SINGAPORE – Malaysian Prime Minister Ismail Sabri Yaakob has few vote-winning achievements to claim after less than a year in office, which suggests he has little to gain and plenty to lose by calling an early election of which graft-tainted party leaders of his United Malays National Organization (UMNO) are aggressively lobbying.
Pointing to thumping wins in recent state elections and an opposition coalition in disarray, UMNO president Ahmad Zahid Hamidi says the electoral time is right for the party to reclaim its traditional political dominance. But Ismail has countered that fast-rising food inflation and basic living costs mean snap polls should be delayed until prices stabilize.
Malaysia’s next general election must be called by the third quarter of 2023, but UMNO-led governments have in the past held early elections to capitalize on political popularity or favorable economic conditions. UMNO suffered a historic defeat in 2018 but returned to power through parliamentary maneuvers and is now eyeing a redemptive victory.
Ismail, however, is adamant that the next election should not be held until the country can curb inflation, telling Nikkei Asia in a recent interview that his government would “have to wait for the right time” to dissolve parliament and call new polls. “We are now facing a period of increasing inflation with high prices… do you think this is the right time?”
Malaysia, a net food importer, is grappling with rising global commodity prices while its ringgit currency continues to depreciate vis-à-vis the dollar, resulting in higher import prices. Domestic supply chain issues have also led to shortages of poultry and other protein sources, prompting authorities to enact an export ban on chicken from June 1.
Restrictions on poultry exports will halt the trade of 3.6 million chickens per month and will remain in place for an unspecified period until domestic prices and supplies stabilize, though the government has not specified a target metric. Poultry traders and economists, meanwhile, remain skeptical that the ban will achieve its intended deflationary effect.
Ismail also faces skeptics within his own party, with influential former premier Najib Razak pushing back against plans to delay polls due to inflationary economic conditions. In a recent speech, Najib called on Ismail to “make a decision that is right and wise, do not think of personal interest but that of the party’s and country’s future.”
But with legal troubles hanging over UMNO’s hierarchy, political observers say personal interest is, in fact, a main motivator for Zahid and Najib’s political faction to push for snap polls. Both politicians face prison time on separate graft and money laundering charges and risk being unable to run in the election if the criminal convictions against them are upheld.
“The faction wants to hold elections before Zahid’s ongoing corruption trial concludes – if convicted, he would not be able to contest the polls. Najib also hopes to shake off his existing conviction, which bars him from running in the next election, though he disputes that,” said Peter Mumford, a Southeast Asia analyst with the Eurasia Group consultancy.
“Meanwhile, Ismail’s interests are better served by a later election that could enable him to gain a firmer grip on UMNO, especially if Zahid is convicted before then and Najib loses a final appeal,” Mumford continued, adding that “sustained rapid food inflation would strengthen Ismail’s argument” in favor of delaying polls within a divided UMNO.
Malaysia’s headline inflation was 2.3% year-on-year in April, lower than some of its regional peers. But rising food prices have been identified as a major contributor to inflation, with year-on-year increases of 4% in March and 4.1% in April. Hitherto the country’s most affordable protein source, poultry rose 10.5% in March and 7.5% in April.
Food inflation is an urgent issue for Ismail’s government, said Mumford, because UMNO and its Barisan Nasional (BN) governing coalition “disproportionately rely on support from less well-off voters, especially rural ethnic Malays who were hardest hit during the pandemic and will suffer the largest impact from high food prices.”
Though the government’s current term expires in August 2023, it has been widely speculated that polls will take place between August and December this year. Mumford believes elections could be pushed backed until next year if measures to tame food inflation fall short, a scenario that could undermine grassroots support for UMNO.
Poultry farmers and traders have by and large balked at the government’s approach to stabilizing chicken prices, a key gripe being a price cap of 8.90 ringgit (US$2) per kilogram in place since February 5. With imported chicken feed prices soaring due to the Russia-Ukraine conflict, the price ceiling has left many producers operating at a loss.
Vendors have reportedly raised prices beyond the government-set cap, ranging as high as 17 ringgit per kilogram according to local media, or chosen to shutter their operations entirely, exacerbating rather than stabilizing supply shortages. Poultry retailers have called for the price ceiling, set to remain in place until June 30, to be replaced or scrapped.
The government has offered chicken breeders a direct subsidy since February, but only 50 million ringgit ($11.4 million) of the allocated 729.4 million ringgit ($166.2 million) has reportedly been disbursed so far. Authorities say low uptake of the subsidy is because industry players prefer for the market, not the government, to dictate poultry prices.
Ismail’s government accordingly announced a withdrawal of the subsidy on June 1 and said funds would instead be “channeled directly to people” requiring assistance. Licensing and quota requirements for imports of chicken, wheat, milk and other goods subject to price increases have also been scrapped recently to boost supply.
“The government may also reduce import tariffs to further bolster supply/reduce prices if food security concerns worsen,” said Eurasia Group’s Mumford. “The export of other food items could be banned if prices spike. For example, Malaysia has previously restricted, in some cases very briefly, overseas shipments of seafood and pork.”
Hafidzi Razali, a senior analyst with strategic advisory firm BowerGroupAsia, believes the government is likely “to remain populist in its approach to soften the inflationary impact,” and said subsidies could continue to “be handed directly to end consumers in the form of a cash transfer or rebate” ahead of the next general election.
Ismail’s administration says it is planning to introduce a subsidy rationalization program aimed at providing targeted assistance to low- and middle-income households in the so-called B40 group, or the bottom 40% of income earners. The government already subsidizes cooking oil, sugar, flour, liquified natural gas, as well as gasoline and diesel.
Soaring energy prices mean that fuel subsidies alone are expected to cost 28 billion ringgit ($6.3 billion) this year, compared to 11 billion ringgit ($2.5 billion) in 2021. Economic setbacks, rising subsidy bills and the government’s weak financial position have spurred Ismail to consider reintroducing a goods and services tax (GST) to boost state revenues.
Najib’s administration introduced a widely unpopular 6% GST levy in 2015 that became a political lightning rod, contributing to UMNO’s 2018 election defeat to Mahathir Mohamad, who scrapped the GST and reverted to a previous sales and services tax, a move that Ismail recently said had cost the government $4.6 billion in annual revenue.
Reinstating the GST would shore up state coffers after pandemic-era big spending and now post-pandemic spiraling inflation but would be a bitter pill for UMNO’s grassroots supporters. Some analysts believe that by putting off early polls to be better positioned against his more-senior party rivals, Ismail risks taking electoral blame for the worsening economy.
“Given the economic setbacks and rising subsidy bills, it may make more sense for UMNO-BN to have an early election to strengthen its political position” ahead of the tabling of the 2023 federal budget by early November, said Hafidzi. “Any decisions to delay the general election would be political and not guided by inflationary setbacks,” he told Asia Times.
Follow Nile Bowie on Twitter at @NileBowie