MIER: Govt must focus on restoring investors confidence
Fulfilment of govt promises should be in line with current economic development
THE government should focus on restoring investors’ confidence in Malaysia as part of efforts to fulfil its manifesto pledges.
Malaysian Institute of Economic Research (MIER) executive director Professor Dr Zakariah Abdul Rashid said the government’s 10 promises were seen as beneficial to the people but the components needed to be scrutinised.
He said actions taken abruptly would not only create uncertainty in the stock market but also uneasiness among the people.
“Most importantly, the action of fulfilling the promises should be consistent and must be in line with the country’s current economic development.
“For example, the abolition of the Goods and Services Tax (GST) and the streamlining of minimum wages are deemed as short-term decisions.
“Therefore, the government must give more time in deciding these policies as they not only involve investors and currencies, but also how the rakyat feel.”
Zakariah said people’s confidence and the markets began to recover after various issues related to the country’s economy were debated in Parliament.
“Although the GST is regarded as a good tax system, issues began to emerge after its implementation.”
Zakariah said it was a challenge for the government to streamline the minimum wages.
He said if the government wanted to standardise minimum wages, economic development in Sabah and Sarawak should be aggressively implemented.
Both states have significant economic differences compared to states in the peninsula, with productivity and gross domestic product still low.
Meanwhile, Maybank Investment Bank said the fiscal position of the government was important to investors as it would impact the stock market and bonds, as well as the ringgit’s movement.
“Any credit rating downgrade will result in outflow of funds that will have a negative impact on the ringgit.
“While people-friendly measures, such as the zero-rated GST, were positive to consumer sentiment, thus driving economic growth through spending, it has an impact on government finances in reducing the state’s revenue,” it added.