Why It Matters

Najib has much to fix in a hurry

With the weight of a politically damaging US$681 million (S$974 million) financial scandal lifted from his shoulders, Malaysia's Prime Minister Najib Razak can now go back to the business of running the country.

But the burden that troubled him for the past year is being replaced by the weight of public expectation to steer the battered Malaysian economy through stormy weather before national elections are called in 2018.

Datuk Seri Najib has often boasted of his administration's management of the economy being lauded by independent bodies. So no doubt voters, especially lower-income Malaysians squeezed by a combination of rising costs and a weak ringgit, will expect the man they have kept in power to shield them from the global downturn.

Malaysia's much-vaunted resilience will be severely tested by the economic slowdown in China, its main trading partner, and the sliding price of oil, which Mr Najib had been able to rely on in past years for one-third of the government's revenue.

 

Besides fixing the economy, he must also train his sights on containing, if not eliminating, the terrorist threat, which has seen bomb attacks in Bangkok and most recently in Jakarta.

To his credit, Mr Najib knows what he must do. Hours after the attorney-general exonerated him of any wrongdoing in connection with the US$681 million in his personal bank accounts, he vowed to "redouble my focus" on the two key issues.

But he is running out of time - and options- to reverse slumping popularity ratings. Economists widely expect a Budget revision to be announced today to unveil unpopular spending cuts.

Trying to wait out the slump could be dangerous, given that the gloomy outlook is likely to continue into next year. Even the state-owned Malaysian Institute of Economic Research, in a report yesterday, has predicted that both unemployment and inflation are set to rise this year.

A version of this article appeared in the print edition of The Straits Times on January 28, 2016, with the headline 'Najib has much to fix in a hurry'. Print Edition | Subscribe