After casting his vote in his hometown of Alor Setar in Kedah state on 9 May, former prime minister and newly minted opposition leader Mahathir Mohamad told reporters that he was feeling “very good and confident of winning” Malaysia’s 14th general election. Some probably dismissed the comment as an attempt to put on a brave face on behalf of the opposition Alliance of Hope (Pakatan Harapan, PH) coalition, which was going head-to-head with the incumbent Barisan Nasional (BN) coalition that had held federal power since Malaysia’s independence in 1957.

But as polling results trickled in for the next few hours across the 13 states of Malaysia, it became clear that Mahathir had not been simply blowing his own trumpet. And just before the stroke of midnight, it was clear the 60-year era of BN dominance was over. The Election Commission, alleged to have pro-BN sympathies and accused of withholding results in a number of seats, eventually revealed at around 5am that the PH had officially won 113 federal parliamentary seats – which meant that the opposition coalition had crossed the 112-seat threshold required to form the next federal government. The PH also extended its control of governments at the state level: retaining Selangor and Penang, winning over Johor, Malacca and Negeri Sembilan, and doing just enough to have a credible shot at claiming Kedah, Perak and Sabah in the coming days.

The M-factor

The PH’s victory defied widespread media and analyst expectations of a BN win, which had seemed increasingly likely prior to polling day after an electoral re-delineation exercise and the prospect of split votes between opposition parties. However, a likely explanation for the outcome – with the benefit of hindsight – is that rural ethnic Malay BN voters, who were long discontented with rising living costs, saw in Mahathir a credible champion of Malay interests and a relatively attractive alternative to scandal-plagued caretaker prime minister Najib Razak. In essence, Mahathir’s inclusion in the PH and elevation as its prime ministerial candidate likely made it safe for a considerable number of longtime BN supporters to cast their votes for the PH.

Stability in scarcity

Mahathir's ascension comes 15 years after he had stepped down from that very position and as BN chief, hoping that his hand-picked successors – first Abdullah Badawi (2003-09) and then Najib Razak (2009-18) – would strengthen the BN’s prospects for longevity. In retrospect, both men instead presided over the gradual decimation of BN supremacy across three momentous general elections in 2008, 2013 and 2018. The first deprived the BN of its two-thirds federal parliamentary majority; the second, its majority share of the popular vote; and the third, federal power. The last one will sting the most.

Yet, there should be no illusions about prospects for political stability in the coming days and weeks – and even months. The new ruling coalition will first have to navigate the credible threat of political defections of PH and PH-aligned lawmakers to the BN, given the latter’s financial resources and experience in employing such tactics. Political infighting at the highest levels will also seriously distract the PH-led government from learning the ropes of federal administration. A split between Mahathir and other PH leaders that could plunge the coalition in protracted infighting remains a potential scenario, particularly given that Mahathir may attempt to wriggle his way out of a promise to have his former nemesis, jailed opposition leader Anwar Ibrahim, succeed him eventually as prime minister. Mahathir is unlikely to consider his legacy completed without ensuring his son, former Kedah chief minister Mukhriz Mahathir’s place in the sun as a future prime minister.

The new order

However, barring such factionalism, fears of serious incompetence and mismanagement in government are likely overblown at this early stage. The coalition has had experience in running the Penang and Selangor state governments, and among its top echelons are two current chief ministers (Selangor’s Mohamed Azmin Ali and Penang’s Lim Guan Eng) and two former chief ministers (Johorean Muhyiddin Yassin and Mukhriz in Kedah). And last but not least, the coalition has Mahathir – the longest-serving prime minister in national history. Their collective capabilities – assuming they do not fall out with one another – gives the PH a credible shot at competent governance.

The multi-ethnic composition of the PH leadership is another reason for optimism, mainly in terms of seemingly improved prospects that the complex system of economic preferences for Bumiputera and Bumiputera-owned companies can be diluted, if not completely dismantled. (The term “Bumiputera” means ethnic Malays and indigenous groups.) Nevertheless, progress is likely to be incremental and susceptible to interference, mainly because the system is highly entrenched in various sectors.

Mahathir’s previous track record as prime minister (1981-2003) indicates that the PH-led federal government is likely to remain largely pro-business and pro-foreign investment, but nationalistic rhetoric about foreign investors taking control of the country will emerge now and then as a way of shoring up political support. Mainland Chinese investments – that were popular under Najib – are more likely than other foreign investments to enter Mahathir’s crosshairs. However, his sense of economic pragmatism means that interference is more likely to manifest in the form of stricter local content requirements than blatant cancellation or rejection of high-profile commercial projects. 

The political transition also poses contract risks for projects initiated during Najib’s nine years in power, particularly because of an entirely new slate of cabinet members and administrators who likely have their own preferences. Projects that once enjoyed prominent backing from the federal BN government or BN-controlled state governments may now face delays because of neglect, whether benign or intentional. Contracts that were pushed through under Najib in controversial circumstances are likely to be heavily scrutinised and potentially politicised to undermine the BN. 

The PH’s promise to abolish the highly unpopular 6% Goods and Services Tax (GST) poses risks to macroeconomic stability, though these are not an existential or immediate threat. Credit rating agencies previously cited the policy and other fiscal consolidation measures as key reasons why Malaysia’s credit rating was maintained at a healthy level despite creeping public debt. The PH’s failure to demonstrate alternative ways of replacing the revenue derived from the GST, coupled with populist spending to consolidate its public support in the early post-election period, may invite cautionary messages from credit agencies and trigger some degree of capital flight. However, the strengthening of Selangor’s finances under the PH suggests that not all hope is lost – at least not yet.

The giant slayers have laid down the marker, but they have equally formidable challenges in the coming months if they are to start their own era of political dominance.

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