Malaysia: Six months-old coalition government fails to stem political crisis

Malaysia's prime minister, Anwar Ibrahim (Photo: CC)

Last November’s general election in Malaysia was expected by many people to solve the ongoing political crisis plaguing the country since the beginning of the Covid-19 pandemic. Instead, the election saw a hung parliament for the first time in the country’s history, with competing political parties continuing to struggle for state power. However, compromises were made between the biggest pro-capitalist coalition Pakatan Harapan (PH), and their long-standing rival Barisan Nasional (BN) to choose Anwar Ibrahim (leader of PH) to lead a mixed coalition government.

Although not even half a year has passed since the last election, the opposition Perikatan Nasional (PN), which has a large share of the parliament seats, has already made open threats about overthrowing the current government by means of a parliamentary coup d’état. This is not new in Malaysian politics, as the previous PH government was also overthrown via a realignment of political parties, two years ago. The Bersatu Party led by former PM Mahathir and Muhyiddin broke away from the PH coalition and formed a new government with the help of BN and PAS (Islamic party). Similarly, the current PH-BN government is also built on shaky foundations and can collapse at any given moment, especially heading up to the state elections in the coming months.

 PH – BN coalition

It was clear from the beginning that the only reason for the two political rivals to work together is to ensure their political survival and ambitions. Anwar Ibrahim’s PH fell well short of gaining a simple majority in the last elections and had to rely on the BN seats to form a government. For the BN leadership, faced with various graft charges, especially its leader Zahid Hamidi, a coalition with PH will provide them an escape from exposing their corruption. Zahid Hamidi has managed to become the nation’s deputy prime minister and will use all his power to direct the state apparatus towards his political enemies, namely the PN coalition, and attack them under the guise of fighting corruption. However, if Zahid succeeds in removing all of his political enemies and consolidating his power within BN, there is no guarantee that he will not turn on Anwar Ibrahim and PH next.

In order to keep in power, Anwar Ibrahim is forced to make contradictory claims and actions. Although his own deputy has multiple pending cases with the Malaysian Anti-Corruption Commission, Anwar is trying to promote an image of a clean and corrupt-free government. He is also portraying himself as a champion against corruption. However, the recent fraud and money laundering charges brought upon the opposition leader Muhyiddin Yassin (the second ex-PM after Najib Razak to be charged with graft) is seen as a politically motivated move, rather than a genuine effort to fight corruption. This is especially true given that those who are politically aligned with Anwar, such as Zahid Hamidi, and former Finance Minister Lim Guan Eng, could have their cases postponed while his political opponents are targeted.

Furthermore, Anwar Ibrahim as prime minister has not taken any steps to fulfill his past and present electoral promises. In both 2018 and 2022, the PH coalition ran on a platform focused on economic prosperity for the masses and democratic reforms. However, the living conditions of the masses have yet to see any improvement and many of the draconian laws which violate democratic rights are still in place.

In the latest, 2nd May 2023, of The Economist magazine’s crony-capitalism index, Malaysia was named third behind Russia and the Czech Republic. The report also exposes that the wealth from crony-controlled sectors amounts to 10% of the nation’s total GDP. Despite endless rhetoric from Anwar and his PH government about fighting corruption and cronyism, none of their policies are yet to solve, or even begin to address this issue. Recently, Anwar was heavily criticised for his actions to keep Azam Baki as the chief commissioner of the Malaysian Anti-Corruption Commission despite various corruption allegations on his name. Ironically, the PH coalition organised rallies and protests last year to demand for Azam Baki’s removal from his position and they even included this demand in their election campaign materials.

The contradictory conduct of the PH-led government is creating doubts amongst the public, including those who supported the PH in the last election, about their ability to bring progressive change to Malaysia. Although often lauded as a progressive figure by the Western media, Anwar Ibrahim has not indicated that he will put any effort into strengthening the democratic power of the ordinary people. Recently, the police have opened an investigation against the organisers of the Women’s March and May Day events held in the capital, Kuala Lumpur. Ordinary people are being detained over social media remarks and female attire is being discriminated against in public areas, such as police stations. In other words, the situation in Malaysia is a continuation of previous governments who were labeled as “dictatorial” and “outdated” by PH politicians themselves.

