Analysis: Malaysia PM's reform agenda in doubt as allies freed from graft charges

With his "reformasi" rallying cry, Anwar campaigned as an anti-corruption advocate for over two decades as opposition leader.

Many hoped his appointment as premier last November would sweep in reforms and improve Malaysia's international standing -– tarnished in recent years by the multibillion-dollar scandal at state fund 1Malaysia Development Berhad (1MDB).

But Anwar now faces accusations, including from his own party, of betraying progressive voters and allies, after state prosecutors this month dropped 47 charges against Deputy Prime Minister Ahmad Zahid Hamidi and failed to appeal against the acquittal of former premier Najib Razak in a 1MDB-linked case.

Anwar has said he does not interfere in court cases, but the independence of the country's attorney generals have often been questioned as they are appointed by the prime minister.

Hassan Karim, a lawmaker from Anwar's People's Justice Party, said he felt "let down" by the premier, whom he described as a close friend.

"Anwar is concerned more about the survival of his government and his power rather than the reform agenda that he had promised to the people," he told Reuters.

The attorney-general's chambers (AGC) and Anwar's office did not respond to requests for comment.

Ahmad Zahid and Najib, who is serving a 12-year jail sentence on separate 1MDB charges, are both from the once-dominant United Malays National Organisation that Anwar has long campaigned against.

Anwar joined hands with his former rivals last year to gain a parliamentary majority.

The AGC has said it dropped charges against Ahmad Zahid to review new evidence, and reiterated that its decisions were made independently.

That has not stopped critics questioning why charges were dropped after four years in court and after a judge had already ruled that prosecutors had established a prima facie case.

On Saturday, around 1,000 people turned up at a protest in Kuala Lumpur organised by Malaysia's opposition, calling for Ahmad Zahid to be prosecuted and chanting "reforms are dead."

Youth party MUDA pulled support for Anwar's coalition over the graft case, with its sole lawmaker Syed Saddiq Syed Abdul Rahman saying that dropping the case against Ahmad Zahid was crossing a "red line."

"When you campaign on a clear platform of reforms and anti-corruption, and you do the exact opposite, be prepared to be punished by the public," he said.

GROWING DISCONTENT

Anwar's reform promises are being closely monitored by voters and foreign investors, already wary after the 1MDB scandal.

Malaysians are also watching to see if Najib could get any reprieve. Najib has sought a royal pardon over his conviction and requested other charges that he faces to be reviewed.

The dropping of the cases comes amid worries over a roll-back in democratic freedoms after Anwar's government blocked several news portals, opened sedition and graft probes against opposition figures, and increased scrutiny of the country's LGBTQ+ community.

"We came in as progressives but now we are seen as regressive," said a government lawmaker who spoke on condition of anonymity.

Syed Ibrahim Syed Noh, another lawmaker from Anwar's party, warned that the government could lose supporters if it failed to fulfil reform promises -- including separating powers of the public prosecutor and the attorney-general, and reviewing subsidies.

Voters' frustration is already showing.

A local election held this month soon after the decision in Ahmad Zahid's case showed voter turnout declined by nearly a third compared to the November election, according to Wong Chin Huat, a political scientist at Malaysia's Sunway University.

Despite a win by a candidate from Anwar's coalition, Wong said the data indicated growing public discontent with the government, with some Anwar supporters shifting towards the opposition.