With new budget, can Najib save his reputation?

Malaysian Prime Minister Najib Razak, who is facing pressure over the state of the economy and international criticism over corruption allegations, appears to be using social welfare programmes in the government’s 2017 budget as a means to improve his tarnished reputation. However, the measures might be too little, too late

Logan Connor
October 21, 2016
With new budget, can Najib save his reputation?
Malaysian Prime Minister Najib Razak speaks to the media during a joint news conference with German Chancellor Angela Merkel (unseen) following their meeting at the chancellery in Berlin, Germany, 27 September 2016. Photo: EPA/BERND VON JUTRCZENKA

Malaysia’s government will today deliver a budget that is expected to include a host of populist measures intended to shore up support for Najib Razak, the country’s embattled prime minister.

Reuters reports that the budget could introduce increased annual handouts to low-income households, tax cuts for the middle-class and keeping the good and services tax rate steady at 6%. It may also include measures for first-time homebuyers to access more pension funds to buy property.

The reported measures come amidst strained economic times for Malaysia, Southeast Asia’s third-largest economy. Growth has decelerated in each of the five last quarters, largely due to plummeting global oil prices, which led to state oil firm Petronas cutting the divided it pays to the government by nearly 40% this year. The Malaysian government’s current growth forecast for 2016 is 4 to 4.5%.

Speaking to state news agency Bernama last week, Najib tempered expectations of major enhancement of social welfare programmes in the new budget, warning that Malaysia would have to tighten its belt in the face of economic difficulties.
“There are so many things that we need to do,” he said, “but one [has] to realise that it has to be in the context of our affordability and also that we need to rein in or at least manage our debt and fiscal deficit in a prudent way.”

In addition to pressure over the economy, Najib has faced criticism for his role in the 1MDB scandal, which has put Malaysia in the international spotlight since allegations emerged that more than $1 billion of government money was transferred into his personal bank accounts, most of which reputedly originated with the 1MDB state investment fund.
International perceptions of Malaysia have been severely damaged under Najib, according to James Chin, director of the Asia Institute at the University of Tasmania.

“This cannot be addressed by the budget,” Chin said. “[International] confidence will not come back until Najib leaves office. I predict FDI [Foreign Direct Investment] will go down significantly this coming year due to the 1MDB scandal.”

According to Amrita Malhi, a researcher on Malaysia at the University of Adelaide, Najib is using the budget as an opportunity to salvage his reputation. In the run-up to Malaysia’s general elections, which a government official told Reuters could come as early as 2017, this will be crucial.

“Najib’s reputation has certainly been dented, yet it appears he is taking the view that offence is the best defence,” she said. “It seems he will campaign on a mixture of issues related to Malay Muslim uplift, such as social welfare and mobility, and Malay Muslim unity.”

Najib’s ruling Barisan Nasional (BN) coalition won big in two by-elections in June, securing wider majorities than in the 2013 federal elections.

Greg Lopez, a research fellow at Murdoch University’s Asia Research Centre, said that despite the BN’s association with Najib, it still commands a considerable following within Malaysia.

“BN is still a juggernaut,” Lopez said. “[It has] control of all state resources, with a large business and middle class dependent on it and the poor, especially in Sabah & Sarawak [states], who rely on their traditional leaders to tell them who to vote.”

Lopez, however, added that Najib’s own reputation was damaged “permanently and irrevocably” as a result of the 1MDB debacle.

Mahathir Mohamad, Malaysia’s former prime minister who has now turned against his former protégé Najib to become an outspoken opposition figure, has decried the government’s purported social measures as nothing more than empty promises.

“Actually, this is only a stage play,” Mahathir said in a recent speech, according to Free Malaysia Today. “The allocations are mere empty promises as even now the government has no money.”

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