Fitch maintains Pakatan on downward spiral, sees component factions turning at each other

Fitch Solutions pointed out that Pakatan Harapan has made little progress in alleviating rising costs that was a key campaign platform before the general election and which remains a crucial topic to Malaysians amid a slowing global economy. Source (pic): Yahoo! News

The ideologically disparate Pakatan Harapan (PH) components could grow hostile towards each other if the pact’s approval keeps waning due to unpopular policies and their own infighting, said Fitch Solutions Macro Research.

With racial and religious politics ramping up again, Malaysians were also losing faith in the promise that the country was headed towards a “New Malaysia” with greater equality.

When PH took over as the government last May, Malaysians had been generous in accepting its reasons for why it could not deliver on some of its more ambitious pledges, such as the abolition of all tolled highways in the country.

As the broken promises and excuses amassed, however, patience began growing thin.


KUALA LUMPUR: The ideologically disparate Pakatan Harapan (PH) components could grow hostile towards each other if the pact’s approval keeps waning due to unpopular policies and their own infighting, said Fitch Solutions Macro Research.


Previously, the credit ratings powerhouse wrote:

In line with the view we first promoted in May, we continue to see risks to the stability of the coalition within the Pakatan Harapan (PH) government over the coming months, as the largest party in the coalition, Parti Keadilan Rakyat (PKR), heads into contentious party elections in November. Additionally, disagreement between Prime Minister Mahathir Mohamad and the PKR with regard to Mahathir’s appointment of the special government envoy to Thailand, as well as PKR President-elect Anwar Ibrahim’s impending return to parliament are likely to further complicate matters over the near term, as it could result in a power struggle between Mahathir and Anwar. We therefore maintain our short-term political risk score for Malaysia at 72.5 (out of 100), which continues to reflect the negative impact on policymaking and policy continuity from the change in government following the general elections on May 9.

Fitch Solutions, 07/09/2018

According to the Fitch Ratings affiliate, the four parties hold different and at times opposing paradigms of the country, which it previously warned of after PH secured the upset victory in last year’s 14th general election.

On one side, Parti Pribumi Bersatu Malaysia (PPBM) is overtly pro-Bumiputera and Amanah professes to be Islamist, while on the other are the multiracial but largely-Malay PKR and Chinese-dominated DAP.

The four had been unified by the shared goal of deposing Barisan Nasional (BN) last year, but these ties have weakened without a common enemy to distract them from their differences.

“This would especially the case if the government were to show continued favouritism to majority ethnic Malay voters, which could alienate ethnic minorities,” Fitch Solutions said in a research note today.

“The other component parties, particularly the DAP, could then feel the need to stake out more racially driven positions in order to maintain the support of the minorities and such a development could foster a greater degree of disunity in the government before its term runs out in 2023.”

Fitch had also pointed out previously that Deputy Presidencyrace between Economic Affairs Minister and incumbent Deputy President Azmin Ali and PKR Vice President Rafizi Ramli had deeply polarised PKR, causing the party to split into two major camps. This polarisation, according to Fitch, held important ramifications for party unity that could ultimately affect the PH government.

Fitch wrote:

The key scenario under which this might happen is if Rafizi gains further prominence after the elections and differences between the two PKR leaders are not resolved. The exchanges between the two so far have been focused on Azmin’s lack of loyalty to Anwar, according to allegations by Rafizi. Anwar however, has steered clear of the battle in public statements stating that he will not be dragged into any of the contesting camps.

RJ Rithaudeen

Matters were made worse as the sheen has worn off the new administration, due in part to its failures to deliver many of the pledges made in its election manifesto.

In particular, Fitch Solutions pointed out that PH has made little progress in alleviating rising costs that was a key campaign platform before the general election and which remains a crucial topic to Malaysians amid a slowing global economy.

With racial and religious politics ramping up again, Malaysians were also losing faith in the promise that the country was headed towards a “New Malaysia” with greater equality.

“Therefore, we are maintaining Malaysia’s Short Term Political Risk Score at 72.5 (out of 100), with the ‘policy-making process’ and ‘policy continuity’ being the weakest sub-components at 68.3 and 67.5, respectively.”

Mahathir’s appointment of Tan Sri Rahim Noor, the man who assaulted Anwar in 1998, as special government envoy to Thailand undermined the latter’s authority over the largest party in the coalition and government unity. Source (pic): The Malaysian Insight

When PH took over as the government last May, Malaysians had been generous in accepting its reasons for why it could not deliver on some of its more ambitious pledges, such as the abolition of all tolled highways in the country.

As the broken promises and excuses amassed, however, patience began growing thin.

Things were exacerbated when PH officials began adopting policies from the previous BN administration, for which they had previously attacked the latter coalition but were now defending with tenuous justifications.

This has allowed BN to point out the apparent duplicity in such moves and contributed to the resurgence in popularity of former prime minister Datuk Seri Najib Razak.

The former prime minister was a key factor for the public rejection of BN during last year’s election but has enjoyed a renaissance of sorts by picking apart the decisions, remarks, and actions of PH leaders and ministers.

He has also tapped into the undercurrent of discontent among some sections of the Malay community, which could increase the pressure of the Malay-based PH components to match the racial rhetoric to the dismay of the pact’s other parties.

Adapted from: Yahoo! News


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