Madani's political-economy disconnect: N Sembilan election analysis Part 2

 

The easy answer to the losses in last month's Negeri Sembilan campaign is to look to ethnic voting and alliances. No question, these factors mattered (as detailed in Part 1). Yet, they don't tell the full story. An economic lens offers additional insights.

Economic voting

Bill Clinton's campaign strategist James Carville coined the now-famous phrase "the economy, stupid" on a piece of paper at campaign headquarters, often known in its longer form "It's the economy, stupid."

Election after election in Malaysia has similarly pointed to economic drivers, from cost-of-living concerns and fuel prices to wages and taxes (GST). Merdeka Center's 2025 survey identified 67 percent - a whopping two-thirds of Malays surveyed - as concerned with bread-and-butter issues.

Voters are overwhelmingly prioritising the economy as opposed to matters of religion. Studies of economic voting highlight perceptions of economic performance and, most important of all, how the economy is being experienced.

The dominant economic mode in Malaysia is insecurity - and this is shaping elections. Economic realities are evident in voting patterns.

This piece on the election results - centred on Negeri Sembilan - shows that the government is not yielding political rewards for its economic management. Drawing from a polling station analysis of voting focused on class/income differences and with attention to youth voting as well as post-election interviews, the Madani government's populist approach is not translating into political support.

High populist spending

This is not for lack of spending or a weak macro performance. The Madani government touts its economic successes - impressive growth and investment numbers. It also lists its populist-oriented spending, from diesel subsidies to cash transfers.

The Madani government has spent billions on various programmes, some of them targeted at socio-economic “cost-of-living” concerns, and others part of an effort to use the government purse to secure political support. After the recent two state election losses, on Merdeka Day, the government announced yet another increase in spending.

A brief overview of the spending programs points to an all-in commitment to populist spending. The heart of these initiatives is the Rahmah Cash Aid (STR), Rahmah Necessities Aid (Sara), and Sara Penghargaan cash transfers, totalling RM46 billion from 2023 to 2026.

This year STR/SARA spending has reached a reported RM15 billion, with the programme distributing to nine million recipients (STR) and around one1 million e-Kasih recipients facing serious poverty. STR/SARA spending has almost doubled from the RM8 billion in 2023.

Recent efforts have worked to expand coverage through the Sara Penghargaan (a one-off RM100/adult), spending for 22 million Malaysian adults rolled out last year in August and was repeated this February.

The most expensive single item has involved the Budi95 fuel subsidies received by 16 million Malaysians, reported in July of this year in a parliamentary reply to reach RM40 billion. The quota for these was recently (in the Merdeka announcement) returned to the 300-litre monthly quota.

There are also more targeted initiatives. The salary adjustment under the Civil Service Remuneration System (SSPA) Phase 2 costs RM18 billion and aims to increase salaries while making public sector costs more sustainable. There is a matching Sara spending programme for gig workers of RM600/year. Microfinancing programs have increased from RM5 billion to RM6 billion.

Recently introduced initiatives include RM2.6 billion in subsidies for paddy farmers and Geran Sejahtera Madani, geared to hawkers, small traders, and home-based mothers engaged in business, with an estimated value of RM200 million. On top of this, there are the frequent festival bonuses, which vary in amount.

Collectively, the funding shows a strong commitment to populist spending through a combination of broad and targeted initiatives. The focus of these is on low-income earners.

Electoral gaps

The election results, detailed below, show that this spending is not translating into political support. First, Anwar Ibrahim's political coalition has not significantly won over B40, lower-income voters. Among lower-income voters, there is an estimated decline in support for Pakatan Harapan of three percent and five percent respectively, with BN winning the lion's share of lower-income support, a gain of an estimated 10 percent and 12 percent respectively. Second, among higher-income voters, there is political erosion as well for Harapan, an estimated decline of 10 percent and seven percent in support levels.

A particular area where the government is not gaining is among youth, as economic policies are impacting youth social mobility, especially on wages. Here, Harapan lost ground by an estimated five percent, as did Perikatan Nasional by an estimated six percent, with BN gaining the most ground at an estimated eight percent. Note that the remaining shares went to alternative parties.

The class and generation analysis sheds light on where Harapan lost ground in Negeri Sembilan, both in the pivotal groups that decide elections - B40 and youth - and in its wealthier, traditional political base.

A matter of disconnect

The billion-ringgit question is: why is the government losing electoral ground?

Recent economic studies/reports have highlighted how growth and investment are not adequately impacting households, drawing attention to wages, job quality, distribution, social mobility barriers, productivity, the limited employment impact of investment (such as from data centres), and larger structural problems in the economy, including regional disparities.

Debate surrounds which of these factors is the most important and the policies needed for greater impact - although this debate has yet to translate into robust policy discussions.

The main approach of Anwar's government has been to treat the symptoms or address one segment/community, such as civil servant salaries, rather than tackle the structural causes holistically. The focus has been on trying to be popular, with measures geared to that purpose.

