Murmurs of early general election in Malaysia as PM Najib seeks to rally his party

Malaysia's Prime Minister Najib Razak (right) and his deputy Ahmad Zahid Hamidi (left) wave national flags during the 59th National Day celebrations at Independence Square in Kuala Lumpur on Aug 31, 2016.
Malaysia's Prime Minister Najib Razak (right) and his deputy Ahmad Zahid Hamidi (left) wave national flags during the 59th National Day celebrations at Independence Square in Kuala Lumpur on Aug 31, 2016. PHOTO: AFP

KUALA LUMPUR (Bloomberg) - There's the whisper of an early election in the air in Malaysia.

Prime Minister Najib Razak and senior officials of his ruling Umno have used dozens of annual party events across the country in recent weeks to exhort members - the bulk of whom are ethnic Malays - to get out and meet potential voters, especially younger ones.

Amid repeated references to the next general election, it's raising speculation Malaysians will head to the polls before the due date of the middle of 2018. Some senior Umno officials say it could be as soon as March.

Datuk Seri Najib, 63, has weathered more than a year of turmoil amid political attacks over a funding scandal that left foreign investors wondering at times if he would survive in the job. Getting an election win under his belt could dispel doubts about his ability to lead, while providing him with a new mandate to implement economic reforms for a long-touted goal of becoming a developed nation by 2020.

"March has been talked about," said an Umno division leader from a southern state, who asked not to be identified, citing the confidential nature of the information. "And why not? The opposition is not together. We are ready as we can be for elections."

Another Umno division leader from a different state also said March was being discussed. The two officials asked not to be identified as the talks are private. They also noted no decision has been taken on the election timing.

Umno leaders are making plans to appeal to the youth and urban vote, with a suggestion by Deputy Prime Minister Ahmad Zahid Hamidi that the party adopt a "hipster" culture. 

A component party of the Umno-led Barisan Nasional coalition said it will announce candidates in October, rather than wait until the "very last minute" to unveil its team.

Analysts are mixed on whether it makes sense for Mr Najib to hold the vote next year, or wait until nearer the 2018 deadline to dissolve Parliament.

One factor that could tilt the balance for a snap poll is the fractured opposition, which has struggled this year in by- elections and a state poll. But some say weakening growth and the spotlight of global probes into billions allegedly embezzled from state investment company 1Malaysia Development Berhad (1MDB) are reasons for Mr Najib to delay.

"Ideally, they would want to hold elections when people feel they are materially better off," said Mr Sholto Byrnes, a senior fellow at the Institute of Strategic and International Studies Malaysia in Kuala Lumpur. "Having it at a time when oil and commodity prices are so low, when there's been a lot of fluctuation in the ringgit, negative talk about the economy - I would feel from those points of view, it's a riskier time to hold elections sooner."

For the last election in May 2013, Mr Najib waited until the last minute to dissolve Parliament, after two years of hints. As he vacillated, the opposition grew stronger, giving Barisan Nasional its worst result in more than five decades in power, including its first-ever loss of the popular vote.

The tables have since turned. Infighting and policy differences have torn the opposition alliance apart, while Barisan Nasional secured bigger wins in the Sarawak state poll in May and two by-elections in June. That's even as Mr Najib battled graft allegations and efforts by a former leader to remove him.

Mr Najib's office didn't reply to a request for comments on the possibility of an early vote, while an Umno spokesman wouldn't elaborate on the speculation. Mr Najib has denied wrongdoing and suggested he was the target of a conspiracy by opponents led by mentor-turned-nemesis Mahathir Mohamad. The attorney-general cleared him of graft in January.

Barisan Nasional should exploit the opposition disunity to go to an election soon, Mr Ahmad Shabery Cheek, an Umno Supreme Council member and Cabinet minister, was cited as saying last month by the official Bernama news agency.

Other Umno divisional chiefs - the bulk of whom have stood by Mr Najib - said they are hearing whispers of early elections from the premier's inner circle.

There are tentative signs the opposition is attempting to unify, and Mr Najib may not want to wait for them to try. A new party - known as Bersatu - has been formed by Mahathir and is targeting Umno's support base of ethnic Malays.

"Given how pressurized Najib is by events and by the scandals surrounding him, the need to strategize instead of wait is great," said Mr Ooi Kee Beng, deputy director of the ISEAS-Yusof Ishak Institute in Singapore. "It should not surprise anyone that elections are called some time next year."

Mr Najib is pushing some constituencies to recapture seats that fell to the opposition, and said he's trying to allocate more funds for rural development in next month's budget. Other overtures include cheaper subway fares in the capital Kuala Lumpur for early commuters, and possible measures to help middle-income earners buy a home.

Barisan Nasional spent more than RM1.5 billion in the 2013 election, Malaysiakini reported in March, citing Idris Haron, chief minister of Malacca state. Malaysia has caps on how much individual candidates can spend contesting a seat but there are no curbs on parties.

While Mr Najib has prevailed amid what's arguably one of his toughest years in four decades in politics, the challenges are far from over. A US Department of Justice civil suit seeks to seize more than US$1 billion in assets that prosecutors allege was siphoned from troubled fund 1MDB, whose advisory board Mr Najib chaired until recently. The DOJ said at least US$700 million flowed into accounts controlled by a top Malaysian official whose description fits Mr Najib.  The Premier previously acknowledged a similar amount went into his accounts before the 2013 election.

He has said the money was a donation from the Saudi royal family and most was later returned.

"Given the size and complexity of the transactions, and the cross-border nature of the case, it may not be resolved quickly," said Mr Eric Berg, a litigation lawyer with Foley & Lardner LLP in Wisconsin and former attorney at the DOJ's Kleptocracy Initiative. "There are many moving parts and the time line we are looking at would be measured in years, not months."

Barisan Nasional may tap a mood of patriotism as Malaysia commemorates its 60th year of independence next year. In neighboring Singapore, the ruling party retained power with a bigger majority in 2015 amid massive festivities for its 50th anniversary.

Still, attempts for a celebratory atmosphere may be tempered by tepid consumer confidence, which has languished below the level of optimism for the past two years. There is residual public anger over a goods and services tax implemented in early 2015, while household debt remains among the highest in South-east Asia.

Last month, a small group of students paraded caricatures of Mr Najib on the streets of Kuala Lumpur, demanding his arrest. The Coalition for Clean and Fair Elections plans an anti-Najib rally in November, similar to one that brought out an estimated 300,000 people in August 2015.

"Najib will want to call for elections only when things are very sure," said Mr Wong Chin Huat, a political analyst at the Penang Institute. "He won't say 'I will go in now, I will take the gamble.' As long as you tell him the odds are against him, he would rather wait."