An economist, Yeah Kim Leng of Sunway University, said political uncertainties are a distraction as attention and resources are diverted to the country’s political climate rather than the economy.
Malaysian Employers Federation (MEF) executive director Shamsuddin Bardan said investors’ confidence may be eroded if the political process takes too long to resolve the impasse about who will run the government.
“Once the question of legitimacy of the government is resolved, the focus will then move to the economy,” Yeah told FMT.
Renewed political uncertainties have arisen after Umno said it would consider pulling out of the Perikatan Nasional government if certain demands on positions are not met.
Several motions of no confidence against the prime minister have been submitted by opposition MPs and Umno MP Tengku Razaleigh Hamzah.
Yeah, who is an external member in Bank Negara Malaysia’s monetary policy committee, said the political uncertainties had not had a direct impact on the economy yet as the economy is largely run by the private sector but investors may put their business plans on hold until the political scenario is clearer.
“They will wait for clearer government policies before making future decisions. Our economic recovery may take longer if political uncertainties take too long to resolve,” he said, adding that it may also affect government contracts and megaprojects.
Yeah said investors who are already in the country may continue to operate as usual as they know there are no dangers from Malaysia’s political uncertainties but those unfamiliar with the Malaysian environment may feel uncomfortable and may delay their investment.
Shamsuddin said politicians should not take too long to resolve their differences. “It may be easier said than done due to the (political) variables involved but it has to be solved,” he told FMT.
He said 70% of the RM70 billion invested in the local market was from Malaysian sources. “The drop from foreign investors is because of a combination of reasons, from the Covid-19 pandemic to the global economic slowdown.
“But prolonged political uncertainties might contribute to the net impact,” added Shamsuddin.
He added businesses were showing signs of recovery from the restrictions of the movement control order (MCO). He hoped the conditional MCO in the Klang Valley from Oct 14 to Oct 27 will not have much impact on the country’s economy.
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