Malaysia‘s Prime Minister Muhyiddin Yassin arrives at a mosque in Putrajaya for prayers in August. Photo: Agencies

SINGAPORE – Prime Minister Muhyiddin Yassin will face a political moment of truth when Malaysian lawmakers vote on proposals for the nation’s largest-ever annual budget in Parliament later this month. A defeat of the spending plan would be equivalent to a no-confidence vote and could plunge the country into a leadership crisis.

Muhyiddin’s eight-month-old government intends to spend a record 322.5 billion ringgit (US$78 billion) in 2021 as it seeks to offset the economic ill-effects of the Covid-19 pandemic and bring Southeast Asia’s third-largest economy back from the brink after gross domestic product (GDP) plunged 17.1% year on year in the second quarter.

The expansionary budget, a 2.5% increase in spending from 2020, aims to hasten an already evident recovery from the worst effects of business activity restrictions enacted under an earlier nationwide lockdown. Third quarter data announced by Malaysia’s central bank on Friday (November 13) showed a smaller 2.7% contraction.  

A resurgence of coronavirus infections since September has seen infections triple to nearly 44,000 cases. Authorities have in response imposed targeted movement curbs in parts of the country, threatening an economic turnaround that the budget, the first to be presented since Muhyiddin was appointed premier by the nation’s king in March, is designed to spur.  

But for the first time in the nation’s history, passage of the federal budget is in question. Past governments held ample parliamentary majorities and could be relied upon to approve budgets without bipartisan support. But with only a two-seat legislative majority and open discord within his ruling coalition, Muhyiddin is plainly vulnerable.

Passage of the premier’s inaugural budget will require a minimum degree of political consensus at a time when Muhyiddin’s fragile leadership has come under attack from both the opposition Pakatan Harapan (PH) and the United Malays National Organisation (UMNO), the biggest party in his wobbly Perikatan Nasional (PN) governing coalition.

Opposition lawmakers have in recent months filed more than two dozen motions of no-confidence against Muhyiddin. But since government bills are prioritized in the legislature, the 2021 budget proposal has become a proxy no-confidence motion. That hasn’t stopped the premier from urging opposition support for his spending plan.

Prime Minister Muhyiddin Yassin at Parliament, Kuala Lumpur, Malaysia on July 13, 2020. Photo: AFP via Anadolu Agency/Syaiful Redzuan

“I hope all parliamentarians can put aside political differences to ensure that the 2021 budget is approved in the interest of the people and the country,” said Muhyiddin, 73, in a televised address ahead of his government’s budget presentation on November 6, voicing hope that “an understanding can be framed among members of Parliament.”

With a razor-thin majority of 113 out of 222 seats in the legislature, Muhyiddin’s administration could collapse if as few as three rebel lawmakers in his government break ranks to oppose the expenditure bill. Reaching a deal with opposition parties would be the premier’s best form of insurance going into the November 25 budget vote, say analysts.

The budget debacle also puts opposition leader Anwar Ibrahim, 73, on the horns of a dilemma. The Parti Keadilan Rakyat (PKR) president has claimed in recent weeks to have enough support in Parliament to oust the premier, and was granted an audience with Malaysia’s king, the Yang di-Pertuan Agong, on October 13 to present his case for forming a new government.

Sultan Abdullah Sultan Ahmad Shah, 61, the country’s constitutional monarch and ceremonial head of state, was unswayed by Anwar’s claims and advised him to “respect the due process of the law” following their meeting. The king has since called on all politicians to put aside disputes to ensure the budget’s passage given the crises facing the nation.

In an October 28 statement, the palace “called on the members of the House of Representatives to respect His Majesty’s advice for them to immediately stop all political disputes and instead prioritize the welfare of the people and the well-being of the country so that the 2021 budget is approved without any interference.”

The declaration is one of several recent public remarks by the Agong urging the nation’s wayward politicians to refrain from actions that could stoke instability and uncertainty. Analysts say the opposition could risk being viewed negatively in the public eye if they opt to defy royal pressure by voting to oppose the budget.