 Economic uncertainties

The stability of the current government hinges on the question of economic growth and improving the lives of the working class and the poor. Although boasting a 22-year high of 8.7% GDP growth last year, the global stagflation crisis, the weakening of demand throughout the world, growing debt, and worsening relations between China and the US means that the future of the Malaysian economy is far from stable. As the post-pandemic recovery took place around the world, the Malaysian economy saw some limited growth last year. However, even the reopening of the Chinese economy this year did not give a boost to the Malaysian economy as expected.

The first quarter of 2023 saw key economic contributors such as the export, industrial production, and manufacturing sectors expanding at a much lower rate compared to last year. With a high household debt of 89% of GDP, the uncontrollable inflation and rise in the cost of living are putting a strain on the masses. The general trend of hollowing out of manufacturing sectors is continuing with a large number of the workforce being shifted to the precarious logistics and delivery industry. The working class, in general, is experiencing a devaluation of their wages which are not keeping up with inflation.

The central bank has decided to increase its interest rate five consecutive times in the span of less than two years to keep up with the US Federal Reserve’s interest rate hikes. The high inflation and devaluation of the Malaysian ringgit against the US dollar have forced the Malaysian central bank to continue with its policy of monetary tightening even at the risk of an economic slowdown or recession.

Due to the drying-up of global demand and inflows of Foreign Direct Investment, the Malaysian government is looking to strengthen economic ties with its largest trading partner for the last 14 years, China. Last month, Prime Minister Anwar Ibrahim made a diplomatic visit to China and secured $38 billion worth of foreign investment. The newly signed memorandum, including an $18 billion project by China’s Rongsheng Petrochemical in a local refining facility, is the biggest-ever business deal in Malaysia. Additionally, the existing Free Trade Agreements such as the ASEAN-China Free Trade Agreement (ACFTA) and Regional Free Trade Agreement (RCEP) could also be used to strengthen trade and investment ties with China.

However, China itself is currently facing internal issues such as the collapse of the housing market and growing economic and military tension with the competing US forces. Their post-lockdown economic recovery has also been modest with limited prospect of robust growth. Furthermore, countries such as Sri Lanka and Pakistan, which enjoyed investments from China in the past, are suffering from economic collapse and are forced to hand over state assets to China due to the failure of debt repayment. There is a genuine worry of a Chinese-style ‘debt trap’ which could result from these exuberant business deals.

Malaysia – US military ties

In the ensuing US-China rivalry, the Malaysian government has sought to remain balanced in the middle. While enjoying historic but risky investments from China, Malaysia is also keen on maintaining its membership in the eleven-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which is set to receive the UK as its newest member. The Finance Ministry earlier this year pledged its full commitment and cooperation towards the partnership.

The growing economic ties between Malaysia and China are happening while disputes in the maritime borders of the two countries continue in the background. As an effort to push back US forces in the South China Sea, China has laid claim to a large part of the ocean which overlaps the sovereignty claim of the Philippines, Vietnam, Indonesia, and Malaysia. This has caused an uneasy relationship between many of the ASEAN countries and China which is engaging openly in territorial claims while being their largest trade partner.

Since February, this year, Malaysian Naval Forces are forced to be on high alert due to the presence of a Chinese coast guard ship near Luconia Shoals and Kasawari Gas Development Project, which is located well within Malaysia’s maritime border. In the past, Malaysia had a few episodes of a naval standoff with Chinese vessels and threatened international arbitration. Meanwhile, China has rubbished all the warnings and continues to step up its naval and air force operations in the region, disregarding historically agreed-upon borders.

As a result of the Chinese expansion into Southeast Asia, the US has responded with an increased number of joint military drills in this region. Earlier this year, Malaysia participated in the largest annual Southeast Asia joint military exercise, co-hosted by the United States Indo-Pacific Command and Royal Thai Armed Forces. Along with Thailand, Indonesia, Philippines, and Singapore, Malaysia is also an important military ally of the US in the region.


The IMF is predicting a global economic contraction as a result of the decoupling of the US and China’s economies worldwide. This is forcing the Association of Southeast Asian Nations (ASEAN) member states to conjure up new strategies to navigate the treacherous economic situation. Realising a possibility of a non-US-led financial world order in the future, Anwar Ibrahim and other ASEAN leaders are mooting the idea of creating an Asian Monetary Fund (AMF) which would function similarly to the US-controlled IMF, providing loans and other financial assistance to struggling economies. This was shared by Anwar during his visit to both Thailand and China recently with China expressing great interest in the idea.

