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Prime Minister Najib Razak, center, posed with Muslim and Christian figures in Sarawak in April after presenting them with checks.PHOTO: SUZANNE LEE FOR THE WALL STREET
By [size=1.4]YANTOULTRA NGUI
May 5, 2016 10:29 a.m. ET2 COMMENTS
SUNGAI LABI, Malaysia—This rice-growing village in Sarawak, like many in this rural state critical to national politics, is attracting government largess as Prime Minister Najib Razak faces the toughest fight of his political career.
A state legislative vote here on Saturday is Mr. Najib’s first electoral test since a scandal erupted last summer surrounding a Malaysian development fund he founded that has sparked opposition demands for him to resign.
The leader has left little to chance, pledging on recent visits to Sarawak to invest hundreds of millions of dollars in government funds toward the state and even holding his cabinet meeting there this week as ministers campaigned for local candidates allied to his United Malays National Organization.
Sarawak’s vote, the only state election this year, comes as Mr. Najib is also under pressure from slowing economic growth due to lower oil prices that led him to slash budgets on ministries by up to half this year. But not in Sarawak. This swath of jungle, rivers and oil fields on western Borneo island that is crucial to his ruling coalition is the beneficiary of a spending surge.
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To be sure, ramping up spending before elections has been a fact of political life in Malaysia for decades. But the stakes today are greater for Mr. Najib and his governing UMNO coalition after its near-loss in the 2013 election and the other pressures they now face.
Malaysia’s Coalition for Clean and Fair Elections, an independent election watchdog, this week accused Mr. Najib and his deputy prime minister of vote buying and breaching election laws in Sarawak. “It is unfettered political financing where state and federal funds are audaciously used to finance candidates’ winning,” said the group, known in Malay as Bersih.
Neither Mr. Najib nor his deputy responded to requests for comment and both haven’t responded to that allegation.
“I anticipate that the government will throw away a lot of money in the elections,” said Faisal S. Hazis, head of the Center for Asian Studies at the National University of Malaysia. “This is a common feature in Malaysian elections including Sarawak.”
In an October budget speech, Mr. Najib’s government pledged to build a $4.2 billion pan-Borneo highway through Sarawak. It has begun to upgrade airports, build new housing and implement other projects to improve the lives of Sarawak’s 2.7 million residents.
During Mr. Najib’s recent visits he was seen distributing checks to mosques and churches during a ceremony surrounded by political allies, in a typically Malaysian hands-on style of campaigning. He didn’t say why he presented the checks.
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Two charities associated with 1Malaysia Development Bhd, or 1MDB, the national investment fund at the center of the scandal, have spent hundreds of thousands of dollars on projects in Sarawak since 2013, say two people close to the charities.
One of them, Yayasan 1MDB, backed a Malaysian social-development program that recently funded 12 rooftop solar panels in Sungai Labi to power a television and fans in the village community hall here, replacing expensive and smelly diesel generators.
“We don’t feel so hot anymore,’’ said village representative Som Batu.
That development program, iM Sarawak, has made 1,400 investments in Sarawak ranging from rural firefighting systems to a Real Madrid soccer camp since it was formed in 2013. Such projects are consistent with its social-development mission. But some foreign diplomats and analysts say iM Sarawak was created to help sway the 2016 state election.
iM Sarawak said it doesn’t disclose details of its funding and declined to comment further.
Yayasan also is sponsoring 150 imams and village officials from Sarawak for a Muslim Haj pilgrimage estimated to cost nearly $400,000. Yayasan, which didn’t reply to a request for comment, has previously sponsored such trips for officials in other states. Mr. Najib said recently the Haj trip was intended to reward these people for their good work and leadership.
Others suspect different motives.
“The Haj pilgrimage is definitely a form of vote-buying,” Mr. Faisal said.
Malaysian Leader Najib Faces First Post-1MDB Election ChallengeMalaysian leader Najib fights crucial Sarawak state election with public spending, charities in first vote challenge since 1MDB scandal erupted.
