Ralph Jennings
Forbes
MAY 10, 2016

Malaysia’s ruling coalition and embattled Prime Minister Najib Razak got some breathing room this month but aren’t out of the ICU.

Najib’s Barisan Nasional party won 72 of 82 state assembly seats in Sarawak on Saturday, indicating that the party’s coalition has a chance of holding parliament in national elections expected by August 2018. To carry on politically, Najib needs to rebuild his name. He has been suspected since last year of moving about $700 million from government-run development company 1MDB to personal bank accounts. The 62-year-old leader faces no formal charges, but based on suspicion alone a lot of people want him out after seven years as prime minister.

The state election, his party’s first contest since the bank account issue erupted, gives Najib a narrow margin to grapple his way back to good standing before the nationwide vote.

His continuation in power would mean more economic development, his thing all along. The well-off Southeast Asian nation of 30 million people relies mainly on resources such as gas and rubber but faces risks from drops in fuel prices and oil-related taxes that the World Bank says account for around 17% of public revenues. So it’s building up an Islamic finance sector, manufacturing (up more than 20% in 2014) and even a film industry.

The Sarawak victory is a quick fix for the leadership. It’s not necessarily enough to last through the national election, per analyst views.

First, since the 1MDB flap came out, most voters have yet to get a say on Najib or his party. Voters in Sarawak, a state on the island of Borneo, are mostly rural and normally favor Barisan Nasional anyway, says Ibrahim Suffian, program director at the Kuala Lumpur polling group Merdeka Center. That’s no guarantee of support in the cities.

Sarawak also was won on “heavy-handed patronage politics” that may not apply to all of Malaysia, says Meredith Weiss, associate political science professor with The State University of New York at Albany.

“Barisan Nasional’s strong win in Sarawak breathes some life in to the ailing coalition, and Najib has been quick to claim credit for and vindication in the coalition’s success there,” Weiss says. But Weiss cautions that “Malaysia’s economy is far from strong at present, so it is not clear whether his coalition could sustain such electoral largesse at the national elections, were elections to precede an economic rebound.”

With economics a top concern before the national vote, expect Najib’s coalition to add funding for social welfare services and try for increases in the minimum wage and salaries for public sector employees, Suffain says.

Najib will also leverage the Sarawak win to vie with opponents in his party, perhaps by offering them senior government jobs, he adds. To crush rivals all out would stoke public sympathy for them. “My sense is that he’s planning either to coopt them or split the opposition,” Suffain says.

Sarawak, Malaysia’s biggest state, offers a clue on how that effort will unwind. Chief Minister Adenan Satem built some of his electoral support by “arguing that a strong mandate for him would allow the Sarawak Barisan Nasional to stand up to Najib and…and extract concessions for the state,” Weiss says.