There is an urgent need for the new government, PerikatanNasional, to address the current economic situation amid political uncertainties. Read more here:
Hot seat: As the country’s economy weakens in the face of multiple threats emanating from external and domestic developments, Muhyiddin has to move quickly to restore confidence among businesses and consumers in the country. — BernamaForeign capital is fleeing. The stock market is reeling, and the ringgit is weakening.
According to economists, among the first few things Muhyiddin needs to do is to quickly establish political stability and the legitimacy of his new coalition government, called Perikatan Nasional . “It is hard to inspire confidence unless there is a stable government. So, there’s an immediate need for the new administration to establish its legitimacy, and hence, political stability in the country, to regain trust, ” says Sunway University Business School economics professor Yeah Kim Leng.
Similarly, economist Lee Heng Guie stresses the formation of the cabinet, comprising members with credibility, competence and integrity, and focused on implementing economic, institutional and political reforms are crucial to restore public trust and confidence. “Any leadership succession or the changing of the political guard is considered important for the masses, businesses and investors because of its implications for change in public policies, ” Lee says.
In a sign of further weakness in the economy, particularly in first half of 2020, Bank Negara over the week cut the benchmark interest rate for the second time this year, bringing it to nearly a decade-low at 2.5% from 2.75% previously. According to the latest official forecast, Malaysia’s economy is expected to grow between 3.2% and 4.2% this year. This is a revision from 4.8% under Budget 2020 as announced last October. In 2019, the country grew 4.3%.
If there’s a need to grow revenue, the Government should do it the right way - grow the country’s economy - Syed Akbar Ali “They must be equipped with the relevant skills, and here is where our education system falls short, ” Syed Akbar points out. He stresses the need to “focus on this vast army of secondary school students who form the backbone of our economy”.
He notes the lack of financing and credit facilities at small-town and small-and-medium-enterprise levels has resulted in the prevalence of illegal moneylenders, or Ah Longs. “The last time Malaysia saw robust economic growth was before the banking system was consolidated, ” he says. “If the banking and financial sector is liberalised, much of this underground economy and its illegal financiers, may become legal businesses; thus expanding the tax base and increasing Government revenue, ” Syed Akbar explains.
“No need to reinvent the wheel. Good policies must be continued and further enhanced to make it more impactful, existing policies must be reviewed, refined or get discarded and replaced by new ones that are deemed appropriate, ” he adds. “Given our economy’s export-oriented nature and unique positioning as a regional hub for many multinational corporations , it is important for the new administration to signal continuation of institutional reform and market liberalisation to boost competitiveness, ” Ali says.
Citing the annual Auditor-General’s Reports, he notes there have been too many cases of wasteful spending at both the federal and state levels.
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