KUALA LUMPUR, Sept 8 — An economic slowdown is often calamitous for political leaders, but Malaysia's current doldrums could present Prime Minister Datuk Seri Najib Razak an opportunity to showcase policies to gloss over the political controversies surrounding his administration.
Amid the continuing scandal over a RM2.6 billion donation deposited into Najib's personal accounts, Malaysia's economic growth has started to slow, triggered by a commodities crash internationally and cooling domestic consumption following the introduction of the Goods and Services Tax (GST) in April.
The prime minister last month established a high-powered economic council to help chart the recovery of the Malaysian economy, which was hit by a plummeting ringgit — now at 4.33 to the US dollar — and slowing expansion.
Although the direction of the economy remains uncertain, recent signs have provided some cause for optimism in Malaysia. July's exports rose 3.5 per cent year-on-year, beating estimates by 0.3 percentage points.
Imports also rose for the first time since the GST was introduced in April, climbing 5.9 per cent in July when economists had predicted a 0.8 per cent decline.
According to political observers, however, even successfully helming Malaysia's economic recovery may not be enough to erase the stain of current controversies from the Najib administration.
“Unfortunately, as he concentrated power on himself, he also concentrated attention and all the problems on himself alone, all the blame is on him. So people will not forgive him that easily,” Institute for Democracy and Economic Affairs chief executive Wan Saiful Wan Jan told Malay Mail Online recently.
Wan Saiful said that while he approved of many of Najib's policies, Putrajaya's response to graft allegations surrounding the RM2.6 billion donation — including disrupting two high-powered probes into the matter — gave the claims sufficient traction to withstand efforts to whitewash them.
Failure to satisfactorily explain the controversies could allow them to linger on and negate the benefits from any possible economic recovery, said Singapore-based academic Dr Oh Ei Sun.
“He should first of all provide clear-cut explanations to these recent persistent questions. Then he must be seen to focus on improving the economy, with quick results,” the senior fellow of Singapore’s S. Rajaratnam School of International Studies said of Najib.
A further factor that could limit the positives from a possible economic recovery was Malaysians’ — especially urban voters — penchant to judge the government on less tangible areas beyond the economy, said Ibrahim Suffian who heads independent pollster Merdeka Center.
In late August, electoral watchdog Bersih 2.0 staged an overnight street rally — the fourth public protest by the group since 2008 — to reiterate its demands for political reforms as well as to call for Najib's resignation over the donation.
Held in Kuala Lumpur, Kuching, and Kota Kinabalu as well as select cities globally, the protest was attended by tens of thousands of urban Malaysians. Independent social research firm Politweet estimated the turnout at between 80,000 and 100,000 although Bersih 2.0 claimed figures as high as 300,000.
“This is because their expectations of the government extends beyond economic performance, but they want performance in good governance, human rights, democracy, and things like that,” Ibrahim explained.
Beyond predicting the upshot of an economic upturn on Najib's fortunes, economists added that it was premature to project how the Malaysian economy will react to the possibility of a larger global slowdown prompted by China's cooling.
Independent economist Lee Heng Guie told Malay Mail Online that the government must first to address the eroding local investor confidence before it shifts attention to shoring up the economy against the effects of the Chinese slowdown.
“If your domestic investors also have no confidence, don’t bother talking about external side of things. You have to reassure investors that things are under control,” he said when expressing hope for more “stopgap measures” to restore investors' faith.
Malaysia University of Science and Technology’s Business School dean Yeah Kim Leng shared Lee’s view, stressing that even if the external economic outlook improves, Malaysia’s economic outlook was clouded by political uncertainty.
“We still need to come to grips with our domestic problems because the erosion of investor confidence has a long-term effect. It creates concern over fundamental issues of how Malaysians view the rule of law and how we move forward,” he said.
“The political uncertainty needs to be resolved for confidence to return because without confidence, the economic prospects will continue to be cloudy.”
