Dec 12, 2006

Bloomberg - Abdullah says no election next year, but target on corruption instead

Another NATO? No action, talk only?

Dec. 12 (Bloomberg) -- Malaysian Prime Minister Abdullah Ahmad Badawi said he probably won't hold an election before 2008, giving himself more time to battle corruption and muster support.

"Next year is too early," Abdullah, 67, said in an interview at his home in Putrajaya, south of Kuala Lumpur. "I have to prove that a lot of things can be done and have been done and we have succeeded."

Abdullah, who must seek a fresh mandate by early 2009, said it's "not easy" to stamp out graft, which he called "cancerous." Too few criminals end up in court even as the government investigates a "very high" number of cases, he said.

Abdullah may lose support at the next election, former premier Mahathir Mohamad said in October. Analysts say fuel price increases have eaten into incomes, pushing many into corruption. Before a poll, the premier may also have to mend relations in his ethnic coalition, where pro-Malay speeches by some leaders have stoked tensions with Chinese counterparts.

"How can he go to elections?" said Shamsul Amri Baharuddin, director of the Institute of the Malay World and Civilization at the University of Malaysia. "Basic economic issues could be decisive for urban voters who are really suffering. That has made a lot of people more corrupt."

Abdullah said he's bolstered his team of investigators and warned officials of the dangers of taking bribes. Malaysia fell to 44th in the 2006 Corruption Perceptions Index from 39th last year, Transparency International said Nov. 6.

Not Happening

"We are doing as much as we can," Abdullah said in the Dec. 8 interview. "If the perception goes on the basis of how many people we drag to court and gain a conviction, of course it doesn't seem to be happening."

Abdullah came to power in October 2003 and led the Barisan Nasional coalition to a landslide election victory in March 2004. He expects his five-year 200 billion-ringgit ($56 billion) plan to improve education and health care, and build roads, ports and houses to fuel faster economic growth.

To deliver growth, Abdullah said he needs a sound racial and political platform.

Former Premier Mahathir, who picked Abdullah as his successor, in October accused him of achieving nothing since taking over, and last month's meeting of the ruling party, the United Malays National Organisation, strained ties within Barisan Nasional.

`Uneasiness'

UMNO, as the 60-year-old party is known, has more than 3 million members and is the biggest political group in the coalition.

Hishammuddin Hussein, head of UMNO's youth wing, said in his assembly speech the position of the ethnic Malay majority shouldn't be challenged and brandished a keris, a traditional Malay dagger. The Malaysian Chinese Association, part of Barisan Nasional, said the act created "uneasiness" among other races.

"I'm equally concerned" about race relations, Abdullah said in the interview. "I know the consequences of race problems and racial tensions, on the economy, on the social development, even on our future."

Clashes between Malays, who make up about 60 percent of the nation's population of about 27 million, and ethnic Chinese in 1969 left hundreds dead on the streets of Kuala Lumpur. Two years later, the government introduced the New Economic Policy to give ethnic Malays privileged access to housing, education, jobs and company shares.

`Positive Sentiment'

Malaysia risks a return to racial unrest if the affirmative action policies are scrapped, Mahathir said in an Oct. 9 interview. Mahathir ruled Malaysia from 1981 to 2003.

Critics of the program say it drags on productivity and impedes competition. Under Abdullah, economic growth in Southeast Asia's third-biggest economy accelerated to 7.2 percent in 2004, then slowed to 5.2 percent in 2005.

Still, Abdullah's policies are good enough for many investors. The Kuala Lumpur Stock Exchange Composite Index has jumped 21 percent this year, outpacing 14 out of 18 major global benchmark indexes worldwide tracked by Bloomberg.

"We have more in Malaysia than we've had for quite a few years," said Anders Damgaard, who helps oversee $500 million of assets, including $35 million in Malaysian securities, at Sydinvest Asset Management in Aabenraa, Denmark. "There seems to be a positive sentiment towards Malaysia."

The government has said expansion this year may beat its 5.8 percent forecast. Abdullah said growth in 2007 will be "not too far away" from the 6 percent target.

Malaysia aims to be a developed nation by 2020. Asked if he'll run for a second term, Abdullah said, "We'll see. Why not?"

Anwar Ibrahim

Abdullah must dissolve Parliament by May 17, 2009, in preparation for an election, or it will happen automatically on that date, according to the election commission. After Parliament is dissolved, an election must be held within 60 days.

An election after 2007 sets up a possible return for former Deputy Prime Minister Anwar Ibrahim, who was arrested in 1998 and imprisoned for almost six years on corruption and sodomy charges. (link)

Malaysia's Federal Court quashed the sodomy conviction in 2004 though upheld the corruption charge. Anwar is eligible for public office in 2008 and said in an interview last month that he plans to run for parliament at the next election.

Living costs have increased in Malaysia after the government raised fuel prices in February, the fifth time since May 2004, and state-controlled Tenaga Nasional Bhd. was allowed to raise power prices in June by 12 percent, its first rate increase in nine years.

Still, the prime minister ruled out cutting interest rates to encourage growth.

"No, no, no," he said. "We are not planning on that at the moment." He said he won't cut gasoline prices either because crude oil costs haven't fallen far enough.

Malaysia's central bank has kept its key interest rate unchanged at 3.5 percent since April. Crude oil, at $61.50 a barrel, has fallen 22 percent from the record $78.40 on July 14.


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