ASEAN Beat | Politics | Southeast Asia

Budget Looms as Crucial Test for Malaysia’s PM Muhyiddin

Facing a raft of internal and external challenges, the budget looms as a vote of confidence in Malaysia’s leader.

Budget Looms as Crucial Test for Malaysia’s PM Muhyiddin
Credit: Flickr/Jorge Láscar

Malaysian opposition parties are threatening to torpedo the passage of a mammoth national budget if the government of Prime Minister Muhyiddin Yassin doesn’t allocate more money to coronavirus relief.

Last week, Yassin’s embattled government announced Malaysia’s biggest ever budget, chock with new infrastructure spending and support for businesses hit hard by the COVID-19 pandemic.

The government plans to spend a record 322.5 billion ringgit ($77.9 billion) in 2021, up 2.5 percent from this year’s budget, Finance Minister Tengku Zafrul Abdul Aziz told parliament on November 6. “Never in modern human history has a pandemic had such a huge impact … this is an unprecedented crisis,” he said. Parliament will vote on the budget proposals later this month, most likely on November 25.

In parliament on November 9, however, Anwar Ibrahim, the head of the opposition Parti Keadilan Rakyat, said that the budget had a lopsided focus on infrastructure projects at the expense of improving access to education, or addressing the needs of people who have lost jobs and livelihoods due to COVID-19.

“We have been told, urged, asked and advised to support a COVID-19 budget,” Anwar said during a parliamentary debate. “Unless this budget 2021 truly serves to help the people, we are not going to support it,” he added.

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In most times and places, the passage of a budget is a routine, even mundane, duty of government. But its passage looms as an existential test for Muhyiddin, who was elevated to office in March after precipitating a collapse of the Pakatan Harapan (PH) coalition that won the last general election in 2018. He has since stumbled along with a thin, two-seat parliamentary majority, and has faced challenges and pressures from both within and without his governing coalition.

In September, Anwar called a press conference to claim that he had attracted the support of a majority of MPs, and that Muhyiddin’s government had effectively fallen. While Anwar was unable to prove to the king that he commands such a majority, he has kept up the pressure on Muhyiddin, who is also facing tensions within his own fragile ruling coalition.

Then, last month, Malaysia’s king repudiated Muhyiddin when he rejected his request to declare a state of emergency. The premier claimed that special emergency powers were necessary in order to fight Malaysia’s spread of COVID-19, but critics saw it as an attempt to strengthen his position in the face of internal and external challenges. The emergency powers would have allowed Muhyiddin to pass laws without the need for parliamentary approval, including the national budget.

As tabled, the 2021 budget contains 28 billion ringgit to fund subsidies, aid and incentives, in addition to 6.5 billion ringgit in cash aid programs. The government also allocated 15 billion ringgit for transport infrastructure projects and said development spending will jump 38 percent to 69 billion ringgit next year.

Finance Minister Tengku Zafrul predicted that the budget would help Malaysia’s economy expand by between 6.5 and 7.5 percent next year after contracting by 4.5 percent in 2020 – a projection that Anwar and other opposition figures described as “unrealistic.”

In a thread on Twitter, former Prime Minister Mahathir Mohamad said that Malaysia’s budget would increase the country’s debt without doing much to get the economy restarted. Government outlook reports released ahead of the budget show that the new spending would push Malaysia’s debt up to 61 percent of GDP in 2021, surpassing the government’s self-imposed 60 percent debt ceiling.

“These big figures are mind-boggling,” wrote Mahathir, who along with Anwar was part of the Pakatan Harapan (PH)  coalition that won a general election in 2018. “It seems that the Government will be putting money in the pocket of everyone, rich and poor, employed and unemployed.  The question that I would like to ask is where the money will come from.”

And so Malaysia’s political drama rolls onward. A defeat for the budget last this month would likely amount to a vote of no confidence in Muhyiddin’s government, prompting a fresh round of politicking and potentially a snap general election. A victory would enable Muhyiddin to limp on until the next crisis. All the while, Malaysians are weathering the public health and economic impacts of COVID-19, which continues its deadly spread.