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Salus Anak Changgai and her huband, Ili Anak Bahayan, at their house in Sungai Labi village.SUZANNE LEE FOR THE WALL STREET JOURNAL
An election billboard in Sarawak features Malaysian Prime Minister Najib Razak and Sarawak Chief Minister Adenan Satem. SUZANNE LEE FOR THE WALL STREET JOURNAL
Malaysian Prime Minister Najib Razak poses for a photograph flanked by Christian and Muslim leaders after presenting checks in a ceremony at the Kuching International Airport in Sarawak, Malaysia in April. SUZANNE LEE FOR THE WALL STREET JOURNAL
A new skyscraper is under construction in Kuching, the capital of Sarawak. The New Sarawak State Legislative Assembly Building lies in the distance. SUZANNE LEE FOR THE WALL STREET JOURNAL
The Sarawak River Cruise takes tourists along the Sarawak River in front of the state legislature.SUZANNE LEE FOR THE WALL STREET JOURNAL
Workers dig through the concrete street in Chinatown in Kuching. SUZANNE LEE FOR THE WALL STREET JOURNAL
Christians kneel in prayer as they attend Sunday Mass held in various languages at the St. Joseph's Cathedral in Kuching. SUZANNE LEE FOR THE WALL STREET JOURNAL
Bronze panels represent the main ethnic groups in Sarawak—Chinese, Dayak, Kayan and Malay—on the Charles Brooke Memorial in Kuching. Charles Brooke was the second of the so-called White Rajahs of a family of English adventurers to rule Sarawak and reigned from 1868 to 1917.SUZANNE LEE FOR THE WALL STREET JOURNAL
Johnny Anak Siew, a resident of Sungai Labi village, disembarks his boat at the jetty in Sarawak.SUZANNE LEE FOR THE WALL STREET JOURNAL
A solar-powered community hall in Sungai Labi village was partly funded by a government-linked charity. SUZANNE LEE FOR THE WALL STREET JOURNAL
A ruling National Front election poster graces the house of Kong Mee Ti at Sungai Labi village, a community of 15 houses that is inaccessible by road. SUZANNE LEE FOR THE WALL STREET JOURNAL
Som Anak Batu, 65, a village head representative, in his house in Sungai Labi village. SUZANNE LEE FOR THE WALL STREET JOURNAL
Salus Anak Changgai and her huband, Ili Anak Bahayan, at their house in Sungai Labi village.SUZANNE LEE FOR THE WALL STREET JOURNAL
An election billboard in Sarawak features Malaysian Prime Minister Najib Razak and Sarawak Chief Minister Adenan Satem. SUZANNE LEE FOR THE WALL STREET JOURNAL
1MDB didn’t respond to a request for comment. Deputy Prime Minister Ahmad Zahid Hamidi said this week that the money given to Sarawak wasn’t a form of vote-buying.
The Wall Street Journal, citing Malaysian and global investigations, has reported how investigators have found about $1 billion was transferred to Mr. Najib’s personal bank accounts, the majority originating from 1MDB and moving via a web of intermediary entities. The fund is under investigation by authorities in Malaysia and in at least six other countries.
Mr. Najib, who headed 1MDB’s board of advisers until it was dissolved this week, has denied wrongdoing or taking money for personal gain. 1MDB has denied wrongdoing or giving any money to Mr. Najib and said it was cooperating with probes. Malaysia’s attorney general in January said much of the money was a legal political donation from the Saudi royal family and that most of that was returned. He cleared Mr. Najib of wrongdoing.
MALAYSIA’S 1MDB DECODED
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Many of Mr. Najib’s opponents say his strategy in Sarawak echoes the 2013 general election. The Wall Street Journal has reported that 1MDB indirectly supported his campaign with donations that funded projects he was able to tout during the campaign. The leader has denied any funds were improperly used. 1MDB hasn’t commented on the report.
Sarawak, whose steaming jungle interior is cut by rivers and speckled with tiny communities, is unique among Malaysia’s 13 states. Its indigenous Dayak people have a history as headhunters. It is the only Christian-majority state in Muslim-majority Malaysia.
And it was ruled for more than a century until 1946 by a dynastic monarchy of English adventurers known as the White Rajahs. Portraits of James and Charles Brooke, two White Rajahs, recently hung in the cluster of wooden homes in Sungai Labi village alongside Malaysia’s current leaders.
Sarawak provides Mr. Najib’s coalition with nearly a fifth of its 133 parliamentary seats. Without votes from Sarawak and a neighboring state, the coalition would have lost its parliamentary majority in 2013 for the first time. The next general election is expected in 2018.
The Malaysian leader recently said he wants a strong electoral victory in Sarawak. Risk consultancy firm Eurasia Group predicts that very result due in part to a weak and divided opposition.
—Celine Fernandez in Kuala Lumpur contributed to this article.
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