Conundrum In GE14

Tan Siok Choo, The Sun Daily

BEFORE marking their ballots on May 9, the 14.9 million Malaysian voters should consider this conundrum: if strong economic growth is the bedrock of an electoral victory, why are several analysts predicting the ruling Barisan Nasional (BN) faces the father of all battles in the 14th general election (GE14)?

The Malaysian economy expanded by a better-than-expected 5.8% last year, the fastest pace since 2014. Prospects for this year are bright. In 2018, Bank Negara Malaysia (BNM) expects healthy growth of 5.5% to 6% while the World Bank has lifted its forecast to 5.4% – its first reassessment this year following three consecutive upward revisions in 2017.

Additionally, the ringgit has rebounded from being the second-worst decliner among Asean currencies in 2016 to Asia’s third best performer this year.

Given this sterling economic backdrop, shouldn’t it be a cinch for BN to improve its tally of 130 parliamentary seats, regain the two-thirds parliamentary majority lost in GE13, boost its popular vote which fell below 50% for the first time in 2013 and wrest control of one or more opposition-held state houses?

Despite the economic tailwind, BN’s electoral aspirations could face some headwinds.

First, despite strong economic growth, a significant segment of households don’t enjoy a living wage. BNM defines a living wage as a level sufficient to sustain a socially acceptable minimum standard of living beyond basic necessities.

An article in BNM’s Annual Report 2017 notes monthly earnings of the bottom 40% of Malaysian households by income (B40), after adjusting for higher living costs, edged up by just 3.8% from 2014 to 2016 in real terms.

Although the median household income in Kuala Lumpur in 2016 was RM9,073 what is worrying is a significant segment – 27% of households – earned less than the living wage: RM2,700 for an individual, RM4,500 for a couple without children and RM6,500 for a couple with two children.

Second, although fiscally questionable, the proposal by Pakatan Harapan (Pakatan) to abolish the goods and services tax (GST) targets a major concern articulated by Malaysians. GST was implemented after GE13.

A survey by Merdeka Centre in November last year said 72% of respondents cited inflation, rising cost of living, corruption and lack of opportunities as their top concerns while a survey by University of Malaya, also conducted last year, noted respondents ranked issues involving jobs and incomes above corruption, religion or education.

Pakatan estimates eliminating GST and replacing it with the sales and service tax could result in red ink totalling RM25.5 billion.

The opposition claims it can bridge this gap and generate a RM6 billion surplus by adopting a three-prong approach – accelerating consumer spending and business activity to generate more tax revenue, boosting efficiency in government spending and cracking down on corruption.

In contrast, BN’s manifesto adopts a scatter-shot approach – promising a multitude of goodies to a dizzying selection of voters. Targeted beneficiaries include Felda settlers, taxi drivers, civil servants, mothers and women as well as specific programmes for each state. For the first time, the MCA also launched its own manifesto.

BN’s two major proposals involving giving BR1M cash handouts to a new group – households with income in the RM4,000 to RM5,000 range – and offer handsome salary increments for civil servants.

Executive director of the Socio-Economic Research Centre Lee Heng Guie’s back-of-the-envelope calculations suggest the additional BR1M payment could cost RM4.2 billion while salary increments could add RM1.4 billion to the government’s expenditure tab.

Rising oil prices, however, offer a considerable cushion of comfort. International benchmark Brent oil surged to US$72 a barrel on April 11 and could breach the US$80 level, spurred by twin fears of extended sanctions against Iran and Syria’s escalating conflict.

In the first quarter of this year, oil prices averaged US$66.70 a barrel, surpassing the Budget 2018 estimate of US$52 a barrel, Deputy Finance Minister Datuk Othman Aziz told Parliament recently. He said every US$1 increase in oil price boosts government revenue by RM300 million.

Third, Election Commission statistics show the 21-29 age bracket account for 17% of the electorate while those in the 30-39 age group comprise 23.9%. Together, these two age groups encompass nearly 41% of eligible voters – a cohort that tends to be anti-establishment.

Allied to youth is the increased use of social media in this country. Malaysian Communications and Multimedia Commission data show there are 24.5 million internet users in Malaysia or 76.9% of the population. Although Pakatan politicians tend to be more internet savvy than their BN counterparts, the gap is narrowing.

Fourth, former prime minister Tun Dr Mahathir Mohamad’s decision to contest the Langkawi parliamentary seat under Pakatan’s banner against a party he helmed for 22 years is a conundrum. Will the feisty 92-year-old win more votes for the opposition from millennials?

In short, instead of a certainty, GE14 could prove to be a cliff-hanger.