Abdullah at Risk After Losing Malaysian Supermajority

By Angus Whitley and Stephanie Phang

March 9 (Bloomberg) -- Prime MinisterAbdullah Ahmad Badawi's hold on power in Malaysia is in doubt after the best performance in 50 years by an opposition that wants to scrap legalized preferences for the ethnic Malay majority, help the poor and battle corruption.

While the National Front rulingcoalition kept control of the government after yesterday's election, it lost the two- thirds majority it has enjoyed in parliament -- a free hand that has helped it to consolidate power. Opposition parties led by a new multiracial party promising to fight poverty and graft won support from ethnic Indians and Chinese, as well as Malays.

``You can't lead a coalition that loses this badly and stay in power,'' said Ooi Kee Beng, an analyst at Singapore's Institute of Southeast Asian Studies. ``He should resign. The coalition is in crisis because it can no longer claim it represents all the races.''

Abdullah's United Malays National Organisation, which leads the ruling coalition of race-based parties, lost power in five of 12 states at stake, including Malay-majority Kelantan and Kedah, the premier's home state of Penang.

``We have done very badly across the board, not just in Kelantan,'' saidAnnuar Musa, UMNO's head in the northeastern state, which the Pan-Malaysian Islamic Party won.

Third-Largest Economy

The Chinese-based Democratic Action Party took every state and parliamentary seat it contested in Penang. The National Front coalition has won the other seven states in Southeast Asia's third-largest economy, according to the Election Commission.

The National Front has won 137 of 222 parliamentary seats, with the opposition at 82, according to the latest data from the Election Commission. The opposition's 37 percent of parliament exceeds 1969's 34 percent.

Former deputy premier Anwar Ibrahim, 60, a well-known moderate Islamist who was imprisoned during the last election, coordinated the opposition campaign and his multiethnic People's Justice Party won 31 seats, up from one in 2004.

``This is the start of our mission to implement our reform agenda for a multi-racial Malaysia,'' Anwar said in an interview just after 4 a.m.

Anwar had been sacked in 1998 and later found guilty of having homosexual relations and of trying to cover up that alleged crime -- allegations he denied. The sex charge was overturned in 2004.

Accepting Defeat

Abdullah, 68, said earlier that coalition leaders who lost their seats should accept defeat. He declined to answer questions about how the government might change its policies after the election.

``At the moment, there's no one pressuring me'' to step down, he told reporters before going home from UMNO's Kuala Lumpur headquarters at about 3 a.m.

The last time the opposition won a third of parliament, in 1969, opposition party victory parades prompted a bloody backlash and the prime minister later resigned. Malaysia's police chief, Musa Hassan, yesterday banned any election celebrations.

Voting went smoothly yesterday, with just one incident in the eastern state of Terengganu where supporters of PAS, as the Islamic party is known, tried to block two buses they suspected contained unregistered voters.

Schools, Homes, Jobs

Malaysia's Indians and Chinese together are a third of the country's 27 million population. UMNO governs with junior Chinese and Indian partners, who have been criticized for accepting an affirmative-action policy that gives Malays educational, housing and job preferences.

Works Minister Samy Vellu, the top ethnic Indian leader in Malaysia's ruling coalition, lost his seat, as did Koh Tsu Koon, the head of one of the coalition's main Chinese-based parties.

``This is the biggest defeat for our party since our founding 40 years ago,'' Koh said late last night. His party Gerakan had been in the opposition when it first won control of Penang in 1969.

``The people have shown their lack of confidence in the coalition in its present form and shape,'' said Tricia Yeoh, director of the Centre for Public Policy Studies, an independent research institute in Kuala Lumpur. ``It's a slap on their faces and a wake-up call.''

Anwar's multiethnic People's Justice Party co-operated with the DAP and PAS against the government, and has pledged to scrap the race-based policy as unjust and a drag on economic growth.

Cheaper Fuel

PAS, after suffering a setback in the 2004 election, dropped its goal of turning Malaysia into an Islamic state from this year's manifesto, promising free education, health services, low-cost housing, cheaper fuel and a minimum wage instead.

Anwar played a key role in moderating the pro-Islamic stance of PAS nationwide and rallying the opposition, said analysts including Ibrahim Suffian, director of the Merdeka Center, an independent Malaysian research group.

``The opposition parties have really gotten their act together in terms of strategizing and they have their icon of a leader in Anwar,'' said Maznah Mohamed, a senior fellow at the National University of Singapore.

To contact the reporter on this story: Angus Whitley in Kuala Lumpur atawhitley1@bloomberg.netStephanie Phang in Kuala Lumpur atsphang@bloomberg.net