PETALING JAYA: The current headwinds, including the US-China trade tensions and the recent cut in the Overnight Policy Rate (OPR), may pose challenges to the government’s economic reform agenda.
“Business and consumer sentiments have been soft but this is largely due to the knock-on effects of external issues, which have also clouded the Pakatan Harapan government’s achievements over the past one year,” said Professor of Economics in the Sunway University Business School Dr Yeah Kim Leng (pix).
“Overall, what the government has done in terms of cleaning up would receive very high marks, given the scandals that happened during the previous government’s administration. In terms of getting the country’s finances in order, restoring trust in the government and strengthening the integrity, transparency and accountability of public finances, they have done well,” he told SunBiz.
He said that the government has received much criticism in terms of institutional reforms, but noted that the government should be given more time, as some of these reforms are difficult to implement, particularly those that involve large scale changes.
“From an economic perspective, the visible progress is Pakatan Harapan’s anti-corruption drive, which they should continue with. I believe it has the right DNA to improve Malaysia’s level of governance, which is important in order to move towards developed nation status,” Yeah said.
In terms of economic management, he said the private sector has been relatively resilient while Malaysia’s rankings, such as transparency and ease of doing business, have continued to improve.
“Our sovereign credit quality also, has been successfully maintained despite the sizeable accumulation of liabilities,” he added.
Yeah said Malaysia now has a reliable and fairly accurate picture of its public finances, which will help allay concerns of investors, the impact of which can already be seen based on the approved foreign direct investments in the manufacturing sector.
Meanwhile, Yeah said the government faces constraints in terms of public sector spending, due to budgetary constraints and the drive to reduce government debt level.
“The government will face constraints thus, it has to shift to the private sector. The government needs to provide a stable political environment and clear policies to drive private sector investments, which is the key to Malaysia achieving a higher level of growth,” he said.
With a higher level of growth, he said the government can secure more revenue which would allow it to focus on B40 issues that are critical for the government to address, as well as some of the concerns of the M40 group such as the rising cost of living.
Moving forward, Yeah said it is important for the government to focus on the anticipated handover of leadership and policies to enhance national unity.
“In terms of the anticipated handover, a smooth transition in leadership would further enhance political stability and private sector confidence while boosting overall sentiments. Secondly, the government must focus on policies to enhance national unity, given that race and religion issues recently have been divisive,” he added.
Source: The Sun Daily