PETALING JAYA: Anwar Ibrahim’s ability to build political support as well as his maiden budget as prime minister have come to characterise his early days as the nation’s chief executive.
Economists were mainly impressed with his success in cobbling together enough seats in the Dewan Rakyat to form the country’s first unity government but are more cautious about his expansionary fiscal policy or his attempt to help small businesses.
Anwar marks his first 100 days in office today. He was sworn in as prime minister on Nov 25, 2022, six days after the 15th general election left the country with its first hung parliament.
UiTM lecturer Firdausi Suffian said Anwar succeeded in bringing stability to the economy with the setting up of the unity government.
“His success in galvanising support from diverse parties in the peninsula as well as Sabah and Sarawak was of great significance,” he told FMT Business.
The market reacted positively, with the benchmark FTSE Bursa Malaysia KLCI hitting a new intra-day high on the day it was announced that he would be leading the nation’s new government.
Coupled with the 1.8% gain chalked up by the ringgit against the US dollar, Firdausi saw it as a discernible sign that the markets were encouraged by what was to come.
However, Anwar’s economic policy has not been as well-received. Sri Muniati Yusuf, deputy director of research at the Institute of Democracy and Economic Affairs (Ideas), said it was still too early to tell if the expansionary fiscal approach would have a positive impact.
“There are no significant spending cuts on operating expenditure but the estimate for development expenditure has risen substantially,” she pointed out.
A lot of the new spending will be on financial assistance to the poor in the form of cash aid and longer-term income generating schemes, a strategy that Firdausi said was more effective than widening subsidies or price control.
Bait al-Amanah analyst Farah Anwar said schemes like the people’s income initiative and continued waiver of examination fees for taxis, buses, e-hailing vehicles and B2 motorcycles also showed a commitment to promote longer-term income generation.
“Rather than perpetuate a culture of dependency, the administration is empowering micro and small businesses and people with job opportunities,” she told FMT Business.
However, Anwar’s attempt to help micro, small and medium enterprises (MSMEs), which account for 98.5% of all businesses in the country, has drawn criticism.
Newly-minted treasury secretary-general Johan Merican pointed out that 150,000 enterprises will benefit from the recently announced 2% tax cut, but Bait al-Amanah’s Farah doubts the provision will have a significant impact, given this accounts for only 10% of all SMEs.
However, Firdausi said the loan assistance to SMEs would help to mitigate the impact of the economic slowdown caused by the Covid-19 pandemic.
The administration’s ambiguous stance on breaking the cartel culture in several primary sectors also drew criticism.
Firdausi said that while the administration seems to have the political will, it will ultimately be judged on its delivery.
“To avoid cartels, we must first reform the government-linked companies (GLCs). Some are licence holders and thus close to the regulators. For the layman, they are both player and referee,” he said.
Going forward, more effort is needed in the pursuit of institutional reforms, Geoffrey Williams, a professor at the Malaysia University of Science and Technology, told FMT Business.
“The shelved reform of PTPTN loans, lack of clarity on targeted subsidy formulas and the silence on the establishment of a parliamentary budget office are signs that the government still lacks a coherent reform agenda,” he said.
The bouquets and brickbat aside, Farah pointed out that the unity government has been put in place only recently so its top priority is to ensure economic and political stability. “We should be patient,” she said.
She pointed out that with stability in place, it would be easier to introduce more concrete institutional reforms.
Ultimately, Malaysia’s political landscape has changed, and the administration now faces unprecedented challenges in its effort to re-invigorate the economy.
It is up to Anwar and his team to chart a new course for Malaysia.