Govt won’t curtail business freedom, says PM

He says the government was more keen in making business freer and easier without too many legal restrictions.

Dr Mahathir says the new government will conduct economic performance studies, including the country’s actual debts and monetary outflows. (Reuters pic)

KUALA LUMPUR: The new Pakatan Harapan (PH) government will not curtail business freedom with too many laws that will burden industry players, said Dr Mahathir Mohamad.

The prime minister said the government was more keen to see business freer and easier without too many legal restrictions.

“We welcome either domestic or foreign direct investment (FDI).

“FDI is limited to bringing in capital and technologies into the country, building factories, and producing products for the local and export markets.

“We find that Malaysians are competent in development and are able to build our own cities.

“We have to determine the needs of the people and all these opportunities will be opened to local companies,” he said during a briefing session for RTM and Bernama at his residence in Seri Kembangan here today.

Mahathir said the government would only open this opportunity to foreign companies if there were no local expertise in any particular area or mega infrastructure projects, but it would be carried out through open tenders.

“If there is something doubtful or unusual about the tenders, we will not hesitate to investigate,” he added.

The prime minister said the new government would also conduct economic performance studies, including the country’s actual debts and monetary outflows.

He added that the public should not be upset or suspicious on the intentions of the new government, as it only wanted to clean up and reduce the country’s economic problems.

Volatile start to trading expected Monday

Reuters reported that the new government was girding for a volatile start to trading on Monday when local currency, debt and equity markets open for the first time since the stunning election defeat of the Barisan Nasional coalition that had ruled the country for six decades.

“We will watch the market and take necessary action whichever way the market goes,” Mahathir said after offshore investors expressed concern that his populist promises could undermine economic prospects.

Mahathir’s alliance had pledged during the campaign to remove a goods and services tax, scrap toll fees, reinstate fuel subsidies and review Chinese investment deals.

The ringgit lost 4% in offshore trading, while an overseas Malaysian equity fund showed a 6% drop in share values after the results were announced early on Thursday.

The currency “may need to play catch up” on Monday, and fall in line with a 4% drop in three-month non-deliverable forwards, while government bonds are likely to be under selling pressure, Frances Cheung Head of Macro Strategy, Asia, at Westpac bank said by e-mail.

Mahathir named Lim Guan Eng, a relative unknown, as finance minister over the weekend, but also appointed billionaire tycoon Robert Kuok and highly-regarded former central bank governor Zeti Akhtar Aziz as advisers on financial matters to allay investor worries.

Local economic analysts said Lim had built a good reputation as chief minister of Penang state and would be welcomed by Malaysian investors.

But tensions within the ruling alliance over Cabinet picks that emerged at the weekend would weigh on sentiment, analysts said.

Mahathir and his jailed ally, Anwar Ibrahim, both stepped in to ease the tensions on Sunday.
“This is a coalition of four different parties with different agendas. The easy part was being in opposition – now they have to form government, and that’s creating uncertainty,” Trinh Nguyen, senior economist at Natixis, told Reuters by phone from Hong Kong.

“This will have an impact on prices and they will have to correct to reflect this higher level of uncertainty… I think the markets have been wrong-footed,” she said, though adding that the economy, especially with oil prices rising, was well placed to absorb the shock.

Analysts also pointed to the possibility of reshuffles at the top of government-linked corporations and, if sentiment sours at the bourse, ratings agency Moody’s sees the banking sector hardest hit.

“We will see increasing risks of capital outflows and a further weakening of the ringgit. That could in turn dampen private sector consumption and operating conditions for banks in Malaysia,” said Moody’s senior banks analyst Simon Chen.

The local share market is Asia’s top performer so far this year after Vietnam, with more than 7% gains in dollar terms. Its open at 9am local time on Monday, provides some time for investors to absorb the surprise election results, analysts said.

“There will be some uncertainty in the near term but at least higher oil prices will provide additional revenue for the new administration,” Khoon Goh, head of Asia Research at ANZ Bank in Singapore told Reuters by e-mail. -FMT