This article first appeared in The Edge Malaysia Weekly on July 4, 2022 - July 10, 2022
AS we enter the second half of 2022, the question on many people’s minds is: Will there be a general election in the next few months? The answer depends on who you speak to and who they support.
One thing that is quite clear, however, is that the results of the recent by-elections and Johor state election point to a triumphant comeback for Umno and Barisan Nasional (BN) at the next general election (GE15), which must be held no later than September 2023, that is, 60 days after the automatic dissolution of parliament on July 16, 2023. The first parliamentary sitting after GE14 was on July 16, 2018.
Hence, political observers are focused on the internal bickering within Umno over when GE15 should be held as this will determine who ends up as prime minister. Currently, there are three clear political clusters in the party that are jostling for power.
One Umno politician explains, “Yes, things are fragmented, but not just in Umno … there are so many divisions in all the major political parties. But yes, you are right, you can largely divide it into three clusters [within] Umno.”
Two of the three clusters are pushing for an election as soon as August this year.
The first — which is pressing Prime Minister Datuk Seri Ismail Sabri Yaakob to call for GE15 as soon as possible — is the “court cluster”, which includes former deputy prime minister and current Umno president Datuk Seri Ahmad Zahid Hamidi, who is also chairman of Barisan Nasional, the leading member of the ruling coalition. Another key character in this cluster is Datuk Seri Najib Razak, who was premier until GE14 in 2018, when he was forced to hand over the reins to the Pakatan Harapan (PH) coalition led by his mentor turned nemesis Tun Dr Mahathir Mohamed.
This cluster’s hope is for GE15 to be held as soon as possible and to leverage the expected victory for Barisan Nasional in resolving their legal matters. While Ahmad Zahid’s trial on 47 charges of corruption, criminal breach of trust and money laundering are ongoing, Najib is appealing to the Federal Court against his guilty verdict and 12-year jail term and RM210 million fine in the SRC International Sdn Bhd corruption case. He was found guilty by the High Court on July 28, 2020, and the Court of Appeal upheld the High Court’s ruling on Dec 8, 2021. Najib’s appeal at the Federal Court is set to be heard in the middle of next month.
Ahmad Zahid and Najib may have difficulty defending their respective parliamentary constituencies of Bagan Datuk and Pekan, not only because of the perception of having been charged, but if found guilty and jailed, may be barred from standing as a parliamentary candidate for a term.
Johor Umno liaison committee deputy chairman Datuk Nur Jazlan Mohamed — the son of former information minister, the late Tan Sri Mohamed Rahmat — recently labelled Ismail Sabri as the “weakest Umno prime minister” in the country’s history and urged for an early election.
This tirade came after Ismail Sabri was supposedly slow to act when Datuk Zuraida Kamaruddin was not dropped as minister of plantation industries and commodities despite her leaving Parti Pribumi Bersatu Malaysia (Bersatu) for Parti Bangsa Malaysia. Nur Jazlan is a strong supporter of Ahmad Zahid.
The second cluster hoping for an election this year is the “non-government cluster”, or a set of politicians who are not part of the current government but hope to be in the next administration post-GE15. These include Datuk Seri Mohamad Hasan (commonly called Tok Mat), who is Umno deputy president and Barisan Nasional deputy chairman, but only a member of the Negeri Sembilan state legislative assembly; he is not a member of parliament.
Other prominent members of this cluster include former second finance minister and corporate player Datuk Seri Johari Abdul Ghani and Umno vice-president and former minister Datuk Khaled Nordin. While Mohamad Hasan did not contest for a parliamentary seat in GE14, Johari and Khaled were defeated.
This non-government cluster is pushing for an early election in the hope of taking over the administration of the country as they are not faced with any legal problems that could stop them from holding office.
The third cluster is the “government cluster”, headed by Ismail Sabri. Described as an accidental PM who got the job because he was in the right place at the right time, he is in no rush to dissolve parliament. That is because there is no guarantee that he will be PM should Umno/BN win. He is neither Umno president nor deputy president, but one of the three vice-presidents of the party.
It is widely known that this cluster wants to have GE15 only after the party election, which is to be held by end-December, unless the Registrar of Societies approves Umno’s decision to have it after GE15. If Umno has to hold the party election in December, Ismail Sabri is expected to challenge Ahmad Zahid for the post of president. And if he succeeds, he will have full control of the party and government — something all previous Umno PMs have enjoyed.
The rift between the clusters escalated after Ahmad Zahid sacked Datuk Seri Tajuddin Abdul Rahman, the member of parliament for Pasir Salak, from the Umno Supreme Council. Tajuddin is aligned with Ismail Sabri and has openly criticised the party president.
