Mahathir’s comeback puts 1MDB and its bankers back in play
Malaysia’s election, while politically invigorating, spells economic uncertainty and opens wounds for banks.
Malaysia's newly elected prime minister Mahathir Mohamad
Regular readers will recall that Nazir Razak, a lifelong CIMB man who is also the younger brother of ousted Malaysian prime minister Najib Razak, sometimes posts Game of Thrones images on his Instagram to convey the political troubles in his country.
Recent events in Malaysia – with 92-year-old Mahathir Mohamad, who more or less invented the Malaysian establishment, returning from retirement as leader of the opposition to oust his own protégé, with a promise to pass the reins to Anwar Ibrahim, who he was personally responsible for jailing for sodomy – would have seemed too much even for Game of Thrones.
But what does it mean for banking and finance in Malaysia?
There is something like consensus on the macro side. Economic growth is likely to slow with the upheaval, Mahathir’s first act – removing a goods and services tax – will boost consumption, but could see a cut in public spending and investment to fill the revenue gap, and there will be a delay at the very least in implementing some public Najib projects.