Malaysia is expected to reap a bonanza from international investors after the ruling coalition's crushing election victory over Islamic fundamentalists, analysts said yesterday.
The overwhelming mandate handed to Prime Minister Abdullah Ahmad Badawi should strengthen his drive to root out corruption, curb money politics and increase government transparency -- moves likely to raise the country's attractiveness to the global business community, they said.
Almost complete official results showed Abdullah's ruling National Front coalition taking nearly 90 percent of the 219 contested parliamentary seats, giving the government a clear mandate to carry out the reforms.
PHOTO: AP
The hardline opposition Islamic Party (PAS) crumbled under the weight of the coalition juggernaut. It lost the key northern state of Terengganu which it captured in the last elections in 1999 while in neighboring Kelantan a vote recount was underway to decide the outcome.
"With this strong mandate, Abdullah is now much better placed to push ahead with his reform program," US credit rating agency Standard and Poor's (S&P) said.
This should "help reduce the excesses of close business political relations and regulatory forebearance that were present in the past and had somewhat affected the efficient functioning of market mechanism."
S&P added that "a shift toward greater transparency in government decision making and more efficient allocation of resources would strengthen the economy and in turn improve the credit standing of Malaysia."
Malaysia's credit rating, last upgraded to A-minus from BBB-plus in October, would be raised if the country narrows its fiscal deficit and cut government debt, it said.
Abdullah had said during the campaign that 30 billion ringgit (US$8 billion) was waiting to be poured into Malaysian equities if he won with a big mandate.
Malaysian share prices rose sharply after the opening bell yesterday but the rise tapered off as investors quickly locked in profits. The benchmark index closed the morning session up 0.4 percent.
"Malaysia is starting to be viewed much more positively by the investment and business community," said Bob Broadfoot, managing director of the Hong Kong-based Political and Economic Risk Consultancy.
"The landslide win shows Abdullah will be in power for a while and he is likely to continue with his anti-corruption policy," Broadfoot said.
Other observers said the defeat of the fundamentalists augured well for regional political stability.
Barclays Capital analyst Dominique Dwor-Frecaut said the win vindicated Abdullah's brand of "progressive and tolerant Islam" as opposed to PAS's conservatism.
"This victory of moderate and progressive Islam is also positive for regional stability, with the improvement in relations between Singapore and Malaysia expected to continue," he said.
"Furthermore, Malaysia stands to become an example of moderate and enlightened Islam against extremist Islamic movements in Indonesia and the Philippines, while it will continue to collaborate closely with the United States in the war on terrorism."
This should herald "more capital inflows" and a continuation of the stock market rally, Dwor-Precaut said, adding however he did not see Malaysia ending the current peg of the 3.80 ringgit to the US dollar.
Chia Woon Khien, an economist with Southeast Asia's biggest lender, DBS Bank, agreed on the results' impact on regional stability.
"If the [National Front] had lost badly in Malaysia's Islamic fundamentalist states, concerns -- warranted or otherwise -- about whether al-Qaeda's influence has penetrated Malaysia and its surrounding region would be raised," she said.
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