‘EVIL’ SPIN OR IS AZMIN CAMP SO UNPROFESSIONAL THEY WILL WALK OUT OF PKR IF RAFIZI WINS NO.2 POST: IF NO-CONTEST THE ANSWER FOR ‘INCUMBENTS’ TO CLING TO POWER, WHY DID PKR, DAP, AMANAH & BERSATU FIGHT UMNO-BN, PAS FOR PUTRAJAYA IN GE14 – DID THEY NOT CARE ABOUT MALAYSIA’S ‘STABILITY’?

• Malaysia’s Pakatan Harapan coalition government is showing signs of strain, which poses downside risk to policymaking and reform.
• Recent events suggesting greater strain between coalition members include contentious Parti Keadilan Rakyat’s (PKR) internal party elections, Prime Minister Mahathir Mohamad’s apparent slight against the PKR and PKR President-Elect Anwar Ibrahim’s planned return to parliament in October.

In line with the view we first promoted in May, we continue to see risks to the stability of the coalition within the Pakatan Harapan (PH) government over the coming months, as the largest party in the coalition, Parti Keadilan Rakyat (PKR), heads into contentious party elections in November. Additionally, disagreement between Prime Minister Mahathir Mohamad and the PKR with regard to Mahathir’s appointment of the special government envoy to Thailand, as well as PKR President-elect Anwar Ibrahim’s impending return to parliament are likely to further complicate matters over the near term, as it could result in a power struggle between Mahathir and Anwar. We therefore maintain our short-term political risk score for Malaysia at 72.5 (out of 100), which continues to reflect the negative impact on policymaking and policy continuity from the change in government following the general elections on May 9.

Acrimonious PKR Internal Elections Spilling Over

Centrist and multiracial PKR, with 50 parliamentary seats in the 116-seat PH coalition, will hold internal elections in November. The most contentious race is for the Deputy Presidency (the second highest office in the party after the Presidency) between Economic Affairs Minister and incumbent Deputy President Azmin Ali and PKR Vice President Rafizi Ramli. The highly charged and personal nature of the contest is likely to polarise the party, which has roughly split into two camps. This polarisation will have important ramifications for party unity that could ultimately affect the PH government for example, if a party split happens and threatens the viability of the governing coalition. The key scenario under which this might happen is if Rafizi gains further prominence after the elections and differences between the two PKR leaders are not resolved. The exchanges between the two so far have been focused on Azmin’s lack of loyalty to Anwar, according to allegations by Rafizi. Anwar however, has steered clear of the battle in public statements stating that he will not be dragged into any of the contesting camps.

When PKR Sneezes, PH Catches A Cold

Malaysia – Pakatan Harapan Parliamentary Seat Composition

Source: News Sources, Fitch Solutions

Meanwhile, Rafizi has capitalised on rumours concerning a plot to stop Anwar from succeeding Mahathir – the allegation was made in August by Kapar MP and PKR member Abdullah Sani, who later retracted it – saying that his bid for the Deputy Presidency is to ensure that Anwar eventually becomes PM. Azmin hit back in early September after staying mostly silent, indirectly describing Rafizi as ‘jobless’ and a mere ‘toddler’ back in the 90s when, he said, he struggled alongside Anwar in service of the Reformasi or Reformation movement. The rumours about the plot became so widespread that Mahathir had to make a public statement while in Brunei on September 2 and again on September 3, reaffirming his promise to hand over power to Anwar after two years as agreed before the general elections. Anwar himself and Deputy Prime Minister Wan Azizah Wan Ismail (Anwar’s wife) also issued a statement denying the existence of a plot to prevent him from succeeding Mahathir.

Mahathir’s Special Envoy Pick To Deepen Divisions

We believe Mahathir’s appointment of the former Inspector-General of Police (IGP) who assaulted Anwar in 1998 as a special government envoy undermines his authority over the largest party in the coalition and government unity.

PKR has its roots in Parti Keadilan Nasional, which was founded in April 1999, months after Anwar was sacked as Mahathir’s Deputy PM during the latter’s first tenure as PM between 1981 and 2003. Anwar’s subsequent arrest on suspicion of sodomy and the maltreatment he suffered at the hands of then IGP Rahim Noor while in police custody (which caused him multiple injuries, including the infamous black eye that drew international outrage) became a rallying cry for the fledgling party. The party adopted and later retained after a merger with Parti Rakyat Malaysia to form PKR, an eye for its symbol in remembrance of the incident. Rahim was convicted of assault for that episode in 2003 and was sentenced to a two-month jail term.

Given the history, Mahathir’s appointment in late August of Rahim – as special government envoy to Thailand to mediate between the Thai government and separatists based in the country’s southern provinces – upset PKR members to a large extent. Anwar’s daughter and Penang MP Nurul Izzah Anwar issued a strong statement on Twitter opposing the appointment, in which she called Rahim a ‘brutal assaulter of an innocent man’. The Straits Times reported on September 2 that Anwar acknowledged that it was Mahathir’s prerogative as PM to appoint the best person for the job, but tellingly, also conceded that the decision had caused ‘unhappiness among various groups’. Anwar’s beating at the hands of Rahim remains close to the hearts of PKR members, especially the senior ones. Thus, we believe that Mahathir’s envoy pick will not be easily forgotten and combined with the unequal allocation of cabinet positions announced in July that disadvantaged PKR, is likely to further undermine his authority over PKR members in the PH coalition ( see ‘Lengthy Cabinet Negotiations Highlight Coalition Risks In Malaysia’, July 3).

Anwar’s Impending Return A Possible Wrench In The Works

We see Anwar’s eventual return to parliament and the likelihood of him assuming a bigger role in government as a further test of the PH government’s unity over the coming months. Anwar has said that he hopes to return to parliament through a by-election in October and will probably play a bigger role in government. Anwar had until recently been coy about his return to government, frequently stating to the media that Mahathir is the PM and the ultimate person in charge of running the country. We see this as an effort to not undermine Mahathir’s rule. In our view, he has good reason for that caution, as speculation was rife as to whether he and Mahathir had indeed buried the hatchet. Indeed, supporters of the two leaders have shown distrust to each other, having previously traded accusations of plots by the opposing camp to undermine their leader.

The return of Anwar to parliament could intensify such suspicions, especially as the deadline for the handover from Mahathir to Anwar nears, and the matter will have to be very delicately handled by both leaders. In the worst case scenario, factionalism becomes overt and entrenched, resulting in the crippling, or even dissolution, of the government, but this is not our core view. To their credit, Anwar’s and Mahathir’s public statements with respect to such matters have consistently been conciliatory and both men have strived to present a united and cordial front, which we believe has kept a lid on underlying tensions between their two camps so far. Therefore, we do not expect any major flare-ups even after Anwar’s return, but the simmering disquiet reflects an underlying level of distrust that we have previously highlighted and could become an impediment to policymaking and pose a risk to the coalition unity ( see ‘Pakatan Harapan To Face Triple Threat’, June 7).

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