BY CLARA FERREIRA MARQUES

It’s too soon to cash a Malaysian election dividend cheque. A muted reaction by investors to the shock election victory of Mahathir Mohamad suggests some optimism over potential reforms. Higher oil prices will help. His past record and some early moves, however, give reason for pause.

Fears of extreme market turbulence after Malaysians voted out the ruling Barisan Nasional alliance last week, ending six decades of rule, have turned out to be exaggerated. In the end, there was a smooth transfer of power. Soothing, if vague, noises from Mahathir on supporting the $300 billion economy played a part, as did the swift appointment of a “Council of Elders” and a core cabinet.

The appointment of former banker Lim Guan Eng to be finance minister is a good portent. A competent pair of hands who ran a successful state, he is also Malaysia’s first ethnic Chinese finance minister in 44 years, an important gesture from Mahathir, who backed Malay privileges as prime minister until 2003 and can now move away from such destructive policies. And it ends the structure implemented by Najib Razak, the long-time leader ousted by Mahathir, who was his own finance minister, too. Yet Lim also embodies the contradictions and tensions of the new alliance: he was twice jailed by Mahathir, in 1987 and 1998.

It’s far from clear that at 92, the man elected on a wave of discontent has changed into a reformer. Mahathir tolerated no opposition during his last tour of duty and consolidated power. There are already signs of strain in the new coalition, though. Senior figures from one party are suggesting cabinet appointments were made without broad consultation.

Keeping the alliance together is critical to strike the delicate balance between populist promises and the need to retain fiscal discipline, as well as to separate the state and business. Mahathir once backed large-scale projects like the Proton car at the expense of economic logic. Rooting out corruption in the country also requires more than just containing Najib and promising to investigate links to the $4.5 billion 1Malaysia Development Berhad  scandal: moving fast to regulate party funding, support whistleblowers and make the anti-corruption commission independent would reassure more.

There are some small signs of scepticism. Shares of Opcom Holdings, a fiber-optic cable company run by Mahathir’s son, are up almost 50 percent. It’ll take considerably more evidence to believe Mahathir 2.0 will be a significant upgrade from version 1.0.

First published May 14, 2018

(Image: REUTERS/Lai Seng Sin)