27 - Will Najib's Election Goodies Be Enough?

Summary

The annual budget is a powerful weapon for the Malaysian government, and never more so than when national elections are impending. Mr Najib Razak's third budget as Prime Minister, announced last Friday, definitely signals that elections are indeed on the way.

Beleaguered as his government must feel - after the Bersih demonstration in July turned into a bigger anti-government event than it needed to be - when major economic indicators are all pointing the wrong way and with only one and a half years left before a General Election has to be held, it is wiser for Mr Najib not to postpone the use of this weapon until next October.

In fact, there is no reason for him to believe that the political and the economic situation will improve over the coming year. Political scepticism runs high in Malaysia and even his recent initiative to repeal the unpopular Internal Security Act (ISA), to lift three declarations of emergency and end the requirement for annual renewal of printing licences, was given a lukewarm reception.

What the public is concerned with is what the government will replace the ISA with. Few believe the repeal is motivated by a humanitarian wish to increase civil liberties.

After two-and-a-half years as Prime Minister, Mr Najib continues to suffer from a credibility problem, which has been aggravated by his penchant for using foreign consultants for public relations exercises and his piecemeal reform initiatives. PR exercises threaten to overshadow serious policy debate in Malaysia.

Given this political milieu, the annual budget announced last week was expected by most to be full of goodies for as many constituencies as possible. In that respect, Mr Najib exceeded expectations.

Not only will 1.3 million civil servants get pay increases of between 7 and 13 per cent, their retirement age is being raised from 58 years to 60. Cheap loans for first-time house owners making less than RM3,000 (S$1,230) a month are being made available for properties up to RM400,000 while taxi drivers are being given various monetary aids.

Significantly, cash handouts to poorer households will benefit as many as 3.4 million families. That's 53 per cent of all households.