Malaysian Premier Seeks Unity With Plan to Bolster Economy

By JAMES HOOKWAY

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Mr. Najib, center, met with his ruling coalition in Kuala Lumpur on Tuesday.

PUTRAJAYA, Malaysia—Newly elected Prime Minister Najib Razak said he would press ahead with a multibillion-dollar modernization program for Malaysia's economy, adding that he hoped it would help reunite the Southeast Asian nation after the most fiercely contested election in its history.

Mr. Najib's National Front coalition secured around 60% of the seats in Sunday's ballot, but the vote was heavily split between Malaysia's thriving cities, which largely voted for opposition parties, and rural, mostly ethnic-Malay areas that threw their support behind Mr. Najib, the 59-year-old son of Malaysia's second prime minister.

Many of Malaysia's ethnic-Chinese minority, which makes up about a quarter of the population, also switched to opposition leader Anwar Ibrahim's People's Alliance, leaving Mr. Najib's coalition ruling the country with 47% of the popular vote, compared with 50% for its opposition rivals, who allege that electoral fraud swung the result against them. The remaining 3% represented votes for independent candidates or spoiled ballots.

In his first remarks to the international media following the election, Mr. Najib told The Wall Street Journal in an interview on Tuesday that expanding the size and scope of the country's economy would help draw support back to the National Front, which has run the country uninterrupted since independence from Britain in 1957.

"My next task is to harmonize the racial makeup of Malaysia," he said.

Mr. Najib had launched a series of economic and social overhauls before the election, rolling back parts of a decades-old affirmative-action program designed to raise incomes among the generally poorer ethnic-Malay majority. Now, he says, he aims to accelerate a $444 billion plan in public and private outlays to help increase local consumer spending and make Malaysia more competitive against wealthier rivals such as South Korea and Singapore.

"There are those who will expect a bit more because they voted for you, but you still have to keep things in balance," Mr. Najib said.

His spending program, known locally as the Economic Transformation Plan, is a bid to drag Malaysia out of the so-called middle-income trap, which forces many emerging economies to compete with each other in producing cheap exports instead of developing more-sophisticated, value-added products.

In previous interviews, Mr. Najib has talked widely on this theme, describing his goal to push Malaysia onto a higher-growth path as the main focus of his administration.

The plans include investing in new industries such as health care and strengthening its logistics and energy capabilities. Mr. Najib is also hoping for a further lift after earlier easing some race-based quotas and repealing a repressive colonial-era security law that allowed for detention without trial.

The British-educated aristocrat's approach is a more modest version of overhauls than those pushed on the campaign trail by Mr. Anwar, who is 65 years old and contesting what he said would be his last election. The prime minister's chief rival argued for a "big bang"-style transformation that would remove affirmative action and replace it with a more-inclusive welfare system, along with immediately freeing up the country's heavily state-influenced media.

Mr. Najib's election win buoyed financial markets, and the prime minister viewed their response as a stamp of approval for the direction he is trying to take the country. The benchmark stock index rose 1.4% to a record 1776.73 on Tuesday, after surging 3.4% on Monday, while Malaysia's ringgit currency gained 1.9% against the dollar in the first two trading days of the week.

"I was happy to see the market strengthen so much. The word is out that Malaysia is now on the 'buy' list," he said.

Still, many political analysts described Sunday's vote as polarizing, deepening many of the divisions that run through Malaysia, as the well as the gulf between those who have benefited from years of rapid growth, and those who have been left behind.

Some government controlled-newspapers harped on these differences Tuesday, with the daily Utusan Malaysia blaming ethnic-Chinese voters for abandoning the National Front and reducing its number of seats in the 222-member parliament to 133 from 140.

Tensions were stoked further as Mr. Anwar, the opposition leader, called for a mass rally at a sports stadium in the suburbs of Kuala Lumpur on Wednesday evening, where he says he will provide evidence of electoral violations he says cost his opposition alliance the election.

Among other things, Mr. Anwar complained in an interview earlier Tuesday about National Front operatives allegedly flying in foreigners from nearby countries to vote in closely contested districts and discrepancies in the electoral rolls.

"We can't stand down. We must fight," Mr. Anwar said, adding that aims to file court cases and press election regulators to hold new ballots in dozens of disputed constituencies—a process that could take months if the regulators and courts choose to act on the opposition's complaints.

Mr. Najib dismissed Mr. Anwar's allegations, questioning the opposition's claims that 40,000 people with dubious voting credentials were moved by airplane into and around the country.

"That would take hundreds of planes. Where were they?" Mr. Najib asked.

He, did, however, acknowledge the divisions in the country suggested by the results of Sunday's election and emphasized the need to pursue polices that are fair and inclusive.

"We need to reach out to others," Mr. Najib said. "That's why I spoke about national reconciliation and moderation" after the election win, adding that once the drama of the elections and their aftermath have passed, the country would find a more even keel.

"We always do," he said.