On 1 February, Sultan Ibrahim Iskandar was appointed as the new king, or Yang di-Pertuan Agong (YDPA), of Malaysia. While the YDPA is expected to remain neutral, Sultan Ibrahim Iskandar is the most business-minded Sultan yet. His appointment will likely steady Malaysian politics and have a significant impact on the wider business environment.
Under Malaysia’s rotational monarch system, Sultan Ibrahim will serve in this role for the next five years, until 2029. He will simultaneously continue serving as the Sultan of Johor, a position he has held since January 2010.
Sultan Ibrahim’s appointment will strengthen prospects for political stability and policy continuity in 2024, as he is unlikely to warm up to leading opposition figures. Although his outspoken nature suggests that he may not hesitate to weigh in on government policymaking, such influence is unlikely to jeopardise the foreign investment climate. Sultan Ibrahim will nevertheless be a key stakeholder for foreign investors looking for opportunities in large-scale projects in property development, infrastructure, and oil and gas.
Sultan Ibrahim has also championed institutional reforms to improve governance standards, but these are unlikely to be adopted by Prime Minister Anwar Ibrahim, who is keen to ensure direct control of state levers.
Calming the political waters
Sultan Ibrahim’s appointment will increase the likelihood that Anwar and his ruling Pakatan Harapan (PH)-led coalition will remain in power this year. In early 2023, Sultan Ibrahim criticised the opposition Perikatan Nasional (PN) coalition for their attempt to oust Anwar by engineering defections from the ruling coalition.
In early January 2024, amid speculation of yet another political coup in the works involving PN, Sultan Ibrahim announced that he would not grant a royal audience to anyone until he became the king on 31 January. This may have been a signal to PN that he would not allow himself to be lobbied to endorse Anwar’s ousting. Sultan Ibrahim also recently praised Anwar’s administration for undertaking anti-corruption reforms and said that his relations with Anwar were “better than with any other previous prime ministers”.
Sultan Ibrahim is also unlikely to desire a PN-led administration. He has consistently emphasised racial and religious harmony. This runs counter to the polarising rhetoric on race and religion that PN uses to court Malay-Muslim voters.
Sultan Ibrahim and his family are also longstanding and fierce critics of former prime minister Mahathir Mohamad (1981-2003, 2018-20), who has been working with PN to unseat Anwar and may be a key financier of coup plots against the administration. Sultan Ibrahim is rapidly working with Anwar to reverse significant governmental decisions taken under Mahathir. These decisions have directly undermined projects in which Sultan Ibrahim is involved, including the terminated Kuala Lumpur-Singapore high-speed rail (HSR) project and the Forest City luxury residential development project in Johor.
All business
Sultan Ibrahim has publicly urged the federal government to make policy changes on several occasions, including improving low-cost housing standards and strengthening institutional independence. These proposals are likely motivated by a mix of factors, including the desire to project himself as a leader of the people.
Being the most business-minded sultan in Malaysia, Sultan Ibrahim is likely to be highly interested in the federal government’s considerations of and approach towards foreign investment. Anwar will seek to keep Sultan Ibrahim on his good side by closely consulting with the king on new projects and investments, mainly to flag opportunities for the king to expand his business interests.
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Sultan Ibrahim has made no secret of his desire to see Malaysia and Singapore revive the Kuala Lumpur-Singapore HSR project. The project was cancelled in 2021 when Mahathir’s former government (2018-20) took the first steps to terminate the megaproject. Sultan Ibrahim has strong personal ties with Singaporean leaders, and Anwar’s government has since put out a request for proposals to restart the project. Sultan Ibrahim’s plan is to have a private consortium finance the project. His daughter chairs a rail subsidiary of a Malaysian property company, which has entered into a private consortium looking to bid for the project. Sultan Ibrahim is the second largest substantial shareholder in the Malaysian property company’s parent.
Another sign of Sultan Ibrahim’s clout is how Anwar has personally intervened to revive the fortunes of Forest City, which is only partially built and has struggled to attract demand due to various factors, including visa restrictions for foreign property buyers introduced by Mahathir in 2018. Forest City is operated by a joint venture between a debt-laden Chinese developer and a Malaysian firm owned by Sultan Ibrahim, the Johor state government, and other entities. Despite persistent doubts about Forest City’s viability, Anwar’s administration in 2023 designated it a special financial zone with various incentives to attract companies and talent.
Partnership or peril
Sultan Ibrahim’s family has an estimated net worth of USD 5.7bn, with investments and ventures across multiple sectors. His assets appear to be more concentrated in real estate, palm oil, and oil and gas. His foray into the proposed Kuala Lumpur-Singapore HSR project and his 30% stake in the master development of the Melaka Gateway megaproject suggest that infrastructure development may become an increasingly important part of his investments.
These sectoral footprints are key to understanding where Sultan Ibrahim will likely make his presence felt vis-à-vis the federal government and foreign investors. While his elevated position as king will mean that his ability to weigh in on projects outside of Johor will increase, his influence in Johor will also continue to far surpass that of any Johor government official. Companies investing in Johor must continue to deal with him as a key stakeholder.
Foreign companies considering partnerships with companies owned by Sultan Ibrahim, his family members, or business associates should assess the extent to which he may try to influence decision-making in a joint venture. His outspoken and independent personality, coupled with his business acumen, could suggest a combative approach to potential disputes. His political connections may serve to smoothen regulatory approvals, but they could also be a double-edged sword if the partnership turns sour, particularly now that he has assumed the kingship. Sultan Ibrahim is also not immune to reputational challenges, exemplified by the controversy surrounding the acquisition of forest reserves, including protected forest reserves, in Johor.
A line in the sand
Nevertheless, Anwar will likely sidestep Sultan Ibrahim’s calls to make Petronas, a state-owned oil company, and the Malaysian Anti-Corruption Commission (MACC) report directly to the king instead of parliament. Anwar will want to ensure he has direct control over decision-making in Petronas, which provides crucial recurring revenue to the government and holds almost-exclusive regulatory powers to approve oil and gas investments in the country.
Anwar will also hesitate to have the MACC under the king’s oversight, as this could directly dilute the power of the executive branch of government in what is fundamentally a constitutional monarchy. The MACC has a long history of politicisation, which appears to have continued under Anwar amid efforts to prosecute and investigate long-term foes of the prime minister. Anwar and the king are aligned on going after Mahathir through the MACC, but this does not mean that there will always be a perfect overlap of interests when it comes to other political figures.
This article is based on a research note originally published in Seerist. Find out more about how Seerist’s adaptive artificial intelligence combined with localised geopolitical risk expertise can help you identify, monitor, and mitigate risks.