Ahmad Fauzi Abdul Hamid, professor of political science at Universiti Sains Malaysia, has said that Tajuddin’s removal was to emphasise “who calls the shots in Umno”, meaning that it was a move by Ahmad Zahid to strengthen his grip on the party and a warning to those not aligned with him.
Also part of the government cluster is member of parliament for Rembau and Health Minister Khairy Jamaluddin, who is seen by many as a future PM if he survives the current infighting. Another is Datuk Seri Hishammuddin Hussein, currently a senior minister holding the defence portfolio and son of former premier Tun Hussein Onn. Hisham, as he is popularly known, is Najib’s cousin and a strongman from Johor, the birthplace of Umno.
While some in Umno want an election to be called soon, the opposition parties — be it the Democratic Action Party (DAP), Parti Keadilan Rakyat (PKR), Parti Pejuang Tanah Air or Parti Amanah Negara — are in no rush. PAS and Bersatu (the party of former PM Tan Sri Muhyddin Yassin), which are members of the current government, also want Ismail Sabri to go the full term.
After a series of electoral setbacks over the past 12 months, these parties know that the momentum is against them and they need to buy time to regroup. The PH coalition led by Datuk Seri Anwar Ibrahim is still ironing out a strategy, including having a “big tent” format where all the opposition parties join forces and stand against BN to avoid splitting the votes for them.
During GE14, Bersatu, DAP, PKR and Amanah stood under the PH umbrella and defeated BN, winning 113 of the 222 parliamentary seats. However, the coalition was in power for only 22 months. It collapsed after Bersatu, together with a group of PKR MPs, left the coalition in what is known as the “Sheraton Move” in February 2020.
There is also a question of political fatigue. In the Sarawak state election held late last year, the voter turnout was 60.67%, while Johor state election in March this year saw a turnout of only 54% (compared with the 85% turnout during GE14).
But while the public may be feeling fatigued, the politicians feel otherwise. Political insiders say a lot of manoeuvring, plotting and negotiations are going on at all of the political parties.
One key question is whether PH will step forward to shore up support for Ismail Sabri as PM if some Umno MPs withdraw their support to force an election, and whether this will prevent an early election from being held. The second half of 2022 will certainly see more drama on the Malaysian political scene.
The Edge: In a time of conflict, trade war, pandemic, rate hikes and political uncertainty, what is the ideal investment horizon for investors? Should they take a longer-term view by looking beyond 2022? What other major factors should investors watch out for?
Kamal Mustadza
Value Partners Asset Management Malaysia Sdn Bhd fund manager
Investors should remain calm amid market volatility. As we expect volatility to remain elevated, we remain defensively positioned in the near term. However, we believe Asia is in a better position than the West as inflation is better controlled in the region and more supportive policies are in place. Moreover, valuations in Asia have already reached attractive levels. In contrast, more earnings downgrades and devaluations in the West are still needed as equity risk premium remains below average. While we expect downward adjustments in gross domestic product and earnings to continue, we believe having a selective and bottom-up focus on quality fundamentals could be rewarding for long-term investors as some valuations offer compelling investment opportunities.
Teoh Kok Lin
Singular Asset Management Sdn Bhd founder and chief investment officer
For equity investments, whether during good or uncertain times, it is always good to have a long-term investment horizon — a minimum of three years. That said, one must remain cognizant that in the short term, share price movements, in addition to fundamentals, are also influenced by investor mood swings, by both greed and fear.
Dr Yeah Kim Leng
Professor of economics at Sunway University Business School
With the five factors individually and collectively fuelling financial market turbulence and a risk-off environment, active investors will be more inclined to take short investment horizons, invest in liquid and gilt-edged assets and engage in opportunistic trades for those with higher risk appetites.
Nevertheless, there are long-term investment opportunities generated by new technologies, innovations and scientific breakthroughs that transform start-ups into unicorns. Investors can participate in start-up ventures directly or through venture capital and private equity funds. New investment avenues through alternative finance such as peer-to-peer lending and crowdfunding will continue to grow regardless of the volatility in the financial markets.
The additional risks to watch out for include a resurgence in Covid-19 infections, either due to new and more infectious variants or waning vaccine immunity. Policy divergence among the developed and developing countries — as they confront the global food and fuel inflation — could amplify economic and financial market turbulence. Finally, food and energy crises at the country or regional level could also manifest if there is an escalation in the Russia-Ukraine war.
Geoffrey Ng Ching Fung
Fortress Capital Asset Management (M) Sdn Bhd investment adviser and director
As the investment markets enter a phase of consolidation and slower (or negative) growth with lessened liquidity, investors should still manage their investments based on their intended investment objectives and time frame. However, the age-old adage of “dollar cost averaging” and diversification remain relevant, where current weak prices in the market offer opportunities to build investment exposure in fundamentally strong companies with pricing power, and defensive and yield-based sectors such as real estate investment trusts (REITs) that benefit from economic reopening.
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