Anwar to fight Malaysia race laws as opposition gains -- Bloomberg

Anwar to Fight Malaysia Race Laws as Opposition Gains (Update2)
By Douglas Wong
March 10 (Bloomberg) -- Malaysia's political world has been upended. The March 8 election left the government of Prime Minister Abdullah Ahmad Badawi hobbled though still in power, its legalized system of preferences for ethnic Malays under attack.
When the dust settles, the most powerful man in Southeast Asia's third-largest economy may be opposition leader Anwar Ibrahim, a former deputy prime minister. Anwar, 60, spent the 2004 election in prison after being ousted from the government and prosecuted on criminal charges -- later overturned -- of having homosexual relations.
The ruling National Front coalition's worst-ever performance will force Abdullah, 68, to face Anwar's emboldened opposition as it presses to scrap race rules that disadvantage ethnic Chinese and Indians in housing, jobs and education. The opposition also wants to increase aid for the poor and fight corruption.
Once all but written off, Anwar now is well positioned to become prime minister eventually, said Eddin Khoo, the director of Pusaka, a Malay cultural studies center. ``It probably won't be until the next election,'' Khoo said. ``This vote was more anti-government than pro-opposition, but he's here to stay.''
The opposition parties yesterday quickly moved to implement their policies, announcing plans to drop race rules in a state where they won control -- Selangor, which is Malaysia's most populous area and surrounds the capital, Kuala Lumpur.
1969 Loss
For now, Malaysia is in uncharted territory, with the government facing meaningful opposition for the first time since 1969, when the National Front, also known as Barisan Nasional, last was denied a two-thirds supermajority in parliament.
After winning 91 percent of the legislature in 2004, the National Front won just 63 percent this time, worse than its 1969 performance by three percentage points. In the new parliament, the National Front will have 140 of the 222 seats.
Malaysia's stock index today slumped as much as 7.6 percent, set for the biggest drop in almost 10 years, and the ringgit weakened.
The opposition alliance -- Anwar's multiethnic People's Justice Party, the Chinese-based Democratic Action Party and the Pan-Malaysian Islamic Party, or PAS -- won the remaining 82 seats, up from 19. Among the losers were Indian and Chinese leaders in Abdullah's Malay-dominated government. Five of 12 states contested fell into opposition hands, including Penang, a manufacturing base for Intel Corp. and Motorola Inc.
Anwar got his start in politics as a student activist at the University of Malaya and helped found the Muslim Youth Movement of Malaysia, many of whose members supported PAS.
Malay Champion
He shocked allies in 1982 by joining the United Malays National Organisation, the Malay party that heads the National Front. For a time, he championed the pro-Malay policies he now opposes.
After successfully backing UMNO's Mahathir Mohamad for prime minister, Anwar rose to became deputy prime minister in 1993. In 1998, Mahathir fired Anwar amidst speculation that the deputy was moving to oust him, eventually choosing Abdullah as his successor instead.
Imprisoned from 1998 to 2004, Anwar was barred from competing as a candidate until April and didn't run. He plans to take one of 31 seats won by his members of his party, including wife Wan Azizah Ismail and daughter Nurul Izzah, 27.
``I have plenty of choices and a lot of work to do,'' he said in an interview yesterday.
Najib Razak
The opposition benefited from attacks on Abdullah's administration by Mahathir, 82, who said the prime minister should step down in favor of his deputy, Najib Razak, 54. ``I made the wrong choice,'' Mahathir told reporters yesterday, calling for Abdullah to take responsibility for the losses by stepping down.
The state-owned Bernama news agency said Abdullah won't resign because he has the support of UMNO leaders, including Najib.
The prime minister was sworn in by Malaysia's King, Mizan Zainal Abidin at 11:15 a.m. local time today. Abdullah will meet the supreme council of UMNO at 12 p.m., and gather leaders of the coalition parties at 3 p.m.
An adviser to the prime minister said Abdullah probably will step down in favor of Najib before the next election, due within five years. The adviser, who spoke on the condition that he not be identified, said Abdullah will try to rebuild the coalition first.
Challenging Task
That will be a challenging task, said Mushtaq Ibrahim, who manages about $1.4 billion at Amanah SSCM Asset Management Bhd. When UMNO and its partners -- the Malaysian Chinese Association and the Malaysian Indian Congress -- lost their supermajority in 1969, they regained it by persuading some opposition parties to join their coalition.
``You now have three very weak component parties,'' Mushtaq said. ``They have to go back to the drawing board to find ways of winning back the confidence of the voters.''
Malaysia was calm in the immediate aftermath of the election. In 1969, Chinese opposition celebrations were followed by clashes that killed hundreds and prompted the government to impose pro-Malay preferences. This year, Abdullah urged supporters to accept the results. Musa Hassan, the country's police chief, promised to maintain order by enforcing a ban on victory parades.
To contact the reporter on this story: Douglas Wong in Kuala Lumpur at Dwong19@bloomberg.net
Last Updated: March 9, 2008 23:24 EDT

http://www.bloomberg.com/apps/news?pid=20601087&sid=axMRUN_fhgb0&refer=home#