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On Reflection | We politicians need to do more to secure our ‘New Malaysia’
- A lacklustre economy and failure to institute reform have plagued the new administration’s first year – but re-engagement with China and the retreat of crony capitalism offer a bright light on the horizon, says MP Wong Chen
- This is the fourth in a series of essays by well-known Malaysians to be published in the run-up to May 9, the anniversary of the country’s first change of government
Reading Time:3 minutes
Why you can trust SCMP
The “New Malaysia” is one year old. It has been a time of high expectations and mixed results. On the one hand, the economy had a lacklustre year and promised political and institutional reforms did not happen. On the other, crony capitalism is in retreat, while freedom of speech and transparency are on the up.
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On the economic front, the Pakatan Harapan leadership went for a record-breaking 315 billion ringgit (US$76 billion) budget for 2019. The market remained watchful on the back of concerns regarding fiscal sustainability and the unexpected resurgent reliance on Petronas. Investors also eyed the massive legacy debt pile, mega-contract renegotiations and delayed and suspended payments for many contractors.
These uncertainties and delays caused cash flow angst along business supply chains and beyond. Despite the reintroduction of Sales and Service Tax (replacing Goods and Service Tax, and collecting less money) the cost of living remained relatively high.
The unhappiness and disappointment of consumers has contributed to electoral defeats for Pakatan Harapan in the last three by-elections. At the time of writing, Malaysians are getting used to these prices, while some basic goods prices have dipped. With government payments to contractors flowing again, the worst seems to be over for domestic policy issues.
What with the US-China trade war, uninspiring commodity prices and challenges to the palm oil industry, the Pakatan Harapan government needed an external boost. Positive re-engagement with China revived the East Coast Rail Link and Bandar Malaysia projects. Malaysia will soon receive a steady injection of Chinese money, and the inflow will strengthen the ringgit and energise the construction sector. The size of the economic multipliers from belt and road projects remains uncertain, but for the time being, the lacklustre Malaysian economy has a lead.
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