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Why Malaysia’s state elections tomorrow matter and what it means for the economy

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Six states in Malaysia – Selangor, Penang, Negeri Sembilan, Terengganu, Kedah and Kelantan – will head to the polls tomorrow (12 August 2023) to determine members of their state assemblies.

State of Malaysia's State Elections

What is crucial to note is that the state elections are taking place some nine months since Malaysia witnessed the first-ever Unity Government last November following a hung parliament for the first time in its election history.

The results of that saw longtime prime minister hopeful Anwar Ibrahim becoming Malaysia’s 10th premier and the unlikely but necessary alliance of foes turned friends Pakatan Harapan (PH) and Barisan Nasional (BN) to form the federal government.

Despite winning the general election Anwar stands on somewhat shaky ground by failing to secure majority support from the Malays, the country’s largest ethnic group.

At present, Kedah, Kelantan and Terengganu are held by the opposition Perikatan Nasional (PN) while Selangor, Negeri Sembilan and Penang are controlled by the ruling coalition PH.

The polls tomorrow will demonstrate the political mileage of Anwar’s leadership although the outcome of the state elections will not have a direct impact on the federal government. It is however a litmus test that will allow the Unity Government to gauge voter sentiment.

The results will affect how well the respective parties get along in the ruling coalition that forms the federal government and will set the tone for whether or not they will work together in the future.

What analysts say?

Based on the results of GE15, former member of Parliament Ong Kian Ming writes that the expectation among political observers in Malaysia is that PN is likely to retain Kedah, Kelantan, and Terengganu while PH, together with UMNO, will retain Penang, Selangor and Negeri Sembilan.

Selangor as the richest state in Malaysia and Penang as an industrial powerhouse that plays a crucial role in attracting revenue for the country are ahead economically compared to PN-ruled states in the north and East Coast.

Economists believe that if PN takes over Selangor and Penang, this will be a setback for the economy. Their analysis is based on the gross domestic product (GDP), foreign direct investment (FDI) and projected annual revenue of each state.

Kelantan, which has been ruled by the Islamic party PAS for the last 50 years remains one of the poorest states in Malaysia along with water supply woes.

Selangor and Penang accounted for 30.29% of Malaysia’s GDP in 2021 while Terengganu, Kedah, Kelantan and Negeri Sembilan together accounted for only 10.88%.

Economists also noted the improvement in economic policies in Negeri Sembilan when the PH-led government took over in 2018.

A quick glance at the manifestos

PN: Kelantan Maju Rakyat Sejahtera

18 plans and programmes are featured in PN’s manifesto aimed at Kelantan voters and include socio-economic improvement plans, clean water supply, infrastructure, education and skills development.

PH-BN: Kita Selangor

Five key pledges include having a superior economy and quality education as catalysts for high-income employment opportunities; religion as a beacon and inspiration for a dignified life in Selangor; good and efficient government services; development that is sustainable, comfortable and liveable; and Selangor being a compassionate state that defends the people’s interests.

Key economic issues at stake

The fallout from the Covid-19 pandemic, rising cost of living, the weakening ringgit and one of the region’s biggest wealth gaps are some major economic issues that require addressing.

Anwar’s cabinet has introduced a slew of reforms including reducing subsidies for the wealthy, easing listing rules for companies, and abolishing the mandatory death penalty.

Since assuming office, the Prime Minister has been promoting Malaysia as a stable and thriving investment destination for foreign investors and the likes of AWS and Tesla setting up headquarters in Malaysia have often been referenced in Anwar’s speeches to signal renewed confidence in the country. More recently, the news of Infineon’s 5-billion-euro investment in Kulim was highlighted to woo voters in Kedah.

“Anwar has a good understanding of the economy and is thoughtful and eclectic in his approach. He is likely to seek a broad range of views and focus on economic reforms,” economist Geoffrey Williams told Al Jazeera.

“There will be fewer handout-based policies and more structured long-term solutions. I also think he will offer a very attractive prospective for international investors and financial markets.”

In essence, a stable government is needed for the economy to grow amid global volatility. It is also important to note that Malaysia experienced a period of political instability when the pandemic began which saw four prime ministers come into power within the span of two years.

Stoking the flames of race and religion

In race-conscious Malaysia, the state elections have also exposed the growing cultural rift in the country with both sides of the camp reportedly relying on racial and religious rhetoric to gain votes, leading political observers to be concerned that such narratives can further divide the country, although this isn’t something new in Malaysian politics.

Conservatives in the Muslim, Malay alliance such as PAS president Abdul Hadi Awang claimed that DAP was out to eradicate Malay and Bumiputera privileges while two-time ex-PM Dr Mahathir Mohamad claimed that Malaysia was never a multiracial country.

The fear-mongering is also seen on the other side of the camp with DAP chairman Lim Guan Eng claiming that those backing the “Green Wave” would destroy Hindu temples and prevent Malaysians from wearing shorts.

There will be a total of 570 candidates from nine parties who will contend for the 245 state assembly seats up for grabs. More than 9.7 million Malaysians are eligible to vote.

Check your voter details and polling location at mysprsemak.spr.gov.my.

 

Sources:

https://www.channelnewsasia.com/asia/malaysia-state-polls-ethnic-divisions-3677486

https://www.straitstimes.com/asia/se-asia/st-explains-all-you-need-to-know-about-the-malaysia-state-elections

https://www.scmp.com/comment/letters/article/3228726/malaysian-state-elections-crucial-how-long-anwar-lasts-pm

https://fulcrum.sg/malaysias-2023-state-elections-projections-and-scenarios/

https://www.reuters.com/world/asia-pacific/malaysia-hold-state-polls-august-crucial-test-pm-anwar-2023-07-05/

https://www.aljazeera.com/economy/2022/11/25/malaysias-anwar-takes-helm-of-economy-as-households-feel-pinch

https://www.nst.com.my/news/politics/2023/07/929461/playing-race-religion-malaysian-politics-will-have-adverse-effects-next

https://www.freemalaysiatoday.com/category/highlight/2023/07/31/pn-win-will-be-a-setback-for-economy-say-experts/

https://www.thevibes.com/articles/news/97415/dizzy-political-brew-key-factors-shaping-malaysian-state-polls

https://www.malaymail.com/news/malaysia/2023/08/06/state-elections-bn-using-retain-and-regain-strategy-to-win-six-states-says-tok-mat/83927

https://www.malaymail.com/news/malaysia/2023/08/01/state-polls-kelantan-perikatan-launches-manifesto-listing-18-plans-and-programmes-aimed-at-voters/82877

https://themalaysianreserve.com/2023/08/01/state-polls-ph-bn-launch-kita-selangor-manifesto-with-five-key-pledges/

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