MALAYSIA Tanah Tumpah Darahku


Tuesday, November 29, 2022

Anwar is Malaysia’s best bet for navigating its challenges


By Shankaran Nambiar

Anwar Ibrahim has finally been appointed as prime minister following a series of dramatic twists and turns. After eluding him for more than 20 years, he will be taking up the role now at a time that will greatly test his skills as a leader.

Malaysia’s political landscape is as fragmented as it can get. Anwar leads a unity government and will depend on the support he can cobble from once-professed enemy Barisan Nasional (BN) and other groups.

The economic environment will not give Anwar any comfort either. The global economy, by almost all projections, is expected to go into a severe slowdown, with many countries falling into recession. Malaysia will not be spared, but although its economy will continue to expand at least marginally, it is probably going to feel much like a recession.

As it is, the country is struggling with inflationary pressures, a declining ringgit and a population that is starting to age. There are also structural problems that could affect the long-term growth of the country and need to be dealt with, including the declining quality of education, an inadequate supply of high-talent labour, inadequate levels of productivity and the middle-income trap the country is caught in.

Anwar has set high standards for himself, and he will be judged by the comprehensive and ambitious manifesto of his electoral coalition, Pakatan Harapan (PH).

Its campaign platform included promises to deliver a humane economy, address the problems of the country’s ageing society and introduce measures to attract investment. Other pledges reflected unaddressed public concerns, including the rising cost of living, eradicating poverty, introducing affordable housing and improving health care.

Less conventional is PH’s focus on the well-being of children and its commitment to accord greater autonomy to Sabah and Sarawak.

Anwar is known for his idealism, his strong sense of good governance and democracy, and his willingness to push for reform.

But the challenging state of the economy and the fractious political configuration that defines the unity government he will lead limits his room for action.

Anwar is Malaysia’s fourth prime minister in the last four years. The factional jostling for power that led to the collapse of coalition governments in 2020 and 2021 is likely to cause even more ructions given PH’s electoral minority.

The economy will be no less tricky to handle. The pandemic has narrowed the fiscal space available to Malaysia, and the harsh economic environment that will emerge in 2023 will likely not be opportune for trimming excess government expenditures.

The global landscape will not be favourable to propping up the economy either. But Anwar must turn his attention immediately to next year’s budget, which the previous government tabled but then left unconfirmed when it dissolved Parliament.

That budget will have to be revisited. It was basically an election year spending plan sprinkled with benefits for various groups rather than a budget for difficult times. More attention will have to be paid to raising government revenues.

Anwar’s choice of finance minister will be important given the economic challenges ahead. Umno’s Johari Abdul Ghani, the lead party in BN, could be a good fit and help to secure his group’s commitment to the new government.

Johari, who has a background in business and previously served as deputy finance minister, has a good understanding of how the market works and is known to voice his thoughts on the economy. He has interesting ideas on how small and mid-sized enterprises can be the bedrock for economic growth, citing lessons from Germany, and is sensitive to the need for tax reform. Like Anwar, Johari values diversity and pluralism.

Anwar himself is no stranger to the finance portfolio, having held the ministerial role between 1991 and 1998 when then prime minister Dr Mahathir Mohamad grappled with the Asian financial crisis. This background could make Johari and Anwar a formidable economic team.

At this stage of Malaysia’s history, as it struggles to cross the threshold to being an influential middle power politically and economically, Anwar seems best poised to lead the country out of its immediate difficulties.

Malaysia needs an economic reset and it needs a more liberal, forward-looking approach to transforming its economy. With his reform mindset, Anwar is the best bet that Malaysia has at the moment. - FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.

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