Malaysia Power Struggle Boils Over With Mahathir’s Resignation

Anisah Shukry and Hadi Azmi
Malaysia Power Struggle Boils Over With Mahathir’s Resignation

(Bloomberg) -- Follow Bloomberg on LINE messenger for all the business news and analysis you need.

A long-simmering power struggle in Malaysia boiled over on Monday, with Prime Minister Mahathir Mohamad kicking off a leadership race with his main coalition partner that could finally determine his successor.

Mahathir abruptly submitted his resignation to the king on Monday and his party exited the ruling coalition. The monarch accepted the resignation, dismissed the cabinet and appointed Mahathir as interim prime minister until a new leader emerges.

While the outcome of the power struggle is unknown, it’s another stunning twist in the decades-long rivalry between Mahathir and Anwar Ibrahim. The distrust between them dates back to the 1990s, when Anwar was ousted from Mahathir’s cabinet and arrested for sodomy.

The re-emergence of political instability pummeled investors on Monday, and threatens the economy at a time when the global coronavirus epidemic and trade wars are hurting growth. Malaysia’s benchmark stock index entered a bear market for the first time in 12 years, while the ringgit slumped to the lowest in almost six months.

It remained unclear whether Mahathir would form a new administration with other political parties, whether Anwar would retain enough lawmakers to lead the government, or whether a new election would take place. Azmin Ali, who was Anwar’s deputy and a rival to succeed Mahathir, left his party with 10 other lawmakers to form an independent bloc, saying it aimed to thwart a plot to topple the 94-year-old prime minister.

Mahathir could end up having more power in determining who joins the next government after this episode, according to Bridget Welsh, an associate professor at John Cabot University in Italy who writes frequently about Malaysian politics.

‘Short Window’

“Mahathir has a short window to show he can form a stable government with the numbers,” Welsh said. “Otherwise there will likely be a call for elections.”

The drama had been building for months as Mahathir refused to set a firm date for handing over power to Anwar. The long-time rivals had joined hands ahead of elections in 2018 for a stunning victory that ousted the previous coalition, which had ruled Malaysia for six decades.

When it took power, the new administration sought to usher in a new era of transparency and good governance, marking a rare victory for democracy and openness in Asia. It prosecuted former Prime Minister Najib Razak for corruption in the 1MDB scandal, and promised policies that aimed at helping Malaysians of all races rather than just the Malay majority.

‘Never Happened Before’

The outcome of the power struggle could determine whether Malaysia continues moving toward policies that treat all races equally, or reverts toward a model aimed at giving preferential treatment to Malays and indigenous groups who make up nearly 70% of the population. Those policies had prompted many educated ethnic-Chinese and Indians to look for work overseas, draining Southeast Asia’s fourth-biggest economy of some of its top talent.

“This has never happened before in Malaysia,” said James Chin, a Malaysian academic and a political analyst who heads the Asia Institute at the University of Tasmania. “What we have now is a political play to bring in a stronger Malay government, and that’s essentially it. Previously the opposition were accusing the government of being too much under the control of the Chinese.”

Tensions came to a head over the weekend. On Friday, the ruling coalition announced that it unanimously agreed Mahathir would stay in power through the Asia-Pacific Economic Cooperation meetings this year, and retain the authority to decide whether to step down at all.

But on Sunday, that all appeared to unravel. Anwar confirmed that some members of his party were working with Mahathir’s camp to form a new government, and they had met with the king. That included Azmin, Anwar’s rival: He later hosted members of Najib’s old party the United Malays National Organisation, or UMNO; the Pan-Malaysian Islamic Party, or PAS; and Mahathir’s party, called Bersatu.

The Sarawak Report, an online media outlet, reported that Azmin triggered the political upheaval because he was upset about the Friday agreement that Anwar would eventually succeed Mahathir. The group on Monday denied accusations of betrayal, blaming Anwar instead.

“Those who tried to topple the prime minister in the middle of the term are the real traitors as they prioritized an agenda to take the prime ministerial power,” Azmin’s bloc said in a statement late Monday, adding that it would still support Mahathir as prime minister.

By Tuesday morning, it was still unclear which side would command the 112 out of 222 members of parliament needed for a majority.

Even before this latest twist, Malaysia’s political rhetoric had become increasingly divisive, with UMNO playing up racial sentiment and accusing the ruling Pakatan Harapan coalition of undermining Malay rights. A coalition that unites Mahathir’s Bersatu party with UMNO and PAS would include the key parties that represent ethnic Malays under one roof, leaving Anwar’s People’s Justice Party and the predominately ethnic-Chinese Democratic Action Party to represent a multicultural-led platform -- if they hold together.

‘Usurp Power’

Still, both Anwar and Finance Minister Lim Guan Eng said Mahathir assured them he wouldn’t work with UMNO. Several other political parties in the coalition, including the DAP, said they would continue backing Mahathir.

“Suffice that we are clear so far,” Anwar told reporters after meeting with Mahathir on Monday. “It was a very good meeting and I am touched by his attitude and stance to not bow down to a group that wants to usurp power without setting an agenda of change.”

--With assistance from Yantoultra Ngui, Philip J. Heijmans and Adrian Leung.

To contact the reporters on this story: Anisah Shukry in Kuala Lumpur at ashukry2@bloomberg.net;Hadi Azmi in Kuala Lumpur at klnews@bloomberg.net

To contact the editor responsible for this story: Daniel Ten Kate at dtenkate@bloomberg.net

For more articles like this, please visit us at bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2020 Bloomberg L.P.