The defeat of Najib's Barisan Nasional (BN) coalition in last week's poll by an alliance led by his once mentor Mahathir Mohamad was a political quake, which toppled an increasingly authoritarian regime that had ruled the country for six decades.
Newly elected Prime Minister Mahathir Mohamad has said he would reopen an investigation relating to allegations that Mr. Najib siphoned money from 1Malaysia Development Bhd., or 1MDB, the Malaysian state investment fund at the center of probes in multiple countries.
The Southeast Asian nation's political landscape has been shaped for decades by a bitter feud between Anwar and Mahathir, whose decision to sack Anwar as his deputy sparked an opposition movement, Reformasi, or Reform, in 1998.
Coming out of retirement, the former prime minister turned his back on the Barisan Nasional (BN) coalition, which had governed Malaysia since it gained independence from Britain in 1957, to lead an alliance of opposition parties to victory. "He should be released immediately when he is pardoned".
Local politicians including PM Lee have been congratulating Malaysian prime minister Mahathir via Facebook. Japanese Ambassador Makio Miyagawa, while extending his heartiest congratulations to Dr Mahathir, said Japan and Malaysia had enjoyed strong ties in many aspects due to Dr Mahathir's Look East Policy. In 2000, he was sentenced to a further nine years in prison after being found guilty of sodomy with his wife's driver. One test for the relationship will be the degree to which the new Malaysian government cooperates with US maritime efforts in the South China Sea.
In a shock turn of events earlier this year, his former nemesis Mahathir Mohamad announced he was going to be running for the top office again.
In his speech, Mr Najib, 64, said he accepted the "verdict of the people". Mahathir has said he plans to eventually hand the premiership to Anwar.
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Mr Mohamad, leader of the Pakatan Harapan coalition, is expected to be made prime minister despite concerns his opponents are trying to cling to power.
The finance minister has been an ethnic Muslim Malay since 1974 and the appointment of Lim, a chartered accountant who led the wealthy northern state of Penang since 2008, reflects reforms pledged by Mahathir's alliance to heal racial divisions in the country blamed on decades-old preferential policies.
Without a royal pardon, he would be banned from politics for five years; with a pardon he could stand for a seat in a by-election and become prime minister, allowing...
Tushar Mohata, an analyst at Nomura Malaysia Sdn, forecasts that volatility will increase amid heightened political risk and the possibility that foreign inflows will reverse.
USA authorities allege that at least $4.5 billion was misappropriated between 2009 and 2015, including $681 million allegedly received by Mr. Najib, whom lawsuits in the US referred to as "Malaysian Official 1".
On the economic front, Mahathir vowed to cancel a goods and service tax imposed since 2015 and said the government could also renegotiate the terms of Chinese loans for infrastructure projects.