Malaysia: Mahathir: This Year And Next


Dr William Case

For many observers, Mahathir's position appears steadily to be eroding. An internal poll within the United Malays National Organisation (UMNO) reported that he is now opposed by up to 70 per cent of the Malay community, revealing grave misgivings among the urban intelligentsia, most government workers, Islamic revivalists, and villagers. Further, a poll carried out by the MCA, the ethnic Chinese party aligned with Mahathir's UMNO in the ruling National Front coalition, has shown that if elections were held today, it would be deserted by most middle and working class Chinese, even in the rural areas. Thus, while Mahathir had been expected to call general elections soon - before the country's economic recession grew worse - the prospect of losing as many as six state governments (the four northern Malay states, plus Penang and Sabah) has evidently dissuaded him. He may, therefore, put off elections until 2000, the longest he can wait by the terms of the constitution.

It seems too that the foreign investors upon whom Malaysia's economic recovery is said to depend have grown seriously disillusioned. Of course, the controls on currency convertibility and short-term capital introduced by Mahathir were intended to discourage the speculators and inflows of "hot money". But despite early expressions of support from the likes of Dell and Unilever, many long-term foreign investors now feel "stuck", remaining in Malaysia only because if they sell their assets in order to shift elsewhere, they will be obliged to leave their capital behind for a year. And doubtless they have not been made any more secure by Mahathir's again whipping up patriotic fervor against Western "neo-colonialism." In sum, many local constituencies and foreign investors have grown weary of Mahathir, suggesting that his days are numbered.

Yet Mahathir retains control of the UMNO party apparatus, the pivotal organization in Malaysian politics. And if the treatment he has meted out to Anwar Ibrahim, his former deputy, has stirred deep grievances, it has also cautioned party members against opposing him openly. Thus, in the party's election scheduled for next June, it is inconceivable that he will challenge for its presidency. In addition, while uncertainty abounds over who will fill the deputy post, it is a measure of Mahathir's strength that he has so far refused to name anyone. Mahathir will name, however, all the UMNO candidates for parliament and the state assemblies when finally he calls general elections. And because these positions shape access to patronage - the main motivation even for joining the UMNO - Mahathir's hand is strengthened still further.

What is more, if foreign investors have tired of Mahathir, local business people, both Malay and Chinese, have been gratified by his easing interest rates, stabilizing the ringgit, and increasing government spending. Though business activity had been rapidly contracting in the middle of 1998, its decline seems now to have slowed. Thus, while Malaysia may not get the 1 per cent growth that it has projected for 1999, its exports in 1998 have picked up 24 per cent over 1997, and imports are down. Worrisome capital account deficits have thus been turned into surpluses and greater foreign reserves. The concerns of business people over political instability have probably also been eased, with weekly mass actions in Kuala Lumpur now waning.

To summarise, Mahathir's image has suffered grievously over the past year. He is no longer the progenitor of miracle growth rates and the conciliator of social grievances. But he retains his grip on the UMNO, and hence the organs of state and much of big business. Indeed, the forces aligned with Anwar have recently signalled the UMNO's continuing centrality by their declining an invitation from Mahathir to form a new political party. Though establishing NGOs and social movements, these forces can envisage no other route for Anwar's ascension than the UMNO.

WATCHPOINT: Mahathir, so long as his health holds out, will be difficult to overtake.


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