Malaysia Elects New PM amid Political Crisis

Economy: Malaysia swears in a new prime minister, one week after Mahathir Mohamad shockingly resigned. But analysts say the political crisis is still a concern.

Prakash Sakpal said Malaysia was still dealing with another fragile coalition, which was not favorable for the markets and investors.

Prakash Sakpal is an Asia economist at Dutch bank ING.

Muhyiddin Yassin, the former home affairs minister under Mahathir, is now Malaysia’s 8th prime minister. His win came after he emerged as a frontrunner for the top job at the end of last week. But Mahathir claims he has the majority support in the country’s 222-seat parliament compared to Muhyiddin.

On Monday morning, the FTSE Bursa Malaysia KLCI Index dropped by more than 1% before recouping losses to trade about 0.3% lower. On the contrary, many of its regional peers gained.

The Malaysian government has been a coalition of parties for decades. The Muhyiddin’s party, Parti Pribumi Bersatu Malaysia (Bersatu), formed part of the former ruling coalition called Pakatan Harapan.

Last week, Muhyiddin pulled his party out of the coalition after Mahathir’s resignation, which led to the collapse of the previous government.

Later, he joined several other parties, including the United Malaysia National Organization (UMNO)- which lost power in 2018 general elections.

It’sIt’s an opportunity for those people who don’t want to miss out on the cabinet positions to jump ship.

Various media outlets believed Muhyiddin had 113 members of parliament on his side – more than 112 lawmakers needed to form the government in Malaysia.

But before the swearing-in ceremony, Mahathir said 113 members of parliament had pledged to support his return as the premier. Mahathir set up Bersatu with Muhyiddin.

Some of Mahathir’s supporters have denied supporting the former prime minister. But analysts say if the numbers hold Mahathir could file a no-confidence motion during the next expected sitting of parliament on Monday, March 09.

According to Harrison Cheng, if Muhyiddin faces a no-confidence motion will hinge on whether the 114 MPs pledging to support Mahathir continue to stick together by then.

However, Adib Zalkapli said it was unlikely the speaker of the parliament would allow lawmakers to vote on a no-confidence motion. Adib Zalkapli is a director at consultancy BowerGroupAsia’s Malaysia office.

He also added that the closest to a no-confidence motion that the Malaysian parliament had seen was the budget bill that the government typically tables at the end of the year.

It’sIt’s still uncertain that the new coalition would have a smooth ride even if Muhyiddin holds his numbers together.

A divided prime minister’s party

Bersatu, the prime minister’s party remains divided, with some members publicly pledging their support for Mahathir instead.

According to Cheng, the Islamist party PAS, one coalition partner could attempt to push for “religiously inspired policies” that could cause friction with other allies, which are moderates.

Also, the return of political parties tarnished with corruption scandals could hinder reforms the previous government had started, and anger the public — who voted them out in the last elections.

Najib is facing corruption charges over billions of dollars allegedly stolen from a Malaysian state investment firm.

Muhyiddin was part of UMNO and deputy prime minister under Najib from 2009 to 2015. He was fired after he publicly criticized the then-government’s handling of the 1MDB scandal.

UMNO and its allies were voted out of power in 2018, partly due to public anger over the 1MDB scandal. But the party’s decision to support Muhyiddin has increased its dominance in the coalition that will form Malaysia’s new government.

The UMNO will have the most significant influence being the largest party in the coalition with 39 seats