{"id":77517,"date":"2023-01-20T06:00:19","date_gmt":"2023-01-19T19:00:19","guid":{"rendered":"https:\/\/www.aspistrategist.ru\/?p=77517"},"modified":"2023-01-19T18:45:28","modified_gmt":"2023-01-19T07:45:28","slug":"malaysias-new-dawn","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/malaysias-new-dawn\/","title":{"rendered":"Malaysia\u2019s new dawn?"},"content":{"rendered":"
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In 2007, on the 50th anniversary of Malaysia\u2019s independence, Nobel laureate economist Joseph Stiglitz celebrated<\/a> the \u2018miracle\u2019 of the country\u2019s economic rise and creation of a vibrant multiethnic society. In the 15 years that followed, however, revelations of large-scale corruption<\/a> and abuse of foreign workers<\/a> damaged Malaysia\u2019s international reputation and fuelled domestic political instability.<\/p>\n

But Malaysia\u2019s fortunes may be turning around. Late last year, long-time opposition leader Anwar Ibrahim was sworn in<\/a> as the country\u2019s prime minister. His record of effective and corruption-free leadership offers good reason to hope that Malaysia can return to a stable development path leading to greater prosperity for more people.<\/p>\n

As deputy prime minister and finance minister in the 1990s, Anwar oversaw<\/a> the double-digit GDP growth that drove Malaysia\u2019s rise<\/a> as one of Southeast Asia\u2019s \u2018tiger cub<\/a>\u2019 economies. When the Asian financial crisis erupted, he played a central role in mitigating the contagion. And he managed all of this without a whiff of malfeasance.<\/p>\n

Anwar\u2019s record stands in stark contrast to that of Najib Razak, another finance minister who went on to lead the cabinet. Under Najib\u2019s government, Malaysia became embroiled in a multibillion-dollar corruption scandal<\/a> at the state fund 1MDB, with much of the plundered funds having ended up in his own bank accounts. He is now serving a 12-year prison sentence<\/a> for corruption.<\/p>\n

To be sure, Anwar was jailed for nearly a decade himself. The difference is that the charges against him were concocted to remove him from the political picture, after his relationship with Mahathir Mohamad\u2014the prime minister when Anwar held the finance portfolio\u2014broke down.<\/p>\n

The question now is whether the 75-year-old Anwar can bring to bear the policy savvy he has previously shown in addressing the challenges Malaysia faces today, not least sustaining the post-Covid-19-pandemic recovery at a time of elevated inflation<\/a> and declining foreign direct investment<\/a>. This will require, for starters, urgent action to strengthen Malaysia\u2019s fiscal position, including narrowing the budget deficit and reducing the debt burden.<\/p>\n

To this end, social spending must be reformed. Malaysia needs a stronger safety net, but funding it will require the government to reduce fiscal leakage by rationalising subsidies and ensuring that resources and services are well targeted. The ethnocentric handouts that have historically dominated Malaysia\u2019s social budget must be replaced by needs-based programs.<\/p>\n

Increased private investment will also be essential. Mending Malaysia\u2019s tarnished international image will help to restore the country\u2019s status as a competitive destination for high-value investments. Any incentives for private investment (foreign or otherwise) must therefore be accompanied by rules ensuring higher labour standards and business practices that comply with international norms. It is assumed that future inward FDI will adhere to the principles enshrined in the National Investment Aspirations<\/a> framework that was adopted<\/a> in April 2021.<\/p>\n

Beyond attracting more foreign investment, Anwar\u2019s government must nurture the investment capacity of Malaysian-owned companies. Malaysia\u2019s entire economy would benefit from enhanced efforts to transform indigenous firms into high-value-added global industrial champions. But upgrading local industries cannot be done in a vacuum. Cultivating partnerships with foreign investors that can provide access to frontier knowledge, technology and capital is also crucial.<\/p>\n

When it comes to trade, Malaysia will maintain its export-oriented<\/a> regime, while pursuing pro-market reforms, such as streamlining non-tariff measures<\/a> and domestic regulatory barriers<\/a>, in an effort to improve transparency and eliminate cartels<\/a>. Malaysia\u2019s government might also consider eliminating<\/a> the \u2018approved permits<\/a>\u2019 licensing system for agricultural imports\u2014a step that would help bring down food prices.<\/p>\n

Equally important, Anwar\u2019s government must break the \u2018iron triangle\u2019 of bureaucrats, politicians and manpower-industry interests that contributes<\/a> to abuse, exploitation and shortages in Malaysia\u2019s migrant labour market. The country\u2019s export sector is already suffering from an acute labour shortage<\/a>. Until Malaysia secures a steady supply of workers whose rights are protected, local businesses cannot grow and foreign investors will not return.<\/p>\n

The good news is that Anwar\u2019s 10-point election manifesto<\/a> acknowledges some\u2014though not all\u2014of these priorities. But campaign promises often go unfulfilled, overwhelmed by the hurly-burly of politics. Overcoming the ills afflicting Malaysia\u2019s economy will depend in large part on Anwar\u2019s ability to maintain a strong and stable government\u2014no easy feat, when the unity government comprises<\/a> members of five political coalitions.<\/p>\n

Anwar has passed his first political test, winning<\/a> a parliamentary motion of confidence in his government. But, to sustain his administration\u2019s unity, he must carefully balance the interests of winners and losers. For now, it is reassuring that Anwar has reiterated<\/a> his commitment to his election manifesto, a move that signals a positive shift in Malaysia\u2019s political culture.<\/p>\n

The next step will be to expand and refine that manifesto. This will require regular dialogue with civil society, including representatives of various ethnic groups. The inclusion of political parties from the East Malay states of Sabah and Sarawak in the new government represents a historic opportunity to address regional disparities.<\/p>\n

The challenges Malaysia faces are undoubtedly formidable. But perhaps no one is better equipped to confront them than Anwar, who has also assumed the role of finance minister<\/a>. A new era of sustained growth and shared prosperity may soon dawn in Malaysia.<\/p>\n","protected":false},"excerpt":{"rendered":"

In 2007, on the 50th anniversary of Malaysia\u2019s independence, Nobel laureate economist Joseph Stiglitz celebrated the \u2018miracle\u2019 of the country\u2019s economic rise and creation of a vibrant multiethnic society. 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