EXCLUSIVE - Malaysia PM Won't Rule Out Early Election

Malaysia's Prime Minister Najib Razak speaks during the Economic Transformation Programme announcement at his office in Putrajaya January 11, 2011. REUTERS/Bazuki Muhammad/FilesBy Mark Bendeich

MELBOURNE, March 4 (Reuters) - Malaysia's prime minister said on Friday he had not ruled out an early election and that he needed no mandate at the polls to proceed with key reforms, like the introduction of a goods and services tax.

Najib Razak, whose National Front (BN) coalition suffered record losses to the opposition in 2008, has pledged to restore investor confidence in Malaysia by pursuing reforms, including introducing the twice-delayed tax.

In an interview, Najib said a good showing in a forthcoming election in the politically important state Sarawak would help assess the public mood and perhaps provide a pointer towards calling an early general election before one is due in 2013.

The BN holds 63 of 71 state legislature seats.

"It's a question of the assessment on the ground, how people are feeling towards the government, whether we can have a feel-good factor and people have confidence in the government and the position of the opposition," he said.

"I would not rule out anything. It could be early or it could be later. I am still assessing the situation. Sarawak will be part of the assessment, certainly."

He referred to the Front's wins in four out of five recent by-elections against the People's Alliance opposition led by former deputy prime minister Anwar Ibrahim, who is beset by new charges of sodomy that have kept him in court.

Anwar has labelled the charge a repeat of accusations that led to his ouster as deputy prime minister in 1998, and six years in jail.

"So far it looks good. So far the reports on the ground are quite encouraging but we cannot take the threat lightly that the opposition will be more determined this time to try to make inroads in Sarawak," he told Reuters during a visit to Australia.

"These are all building blocks toward a general sense of confidence heading towards the next general election, but I am also mindful of the fact that by-elections and state elections are not everything in terms of the final outcome with respect to a general election."

He said he believed the GST aimed at widening Malaysia's narrow tax base, could be introduced "slightly later" than this year, but no time frame had been established.

But no election mandate was required, he said, before proceeding with the tax, twice put off to ensure broader public acceptance.

A national election is likely to be held after Najib tables the country's 2012 budget some time during the third quarter of this year.