PETALING JAYA: An economist says Putrajaya must present a clearer and more coherent vision for the economy if it wants to attract investors, in the wake of a report that global investors are losing patience with the country and opting to invest in other markets instead.
The report by Bloomberg also noted that Malaysian stocks had recorded outflows in all but two of the past 12 months, and that the ringgit is among the worst performers in Asia.
Carmelo Ferlito, a senior fellow at the Institute for Democracy and Economic Affairs, said Pakatan Harapan’s victory at the polls last year had been welcomed with “unrealistic expectations” by many, including financial markets.
A year later, he told FMT, investors were realising that no political party can “perform miracles” and provide an instant fix for the issues plaguing the economy.
He added that the euphoria seen around the country following GE14 had largely evaporated while public confidence appeared on the decline, especially given the budget cuts involving big projects.
While Putrajaya was right to revisit its spending and attempt to tackle the country’s debts, he said, it had also sent out what he called “mixed messages”.
“The present government has sent out mixed messages, claiming sometimes to believe in the primacy of private initiatives, and at other times expressing the desire to embark on new government-led investment projects like the third national car.”
He also spoke of government initiatives that seem “too centred” on Prime Minister Dr Mahathir Mohamad and have no clear policy framework to guide investors.
He said Mahathir, at 94, is held in high regard but added that his leadership is not seen as a long-term phenomenon “for obvious reasons”.
“A lack of clarity on future strategies increases the degree of uncertainty, worrying investors and hampering them from making sound predictions,” he said.
Ferlito said Putrajaya must act like a government instead of operating as “a series of ministers”. He also urged it to build a political identity that is about more than the fight against corruption and the issues surrounding former prime minister Najib Razak.
“A stronger identity should lead to a clearer and more unitary vision on economic issues, which could become a point of evaluation for coming in or going out.
“Clarity, vision and stability are the right mix for attracting investments.”
Another economist, Firdaos Rosli of the Institute of Strategic and International Studies, said the new “Shared Prosperity” model announced by the government last week would require more detailed explanation to give investors an idea of Putrajaya’s economic planning.
“Investor confidence is not static,” he said.
“Many of our competitor countries offer similar investment incentives as we do, so the real question is: what can we offer that others can’t or won’t? How many more fiscal incentives can we offer given the circumstance we are in today? What is our niche?”
He referred to economic reforms and measures undertaken by the previous administration like the Competition Act, Minimum Wage Act, goods and services tax, Pan Borneo Highway, Belt and Road Initiatives and Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
These, he said, were likely implemented as the government at the time knew that Malaysia’s economic growth was no longer the same.
He said the continuity of policies is critical to further refining such reforms.
“Once we disrupt the momentum, it will be much harder for us to move forward,” he added.