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New Government Will Be Business-Friendly
While the world is cheering Tun Mahathir-led opposition’s stunning victory over the ruling party, both local and international investors are eyeing Malaysia’s economic performance after the opposition alliance’s historic win.
What Does Malaysia 14th General Election’s Result Mean for the Country’s Economic Outlook?
Undoubtedly, the surprise verdict has sent a shocking wave to the market because Malaysia has never witnessed a political shift since its independence in 1957. The election result has cast Malaysia into a state of uncertainty especially about the future direction of its domestic politics and foreign policy.
That said, analysts were optimistic about the transition of power and Malaysia’s future.
New Government Will Be Business-friendly
Tun Mahathir was sworn in as Malaysia’s seventh Prime Minister on Thursday night (May 10), marking a new chapter for both Malaysia’s politic and economy. In his first news conference after being sworn in as Malaysia’s 7th Prime Minister, Mahathir reassure the financial community that Malaysia will continue to promote a business-friendly environment to attract foreign investors. Also, at the news conference, the newly-minted Prime Minister promised that he would try to make the ringgit as steady as possible (though he did not announce any policy moves). He expressed hope that the stock market will continue to remain active after it reopens on Monday (May 14) following the two-day public holidays declared after the general election.
Restructuring and Economic Growth
On top of the reassurance, the move of scrapping the 6% goods and services tax (GST), the reintroduction of fuel subsidies and the increment of minimum wages would be credit positive to the nation’s economic performance. The opposition coalition has promised that it (GST) would be replaced with a fairer sales and services tax – which many predicted it would be a game changer to Malaysia’s economy. In terms of policies, Prime Minister said the new federal government will revisit and re-evaluate some laws, for example the law regarding Anti-Fake News, as well as the role of the National Security Council.
The central bank (BNM) has announced its interest rate decision as planned at 3pm on Thursday. BNM kept its key interest rate unchanged at 3.25 percent on Thursday, indicating lower inflation and steady economic growth hours after a shock election result. Besides, the election outcome implies that “Malaysia could finally start healing old wounds (some of the institutional problems that are holding back the country’s long-run prospects)” and it will credit positive to Malaysia’s long-term development.
A Breath of Fresh Air
To further restore investors’ confidence, Prime Minister Mahathir named Lim Guan Eng as the new finance minister and set up a five-member – “Council of Elders” (which is also known as the “Team of Eminent Persons”) to revive the country’s economy. Former Finance Minister Tun Daim Zainuddin will head the council. Other members include former Bank Negara governor Tan Sri Zeti Akhtar Aziz, former president and CEO of Petronas Tan Sri Hassan Merican, billionaire Tan Sri Robert Kuok and prominent economist Dr Jomo Kwame Sundaram.
Earlier today, the newly appointed finance minister has cleared the air that circulars claiming the GST would be abolished from June 1 were fake. Guan Eng reassured the citizens that the move to scrap GST would be implemented as promised, but it can only be done after he officially sworn in as the finance minister.
Prime Minister has touted that the new government will focus on Malaysia’s finances and the economy’s management – which is a strong message of assurance and a good start for the new chapter of Malaysian’s history.
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