Partisan politics must end

Malaysia’s main challenge in 2009 is not the global financial meltdown; it will be the continued political grandstanding between the ruling coalition and the immensely strengthened opposition.

The aftermath of the elections on March 8 last year resulted in a lame duck prime minister with a lame duck government and policy-making an afterthought to political survival.

Prime Minister Abdullah Ahmad Badawi, instead of resigning gracefully after leading the Barisan Nasional to its worst ever electoral results, stubbornly held on to his party’s presidency (Umno) and the premiership.

Members of his own party were not satisfied and demands for his resignation continued to grow. Political in-fighting in Umno left the nation rudderless throughout most of 2008.

Abdullah ultimately caved in to the intense pressure from within the party in October 2008 and agreed to step down in March 2009 as part of a transition plan.

Deputy Prime Minister Najib Abdul Razak is scheduled to take over as the next prime minister subject to a vote at the next Umno general assembly where Najib is the only candidate.

Although this transition plan was supposed to improve confidence in the ruling government and strengthen policy-making, the reverse has been the case.

Najib’s many skeletons in the cupboard have been a beacon for the opposition.

Although opposition leader Anwar Ibrahim set a deadline which has passed, his threat to topple the government remains.

Politicians and bureaucrats have been more and more focused on gaining political mileage and less and less on managing the country as the global financial crisis unravels.

RM7bil stimulus plan

Scoring political points - not developing policy strategies - has become the priority with little exception. Partisanship and political blackmail are the order of the day.

A major test in assessing the appropriateness of the government’s response to the financial crisis was the annual budget.

Najib, now the heir apparent and finance minister, presented his maiden budget and announced Malaysia’s RM7 billion stimulus plan. He was flayed by the opposition for getting parliamentary procedures as well as the budgetary numbers wrong.

The stimulus plan followed the conventional pattern of increased infrastructure and public works spending.

But blatant use of the Employees Provident Fund to the tune of RM5 billion to prop up the stock market (government corporations and corporations linked to the ruling BN) had the feel of crony capitalism.

The opposition, led by DAP, proposed a RM50 billion populist strategy spending spree. These elements included:

(1) RM6,000 annual oil bonus to all families earning less than RM6,000 a month or RM3,000 annual bonus to bachelors earning less than RM3,000 a month;

(2) Progressive reduction of corporate tax rate from the present 25 percent to 17 percent;

(3) Daily revision of petrol prices to take into account changes in the international price of oil;

(4) Immediate reduction in gas prices as well as electricity tariffs; and

(5) An additional RM2 billion wireless project to make all the major towns and cities in Malaysia wi-fi enabled.

Wrong response to a financial crisis

While expansionary policies are a necessary response to the financial meltdown, the package focused more on pleasing the public than sound economic outcomes.

This is clearly not the way for a country to respond to a global financial crisis. More importantly, Malaysia has been running a fiscal deficit since 1998.

Even the reputable and conservative Bank Negara showed signs of partisan politics when it predicted that Malaysia would not suffer recession this year and enjoy a domestic growth of 5.5 percent.

In contrast, forecasts from domestic analysts, multilateral agencies and research houses all predict that Malaysia, along with most high-performing East Asian economies, will grow at much lower rates as the first signs of a global recession are felt and the crisis impacts on Malaysia’s open economy.

Sound policy-making will take the back seat in Malaysia as Najib prepares for a crucial by-election tomorrow. This will be an important test of his and the ruling party’s popularity.

He has to demonstrate to Umno that he is not weak and will not give in to the demands of the non-Malay political parties in BN who now are themselves fighting for their political survival.

At the same time, Najib must attempt to restore popular and, more importantly, investor confidence in the face of serious allegations of foul-play, corruption and political uncertainties.

Anwar predicts that Najib will call for a snap election immediately after March 2009 when Najib becomes the new prime minister.

It seems that dealing with the global financial crisis is a low priority for Malaysia’s politicians as 2009 rolls in.

Unless there is a paradigm shift in the politics of Pakatan Rakyat and the Barisan Nasional towards focusing on national priorities such as responding to the global financial crisis, an impending recession and using this opportunity to restructure the Malaysian economy, partisan politics will drag Malaysia into a quagmire.

GREG LOPEZ is a postgraduate student at the Crawford School of Economics and Government, Australian National University.