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Malaysia’s Anwar took charge of the economy, families are facing problems. business and economy

Kuala Lumpur, Malaysia – In his first address as the 10th Prime Minister of Malaysia, Anwar Ibrahim pledged to prioritize the welfare of the “ordinary Malaysian”.

To live up to his promise, Anwar must face economic challenges, ranging from the scars of the pandemic and rising living costs to a falling currency and one of Asia’s largest wealth gaps.

Anwar, whose appointment Remarkable journey of three decades From leader-in-waiting to jailed opposition leader and back again, he has laid out some of the highlights of his economic plans in addition to promising racially inclusive and corruption-free development.

But Anwar Who was confirmed as Prime Minister on Thursday Having immediately sent Malaysia’s stock market and ringgit higher after days of political impasse, has gained a reputation as a reformist with an inclination towards economic liberalization during his long political career.

“Anwar has a good understanding of the economy and is thoughtful and generous in his approach. “He is likely to seek a wide range of views and focus on economic reforms,” ​​Geoffrey Williams, an economist and non-resident senior fellow at the Malaysia University of Science and Technology, told Al Jazeera.

“There will be fewer handout-based policies and more structured long-term solutions. I also think he will present a very attractive prospect to international investors and financial markets.

INTERACTIVE_MALAYSIA_ELECTIONS_2022_ANWAR IBRAHIM

On the campaign trail, Anwar, who leads the multiracial Pakatan Harapan (PH) coalition, highlighted his ties to international trade and finance and argued that he could attract investors whom he considered his “friends”. The middle is counted. He also stressed the need to restore Malaysia’s image, which had been damaged by the 1MDB state corruption scandal involving jailed former prime minister Najib Razak.

Monash University Malaysia Head of Department Grace Lee Hui Yen said, “There is no doubt that corruption is Malaysia’s most important systemic issue that can lead to unequal wealth distribution, compromising the quality of education and health care ” Economics, told Al Jazeera.

“In a corrupt economy, resources are allocated inefficiently and companies that would otherwise not be eligible to win government contracts are often given projects as a result of bribery.”

As deputy prime minister and finance minister during the 1990s, 75-year-old Anwar presided over a boom period that saw Malaysia become one of the fastest-growing economies in the world.

At the start of the Asian financial crisis of 1997–98, Anwar implemented spending cuts and market-oriented reforms recommended by the International Monetary Fund, winning respect in Western financial circles, but at odds with his political mentor and then-prime minister Mahathir Mohamad. strained relations.

As relations between the two men deteriorated, Mahathir dismissed Anwar, who went on to lead a reformist movement against the government before being imprisoned on charges of sodomy and corruption, which drew criticism from politics at home and abroad. Was inspired.

“Given his legacy as finance minister during the 1990s, when the economy enjoyed nearly double-digit growth aided by manufacturing exports, I expect Anwar to be more market-oriented and open to foreign direct investment and infrastructure Will be investment friendly,” Niyaz Asadullah, a professor of economics at Monash University Malaysia, told Al Jazeera.

“More than previous leaders, he will seek global integration and strive to improve Malaysia’s tainted international image as an investment destination by aligning domestic policies with global standards and international best practices.”

Asadullah said he expected Anwar’s agenda to be pro-business as well as “people-centred”, focusing more on allocating resources based on need rather than membership of an ethnic group – Malaysia A divisive subject in a country where the majority Malay population enjoys few privileges. The Chinese and Indian communities were not tolerated.

The previous PH government, elected in 2018 in a historic vote ending six decades of rule by the Malay-majority Barisan Nasional (BN), collapsed partly because of a reform agenda Malay nationalists feared would destroy Malay’s “special status” will decrease. Constitution.

“While he will remain committed to social security policies, he will seek to reduce fiscal leakages by rationalizing subsidies and ensuring smart targeting of resources and services,” Asadullah said.

A train moves along a busy railway track, with multiple lanes of cars beneath it in what looks like a busy city center
Malaysia’s economy has made a strong comeback from the COVID-19 pandemic [File: Bazuki Muhammad/Reuters]

Later experiencing the greatest contraction Since the Asian financial crisis of 1997–98, Malaysia’s economy has made a strong comeback from the pandemic.

GDP grew by 14.2 percent during the July-September period after an 8.9 percent expansion during the second quarter.

Still, Southeast Asia’s fourth-largest economy faces slowing growth amid fears that the global economy will slide into recession in the coming months.

Inflation at 4.5 percent in October, while modest compared to Europe and North America, and rising interest rates are straining the budgets of low- and middle-income households, while the ringgit is near a quarter-century low.

Malaysia’s long-term prosperity requires structural reforms to ensure its transition to a high-income economy, according to economists.

The OECD and the World Bank have highlighted the strengthening of social protection and the introduction of competition in state-dominated sectors such as transport and energy as priorities for reform.

“The advancement of a ‘high productivity, high income’ workforce is a prerequisite for achieving high income and a developed nation,” Monash’s Professor Lee said. “However, low economic growth following the Asian financial crisis has hurt the Malaysian economy. One of the main contributing factors to the low growth is low labor productivity growth.”

As the head of a unity government that includes several rival groups including BN, Anwar, whose first tasks will include passing the long-awaited budget for 2023, may find it difficult to implement any significant reforms.

Yeh Kim Leng, director of the Economic Studies Program at the Jeffrey Cheah Institute of Southeast Asia in Sunway, said, “Given the unity government he is leading, he will face structural reforms without long negotiations and consensus among coalition members.” It will be difficult to implement quickly.” University, told Al Jazeera.

“With the ‘Big Bang’ likely to be risky and politically unstable, he would inevitably be drawn to Deng Xiaoping’s ‘feeling the pebble while crossing the stream’, which embodies a gradualist approach,” Yes added, referring to China’s reformist leader who presided over a period of economic liberalization during the 1980s.

Harris Zainul, a senior analyst at the Institute for Strategic and International Studies (ISIS) Malaysia, said Anwar was unlikely to shake up the status quo due to political uncertainties, including the upcoming state elections.

“I do not expect Anwar to make any major changes in economic policy in the near term, especially with regard to taxes,” Zainul told Al Jazeera.

“The reason there is little political appetite to increase the tax base right now is that some of Malaysia’s major states still need to hold their elections by mid-2023. Until that happens, I don’t think Anwar will be politically successful.” Any would be risking being seen as unpopular.

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