Mahathir’s Malaysia was built on the promise of diversity. A year after the election, will racial politics tear Pakatan Harapan apart?
- As the May 9 anniversary nears, the new government is facing some old concerns, with opposition parties leaning to the right and finding many willing to listen
- This is the third in a four-part series on Malaysian politics a year on from the Pakatan Harapan coalition’s historic election victory on May 9, 2018
As the Mahathir Mohamad administration prepares to celebrate the first anniversary of its audacious election victory, a controversy over a savings fund for Muslim pilgrims provides a sobering reminder that the perennial issue of race relations is still the most daunting challenge facing the “new Malaysia”.
A rescue plan the Pakatan Harapan coalition devised last December to revive the struggling balance sheet of Lembaga Tabung Haji was meant to be anything but controversial.
Soon after taking power, Mahathir’s administration uncovered that the fund – tasked with helping Muslims save for a pilgrimage to Mecca – was knee deep in trouble.
Its liabilities outstripped its assets, making it untenable for the fund to pay good dividends to finance haj journeys. The government’s solution was simple.
The finance ministry, led by Lim Guan Eng, formed a special-purpose vehicle that took over some 19.9 billion ringgit (US$4.59 billion) of the fund’s underperforming assets. This would allow the fund to balance its books and pay out dividends.
Little did Lim and others in the nascent administration expect that their opponents – defeated in the May 9 election – would turn the innocuous rescue plan into a racial issue.