With the price of oil and gold falling and the Ringgit declining against foreign currencies (now RM5.5-5.6 against the Pound Sterling from RM4.8-4.9 just a couple of years ago), Malaysia has to brace itself for a repeat of the 1988 and 1997 financial crises.
The problem that the country is going to face is that Malaysia’s recently approved budget for next year was pegged at a higher contribution from Petronas, which contributes to about 30% of the government’s revenue, and which is now going to fall short.
There is talk that the oil price may fall even lower, possibly even below US$60 a barrel, and if this happens many countries are going to get hit, Malaysia included.
As has been pointed out by many political analysts, Barisan Nasional needs at least 45% of the popular votes to stay in power while the opposition needs at least 55% to take power. This is because of the way the seats are carved up, what some would call gerrymandering, something that exists even in the UK and US and is not illegal.
Hence there is only a 2% or so gap to see a change in federal government, not a very large gap indeed.
Barisan Nasional has to take cognisance of this fact. Changes in government happen when the rakyat are facing an economic crisis. In the 1988 and 1997 crises it was not so crucial. The opposition made some gains in the 1990 and 1999 general elections that followed but not enough for a change of federal government, mainly because the gap was quite wide.
This time, however, the gap is very narrow, just 2%. Hence a 2% shift in popular votes, although not enough to do much damage in 1990 and 1999, may have an affect this time around.
Barisan Nasional must not only brace itself for a crash-landing but also be able to survive this crash-landing in one piece.
This should be Barisan Nasional’s focus in the 12 months to come, unless by the grace of Allah the price of oil goes back up to US$80 a barrel or higher.