AFTER being hit by fresh sexual assault allegations, Malaysian opposition leader Anwar Ibrahim has promised once again to set right the injustices facing the country.
He spoke again on Sunday of the need to end corruption and nepotism. It was a familiar line. But the opposition leader has now added another promise: Not only will the opposition “rule in a short while” but “the next day we will lower the price of oil”.
By widening his list of campaign issues in this way, Datuk Seri Anwar clearly hopes to ride to power on the back of popular resentment over inflation, which is officially expected to rise to a 10-year high of 4.2 per cent this year. Early last month, petrol prices were raised by 41 per cent and diesel by 63 per cent.
But while his promise to reduce domestic fuel prices was politically savvy, it has also raised uncomfortable questions about the sort of economic policies an Anwar-led government would pursue.
As a former finance minister, he is almost certainly aware of the economic implications of rolling back the fuel price rise.
Without the increase, the total cost of the government’s fuel subsidies this year would have amounted to more than four times what it spends annually on education, health care and defence. The subsidy would also have cut deeply into the government’s development expenditure.
For his critics, Mr Anwar’s promise to reduce oil prices has merely reinforced the view that the leader of the opposition alliance is a chameleon who tells people what they want to hear rather than what he really thinks. But the promise to reduce oil prices is one that a future Anwar-led government would almost certainly have to keep.
Most analysts believe that if Mr Anwar does take power, his government would only have a wafer-thin parliamentary majority. This implies that the new Cabinet would be forced to implement populist policies in order to cope with the challenge posed by a well-financed opposition determined to regain its position in government.
Many of the defectors from the current ruling coalition are expected to come from East Malaysia. This suggests the new government might have to allocate a large portion of scarce development funds to those states. Revenue sharing agreements may also need to be re-negotiated.
Would an Anwar-led government react by borrowing money? Malaysia’s government debt to GDP ratio now stands at around 43 per cent, one of the highest in Asean. The fact it nevertheless has a better credit rating than most of its neighbours is at least partly the result of the current government’s emphasis on development expenditure, something that Mr Anwar will almost certainly have trouble maintaining if he raises fuel subsidies.
As finance minister in the late 1990s, Mr Anwar won kudos for opposing some of then-prime minister Mahathir Mohamad’s grandiose schemes and controversial conspiracy theories.
He also won the support of the International Monetary Fund during the 1997-98 financial crisis by opening up the country to greater foreign investment and competition while implementing a controversial austerity package. Economists are still debating whether Mr Anwar’s policies would have been more or less successful than Tun Dr Mahathir’s had they continued.
More seriously, Mr Anwar’s commitment to reformasi is somewhat undermined by other aspects of his record while in office. Back in the 1990s, local stockbrokers regularly recommended stocks based on little more than the fact that the company concerned was run by businessmen linked to powerful politicians. Many businessmen were believed to have been Mr Anwar’s cronies.
None among them is a force to be reckoned with now. But such businessmen could make a comeback should Mr Anwar find them useful as corporate allies if he becomes prime minister. The companies which would stand to lose the most from an Anwar-led government would be those with strong links to the current ruling coalition.
Another area to watch will be the way Mr Anwar deals with long-standing complaints that many goods are not manufactured in a most cost-efficient manner due to market distorting administrative controls. For example, the government subsidises items ranging from rice and sugar to steel and cement. The result is a small group of firms enjoying a near monopoly over the supply of price-controlled items. Prices are set on a cost-plus basis, virtually guaranteeing them profits.
Yet another concern is how the bureaucracy and the business community would react to a new government. The Malaysian economy has been so heavily politicised for so long that it is hard to imagine businessmen abandoning the practice of cultivating influential politicians and bureaucrats to gain favours or to seek protection from competitors.
Only a determined leader confident of his parliamentary majority could successfully resist such pressures.
For a time, however, things may appear to improve. After all, corruption trials are a well-established means by which a new political elite consolidates its power. Mr Anwar learned all about that when he faced his first sodomy charge in 1998.
His business associates found out about it the following year, after an extensive crackdown in the corporate sector resulted in many of them facing graft charges.
And so it goes...
Copyright 2008 Singapore Press Holdings