A vote in favor of the budget, however, would prove majority support for Muhyiddin and thereby weaken any argument disputing his legitimacy, a bitter pill for Anwar to swallow in the wake of his botched power play and rival claims of having “formidable” but thus far unproven majority support among parliamentarians.  

Another option for the opposition would be to abstain from the budget vote rather than opting to defeat it outright, which would be seen as demonstrating dissent while still acceding to royal advice. Opposition parties have, in any case, said they would support the budget if it protects public health and welfare sufficiently.

Malaysian opposition leader Anwar Ibrahim makes a speech at a press conference after meeting with King Yang Di-Pertuan Agong Sultan Abdullah, Kuala Lumpur, October 13, 2020. Photo: AFP Forum via Anadolu Agency / Surya Fachrizal Aprianus

“Given the royal advice urging MPs to support the budget – which is rare, if not unprecedented for constitutional monarchies – one can expect that the budget will pass despite the current political bickering,” said Piya Raj Sukhani, a political analyst at the S. Rajaratnam School of International Studies (RSIS) in Singapore.

“While the monarch’s position is largely symbolic in the Malaysian political firmament, loyalty to the king is enshrined in the Rukun Negara,” the country’s declaration of national principles, said Sukhani. “Snubbing his advice would not only be considered tremendously audacious, but also will be inordinately costly.”

The budget’s defeat, though unlikely, could result in Muhyiddin’s resignation and the appointment of a caretaker prime minister, or a parliamentary motion of confidence in support of an alternative prime ministerial candidate. Either scenario would lead to Malaysia’s second change of government without an election in less than nine months.

Insider sources cited in local media reports have pointed to veteran UMNO backbencher Tengku Razaleigh Hamzah, 83, as a possible interim prime minister at the helm of a unity government comprised of political parties as well as individual lawmakers should Muhyiddin fail to get support in Parliament.

Photos of Tengku Razaleigh, a former finance minister who is a descendant of Malay royalty, meeting with ex-premier Mahathir Mohamad – who the former mounted an unsuccessful leadership challenge against in 1987 for UMNO’s top post – have gone viral in recent weeks, fuelling speculation of a power play to sideline Anwar from claiming the premiership.

In October, the publication of a private letter written by Tengku Razaleigh to Speaker of Parliament Azhar Azizan Harun urging him to expedite a motion of no confidence against the premier that Mahathir submitted in March was widely seen as a signal to both Muhyiddin and Anwar to resolve the country’s political impasse through constitutional and parliamentary means.

Tengku Razaleigh Hamzah is seen as a possible interim premier in a national unity government. Image: Facebook

Political uncertainty linked to those outcomes would negatively impact markets, put off foreign investors and inevitably hamper efforts to to steer the nations out of recession, say analysts. In light of such potentially dire consequences, new amendments to the budget proposal are expected to ensure its passage. But the opposition hasn’t yet ruled out an opposing vote.

Anwar, in remarks to Parliament on November 9, said passage of the 2021 budget “is not yet a guarantee” without amendments to “take care of the people as per our demands.” PH made six key demands ahead of the budget’s tabling, though only one demand, an increase in Health Ministry resources to battle the coronavirus pandemic, was included.

The government has set aside 20 billion ringgit ($4.83 billion) for a special Covid-19 fund that will increase spending on protective gear for frontline workers, financial aid packages to support mental health measures and childcare centers, and expand tax relief to include immunization expenses ahead of the procurement of vaccines.

Recommendations by the opposition included expanded social protections and welfare payments for the vulnerable and unemployed until the end of the coronavirus crisis, an extension of a bank loan moratorium and wage subsidy scheme until March 2021, and increases in education spending and development expenditure.

Anwar, the nation’s finance minister from 1991 to 1998, said incumbent Finance Minister Tengku Zafrul Abdul Aziz appeared to “care more about banks” for not extending its earlier debt moratorium. UMNO lawmakers have uncharacteristically backed some of the opposition’s demands, including for a six-month loan moratorium extension.

