Home Asia-Pacific Economic Revival in Malaysia Still a Doubt Despite Mahathir Return

Economic Revival in Malaysia Still a Doubt Despite Mahathir Return

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Malaysian citizens had high hopes for reforms and an economic revival once Mahathir took office. However, the hopes are quickly fading considering the country was already drowned in corruption and public debt.

Mahathir has put his efforts in trying to clean up the public finance mess left by the previous administration. The state fund 1MDB and Najib Razak, the former prime minister, are under investigation for involvement in the multibillion-dollar corruption scandal the pegged the country.

Polls show that hope for the successful fight for corruption and an economic revival is quickly fading. Divisions in the administration have further diminished any efforts to attract investment, create job opportunities nor give the government a revenue boost.

Malaysians are also losing faith in the government with support dipping from 66% to 39% since August 2018 based on data collected from Merdeka Center and independent pollster. The popularity of Mahathir is also dropping with figures indicating a loss of faith from 71% to 46% within the same period.

The independent pollster also indicated that the majority of Malay Muslims were becoming critical of Mahathir’s administration. This may be partly because the Malay Muslims benefited more from subsidies in the previous administration. The appointment of a Malaysian-Indian attorney general and a Chinese finance minister by Mahathir may have further led to the loss of support from the Malay Muslims.

Aliff, a Malayan protester, said that a big number of young people were hopeful of the Mahathir government, but they were yet to see any sign of the change they had hoped for.

The survey by Merdeka also showed that investors were wary of the fluctuating currency and the slow growth of the economy. Stocks are underperforming, and the currency is depreciating against rivals in the region. State entities such as the Malaysia Airlines that are embroiled in debts have also dented any efforts to recover the public debts.

Slowing global growth and the ongoing US-China trade war made the Malaysian central bank cut the economic growth forecast for the year 2019 with an expectation of drop-in export.

Mahathir has tried to solve the revenue burden by mending ties with China acquiring an investment boost in the form of an 11-billion-dollar rail deal.

Winning back the voters’ confidence and boosting the economic growth will be problematic for Mahathir with an unstable coalition administration, lack of public support, and a debt to GDP ratio of about 50%.

A research note by capital economics reported that exports are expected to be in jeopardy and the GDP is looking to further slow to crisis level in the coming post-financial period.

A senior government official who requested to stay anonymous said that officials in the government are all working in silos where everyone knows the problems the country is facing, but none is instigating a discussion on the way forward.

The hope for reforms is also being dragged down by cracks in the ruling party, Pakatan, with the member parties of the coalition failing to agree on anything.

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