Uphill reform drive for Najib

But his reputation has been sullied by allegations of corruption over a slew of defence deals and involvement in the murder of a Mongolian model.


Incoming Prime Minister Datuk Seri Najib Razak looks set to initiate aggressive political and economic reforms, but change could be slow and difficult as the country faces one of its toughest tests.

Najib, a British-trained economist, will become Malaysia's sixth prime minister tomorrow, assuming the mantle as the economy enters its first recession in a decade and the government faces the prospect of losing power to a resurgent opposition.

Outgoing Premier Datuk Seri Abdullah Ahmad Badawi handed in his resignation letter to the Yang di-Pertuan Agong today, following a tenure considered weak and ineffective by many.

Falling foreign investment and racial tensions will push Najib to tackle corruption and review a race-based policy which has kept control of the economy in the hands of well-connected ethnic Malay tycoons.

"His major clear clarion call is a call for change from the politics to the economics side," said Zainal Aznam Yusof, a member of a council that advises the premier on economic issues.

The 55-year old Najib has pledged to wean the economy off its reliance on low-end manufacturing, further open up the services sector and close a widening ethnic and religious divide.

A source told Reuters last week that Najib would name his Cabinet within a week of taking office and radically reform state-linked firms to make them more profit-oriented.

But Najib has to drive reforms while trying to steer Asia's third most open economy through the headwind of slumping exports and rising unemployment.

A son of Malaysia's second prime minister and nephew of the third, Najib is regarded as a capable administrator who has been groomed for over three decades for the country's top job.

But his reputation has been sullied by allegations of corruption over a slew of defence deals and involvement in the murder of a Mongolian model.

Najib has dismissed both claims as "malicious lies".

An immediate test would be three by-elections — one parliamentary and two state seats — on Tuesday.

The outcome of the polls would not alter the balance of power in Parliament but it is still crucial after Najib led the ruling coalition to defeats in two recent by-elections.

"If the Barisan Nasional loses… it will show that the voters have not yet seen the changes that they expect, and that they want the process of reform to continue," said political analyst Khoo Kay Peng.

As Najib wrestles with a resurgent opposition, there are fears of strong-arm tactics to stifle political dissent.

Last week opposition websites were barred from covering the annual general assembly of Umno. An opposition MP and a popular blogger have been charged with sedition, and two opposition newspapers have been banned.

"Najib is already blamed for quickly transforming the political atmosphere in the country to an increasingly gloomy and darkening landscape, coupled with grave concerns about his suitability, integrity and legitimacy," said veteran opposition leader Lim Kit Siang.

In the longer term, Najib has the tricky task of reviewing a decades-old policy favouring Malays in jobs, education and business without upsetting the main ruling party's power base.

"I don't think there is much appetite or political consensus to put into effect a radical reorientation of affirmative action," said Manu Bhaskaran, a partner at US advisory Centennial.

"It would probably be better to iron out the weaknesses in the affirmative action programme, to tackle specific areas where the weaknesses are particularly egregious in terms of the openings for corruption, for cronyism, for damaging, inefficient consequences.