Mahathir reassures business, aims to boost stock market

The Pakatan Harapan chairman says he will focus on growing the economy and reducing debt.

Prime Minister Dr Mahathir Mohamad says there’s a lot of work to be done. (Reuters pic)

KUALA LUMPUR: Dr Mahathir Mohamad assured he would lead a business-friendly administration and seek ways to boost Malaysia’s stock market in his first remarks after being sworn in as prime minister.

In a late-night briefing yesterday, the 92-year-old politician said he’d focus on growing the economy and reducing debt, adding that some terms may need to be renegotiated. He said Malaysia would seek friendly ties with other countries as a trading nation.

“Our concern over the economy is the main thing,” Mahathir told reporters. “We would like to tell the business people to push up the value of the stock market. And on the currency, there is no cause to devalue the ringgit. We should ensure this.”

Mahathir’s comments appeared designed to counter worries among investors who had bet that former leader Najib Razak would stay in power. The iShares MSCI Malaysia ETF based on the nation’s stocks, which fell as much as 9.5% after the vote, rose 4.3% after Mahathir’s remarks yesterday. Malaysia’s financial markets are closed until Monday.

“I’m fully confident that in the long term this transition will be good for financial markets in Malaysia,” CIMB group chairman Nazir Razak, Najib’s brother, told Bloomberg TV interview yesterday.

“Malaysia is going to prove that we can do a political transition smoothly and maybe financial markets and corporate Malaysia will become more detached from the political sphere.”

Mahathir, who ran Malaysia for 22 years, became prime minister again a day after his disparate coalition ended the ruling coalition’s 61-year grip on power. Najib congratulated Mahathir late yesterday and said he’s willing to help with a smooth transition of power.

The conciliatory words came after a bitter campaign in which the two leaders traded personal insults. Mahathir effectively came out of retirement to challenge Najib, who endured public anger over a goods-and-services tax and a money laundering scandal involving hundreds of millions of dollars siphoned from state investment firm 1MDB.

While Najib denied wrongdoing, Mahathir lambasted him as a “thief” on the campaign trail. Yesterday, Mahathir said he thought he could recover most funds from 1MDB, and if Najib did anything wrong “he will have to face the consequences”.

Mahathir’s coalition expects him to serve as interim prime minister until long-time opposition leader Anwar Ibrahim is released from prison in June. To be eligible to take power, Anwar will have to secure a royal pardon and then win a by-election for a parliamentary seat.

Mahathir said yesterday he would push for a full pardon for Anwar, but declined to give a timeframe for handing over power to his former deputy. Mahathir said the government would need to leverage his experience for as long as needed.

“There is a lot of work to be done,” he said. “We need to attend to this mess as soon as possible.”

Mahathir’s coalition has pledged to scrap the goods and services tax within his first 100 days in office, and reintroduce fuel subsidies. If implemented with no other changes, those moves could narrow the government’s revenue base and be credit negative for Malaysia’s sovereign, according to Anushka Shah, a senior analyst at Moody’s Investors Service.

The vote showed that Mahathir still knows how to win elections. The victory was dominant: he swept traditional government strongholds like Johor, Kedah and Negeri Sembilan and neutralised Najib’s advantage in the Borneo states of Sabah and Sarawak.

“This has been a Malaysian tsunami, across the board and the country,” said Bridget Welsh, a political scientist at John Cabot University in Rome who specialises in Southeast Asia.

“Mahathir was a game changer. But it also took Najib. They wanted Najib gone.”

What comes next is unclear. Mahathir helms an unwieldy four-party coalition that includes Malaysia’s largest ethnic Chinese party. He said the bloc would meet today to discuss forming a cabinet.

“I have to manage four presidents of four different parties,” Mahathir said of his coalition. “It’s going to be a headache.” -FMT