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Reforms Dent Malaysian Prime Minister’s Popularity
18-Dec-2013, The Wall Street Journal
By Abhrajit Gangopadhyay and Jason Ng

KUALA LUMPUR, Malaysia—The Malaysian government’s recent drive to narrow a persistent budget deficit has put a dent in Prime Minister Najib Razak’s popularity, with the majority of those surveyed in a recent poll saying the country is headed in the wrong direction.

The survey, released Wednesday by independent pollster Merdeka Center, showed that 52% of poll respondents approved of Mr. Najib’s leadership, a significant drop from the 62% approval rating he achieved in June.

In response to the poll, a government spokesman said, “to keep Malaysia’s economy strong, we need to keep our public spending in check. In the short term, this will be unpopular with some.”

Conducted via telephone interview between Dec. 4 and Dec. 12, the poll collected responses from 1,005 voters in peninsular Malaysia. Malaysians in Sabah and Sarawak states on Borneo Island, where Mr. Najib’s governing United Malays Nationalist Organization enjoys strong support, were not surveyed. The survey estimates a margin of error at 3.09%.

Among the various questions asked, including how people perceived the economy and what issues they were most worried about, higher living costs topped respondents’ concerns, with 67% saying they were worried about rising inflation.

Inflation has accelerated since May, when the ruling coalition led by Mr. Najib won a majority in a hotly contested general election. In November, consumer prices rose by 2.9% from a year earlier, gaining pace from a 1.8% rise in May.

The survey comes just months after Mr. Najib cut fuel subsidies in September and announced hikes in power tariffs that will become effective next month. In October he withdrew subsidies on sugar.

Those measures are aimed at reining in a budget deficit that has narrowed but failed to move to surplus since the Asian Financial Crisis in the late 1990s, due largely to subsidies that account for a huge chunk of government spending. International rating agencies have frequently voiced concern that Malaysia’s fiscal health is being jeopardized as the costly subsidies strain government finances.

Given recent moves to reform the economy, government officials say they expect Malaysia’s economy to grow between 5.0% and 5.5% in 2014 – faster than the 4.5%-5.0% expected this year.

It is widely-expected by economists that the government will raise fuel prices at least twice next year to achieve a goal of shrinking its subsidy bill by nearly 16%. But those subsidy cuts have added to voters’ fears that the cost of living will increase over the next year.

Mr. Najib’s drop in popularity extends to public perceptions of his government. Only 38% of survey respondents across Malaysia’s three major ethnic groups said they are happy with the government, compared to 50% in June.

The erosion in perception was steepest among ethnic Malays, who make up the country’s majority and have long benefitted from policies that provide them with preferential access to universities and housing. According to the Merdeka survey, only 52% of Malays say they’re in favor of the government compared to 67% in August. Opinions among ethnic Chinese slipped to 10% from 15% during the same period, while ethnic Indians’ perceptions dropped by 12 percentage points, to 40%.

Yeah Kim Leng, the chief economist at RAM Holdings Bhd, one of two local rating agencies, said the key to balancing public opinion and pushing through reforms was to “stabilize prices and sustain economic growth.”

Agence France-Presse/Getty Images Malaysian Prime Minister Najib Razak addresses delegates of the ruling party, United Malays National Organisation, on Dec. 5 in Kuala Lumpur.

He suggested that the government stagger the various subsidy reductions it has planned “to avoid bunching together price shocks that would create a spike in inflation.”

Much of the current resentment felt toward the government comes from the decision to reduce fuel subsidies by 10.5% back in September, but other policies have also made citizens unhappy.

In his October budget announcement Mr. Najib said a new goods and services tax would be introduced in 2015 that would help boost government revenue, sparking concerns among some citizens who fear the new 6% consumption-based tax would pinch their pockets.

Perhaps the most sobering indication of how voters feel about their government, however, came from a question about Malaysia’s future direction.

The majority of those polled, 49%, said the country is headed in the wrong direction, versus 41% who approved of where things were going.  The remaining 10% of respondents were either unsure or declined to comment. A similar question asked in a survey in late January had 37% of respondents saying the country was moving in the wrong direction, compared to 56% who were comfortable with how things were.