Victorious Mahathir mulls Cabinet choices

Victorious Mahathir mulls Cabinet choices

KUALA LUMPUR (Agencies): Malaysian Prime Minister Mahathir Mohamad met leaders of his victorious ruling coalition on Monday amid speculation he would tap a former archrival to replace his finance minister in a new cabinet lineup.

Leaders of his 14-party Barisan Nasional coalition met Mahathir separately to discuss the formation of the cabinet, the official Bernama news agency said.

The Barisan Nasional (BN) won 148 of 193 seats in last week's general election, giving the alliance its 10th consecutive mandate to rule Malaysia since independence in 1957.

Although Mahathir's coalition won three-quarters of the seats in the lower house of parliament, its grip was weaker than in the outgoing parliament, in which it held 166 seats, as the opposition Parti Islam se-Malaysia (PAS) made inroads in the Malay heartland in the east and north of Peninsular Malaysia.

There was mounting speculation that Finance Minister Daim Zainuddin, architect of Malaysia's 14-month-old capital controls and regarded as friendly to the country's markets, would leave the government.

Asked by reporters if he would seek to remain finance minister, Daim said: "You should ask the prime minister, not me. Only the prime minister can answer." Daim also said he might not be in the cabinet to present a new budget for 2000.

Daim, who has been in the cabinet since mid-1998, denied he disagreed with Mahathir over an ambitious bank merger plan.

But financial markets have been expecting Daim, 61, to leave the government now that the economy has recovered from the worst recession in four decades and the election is over.

The stock market was increasingly expecting Mahathir to name his erstwhile rival, Tengku Razaleigh Hamzah, to replace Daim.

Razaleigh, 62, once served in Mahathir's government, but the two men became bitter rivals and engaged in a fierce contest in 1987 that split the politically dominant ethnic Malays.

A former finance minister and member of one of the country's royal families, Razaleigh joined forces with several other opposition parties to try to topple Mahathir in the 1990 general election.

Until his return to Mahathir's UMNO in late 1996, Razaleigh had teamed up again and again with old foes to fight Mahathir. But Mahathir and Razaleigh have largely smoothed over their differences, and the prime minister tapped the former finance minister to lead their coalition in the key northeastern state of Kelantan in last week's polls.

Stockbrokers said they saw no major change in policy if Razaleigh were to take office, but Daim's departure could upset the share market.

"Daim is considered more market-friendly than Razaleigh, and continuity of policy would be maintained if Daim stayed," one dealer said.

Malaysian Chinese-dominated parties from both ruling and opposition camps warned PAS on Monday to scrap plans for a special tax on non-Muslims in a state where it won election.

PAS has proposed legislation to collect compulsory tithes or zakat from Muslims in northeastern Terengganu, and a corresponding tax or kharaj from non-Muslims.

But the Democratic Action Party (DAP), PAS' ally in the country's first formal opposition alliance, warned it risked losing support of non-Muslims.

"PAS should seriously weigh the political costs of imposing kharaj at the expense of alienating the sensitivities of non- Muslim Malaysians," chairman Lim Kit Siang said in a statement.

The DAP will form a special committee to study all proposed new laws by PAS in Terengganu and neighboring Kelantan to ensure they are aligned with the Alternative Front's common manifesto, he said.