Malaysia is a federal constitutional elective monarchy nation located in Southeast Asia region. Malaysia’s general election (GE) is separated into two levels: i) The federal level elections are those for memberships in Dewan Rakyat, the lower house of the Parliament, ii) The state level elections are for membership in the various State Legislative Assemblies. Both of the federal and state governments will be at the helm for not more than five years before an election is held. The recent GE 13 was held on 5 May 2013 which consists of two contesting parties, Barisan National (BN) and Pakatan Rakyat (PR). With the announcement on the dissolution of the parliament to be dated today, the same 2 parties are expected to battle it out for the throne in Putrajaya.
During GE 13, both parties proposed their own manifesto namely, “A Promise of Hope” by BN and “Manifesto Rakyat: Pakatan Harapan Rakyat” by PR. These manifestos addressed the major issues that concerned by the citizen of Malaysia. The manifestos gave a shadow on the governance of the elected party.
The major issues, such as corruption and cost of living, were highlighted by both parties in the GE13. Same problems faced by the nations have been pointed out with different solutions. However, each party did address certain areas that were not in their opponent “To-Do-List”. For example, BN focused on the foreign policy while PR was advocating a better governance in Malaysia [Cassey Lee, 2013].
In order to eradicate the rakyat’s main concern, the rising living cost, BN had to undergo the process of subsidy rationalisation by gradually reducing the overall subsidies. Targeted low income groups or the bottom 40% income households (B40) were granted with aids including the social assistance, Bantuan Rakyat 1 Malaysia (BR1M), book vouchers and schooling aids to the students [The Star Online, April 2013].
In the other hand, PR’s solution in easing the households’ burden was mainly focused on lowering the price of utilities as well as the abolishment of tolls in Malaysia [The Rocket, February 2013]. Both parties believe that by reducing the input cost, the overall price level will fall gradually. Hence, Malaysian will enjoy a lower cost of living aligned with the lower inflation.
Besides, rising property price with a growth of approximately 3% in 2012 [Global Property Guide, 2017] has reduced the ownership of properties which recorded a fall in 2013 since the year 2005. Therefore, contesting parties was aiming to provide more affordable housing in both urban and rural areas. From BN, the project of PR1MA House will be increased together with the introduction of lease and own scheme for the government housing. In the other hand, PR only addressed that 150000 units of affordable housing will be introduced alongside with a National Housing Corporation concept in assisting the construction projects. From here, clearly seen that both parties paid a high degree of attention to the matter of affordable housing in Malaysia as housing issue has been one of the rakyat’s challenges.
The economy of Malaysia was recovering slowly since the 2008 Financial Crisis as the business and consumer confidence were regaining gradually. In 2012, Malaysia real gross domestic product (GDP) was grew at the pace of 5.5% with the unemployment rate of 3.0% [Economic Planning Unit, 2015]. Despite the positive outlook of the local economy compared to the regional market, an inclusive economic reform should be strategizing to ensure the continuous prosperity.
In the effort of structuring a good economic development plan, BN aimed to bring in RM 1.3 trillion investment which can create 3.3 million job with 2 million in high income category. For the challenging economic outlook, more attention should be diverted to vulnerable groups. For this, BN had aimed to structure a fair and equitable economic policy to uplift all the races. However, PR’s economic reform focused on removing the monopolies and promoting competition in order to enhance efficiency. Employment rate was aimed to be improved by reducing the dependence of foreign labours in the domestic workforce market.
In the “A Promise of Hope”, welfare of youth and women were not left out. MyCreative Venture Capital Fund was established to harvest and invest in youth’s idea. A 30% increase of women participation in corporate board level aimed to provide more opportunities for women. On the agenda of opposition, Small and medium enterprise (SME) was the focus of PR as more incentives were planned for this sector because PR strongly believe that the SME is the driver of the national economy. It was clearly shown that both parties acknowledge the importance of enterprise and development of human capital in forging the nation’s prosperity because they are the backbones of an economy.
The next round of general election is just around the corner. It’s time to examine what the country has achieved since the GE13 because the past achievements will serve as an indicator to dictate the future of a nation.
