Longtime Malaysian minister signals confidence his party will hold onto power in coming elections

Key Points
  • Musa Aman heads up the Barisan Nasional party in the state of Sabah.
  • The country's prime minister is expected in coming days to call national elections for this year.
  • The vote comes amid ongoing investigations into an alleged misappropriation of state funds, known as the 1MDB scandal.
Sabah's chief minister on the upcoming Malaysian elections

The chief minister of one of Malaysia's largest states on Thursday struck a confident note on his party's chances of holding onto power in upcoming elections.

That would mark a major win for the ruling Barisan Nasional party, which is beset by a scandal involving 1MDB, a sovereign wealth fund that was set up to stimulate the country's economy.

Musa Aman, who heads up the state of Sabah, said economic improvements implemented during his 15-year tenure made his party an obvious choice for voters faced with a range of alternatives that lack "long-term policies."

"Some new parties have been formed in the coming elections without clear long-term policies or strategies for the betterment of Sabah," Musa told CNBC's Asia "Squawk Box." But he insisted that citizens could see that his economic blueprint for diversifying the state's economy – namely moving away from primary commodities to services, tourism and manufacturing – was now "bearing fruit."

Sabah is the third-largest of Malaysia's 13 states, home to a more than a tenth of the country's population. Situated on the island of Borneo, it is seen as a bellwether in national elections.

Elections expected any day

Malaysia is set to hold a general election by August, though the Prime Minister Najib Razak could call one as soon as this Friday, according to Reuters reports. Under the Malaysian electoral system, voters submit two votes: one for state government and another for federal government.

What happened to Malaysia's 1MDB money?

Traditionally, the Barisan Nasional party and its predecessor the Alliance Party have been a sure bet in elections, having dominated Malaysian politics for more than three decades.

But the U.S. Justice Department is among the authorities carrying out investigations into the alleged misappropriation of state funds via 1Malaysia Development Berhad, a sovereign wealth fund set up by Najib in 2009. That has led to questions about the party's ability to hold onto power.

Najib has denied wrongdoing in the so-called 1MDB scandal.

'Fake news' crackdown

Najib on Wednesday introduced 1.46 billion ringgit (roughly $377.6 million) in pay hikes for the country's 1.6 million civil servants — a traditional core support base for the Barisan Nasional.

The country's parliament this week approved a new law prohibiting the spread of what it calls "fake news," threatening punishments of up to six years in jail and a 500,000 ringgit (about $128,000) fine for offenders.

Opponents have criticized the new laws as an attempt to stifle criticism ahead of the country's election. But Musa said voters were "mature" enough to use their own judgment.

He added that the government would do more to shed light on its "success stories."

"The spread of information and news to digital and social media makes it critical for us to ensure we are sharing our success stories online, while correcting the lies and fake news media," he said.