Question mark over impact of Najib decision on business, investment

 

Niaz Asadullah and Chin Chee Seong said foreign investment might suffer, but Geoffrey Williams said those who invest in Malaysia are not those seeking high standards of governance.

PETALING JAYA: Question marks remain over the possible business impact of the Pardons Board decision to commute the jail sentence of former prime minister Najib Razak.

An economist, Niaz Asadullah, said the decision would raise doubts about the government’s capability to deal with “corrupt power elites” and undermine confidence in the business community.

The SME Association of Malaysia said foreign investment might be affected, with doubts about the judicial system.

However, economist Geoffrey Williams said: “The reality is that foreign investment in Malaysia comes from countries and companies with very little concern for environmental, social and governance standards, so the reduction in Najib’s sentence will be of no interest to them.”

Niaz said there was a risk that Malaysia’s ranking in the corruption perception index could drop, after the country rebounded in Transparency International’s rankings after two years.

Political turmoil

Niaz said the Pardons Board’s decision could lead to a volatile political scene as the opposition would use the issue to question Prime Minister Anwar Ibrahim’s leadership.

“If that happens, Anwar’s government may find it harder to sustain last year’s jump in foreign investment,” Niaz told FMT. Malaysia attracted RM225bil of approved investments in the first nine months of 2023, the bulk of it coming from foreign investors.

SME Association of Malaysia secretary-general Chin Chee Seong said the decision might cause foreign investors to lose confidence in the judicial system.

Investor confidence

Chin said that maintaining investor confidence is a priority for businesses, especially when many are still struggling to recover financially from the Covid-19 pandemic.

“Investor confidence is important, and this decision doesn’t paint the country in a good light,” he said.

However, Williams said there would be no effect on investments or the economy as Najib would be in prison until 2028.

High standards

Investors seeking high standards of governance do not look to Malaysia as a key investment market, he said.

“In any case, Najib still has other cases which might result in further prison time if he is found guilty,” he said. Najib has three ongoing cases in court. - FMT