Malaysia is set for its most contested general election since independence in 1957 after Prime Minister Najib Tun Razak dissolved parliament on Wednesday.
The poll will define the pace of economic and political reform in the resources-rich southeast Asian nation. The election commission must set a date for the poll, with April 20 being one possibility.
Investors have been unnerved by the uncertainty surrounding the election. The poll pits a resurgent opposition coalition led by Anwar Ibrahim against Mr Najib’s Barisan Nasional coalition, which has ruled uninterrupted for the past 56 years.
Malaysian equities fell on the news, with the Kuala Lumpur Stock Index down 1.2 per cent by midday at 1,664.58. The market has been one of the worst performers in Asia this year amid election uncertainty.
Malaysia is a moderate Muslim state and a key US ally. Its politics have long been dominated by the United National Malays Organisation (Umno) party, which represents the majority Malay population in the ethnically mixed population of 28m.
Mr Najib tun razak, who heads Umno, has presided over robust growth since embarking on a sweeping economic programme in 2010. The economy grew by 5.6 per cent last year, making Malaysia one of the best performers in Asia.
Foreign investors have been cheered by initiatives that aim to double per capita gross domestic product to $15,000 by 2010, and fiscal reforms that will gradually wean the country off fuel and food subsidies.But the pace of reforms could be called into question if, as political observers expect, Umno and its coalition partners only scrape a narrow victory.
Barisan faces an uphill struggle to improve on its showing at the last election in 2008, when it was robbed of its two-thirds majority in parliament for the first time. That led the party in 2009 to replace then-prime minister Abdullah Badawi with Mr Najib Tun Razak, the son of a former Malaysian prime minister.
An opposition win would propel to power a coalition whose economic policies are untested, which has also unsettled investors.
Warning that Malaysia’s “national transformation” was “still a story half-told”, Mr Najib said the country risked “losing out” if Barisan Nasional were not re-elected.
“If we do not keep up the pace of reform, we risk losing out,” Mr Najib Tun Razak said in a televised address. “But with a strong mandate, we can continue. So today, I ask you to let me finish the job: to vote for progress, not against it.”
To shore up support from lower-income, rural workers and government employees, Mr Najib Tun Razak has in recent weeks stepped up a campaign of cash handouts. This week he announced M$1,000 (US$320) bonuses for 40,000 employees of Petronas, the state-owned oil and gas company, for “contributing to nation-building”.
However, the ruling coalition is vulnerable amid widespread dissatisfaction with corruption and alleged cronyism after decades of Umno rule.
“This is the first election in Malaysia’s history when the electorate will have a clear choice over whether to keep the longest running coalition in the world in power,” said Bridget Welsh, a Malaysia expert at Singapore Management University.
Asked in an interview with the FT last week if his government was doing enough to tackle corruption, Mr Najib Tun Razak said: “It is a scourge and we all have to fight it, and it’s going to be a hard battle.”
The opposition Pakatan Rakyat coalition, which is made up of three parties, is seen as better organised than at the last election in 2008, political observers say.
Both sides are wooing a wave of young, new voters who could prove decisive in some battleground states such as Selangor on peninsular Malaysia’s west coast.
An estimated 3m young people – more than 10 per cent of the population – have registered as first-time voters. That is a 25 per cent increase in the number of new voters at the last election and the biggest such rise since Malaysia won independence from Britain.
Barisan currently holds 137 seats in the 222-seat parliament, with Pakatan Rakyat on 75. The rest are held by independents. To win power, either coalition must secure 112 seats, with key battleground states expected to be Johor, opposite Singapore, Selangor, Perak and Kedah.