Image credit: Kementerian Kewangan Malaysia
PETALING JAYA: Malaysia can ill afford another power grab as political upheaval will hamper the country’s ability to attract investments which are needed to propel the economy forward, say business groups.
Malaysian Employers Federation (MEF) president Datuk Dr Syed Hussain Syed Husman said investors would look at political instability before deciding on investing.
Investors shun political instability, which could cause them to relocate their businesses elsewhere, he said following talk that political rivals of the unity government were planning another coup.On Monday, Prime Minister Datuk Seri Anwar Ibrahim acknowledged the existence of such a plot but said his administration was strong enough to resist it.
In March, Anwar pointed to Malaysia’s political stability as a factor that had brought in Amazon Web Services Inc (AWS).
He said the technology giant would be investing RM25.5bil up to 2037.
According to Anwar, AWS had informed the government that it chose Malaysia as a base because of political stability and clear policies from the government.
MEF’s Syed Hussain said the unity government should prioritise policies aimed at attracting foreign investments, especially investments that spurred innovation and technological upgrading.
It should also implement key structural reforms such as revitalising quality investments, digitalising the economy, creating a highly skilled workforce, enhancing trade competitiveness and market access as well as crafting policies on sustainability, technology, innovation and inclusivity.
“The 2019 Global Investment Competitiveness Survey suggests that the most important reasons multinational companies invest in Malaysia include its macro-economic and political stability, business-friendly legal environment and skilled labour force.”
Syed Hussain said the government should also modernise the investment ecosystem to attract more quality investments, encourage deeper linkages between public research institutions and industry, strengthen firms’ technological and skills readiness, and mainstream environment sustainability into economic policy making.The government, he added, should tackle short-term challenges faced by businesses by making funding available for small and medium enterprises and providing the right conditions and incentives for building innovative businesses.
“Currently, most businesses need more financial support from the government such as cheaper business loans as working capital to build back. These include incentives such as lower taxes, lower sales and service tax, cash or grants to businesses, rental subsidies for premises owned by the government and its agencies, and utility subsidies,” he said. Malaysian Associated Indian Chambers of Commerce and Industry president Datuk Seri N. Gobalakrishnan echoed this, saying that another coup would negatively affect the nation’s economy and drive tourists away.
“A stable government and strong economy must go hand in hand to develop the nation. So, all parties should work towards the nation’s growth,” he added.
The Malaysian Investment Development Authority said last month that new investments dropped 13.7% to RM264.6bil in 2022, from a record high of RM306.5bil in 2021.
Malaysia saw two changes of prime ministers after the Sheraton Move which brought down the Tun Dr Mahathir Mohamad-led Pakatan Harapan administration in February 2020.
Source: https://www.thestar.com.my/news/nation/2023/05/03/govt-change-will-jeopardise-economic-growth