Three features stand out about the Madani populist measures. First, the amounts involved are not significantly reducing household burdens - they are a drop in the bucket in an era of rising costs. While welcome, the relief provided is temporary, especially for households with significant debt.

Ironically, for many - according to post-election interviews - the focus is on the remaining burden rather than on the financial relief.

Increasingly, populist measures are seen as expected, the norm, and, for some, an entitlement. Households' shortfall in funds gets the focus in this time of economic uncertainty — which means that the Anwar-led government is not getting political credit for the populist measures. This is especially the case for B40 voters.

Second, there is inadequate recognition of the impact of the costs the government is imposing on businesses, especially small businesses, from increased regulatory requirements — not just e-invoicing (which has been a flashpoint and has been scaled back in its application) but also licensing, stamp duties, rising water and electricity costs, and more.

Government requirements — red tape — have increased sharply, implemented in an approach that does not differentiate between the different costs of carrying these out for larger and smaller businesses. This has come with more activism in tax collection, including targeting small companies.

Many businesspersons are politically realigning. A repeated complaint is the pain/squeeze on small businesses and households, which are being pushed into the red by government implementation and rising competition from foreign chains displacing local companies. Tighter margins amid slow payments have bred discontent, with perceptions that growth in the economy is favouring foreign investors rather than domestic businesses.

These “struggle” conditions - experienced in particular by middle-class voters - have fostered negative views of the Anwar-led government, where the populist measures are being offset by red tape and the sense of being squeezed.

Third, there is the question of who is benefiting from the initiatives. The billions spent are injecting funds into the economy, an important driver of growth. Yet, Anwar's populist measures are seen to benefit some more than others.

Spending always brings trade-offs. A “give to the less well-off” approach has been a marker of the Anwar government's programmes. Most concur. Yet, the trade-off has been inadequate attention to the middle class and to initiatives that spur growth for the business sector/economic growth as a whole, especially domestic business that has long been dependent on government spending/contracts.

Patronage has reduced in scope, with some of it still captured by those with current political ties, leaving many other businesses, especially those reliant on contracts, struggling to survive. Some concur with this cut-off patronage approach as well.

Yet, without alternative pathways for the patronage-tied economy to transform, the effect has left many dissatisfied and unhappy. A solution for microfinancing is coming late and is also seen as unevenly implemented. It is thus not a surprise that political support among wealthier/middle-class voters is also moving away from the Harapan-led government.

Changes in voting are not just about dissatisfaction with political reform. Instead, there is dissatisfaction with the narrow focus of the economic reform, in which many see themselves as targets. Transforming structural conditions more holistically is seen as secondary to populist measures.

Negeri Sembilan (Johor and others) political disconnect

After the electoral losses first in Johor and then in Negeri Sembilan, the response has been to double down on more populist measures and to move on, implying that the results were the product of political alliances, racial politics, and local conditions. The same moving-on dynamic happened after Sabah’s polls.

What differentiates the current response is a return to fighting mode. Attacks have focused on Umno/BN, rather than looking within the Harapan coalition, its parties, and the political effectiveness of the policies in place.

In a time of economic insecurity, Umno/BN and PAS/PN have the overall advantage of being the non-Harapan, more oppositional alternative. Umno/BN has the advantage of having governed in the past, of experience, and of being a known quantity - even with its many flaws and legacy issues. Voting trends show that B40 voters are moving back to where they feel more secure.

For both the BN and PN coalitions, the ability of their main Malay parties to reach the grassroots is crucial, while PKR's already weaker machinery, by comparison, has weakened further from party splits. The ability to connect to the ground, to explain and connect economic policies to individuals, is shaping political support. PKR is relying more on government machinery than its own party base - a dimension that makes the coalition as a whole weaker when policies are not being felt.

Since August, Negeri Sembilan has had a new government. Its results show that the outcome was shaped by Madani populist policies, but not in the way those at the apex of power were expecting. Madani populism has not made the government as popular as expected, nor to the degree that would yield electoral victories.

Ironically, the attention to the money delivered, set against the felt reality of not effectively changing the conditions that ordinary people are facing, has led to a contraction of support for Anwar's coalition among those his policies are aiming to help the most. As implemented, Anwar's populist measures are reinforcing a false sense that they make a government popular - and simultaneously illustrate that money can only be part of a solution to underlying socioeconomic challenges.

Looking ahead, it is likely to be too short a runway before the general election for the Anwar government to make meaningful shifts, to better assess implementation, measure the effectiveness of populist policies holistically, and tackle the structural issues more meaningfully. The implication is that the next budget – which the Merdeka announcement foreshadowed – will be a high-spending populist electoral budget. Based on recent polls, the impact will not be the intention. The effect will be to rely on other levers of power to stay in power.

Negeri Sembilan's results suggest that the economy remains central in elections, and, moving forward to Malacca’s coming polls, will likely remain so. - Mkini

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BRIDGET WELSH is an honorary research associate of the University of Nottingham’s Asia Research Institute and a senior associate fellow at The Habibie Centre. Her writings can be found at bridgetwelsh.com.

The views expressed here are those of the author/contributor and do not necessarily represent the views of MMKtT.