UNITY GOVERNMENT BUILDS A STRONG FOUNDATION TO RESTORE THE ECONOMY

The Unity Government led by Datuk Seri Anwar Ibrahim has planned various initiatives and strategies to serve as a strong foundation in its effort to revitalise the country's economy and the people despite only being a year in office.

Anwar, together with his Cabinet ministers, has successfully generated various strategies to improve the standard of living for the people and ensure that the nation's wealth is enjoyed equitably by all segments of the population despite facing various challenges and uncertainties in the domestic and international economies.

In his inaugural speech as Prime Minister a year ago, Anwar pledged to address issues afflicting the people, including the rise in the cost of living, while emphasising good governance in his administration by combating corruption and moral decay.

As a result, Anwar, who is also the Finance Minister, and the Cabinet of the Unity Government made significant progress in the face of various challenges domestically and globally to steer Malaysia back on track towards becoming an advanced nation after a year.

The pledge is not just empty talk as the Unity Government under his leadership has successfully attracted approximately RM333.69 billion in potential investments and RM11.56 billion in potential exports since taking over Putrajaya.

These investments, which come from several major countries such as the United States, China, Japan, South Korea, the UAE and Singapore, clearly demonstrate the confidence of foreign investors in the capabilities, political stability and long-term plans outlined by the country's leadership.

Improvements and Enhancements under the Unity Government

Director of MBA programmes and associate professor at Putra Business School, Dr Ahmed Razman, said that from an economic perspective, there are several macro indicators showing improvements and enhancements.

“Especially when we refer to the gross domestic product (GDP) growth, our country still records positive growth although it is slightly lower compared with the previous year but it still demonstrates the ability of our country to make economic progress in a challenging global environment, particularly on the global stage.

“The inflation rate continues to decrease for nine consecutive periods to only two per cent currently and we also don't see drastic hikes in interest rates such as the overnight policy rate (OPR), only three per cent,” he told Bernama.

Furthermore, he said the latest data showed the unemployment rate decreased to 3.2% accompanied by a continuous increase in the labour force.

“Overall, we see that our country is still capable of generating income in the face of a challenging environment, unlike some other countries that are still grappling with an uncertain economic situation,” he said.

On 27th July, the National Energy Transition Roadmap (NETR) Phase 1 was launched by the Economy Minister Rafizi Ramli, marking the beginning of efforts to mainstream the narrative of energy transition in the country's development.

Simultaneously, Rafizi announced 10 flagship projects that are expected to generate investments totalling RM25 billion and create 23,000 high-value job opportunities.

NETR is not just a document outlining steps to achieve net-zero targets but a combination of strategies and initiatives that can transform the economy, people's livelihood and country's position on the world map.

The New Industrial Master Plan (NIMP 2030), launched on 1st September, 2023, will breathe new life into planning the country's industrial direction for the next phase of economic growth, aligning with the increasingly challenging global environment.

The master plan takes a four-mission-based approach to drive large-scale industrial transformations, aimed to advance the economy, build a technologically advanced nation, move towards reducing carbon emissions and establish a sustainable economy.

At the recent parliamentary seating, Anwar also assured his commitment to the country and economic growth by constantly seeking opportunities to establish relationships with countries of potential to attract investors.

He said the government does not miss opportunities to hold bilateral meetings, officially or separately, with several countries while attending the 30th Asia-Pacific Economic Cooperation (APEC) Economic Leaders' Meeting that was held in the United States (US) on 14th-17th November, 2023. 

Challenges of the Unity Government

However, Ahmed Razman said every country faced unique challenges and for the Unity Government, one significant challenge lies in the weakness of the ringgit compared to the US dollar.

“At the same time, people are complaining about the cost of living. Although there are price controls on goods, the overall cost of living remains an issue that is frequently discussed.

“It may not be fair to assess the performance of any government within just a year but credit should be given if successful achievements have been obtained,” he said.

He said undoubtedly, some improvements and efforts to further boost the economy would take a longer time.

According to Ahmed Razman, the assessment of a government's performance should be seen more holistically and not just for a one-year period but over the span of the administration term, approximately four to five years.

He said the Prime Minister's focus and primary agenda are to ensure that no one is left behind in terms of income and wealth.

“When any government focuses on boosting the economy, we don't want a scenario where economic growth increases and the profits and income of companies rise but only large corporations benefit.

He said in the tabling of Budget 2023, there are commitment to eradicate hardcore poverty, aiming to improve the living standards of those genuinely below the poverty line. 

Attracting Foreign Investors' Commitment 

He said this year witnessed a significant influx of foreign direct investment (FDI) commitments into the country coupled with memoranda of understanding (MoUs) with several major trading nations, all of which the impacts would not be immediately visible.

“These are investor commitments and they need time to build factories or establish their businesses in our country, hire workers and then we will see the effects where the people will begin to enjoy competitive wages,” he said.

He said within a year, various reports and plans related to the economy have been presented and various existing policies have been improved or new policies introduced, meeting the expectations of business owners and investors.

Institute for Democracy and Economic Affairs (IDEAS) chief executive officer Dr Tricia Yeoh said among positions taken by the government, investors have responded well to the Public Finance and Fiscal Responsibility Act, which was most recently tabled and passed by Parliament.

“This signals that the government will use specific measures and limits to manage its public finances, for instance capping the debt-to-GDP ratio at 60% (which is below the current ratio of 65%).

“It has also released its slate of policy documents including the NETR, NIMP, Malaysia Madani framework and the Mid-Term Review of the 12th Malaysia Plan, which provides to the public its policy priorities,” she said. 

In business and trade affairs, Ahmed Razman said perception is crucial as it demonstrates the government's seriousness in implementing a particular agenda.

“When the Madani Economy was launched, we saw many countries wanting to collaborate (with Malaysia), including during the APEC meeting recently.

“For investors, the most important thing is political stability. When there have been many changes in government leadership before, investors begin to lose confidence because if the government changes, what about the promises made by the previous government?” he said.

He said investors' confidence increased when they could see signs of a stable government capable of completing its term coupled with clear documents outlining the goals to be achieved.

Echoing the view, Tricia said political stability is fundamental in ensuring investor confidence as this contributed to economic viability.

“I believe there is generally a positive outlook on Anwar's administration, primarily because there has been greater political stability now than we have experienced over the last few years,” she said. 

The Approach in Developing the People's Economy 

Ahmed Razman said the government's strategy so far is to ensure that every assistance provided is targeted and goes to those who truly need it while reducing waste and corruption.

He said when targeted subsidies are implemented, it would be directed towards those genuinely eligible and at the same time, cash assistance to those in need would be increased, aligning with the government's original focus.

“The goods and services tax (GST), if reintroduced now, would actually cause the government's efforts to fail because this tax is based on purchases. When people spend, they will be taxed.

“If we look at household spending, the B40 group spends more on food compared with the T20 group. If GST is reintroduced and many food items are taxed, it will leave them (B40) with no surplus income,” he said.

“(Nevertheless) In the first year of this Unity Government, I see the focus, trend and policy orientation are more towards a gradual transition as evident in the implementation of targeted subsidies,” he said.

Tricia said there is a sharper focus on fiscal consolidation, which was seen given the removal of price ceilings on chicken, subsidy rationalisation for electricity and diesel and talk of possible targeted subsidies from next year. 

“Ultimately it is about the government laying the groundwork with independent and robust institutions, providing a strong and clear regulatory framework and a stimulating ecosystem that can invite businesses to operate in Malaysia,” she said.