Najib faces uphill drive

KUALA LUMPUR - INCOMING Malaysian premier Najib Razak looks set to initiate aggressive political and economic reforms, but change could be slow and difficult as the country faces one of its toughest tests.

Mr Najib, a British-trained economist, will become Malaysia's sixth prime minister on Friday, assuming the mantle as the economy enters its first recession in a decade and the government faces the prospect of losing power to a resurgent opposition.

Outgoing premier Abdullah Ahmad Badawi handed in his resignation letter to the king on Thursday, following a tenure considered weak and ineffective by many.

'The handover and swearing in of the new Prime Minister will take place as scheduled on Friday,' a high-level government source told Reuters after Mr Abdullah and Mr Najib met the king separately on Thursday.

Falling foreign investment and racial tensions will push Mr Najib to tackle corruption and review a race-based policy which has kept control of the economy in the hands of well-connected ethnic Malay tycoons.

'His major clear clarion call is a call for change from the politics to the economics side,' said Zainal Aznam Yusof, a member of a council that advises the premier on economic issues.

The 55-year old Najib has pledged to wean the economy off its reliance on low-end manufacturing, further open up the services sector and close a widening ethnic and religious divide.

A source told Reuters last week that Mr Najib would name his cabinet within a week of taking office and radically reform state-linked firms to make them more profit-oriented.

But Mr Najib has to drive reforms while trying to steer Asia's third most open economy through the headwind of slumping exports and rising unemployment.

In the longer term, he has the tricky task of reviewing a decades-old policy favouring Malays in jobs, education and business without upsetting the main ruling party's power base.

'I don't think there is much appetite or political consensus to put into effect a radical reorientation of affirmative action,' said Manu Bhaskaran, a partner at US advisory Centennial.

'It would probably be better to iron out the weaknesses in the affirmative action programme, to tackle specific areas where the weaknesses are particularly egregious in terms of the openings for corruption, for cronyism, for damaging, inefficient consequences. -- REUTERS