Malaysian PM Mahathir has sent resignation letter to king, claim sources

Malaysian Prime Minister Mahathir Mohamad has submitted his resignation to the king, two sources with direct knowledge of the matter told Reuters on Monday, amid talks of forming a new coalition to govern the country.

Mahathir, 94, assumed office in May 2018 for his second stint as prime minister. A spokesman from the prime minister's office declined to comment, saying only that a statement will be issued soon. The sources declined to be named as they were not authorised to talk to the media, reported Reuters news agency.

Also read: Pakistan will try to compensate Malaysia’s palm oil trade loss to India: PM Imran

The fate of Malaysia's ruling coalition is hanging in doubt after surprise weekend talks between Mahathir's party and other groups on forming a new government that would exclude his anointed successor Anwar Ibrahim.

The tussle between old rivals Mahathir, 94, and Anwar, 72, has shaped Malaysian politics for decades and tension has persisted, despite their alliance to win 2018 elections based on a promise that Mahathir would one day cede power to Anwar.

Also read: Kuala Lumpur Summit aimed at fighting Islamophobia: PM Imran

“I am impressed with his position...to not bow to groups that want to seize power without an agenda for change,” Anwar told reporters outside Mahathir's residence after the two met, but without saying what they had agreed.

Anwar added, “I am satisfied with his position, that it is the principle that we need to uphold. The reform agenda must be continued.” He described the meeting as having been “very good”.

Also read: PM Imran arrives in Malaysia for two-day visit

Turmoil spooks investors

The turmoil, amid growing fears about a spreading virus, had spooked investors, driving Kuala Lumpur's benchmark to a 10-year low, while the ringgit currency slid 0.7% to an almost six-month low, its sharpest drop in over three years.

The yield on 10-year Malaysia government bonds leapt six basis points, the steepest jump since last October. The added political risk makes Southeast Asia's third biggest economy, which grew at its slowest pace in a decade in the fourth quarter, less attractive for investors, one analyst said.

Also read: Malaysia's Mahathir defends criticism of India despite imposition of curbs on palm oil

“It becomes quite hard for Malaysia to bring foreign investors back,” added Jolynn Kek, head of equity at BOS Wealth Management Malaysia, pointing to more political stability and more compelling growth stories among its neighbours.

On Sunday, Anwar had accused Mahathir's party and “traitors” in his own party of plotting to form a new government with the United Malays National Organisation (UMNO), the former ruling party ousted in 2018 amid graft accusations.

Sources said Mahathir's party and a faction in Anwar's party met officials from UMNO and the Islamist party PAS in efforts to form a new coalition and possibly back Mahathir to serve out a full five-year term as prime minister.