In 2016, Malaysia has achieved an economic growth of 4.2% which was slower than the 5.0% in 2015. Despite considerable external and domestic headwinds, the local economy outperformed from the global benchmark of 3.1%. However, it performed moderately compared to its regional peers such as Philippines and Indonesia who recorded a higher growth of 6.8% and 5.0% respectively [Bank Negara Malaysia, 2017]. The volatility of global market and the fluctuation of commodity prices were the key factors that affected Malaysia’s market. More than 50% of the plummet in crude oil price heavily affected the government revenue from oil and gas sector (O&G) by nearly 30%. In fact, the government reacted quickly by minimising the dependence on O&G sector from 31.2% in 2013 to just 14.7% in 2016 and seeking revenue from other sources.
The introduction of Goods and Services Tax (GST) in April 2015 with a rate of 6% had helped the country to generate a revenue of approximately RM 77 billion up-to-date since the implementation. A full removal of fuel subsidy was replaced by a managed float mechanism on December 2014 has saved government almost RM 20 billion ringgit annually. Hence, subsidy rationalisation helps government to improve the fiscal deficit from 3.8% in 2013 to 3.1% in 2016 [PEMANDU, 2016] as the ultimate goal is to achieve a balance fiscal position in the year 2020.
Moreover, under the National Transformation Programme (NTP), 12 National Key Economic Area (NKEA), namely wholesale & retails, O&G, tourism and etc, was designed to position the private sector as the engine of economic growth. Encouraging private investment in the economy is an integral measure to be taken as this will promote competition and improve the efficiency of the whole market’s mechanism. More injections from private sector shows that there is an improvement of the business sentiment towards Malaysia.
In 2016, the private investment had recorded a total of RM 187.1 billion ringgit which was 71% of the total investment in the country. Besides, 11 multinational corporations (MNC), include Toshiba from Japan and China Railway Group Limited had invested in Malaysia under the initiative of InvestKL [InvestKL, 2017]. These MNCs have provided more job opportunities to the local workforce and created a large spillover effect to the whole domestic economy. All these achievements have served Malaysia as the 5th most attractive investment destination and 3rd preferred global offshore destination.
In March 2017, the inflation rate had reached its highest since 2008, with the consumer price index (CPI) rising 5.1% as it was driven by cost push inflation. As the global crude oil price is stabilised at the range of US$ 45 to US$ 50 per barrel, the domestic petrol price, namely RON95 has increase to RM 1.93 per litre in July 2017 compared to RM 1.75 for the same month in 2016. A general increase in price level has affected by the rise in transportation cost. The rising cost of living has affected all the households in Malaysia especially the B40 group.
Despite the rising inflation, the unemployment rate in the country still recorded at a healthy level of 3.3% in 2016 [World Bank Data, 2017]. However, the unemployment level among youth has reached 10.7%. Cautious business sentiments and moderating economic performance have restrained the businesses from expanding their workforce. An effective measure should be taken in order to eradicate this phenomenon of rising unemployment among youth.
From the view of financial market, FBM KLCI has rebounded to 1788 point in June 2017 after facing a market correction since mid-2015 [Bloomberg, July 2017]. This was driven by the foreign capital inflow as business confidence strengthens and also the stability of Ringgit towards other currencies. Bank Negara Malaysia (BNM) had lower the overnight policy rate (OPR) to 3.0% in 2016 due to uncertainties in global market and Brexit. This served as a catalyst to boost the economy as more disposable income among households due to lower interest payment and cheaper cost of borrowing [Mangalesri Chandrasekaran, 2016].
Although the Ringgit was depreciating against the major currencies, there is still a silver lining as it spurs the export sector with a growth of 33% in May 2017 [Karl Lester M Yap, Anisah Shukry, July 2017]. The export sector is also encouraged by the establishment of ASEAN Economic Community (AEC) in 2015 because many trade barriers are eliminated among the members. Malaysia has recorded a total export of RM 230.93 billion among ASEAN markets in 2016 compared to RM 213.4 billion in 2014.
The future of Malaysia is filled with uncertainties. In terms of the economy, geopolitical changes and global economic trend will be the determinant of the national growth. Policy makers play a pivotal role in establishing an inclusive policy that will forge a conducive business ecosystem to promote healthy competition and attract more private investments. This includes providing an attractive financial system, high quality of human capital, and well-equipped of infrastructure.
