By JAMES HOOKWAY
Wall Street Journal
Aug. 28, 2015

Malaysian police were bracing Friday for what is expected to be a massive weekend protest in Kuala Lumpur against Prime Minister Najib Razak’s management of the economy and the growing debt problems at a state investment fund.

Authorities said the planned protest is illegal while the Malaysian Communications and Multimedia Commission, a government agency, said in a statement it would block websites promoting or encouraging the demonstration, which is set to begin near Merdeka, or Independence, Square in the center of Kuala Lumpur on Saturday. The government also announced that it was against the law to wear yellow T-shirts in support of the rally.

The moves reflect Mr. Najib’s growing resolve to stay in power after it emerged that nearly $700 million was deposited into his bank accounts shortly before 2013’s national elections. Last month he sacked then-Deputy Premier Muhyiddin Yassin after Mr. Muhyiddin called on Mr. Najib to explain the worsening situation at the investment fund, 1Malaysia Development Berhad, or 1MDB. Mr. Najib also promoted four members of a parliamentary committee investigating 1MDB to the cabinet, meaning they could no longer stay on the panel. The following day, he replaced the country’s attorney-general, who was also involved in an investigation into 1MDB, ahead of his scheduled retirement date in October.

On the financial front, Mr. Najib also this week created a new policy team to help stabilize the country’s economy.

Political analysts say that Mr. Najib will likely succeed in keeping control of this resource-rich nation–as long as the British-educated leader can retain the support of the ruling United Malays National Organization and prevent a steeper slide in the value of Malaysia’s fragile ringgit currency, which has lost around 16% of its value against the dollar so far this year.

The planned protest, due to run through the weekend, follows a report in The Wall Street Journal last month that Malaysian investigators had traced nearly $700 million of deposits into what they believed were Mr. Najib’s personal bank accounts after the movement of cash among agencies, banks and companies linked to 1MDB. Mr. Najib is head of 1MDB’s advisory board.

The Journal reported that the original source of the money was unclear and that the government investigation hadn’t detailed what happened to the money that allegedly went into Mr. Najib’s personal accounts. Mr. Najib has denied any wrongdoing or taking money for personal gain. The country’s antigraft agency said the money in Mr. Najib’s account was a donor contribution that originated from the Middle East. The donor wasn’t specified.

The issue has created a political firestorm in Malaysia, however, re-energizing the country’s opposition movement. It also provided fresh momentum to former prime minister Mahathir Mohamad’s campaign for 62-year-old Mr. Najib to resign as head of both Malaysia’s ruling party and its government.

Economists say the furor has further depressed business sentiment in the country, making the ringgit one of Asia’s worst-performing currencies this year.

The latest protest, organized by the Coalition for Clean and Fair Elections, or Bersih, as it is known in Malay, also draws on growing dissatisfaction with some of Mr. Najib’s economic policies. Supporters say they have already sold more than 30,000 yellow, Bersih-themed T-shirts in an early indication that the turnout could be substantial. Prominent opposition politicians are expected to join the protest, too, fired up with a litany of complaints ranging from the alleged gerrymandering of electoral districts to the conviction of opposition talisman Anwar Ibrahim for sodomy earlier this year.

Yet analysts say that despite what is likely to be a strong show of dissent on the streets, Mr. Najib’s position is likely to be secure as long as he can keep the support of UMNO, which has governed Malaysia since independence from Britain in 1957.

“That’s his immediate concern: To ensure the stability of the support for himself in UMNO,” said Ibrahim Suffian, director at Kuala Lumpur-based polling firm, Merdeka Centre.

“The Bersih protest itself isn’t going to change anything,” agreed James Chin, a Malaysian academic who heads the Asia Institute at the University of Tasmania in Australia. “Unless there is a full-scale riot, he is still in a strong position. The only thing that can really kill Mr. Najib’s career is if the ringgit slides,” Mr. Chin said. “Then we might see the country’s big business tycoons withdrawn their support from UMNO and push him to go.”

Given that Mr. Anwar, who is by far the most influential opposition figure, is serving a six-year prison term, Mr. Najib’s biggest obstacle to survival might well be one of his predecessors, former leader Dr. Mahathir, who served as the country’s prime minister for 23 years before stepping down in 2003.

In recent months Dr. Mahathir, now 90, has actively campaigned for Mr. Najib’s resignation, accusing him of mismanaging 1MDB, the state investment fund that has amassed some $11 billion in debts. Mr. Najib has denied any wrongdoing.

Dr. Mahathir still commands considerable support within some sectors in UMNO and on August 20 called for a non-confidence debate in parliament to determine Mr. Najib’s future. So far parliament hasn’t acted on the former leader’s call.

Mr. Najib’s supporters privately say he has the numbers within UMNO to fend off Dr. Mahathir.

His fight to stay in government is far from over, however. Swiss authorities last week said they have opened a criminal probe into the relationship between what they called “suspicious transactions” in Switzerland’s banking sector and 1MDB. The investment fund said in a statement that it is ready to assist in any investigation.

—Celine Fernandez in Kuala Lumpur contributed to this article.

Write to James Hookway at [email protected]