Malaysia's main party urges reform for new PM

Malaysia's main ruling party, still reeling from losses in last year's election, was urged on Thursday to clean up and reform so as to reconnect with voters and avoid political "death".

The United Malays National Organisation (UMNO), the biggest party in the National Front coalition that has ruled Malaysia for 51 years, gets a leader at its annual congress on Thursday who has pledged to end corruption and enact economic reforms.

Questions remain as to whether the incoming Najib Razak can do any better than incumbent who rode a wave of popular enthusiasm after the end of Mahathir Mohamad's 22-year rule to win 90 percent of seats in parliament in elections in 2004.

By 2008, Abdullah Ahmad Badawi, who had pledged reforms and to end corruption, was dead in the water and the National Front coalition recorded its worst ever result in national and state polls, losing its two-thirds parliamentary majority.

Abdullah embraced his successor on stage at the United Malays National Organisation (UMNO) meeting and warned it not to turn on Najib who is deputy prime minister and "assassinate his character" as it did to him.

He also took a dig at Mahathir who has sniped continuously at his successor and warned UMNO not to return to oppression.

"They believe that UMNO will regain its glory if we revert to the old ways - the old order, by restricting the freedom of our citizens and by silencing their criticism," Abdullah said as he readied to hand over power.

The 2,509 delegates have already had a taste of defying the party leadership, voting in Abdullah's son in law, Khairy Jamaluddin to head the youth wing of the party in preference to former premier Mahathir Mohamad's son.

The youth wing has provided three of Malaysia's prime ministers if Najib, who will be the sixth when he takes office in April, is included.

Key votes for members of Najib's team will take place throughout the day and hundreds of chanting supporters wearing colourful T-shirts and carrying pictures of their favoured candidates lined the route delegates took to the convention hall.

Among those standing and seen as backing the kind of economic reforms that Najib wants is International Trade Minister Muhyiddin Yassin who is standing a deputy president of UMNO and would also become deputy prime minister if elected.

Others, such as Foreign Minister Rais Yatim, who is standing as one of UMNO's three vice presidents, are seen as throwbacks to the Mahathir era.

A NEW TEAM, A NEW ERA?

Even if Najib can get reformers into key positions he will have a tough time pushing through change.

Just days after he becomes prime minister the National Front will have to face off against the opposition led by former deputy prime minister Anwar Ibrahim in a parliamentary by-election and in two state by-elections on April 7.

Political tensions have reached boiling point in this Southeast Asian nation of 27 million people and the government has charged an opposition legislator with sedition, banned opposition newspapers and used riot police to break up rallies.

Investors are also watching closely to see if Malaysia can reform its economy under Najib.

The incoming premier has pledged to reduce Malaysia's dependence on exports of electronics which account for nearly 40 percent of the total and on commodities in Asia's third most trade dependent economy after Hong Kong and Singapore.

He wants to push the economy up the value chain and into services but before he can attempt that he will have to convince the UMNO grassroots of the need to end corruption.

In addition, Najib has been mauled on opposition-supporting internet sites who have linked him to the lurid murder of a Mongolian model, although there has been no evidence and Najib has repeatedly denied involvement.

"Fundamentally there does need to be a reform in the way politics is done in Malaysia before the market and investors in general take these sorts of things (Najib's promised reforms) seriously," said IDEAglobal economist Philip McNicholas.

By Razak Ahmad and David Chance

KUALA LUMPUR, March 26 (Reuters)