Current ASEAN leader, Indonesian President Joko Widodo called for more cooperation between ASEAN members in order to fight against the interest of bigger economies, such as the US, Europe, and China in the region. In a statement, he said that ASEAN should not be a proxy to China, the US or any other nation. As the biggest economy in Southeast Asia, the President of Indonesia is looking to unite the region to form a strong economic block as a means to survive the coming crisis.

In the current economic climate, even a well-established formation, such as the EU, is facing a crisis with Britain leaving them in 2020 and other countries perhaps contemplating over the next years of capitalist crisis about whether to follow suit. In Southeast Asia, there are political and social issues, such as a military dictatorship in Thailand and an emerging civil war in Myanmar that need to be overcome before a strong economic block could be forged. Furthermore, as a formation of different neo-colonial nations, ASEAN member states have large development gaps between them, and many countries are still embroiled in unsolved national questions.

Building a socialist alternative

Despite various ideas and promises by the capitalist representatives in parliament, in reality, they do not have any idea to overcome the coming economic disaster. As an export-dependent economy, Malaysia will be susceptible to the impacts of global economic contraction which will inevitably produce political instability and social unrest. However, the current government is not capable of fighting capitalist interests to deliver the masses out of the crisis. Instead of allocating more resources to improve the living standards of the poor and downtrodden, the new government’s 2023 national budget saw a dedication towards tax incentives and hand-outs for the rich to attract multinational investors.

The current Malaysian government is not only unable to find a way out of the global inflation crisis, but they are also unable to reduce the polarisation of Malaysian society, which is fuelled by falling living standards. The failure of the PH government to address the increasing economic burden of the masses will play into the hands of the right-wing nationalists and religious fundamentalists who will divert the people’s anger towards a narrow agenda of racism or nationalism. The opposition Perikatan Nasional (PN) coalition, led by the nationalist Bersatu Party and Islamic fundamentalist PAS, is the second largest political coalition and currently has the electoral support of the majority of the Malay and the Muslim population, especially in the lesser-developed northern and eastern states. The PH, despite their shortcomings, is supported by the non-Muslim population in the elections, to avoid the dominance of the conservative forces in the political arena.

However, these political parties can only play the racial and religious card for so long. The prospect of a global economic crisis following the devastating Covid-19 pandemic is forcing the masses to look for an alternative outside these pro-capitalist options that are not providing any concrete solutions to their daily problems. These politicians are being exposed as nothing but a puppet to the interest of the capitalist class who are pulling all the strings from behind the curtain. As the condition worsens for the majority, all the capitalist representatives will be exposed as incapable of carrying the people’s aspirations forward.

This is the right time for the working class, youth, left organisations, and revolutionaries of Malaysia to build a mass working class-based political party with a clear perspective for a socialist solution to the current capitalist crisis. This revolutionary organisation should build a socialist programme to gain support from the masses and involve them in a political struggle against the capitalist class to claim state power. Only by achieving political supremacy, the working class as a collective could overcome both the issue of polarisation of society and find a way out of this capitalist economic crisis.

A mass workers’ political party will be able to cut across the racial and religious divide imposed on society from the state and pro-capitalist politicians. Economic and political programmes, such as a living wage, free education and healthcare, bringing the big industries under the democratic management of the working class, democratic rights in the workplace and the production process, and so on, will inspire and unite the working class and the masses from different backgrounds. Besides that, democratic demands popular among youths such as freedom of speech, freedom of media, freedom of religion, gender equality, and democratic control of education and such should also be included in the programme.

Left with their own devices, the capitalist class and their representatives will continue to deceive the masses and bring destruction to millions of lives in order to safeguard their own interests. Only through an organised fightback from the working class, beginning from strike actions at the workplace to forming a mass workers’ party to lead social and political struggles, the nation, region and the world could be saved from capitalist greed and destruction.

The working class should build movements outside the parliament as a means to gather popular support from the masses but should also challenge the political dominance of the capitalist class in any political platform including in the general and state elections. The masses should organise themselves in a new political formation with the democratic leadership of the working class and arm themselves with a perspective to break away from the oppressive capitalist system to establish a socialist society.

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May 2023