Q+A: What’s at stake in trial of Malaysia’s Anwar?

By David Chance

KUALA LUMPUR (BestGrowthStock) – Malaysian opposition leader Anwar Ibrahim will go on trial on Tuesday on charges of sodomy, the second time he has faced what he says are political allegations aimed at ending his challenge to the government.

Anwar, 62, was convicted of sodomy in August 2000 and sentenced to jail in a trial whose conduct was condemned internationally. The conviction came on top of a six-year sentence for corruption.

Critics say both convictions were aimed at destroying the heir apparent to then-premier Mahathir Mohamad, for opposing Mahathir’s management of the 1998 Asian financial crisis.

The current trial had been scheduled to start in July but was delayed due to appeals by Anwar’s lawyers. If found guilty, Anwar could be jailed for 20 years, ending his political career.

WHAT HAS CHANGED SINCE JULY?

Anwar has been on the stump recently, holding rallies, some of which have attracted thousands of supporters, but still a far cry from the tens of thousands of people that attended his rallies in 1998.

Since July, a row has erupted over whether Christians have the right to use the word “Allah” or whether it is unique to the Muslim Malay population. [ID:nSGE60900E]. While the case may inflame passions, it is unlikely to lead to major riots. But it has drawn a line between the opposition, which supports the Christians, and a government unable to take a firm stand.

SHOULD INVESTORS BE CONCERNED BY ANWAR’S TRIAL?

Yes, after the Allah row, a caning sentence handed down to a young woman caught drinking beer [ID:nnSP362899] and continued worries about corruption [ID:nKLR239094], Malaysia has been getting its share of bad publicity.

This was the year in which Prime Minister Najib Razak was to enact substantial economic reforms before putting his coalition government on an election footing in 2011. Although elections do not have to be held until 2013, they are likely to come in 2012.

Faced with the row over “Allah,” and the prospect that ethnic Chinese and ethnic Indian voters will not return to the government fold, Najib may seek to avoid unpopular reforms.

Najib is to review fuel subsidies and any radical reform could add to the government’s unpopularity if it hits poorer Malays. Last year, the government backed off price hikes for electricity and natural gas.

Without spending and subsidy reform, efforts to rein in the budget deficit which hit a 20-year high of 7.4 percent of gross domestic product in 2009 could be in danger.

Reforms so far have drawn praise but little cash from funds.

Malaysia saw the third-biggest drop in foreign exchange reserves of any emerging market country in 2009, according to research from investment bank UBS.

Scared by the global financial crisis and uncertain politics after the 2008 election, foreign investors withdrew $35 billion between Q2 2008 and Q2 2009.

Foreign ownership of Malaysia’s stock market stood at 20.8 percent at the end of 2009, according to data from Bursa Malaysia, less than the 21 percent in March before Najib took over the failing leadership of the National Front coalition.

WHAT HAPPENS TO THE OPPOSITION IF ANWAR IS JAILED?

Malaysia’s three-party opposition alliance, despite its election successes in 2008 and in recent by-elections, is prone to bickering and indecision.

Anwar is the glue that holds the sometimes uneasy alliance of Islamists, a mainly ethnic Chinese party and reformers together. If he is sidelined, the government might be able to prise the opposition apart, winning over the Pan Malaysian Islamic Party.

There is no obvious successor to Anwar and there have been rumblings over the quality of his leadership as well as signs some opposition legislators may shift to the government.

WHAT WILL BE THE IMPACT ON THE GOVERNMENT AND NAJIB?

The government is obsessed with Anwar at every level. The trial could harden opposition to Najib and if Anwar is found guilty with dubious evidence or procedure, it will certainly tarnish the reputation of Malaysia and its prime minister.

The row over religious rights could see the government’s vote banks in the states of Sabah and Sarawak, where there are large Christian minorities, come under threat.

Sarawak has 31 MPs and Sabah 25 and between then they are home to just two opposition MPs. The government has 137 seats in a 222-member parliament.

To get the mandate he needs to push through reforms, Najib needs to improve on the 2008 election showing in which the government lost its two-thirds parliamentary majority. Without it, the government cannot change the constitution.

Stock Market News

(Editing by Bill Tarrant)

Q+A: What’s at stake in trial of Malaysia’s Anwar?