Malaysia is headed for a full-blown political crisis that may take months to resolve, leaving economic troubles to warm on the back burner until that is done, financial analysts and political leaders warned today.
Opposition Leader Anwar Ibrahim is already expecting a more repressive political climate that he fears may be shunned by international investors once Prime Minister Abdullah Ahmad Badawi hands the baton over to his deputy Najib Abdul Razak in early April.
“There will be dirty hands in every single avenue, in Parliament, in the courts and we can also expect police intimidation against opposition politicians in this country,” said Anwar.
Not only is Najib battling Anwar’s Pakatan Rakyat coalition, he is also pulling out all the stops to stay on top at his own Umno party. His popularity has been sinking on fears that he may propagate the unpopular hardline policies of his mentor and ex-premier Mahathir Mohamad and former economic adviser Daim Zainuddin.
Adding to the deep distrust Malaysians feel for him are the string of graft allegations that have dogged his 33-year political career and more recently, Najib and his wife Rosmah Mansor were accused of being involved in the commission and murder case of Mongolian national Altantuya Shaariibuu.
Economy may have to take a backseat until the political equation is settled
Already, a major purge of all Abdullah loyalists is taking place as Umno gets ready to hold its party election and annual congress beginning Mar 25.
Mohd Ali Rustam, the frontrunner for the deputy presidency and backed by Abdullah, has been barred for participating in the polls for alleged involvement in vote-buying - paving the way for Muhyiddin Yassin, the International Trade Minister favoured by Najib, to become the next deputy prime minister.
“Umno is just about the oldest surviving political party in the country. It is also the largest and because it enjoyed absolute power during the past five decades, it has now become corrupted almost absolutely,” said Azrul Azwa, an economist at Bank Islam.
“The rot is really deep and it has to be dealt with before Malaysia can progress. If only, we can have general election tomorrow and banish Umno from the scene until it heals itself. But unfortunately, we can’t and frankly, I cannot see how any of the Umno leaders can at this point in time put aside their claim to power for the sake of the economy.”
Malaysia’s stock market has borne the brunt of the political punishment as investors - both local and overseas - shy away from putting in any serious money until the picture was clearer.
Not even an unprecedented RM60 billion fiscal stimulus package unveiled by Najib last week has shored up confidence.
In fact, that ‘x’ factor is probably at its lowest in years, thanks to his abuse of federal apparatus - such as the courts and the police - to carry out the political will of his party in north-western Perak state, where a fierce battle is being waged against the Pakatan for the control of the state government.
Foreign research house CLSA has warned that the national economy could contract by as much as 5 percent in 2009.
At the closing bell, the Kuala Lumpur Stock Exchange Composite Index had barely moved, at 841.87 points, with investors sidelined and selling into strength whenever opportunity arose.
The ringgit remained weak against the US dollar and depreciated against the Singapore dollar and the Euro . In morning trade, the ringgit hovered around 3.6690/6730 to the greenback compared with 3.6690/6740 a day ago. It fell against the Sing dollar - at 2.3926/3977 versus 2.3912/3969 - and against the euro - at 4.7708/7778 versus 4.7631/7707 - the day before.