Najib takes over as finance minister

BREAKING NEWS! updated 3.15pm Prime Minister Abdullah Ahmad Badawi today said he would pass his finance portfolio to his deputy Najib Abdul Razak, while he takes over as defence minister.

Abdullah told a press conference this afternoon that the swap in the cabinet posts will take effect immediately.

The prime minister, who has held the post of finance minister since 2004, said he had informed the cabinet of the decision.

Abdullah also said that he may step down earlier than 2010 depending on Najib's performance.

However, both leaders nevertheless reaffirmed their commitment to the 2010 power transition plan.

Abdullah added that both he and Najib will defend their respective posts as Umno's top two leaders in the party polls in December.

Najib, who was present at the hastily-called press conference, said when asked to comment: "We have agreed. I'm leaving it to the party. We are offering ourselves to the party and I hope that they will accept."

There has been increasing pressure on Abdullah to quit earlier than scheduled, but it now appears that Najib has stitched a deal with his boss to placate the demands of the Umno grassroots.

Both men have been at the centre of a political maelstorm, caught by bitter infighting in Umno amid a mounting challenge from Opposition Leader Anwar Ibrahim, who has promised to form a new government soon.

Anwar A "Threat To Nation's Economy'

Last week, Najib backed away from a power transition pact made with Abdullah in July, whereby his 68-year-old boss would hand over to him the premiership and Umno presidency in June 2010.

Observers say the latest move by Abdullah was to assure Najib that his accession to the top post in the country was not affected, and also to deflect a campaign led by ex-premier Dr Mahathir Mohamad (left) to unseat him from the Umno presidency.

Abdullah also touched on Anwar's request for a meeting to discuss a power transfer to the opposition Pakatan Rakyat, based on the claim that the latter has at least 31 defectors from Barisan Nasional to form a new government.

He said the letter which was sent by Pakatan leaders did not mention anything about a power transfer.

The prime minister also described Anwar as a "threat to the country's economy as well as possible threat to security".

"I will not indicate what plan I have," he said when asked if he would act against Anwar.

Najib has also been appointed deputy chairperson of government investment arm Khazanah Holdings.

Market Soft

Meanwhile, shares sank a third day today - charting a new low for the year - amid gloom in global banking stocks and growing fears that the political standoff between Abdullah and Anwar might be prolonged.

“The worst case scenario is the uncertainty dragging. Even if the global backdrop clears but the domestic uncertainty plays out further, there will certainly be room for further downside,” said Vishnu Varathan, analyst at Forecast Singapore Pte Ltd.

Political bickering has marred the Malaysian bourse this year, with investors staying on the sidelines in anticipation of a sea change in the local scene after Pakatan scored a major victory in the March general election.

At the midday break, the Kuala Lumpur Composite Index was at 1,007.14, down 5.23 points. It hit a fresh year-low of 1,002.83 in morning trade.

Dealers expect more losses in the days ahead, with the benchmark index forecast to breach the pyschological 1,000 points, while support is seen at the 900 points mark.

[More to follow]