MALAYSIA’S fourth quarter GDP performance will depend on the policies of the new government if there is indeed a change in leadership as announced by Anwar Ibrahim, said analysts.
They said Prime Minister Muhyiddin Yassin’s policy progress was slow in the first few months since he took office in March because he had to take time to set up his cabinet, which included several new ministries.
However, as the Malaysian economy is still recovering from the Covid-19 pandemic, they said, a few months’ lull, as a result of further delays by an incoming government, can scuttle growth.
Institute for Democracy and Economic Affairs senior economist Adli Amirullah said if Anwar can indeed seize power, a quick transition and speedy policy adjustment are critical in maintaining the current economic recovery.
Adli also said, assuming Anwar becomes prime minister, how his administration responds to the current slump and policies of relevant ministries will have an impact.
“When Perikatan Nasional assumed power, we could see that for one to three months, there was some confusion.
“It took some time for the new cabinet to be announced and there were also new ministries. These new ministries need funding and the procedures to do so also take time,” he said.
So, Adli said, it is imperative for Anwar to move quickly, should he receive the mandate, and ensure economic recovery.
“If that cannot be done, then it can be said that the fourth quarter is a goner,” he said.
Meanwhile, if Anwar is bluffing or does not have the support, then the economy will remain stable because Muhyiddin has been in power for about seven months and many important economic policies, such as the 12th Malaysia Plan and Budget 2021, are already being formulated, Adli said.
“If these are already in the works, then the bureaucracy and delays are reduced. Plus, Muhyiddin has already passed the first stage of setting up a government, which is the cabinet composition and co-ordination between them.
No huge changes
However, another analyst said political stability will have little to do with the rate of economic recovery.
Universiti Tunku Abdul Rahman associate professor of economics Wong Chin Yoong said the public will not be much affected by the change in administration.
“There won’t be a huge difference as far as the public is concerned, and they won’t be fearing an economic collapse.
“The latest economic stimulus package (Kita Prihatin) has already been announced, which sticks to the previous plan of wage subsidies, loan repayment moratorium and improving cash flow. All these will have a stabilising effect.
“There is already a good momentum in economic recovery, of course, people will still be worried about potential issues after the loan moratorium ends but that has nothing to do with politics,” Wong said.
As such, the news that the opposition has enough support to form a government will not have drastic effects on the economy, he said.
Wong said if there were to be a new government, it will likely only amend certain aspects of next year’s budget – scheduled to be tabled on November 6 – instead of rejecting or delaying it wholesale.
“The bureaucracy is still working on it but most of it has already been completed, there won’t be any huge changes,” he said.
“If there is a change in government, the budget and its policies will most likely be allowed to continue. If it was rejected, then I can only comment if it happens, it’s not impossible.
“However, because of the time constraint, I don’t believe there will be any huge changes,” he said.
Wong said if Parliament is to be dissolved to pave way for a general election, then the budget will not be tabled and things will not be as certain.
However, he said the caretaker government still has the authority to make some intermediate funding allocations before the new administration takes over.
Independent economist Prof Hoo Ke Ping said that looking at the Kita Prihatin package and other supporting measures, it appeared Muhyiddin had already made the necessary preparations for snap polls.
“Muhyiddin is prepared for an election, and the effect of politics on the economy will be minimal as the people now have hope (due to the economic assistance),” he said.
Anwar is due to appear before Yang di-Pertuan Agong Al-Sultan Abdullah Ri’ayatuddin Al-Mustafa Billah Shah tomorrow, when he is expected to announce that he has secured a parliamentary majority.
On September 23, the Port Dickson MP held a press conference to announce he had garnered sufficient support from MPs to back his bid to replace Muhyiddin as prime minister.
THE MALAYSIAN INSIGHT