Polls results may not be good news for investors, says analyst

 

The growing support for PN is bad news for Prime Minister Anwar Ibrahim as it will make it harder for him to undertake fundamental reforms to the economy.

PETALING JAYA: The significant inroads made by Perikatan Nasional in the state elections, especially in Selangor and Penang, will send chills down the spines of many investors, says a research analyst.

The burgeoning support for the Islamic and Malay-centric coalition of PAS and Bersatu also spells bad news for Prime Minister and finance minister Anwar Ibrahim as it will make it much harder to undertake fundamental reforms to the economy.

Oh Ei Sun.

Pacific Research Center of Malaysia principal adviser Oh Ei Sun said the election outcome would be concerning for the local and international business community.

“The election results will send chills down the spines of many investors, both foreign and domestic,” he said, noting that PN’s “green wave” swept more than a third of the seats in Selangor, the country’s most prosperous state.

To prove his point, Oh cited the lacklustre investment performance in the east coast states, compared with the more robust investment climate on the west coast.

“The business community is usually very reticent and normally won’t express their sentiments. However, deep in their hearts, I think they won’t look at the results favourably,” he told FMT Business.

The elections resulted in a status quo where Pakatan Harapan and its ally, Barisan Nasional, retained Selangor, Penang and Negeri Sembilan with reduced majorities while PN handed PH-BN a drubbing in Kelantan, Terengganu and Kedah.

More pro-Malay policies?

James Chin.

James Chin, a professor of Asian Studies at the University of Tasmania, said Anwar will now face a greater challenge to win over support from the Malay community to maintain a stable and sustainable federal administration.

“The fact that Anwar and Umno are unable to claw back Malay votes is a big problem. You can see PN making headway into Selangor, Penang and Negeri Sembilan.

“This means it will be harder for Anwar to make fundamental reforms to the economy. He will have to double down on more pro-Malay policies to show that he is more pro-Malay and pro-Islam than PN,” he said.

“I doubt he would be able to introduce a thorough reform (of policies) such as the New Economic Policy. I don’t think that is possible.”

Chin said most pollsters and analysts already predicted the state elections will result in a status quo. “The business community will be neutral on the results, as it was what everyone was expecting.”

Afzanizam Abdul Rashid.

Meanwhile, Bank Muamalat Malaysia chief economist Afzanizam Rashid said the conclusion of the elections may act as a potential catalyst to expedite economic development and reform implementation.

However, he pointed out the federal government now faces the challenge of demonstrating effective economic management amid a globally uncertain growth outlook.

“In the short term, it is crucial for the government to focus on domestic demand to counterbalance external sector vulnerabilities.

“Looking ahead, the meticulous execution of the Madani economy plan over the mid- to long-term emerges as a paramount priority,” he said.

Areca Capital CEO Danny Wong sees more stability post-state elections, and this could be a catalyst for better market sentiment and the return of foreign fund flow.

“This may remove the overhang issue and I expect a more stable political situation in Malaysia (moving forward).

“This new political situation may even boost business confidence and further enhance potential economic activities,” he told FMT Business. - FMT