trumpet to show that confidence has returned,” said an aide. Inflation eased but cost pressures persist. Investor ambivalence reflects uncertainties in politics, not helped by questions over Anwar’s backing among Malays.
The multi-racial government faces its first major test in the state elections. Anwar desperately needs gains to reverse losses to Perikatan Nasional, comprising Bersatu and the right-wing PAS, the two largest Malay parties. The ethnically-mixed states of Penang, Selangor and Negeri Sembilan under PH control are unlikely to change. The challenges are Malay-majority Terengganu, Kelantan and Kedah, ruled by PAS.
Even modest wins would reassure. Big defeats may derail reforms. “The policy stance of government spending is no longer sustainable … Malaysia needs a new economic narrative,” said Sunway University professor Yeah Kim Leng, advising Anwar. Malaysia needs to shift from pump-priming growth to attracting high-tech, high-wage industries.
Meanwhile, PAS is eager to expand control after its gains in 2018 made it parliament’s single largest party. It aims to “take over” Selangor and Negeri Sembilan, and “deny the two-thirds majority” in Penang. It will “defend control” in its strongholds.
The polls will test support for Anwar and whether PAS’ religious populism, seen as right-wing by some, resonates. PAS defied royal decrees banning politics in mosques. President Hadi Awang said politics and religion were inseparable in Islam. The king reminded Muslims to keep mosques politically neutral.
Capitalising on Islam for popularity typifies “political Islam” and populism, said academic Ahmad El-Muhammady. However, in Malaysia’s plural society, banking on religious populism has limits, said former minister Khairy Jamaluddin.
“(PAS is) doing very well now, … but PAS also knows that if they want to be accepted by the Malaysian public, they have to moderate their views.”
Citing his time in government under a PAS-Umno coalition, Khairy said PAS never pushed for stronger shariah laws at the national level. Analyst Chandra Muzaffar said no party could afford extremism in Malaysia: “We’re not just talking about ideals … (but) about real politics.”
PAS’ recent parade of youths in Islamic dress and brandishing weapons was “political and religious intimidation” to some but just “cosplay” to PAS. “It reflects PAS’ belief that they’re very strong now: ‘We’re now at the forefront, we can do what we want, and what we want is this Islamic society,’” said academic Syaza Farhana Mohamad Shukri.
While outside observers see Islamic conservatism with alarm, Syaza believes PAS unlikely to push hardline shariah laws nationally. Still, the state elections may show if religious populism turns Malaysia rightwards.
Syaza expects PH to retain Selangor and Penang but with smaller majorities. The status quo in PAS states should remain. Anwar must now deliver economic gains to struggling Malaysians or risk instability. Malaysia’s future hinges on navigating political uncertainties to pursue reforms in the face of economic headwinds. The state elections may prove a bellwether of what lies ahead.