What next for Malaysian PM after anti-govt rally?

KUALA LUMPUR Sun Jul 10, 2011 3:27pm IST

Malaysia's Prime Minister Najib Razak is seen before he gave the opening keynote speech at the 10th International Institute of Strategic Studies (IISS) Asia Security Summit: The Shangri-La Dialogue, in Singapore June 3, 2011. REUTERS/Tim Chong/Files

Malaysia's Prime Minister Najib Razak is seen before he gave the opening keynote speech at the 10th International Institute of Strategic Studies (IISS) Asia Security Summit: The Shangri-La Dialogue, in Singapore June 3, 2011.

Credit: Reuters/Tim Chong/Files

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KUALA LUMPUR (Reuters) - Malaysian Prime Minister Najib Razak will likely hold off on calling a snap election any time soon and rethink tough economic reforms to consolidate support after a rare anti-government protest highlighted the opposition's growing strength.

More than 10,000 people took to the streets on Saturday to demand more transparency in the voting process, which they say is riddled with irregularities that favour the ruling coalition, and to urge the election commission to be impartial.

The rally was Malaysia's biggest anti-government protest since 2007, and took place despite a heavy police presence and the use of tear gas and water cannons to disperse demonstrators. More than 1,400 people were detained.

Analysts say the unusual public display of discontent could embolden the opposition and erode the political gains Najib has achieved since taking office in 2009. It may also delay economic reforms seen as essential to draw investment.

The following are possible ramifications on the timing of the general election as well as the fate of Najib's promised political and economic reforms:

ELECTIONS - SOONER, OR LATER?

Since taking office in 2009, Najib has seen his approval rating rise from 45 percent to 69 percent in February this year with promises of political and economic reforms.

This, coupled with the Malaysian economy's strong growth, has led to speculation that Najib could call for snap polls late this year although elections are not due until mid-2013.

Holding polls later rather than sooner will give Najib more room to rebuild support following the rally and to deliver results from a series of economic programmes designed to boost growth. But analysts say Najib also risks seeing the opposition gain further traction if he holds out for too long.

Despite fallout from the rally, national polls are not expected to be held before Najib tables a "pre-election" budget on October 7 with populist measures aimed at placating voters with polls likely to be called next year.

HOW WILL NAJIB COME OUT OF THIS?

The best case scenario for the ruling National Front coalition in the coming elections would see it regaining its two-thirds parliamentary majority and control of at least two of the five states that it lost to the opposition in 2008.

A strong mandate would give Najib fresh impetus to pursue promised economic reforms. To achieve that, however, Najib will need to effectively deal with the fallout from Saturday's rally.

He could opt for a conciliatory approach but has so far chosen to take a tough stand, telling party members and supporters on Saturday that the National Front was not afraid of confronting the opposition in the next polls.

Adopting a hard line strategy against the opposition would bolster Najib's own standing as a strong leader within the coalition but risks polarising the electorate even further.

SOME OPPOSITION GAINS

The opposition People's Alliance scored a major upset in the last polls but has struggled to build on this momentum.

The opposition leader Anwar Ibrahim has been embroiled in a lengthy court battle involving a sodomy charge, which he says is a political plot to prevent his alliance from wresting power.

The three-party opposition alliance -- which comprises a motley crew of Islamists, secularists and urban reformists -- has also struggled to find common ground on several issues, including the implementation of Islamic law in Malaysia.

The rally on Saturday was mainly comprised of opposition members and failed to draw a large crowd of ordinary Malaysians, unlike the 1998 protests that followed Anwar's sacking as deputy prime minister, which gave birth to Malaysia's reform movement.

But analysts say the fact that more than 10,000 protesters defied weeks of warnings by police and managed to slip through a police lockdown of capital indicated a significant groundswell of unhappiness against the ruling coalition.

WHAT WILL HAPPEN TO PROMISED ECONOMIC REFORMS?

Najib will likely delay politically painful but economically crucial reforms such as implementing a goods and services tax and further cutting back fuel subsidies to avoid more voter backlash.

The government is expected to be wary of stoking public anger over rising prices to avoid becoming more unpopular after its dismal performance in the 2008 general elections.

In May, the ruling coalition raised electricity prices by an average of 7.1 percent but it has yet to move on the more politically sensitive issue of fuel subsidies which economists say would trigger increases in the price of food and transportation.

(Editing by Liau Y-Sing and Miral Fahmy)

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