Malaysia’s Finance Minister Tengku Zafrul Tengku Abdul Aziz delivers a speech on the national 2021 Budget at the Parliament in Kuala Lumpur, November 6, 2020. Image: AFP via Malaysia Department of Information/Khirul Nizam Zanil

Lawmakers within Muhyiddin’s coalition from UMNO, who are more accustomed to running the country and not content to play second fiddle to the premier’s smaller party, Parti Pribumi Bersatu Malaysia (Bersatu), have in recent weeks echoed calls by the opposition and even flirted with forging an alliance of convenience with the Anwar-led PH.

When the Agong in a rare rebuke rejected an attempt by Muhyiddin to declare emergency rule last month, which would have allowed him to suspend Parliament and approve expenditure outside of the usual legislative process, some UMNO lawmakers seconded opposition demands that the 73-year-old premier resign.

Lawmakers from UMNO and PH have both strongly objected to the 2021 budget’s most controversial proposed allocation: an 85.5 million ringgit ($20 million) cash injection put toward reviving the Special Affairs Department (Jasa), which previously functioned as a propaganda unit of the former ruling coalition, Barisan Nasional (BN).

Jasa was previously abolished by the short-lived PH government after it came to elected power in 2018. The department received annual allocations of between 21 to 22 million ringgit from 2011 to 2018 and had infamously organized a public relations campaign for the scandal-plagued investment fund 1Malaysia Development Berhad (1MDB).

Jasa is most synonymous with former premier Najib Razak, who in July was found guilty on various corruption charges linked to 1MDB and sentenced to jail. Still able to address Parliament as a lawmaker pending appeal of his conviction, Najib said the four-fold budget increase for Jasa was “unacceptable” and would court public anger.

The government has said the unit will be used to promote patriotism and counter Covid-19 related disinformation, though critics believe Bersatu is planning to use Jasa to gain a narrative edge over its rival UMNO as both parties eye post-pandemic polls where they will vie for the same Malay Muslim electorate’s support.

Muhyiddin will be able to pass the 2021 budget without bipartisan support if government backbenchers unanimously vote in favor of the spending plan. UMNO president BN chairman Ahmad Zahid Hamidi has said all 43 of the coalition’s lawmakers would back the budget, but that BN still wants its suggestions to be implemented through amendments.   

Wong Chin Huat, a political scientist at the Jeffrey Sachs Center on Sustainable Development, believes Muhyiddin has three options to safeguard against a budgetary defeat. One measure is to proactively amend any unpopular specifics during the November 9 to 23 debate session to deny the opposition the excuse to vote down the spending plan.

Another would be to announce a Cabinet reshuffle that would see more UMNO ministers appointed to prominent positions to ensure that the party solidly backs the budget with or without any amendments. UMNO members want one of its leaders to be appointed as deputy prime minister and to be given control of key ministries.

Ahmad Zahid Hamidi speaks to reporters during a press conference in Kuala Lumpur, May 14, 2018. Photo: AFP / Roslan Rahman

Wong said the safest way forward for Muhyiddin would be a confidence-and-supply agreement with the opposition, which would ensure their support for the spending plan in exchange for conceding to specific budgetary amendments, parliamentary reforms and measures such as equal constituency funding for lawmakers that PH has called for.

“All three steps mean losing face. But a confidence-and-supply agreement is the best deal because getting opposition support for whatever agreed period – be it one year or two years of the remaining term – will give Muhyiddin space to manage the pandemic and economy without being blackmailed by UMNO or his own party rebels,” Wong told Asia Times.

“From Muhyiddin’s moves – from the failed emergency self-coup to this partisanship-before-pandemic budget – so far he looks like a compulsive gambler who insists on going to the casino despite a bad prospect. Some of his advisors want him to take the maximum risk because they stand to gain even if Muhyiddin is sacrificed,” he added.

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