Projects such as KL-Singapore High Speed Rail (HSR) and East Coast Railway Line (ECRL), which improve the connectivity of other cities and benefit the businesses in the country as the cost of transportation and travelling time are reduced, together with the development of the sub-urban city and rural area. Therefore, government should focus in facilitating the progress of these major projects to ensure that the projects are carried out effectively and completed on time. Supervision from related authorities is essential to make sure the public can really benefit from all the projects.
Furthermore, government should also diversify their revenue from different of sources besides prioritising the public interest. Constant expenditure from government without any revenue received will deteriorate the country’s fiscal position. The participation of government in business activity should not be minimised but a separated entity should be establish to manage all the invested portfolio efficiently. This can avoid the unnecessary red tape which might deter the decision making process.
In future, focus should continue to remain on the SME sector because SMEs are made up for 65% of the total employment and nearly 36% of Malaysia’s GDP [World Bank, 2016]. Therefore, government should focus on how to uplift and empower SMEs with the resources available. Initiatives should include on SME financing, management training and promoting exports among SME.
Last but not least, the most concerning topic to Malaysians is the rising cost of living which should be addressed with a more effective approach. To eradicate the rising cost, constant aids and subsidies are not the most viable long term method because this might heavily increase government expenditure and rise the nation’s borrowing and debts. Instead, more spending should use in forging an ecosystem where public can self-sustained from the environment in term of employment or entrepreneurship rather than heavily dependent on the support from government.
In conclusion, the highlight of GE 14 will be on how the contesting parties address the issues concerned by the Malaysian such as rising cost and a better business environment. The solution proposed might be one of the factors that decide the future leadership of the nation. The solution should consist of short term measures to counteract the current situation and a long term initiative to ensure a sustained growth and development of the country.
Cassey Lee, April 2013, Malaysia’s GE 13: A Tale of Two Manifestos, ISEAS Perspective, Institute of Southeast Asian Studies Singapore. https://www.iseas.edu.sg/images/pdf/ISEAS_Perspective_2013_24.pdf/
The Star Online, April 2013, GE13: Barisan National Manifesto, http://www.thestar.com.my/news/nation/2013/04/06/ge13-barisan-nasional-manifesto
The Rocket, February 2013, Manifesto Rakyat: Pakatan, the People’s Hope. https://www.therocket.com.my/en/manifesto-rakyat-pakatan-the-peoples-hope/
Global Property Guide, 2017, Subdued House Price Rises in Malaysia, https://www.globalpropertyguide.com/Asia/Malaysia/Price-History
Economic Planning Unit, 2015, The Malaysia Economy Figures in 2015, Economy Planning Unit Prime Minister’s Department. http://www.epu.gov.my/sites/default/files/2015.pdf
Bank Negara Malaysia, 2017, Annual Report 2016, http://www.bnm.gov.my/files/publication/ar/en/2016/ar2016_book.pdf
PEMANDU, 2016, National Transformation Programme: Annual Report 2016, https://www.pemandu.gov.my/assets/publications/annual-reports/NTP_AR2016_ENG.pdf
Invest KL, 2016, Greater Kuala Lumpur: Performance Report 2016. http://www.investkl.gov.my/upload/FlipPage_2016/mobile/index.html#p=1
World Bank Data, 2017, Unemployment Rate by World Bank, http://data.worldbank.org/indicator/SL.UEM.TOTL.ZS?locations=MY
Bloomberg, July 2017, FBM KLCI Index, Bloomberg Market. https://www.bloomberg.com/quote/FBMKLCI:IND
Mangalesri Chandrasekaran, 2016, 6 Impacts of Overnight Policy Rate Reduction, PropertyGuru. http://www.propertyguru.com.my/property-news/2016/7/130561/6-impacts-of-overnight-policy-rate-reduction
Karl Lester M Yap, Anisah Shukry, 2017, Cheapest Currency in Southeast Asia Gives Malaysia an Edge in Export Race, Bloomberg Market. https://www.bloomberg.com/news/articles/2017-07-12/malaysia-wields-cheap-currency-to-beat-peers-in-export-race
World Bank, 2016, “Small is the New Big” – Malaysian SMEs Help Energize, Drive Economy, http://www.worldbank.org/en/news/feature/2016/07/05/small-is-the-new-big—malaysian-smes-help-energize-drive-economy