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NEWS UPDATES 13 May 2009

Malaysia govt retakes control of disputed state

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Malaysia's National Front government, armed with a court order, took control of disputed Perak state again on Tuesday in a development that will likely deepen political divisions in the country, reported Reuters.

An appeals court decision on Tuesday delayed the handover of power to the national opposition after they won the right on Monday in the High Court to retake control of the state which they won at the 2008 elections.

After Tuesday's decision, riot police sealed off the assembly building in the state capital of Ipoh, where 90 people were arrested in anti-government protests last week.

The crisis in peninsular Malaysia's second largest state began when the National Front government took control of the state government in February through defections orchestrated by Najib Razak before he became premier in April.

It comes at a time when the National Front coalition is at its weakest in 51 years of ruling this Southeast Asian country of 27 million people and as the economy faces its first recession since the Asian financial crisis a decade ago.

"Perak is still in a state of limbo and uncertainty," said Mohd Nizar Jamaluddin, the chief minister of the opposition People's Alliance state government. "The courts cannot decide on the status of the government. It must be the people."

Nizar left the state assembly building after the appeals court ruling and the National Front chief minister said he would take power on Wednesday and reverse all decisions made by People's Alliance government over the last two days.

"I will continue my duties as chief minister until the appeals court decides on this matter," Zambry Abd Kadir told a news conference in Ipoh.

The stalemate in Perak comes as Malaysia's government is implementing a $16 billion budget boost to help the economy and as bond yields have risen due to a surging government budget deficit that will hit 7.6 percent of gross domestic product this year. A-rated Malaysian 5-year bonds yield a percentage point more than BBB-rated Thai bonds.

The government stumbled to its worst ever election result in national and state polls last year and has since suffered defeats in four out of five by-elections as well as ousting lacklustre premier Abdullah Ahmad Badawi and replacing him with Najib.

It desperately wants to avoid another defeat, analysts said.

A poll by the independent Merdeka Centre after the February takeover by the National Front showed that 74 percent of respondents believed new elections should be held in Perak.

"The ruling party has not gained traction since Najib took over as PM and this leaves political uncertainty in the dire economic cocktail," said Vishnu Varathan, an economist at 4Cast, an economic research house.

The election defeats and the standoff in Perak have pitted the opposition against the government and the courts against Malaysia's royal families. Najib has also started to draw criticism from within his own United Malays National Organisation (UMNO), the main ruling party.

On Tuesday, a former finance minister who tried to contest the UMNO leadership vote in March against Najib called the government's actions in Perak "shameful" and "illegitimate".

"... It is better for BN (the National Front) to risk state elections that we may lose rather than to lose the entire country by being seen to be opposed to decency, the rule of law, and the will of the people," Razaleigh Hamza wrote in his blog (

"We have no future as a party if we are seen as being against the people rather than for them," he wrote.






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