How a $7 billion dispute helped topple Mahathir's 'New Malaysia'

His then-ruling alliance had suffered a series of by-election losses, stunting its momentum after a historic election win in 2018 against a government in power for six decades

Mahathir Mohamad — Mahathir wanted quicker action to reduce living costs, a key part of the “New Malaysia” agenda that had propelled the bloc’s surprise win. But his proposals only spurred more bickering within the unwieldy coalition of four parties with racial and religious differences

Bloomberg Kuala Lumpur

2 min read Last Updated : Mar 03 2020 | 2:03 AM IST

In the weeks before his shock resignation as prime minister threw Malaysia into turmoil, Mahathir Mohamad (pictured) was getting agitated.

His then-ruling alliance had suffered a series of by-election losses, stunting its momentum after a historic election win in 2018 against a government in power for six decades. Mahathir wanted quicker action to reduce living costs, a key part of the “New Malaysia” agenda that had propelled the bloc’s surprise win. But his proposals only spurred more bickering within the unwieldy coalition of four parties with racial and religious differences.

One conflict centered around highway tolls. In January, Mahathir agreed to let the conglomerate Maju Group take over highways operator PLUS Malaysia Bhd, which is controlled by the finance ministry, according to people familiar with the matter who asked not to be identified. Under the deal, valued at about 30 billion ringgit ($7 billion), Maju Group would’ve scrapped toll fees in return for government contracts to maintain the roads, the people said.

But his coalition partners disagreed: The largest, the Democratic Action Party or DAP, was strongly opposed to the deal because it wanted PLUS to be directly held by the government, according to a person familiar with the discussions. In the end, the administration rejected all bids for PLUS and restructured concessions to reduce highway fares instead of eliminating them.

The failed deal highlighted a series of policy disputes that eventually brought down the coalition, showing that the differences in Mahathir’s government extended far beyond when he would cede power to Anwar Ibrahim, his long-time rival. New Prime Minister Muhyiddin Yassin is backed by parties that lost in 2018, shifting Malaysia back to an agenda favouring the Malay majority. Mahathir, 94, hasn’t given up: He’s revived the alliance with Anwar and the DAP, and said on Sunday he has the numbers to oust Muhyiddin in a confidence vote during the next meeting of parliament, now scheduled for March 9.