The Star Malaysia - StarBiz

The effect of a hung parliament

Investors to adopt a wait-and-see attitude


“What we expect – as per the cash handouts – is for other assistance to become more targeted such as subsidy restructur­ing to a targeted mechanism from a blanket system and the rationalis­ation of various social safety net and welfare programmes.” Suhaimi Ilias

KUALA LUMPUR: The just-concluded 15th General Election (GE15) has brought Malaysia to unchartere­d waters with a hung parliament, wherein neither coalition crossed the indispensa­ble line of 112 simple majority to form the next government independen­tly.

The conundrum is not surprising, Universiti Tun Abdul Razak economist Prof Dr Barjoyai Bardai said, adding that it is how democracy works today.

“The new government can be formed without a majority of winning seats, a mixed government of several political parties, and a new coalition emerges,” he told Bernama in an interview.

A total of 220 of the 222 parliament­ary seats were contested as polling in the Padang Serai parliament­ary constituen­cy in Kedah has been postponed to Dec 7 following the death of the Pakatan Harapan (PH-PKR) candidate for Padang Serai, incumbent M. Karupaiya on Wednesday.

The new date for nomination of candidates is Nov 24.

At the same time, voting was suspended at 11 polling stations in Sarawak’s Baram parliament­ary constituen­cy due to flooding, with voters seen standing knee-deep in floodwater­s.

Citing recent developmen­ts in the United Kingdom whereby the then prime minister Liz Truss was changed in 45 days after appointmen­t, it goes to proof that rotating prime minister – a swap method that allows the government to exist without the need of one majority party – is possible, said Barjoyai.

Fundamenta­lly, Malaysia’s economy is strong but the current scenario would somewhat still affect investor sentiment albeit in the short term, said Professor Datuk Dr Shazali Abu Mansor, deputy vice-chancellor of research and graduate studies at I-CATS University College.

Investors would probably adopt a waitand-see attitude until a new government is formed, he said.

Professor Dr Mohd Nazari Ismail from Universiti Malaya’s Business and Economics Faculty said there are many scenarios and it really boils down to the outcome of negotiatio­ns between the parties.

GE15 saw three major coalitions, namely Barisan Nasional, PH and Perikatan Nasional (PN) versus the previous election, which had only Barisan and PH.

“If one party won, the political situation will be more stable; if the results are even, two parties will work together to form a government but we don’t know who will cooperate with whom at this point of time,” he said.

“We should not rule out the potential scenario of ‘unthinkabl­e’ alliance,” Maybank Investment Bank’s analyst, Suhaimi Ilias, had also said prior to the GE15 itself.

He said another possibilit­y is a “minority” government due to a “hung” Parliament outcome or a stalemate among parties in forming a coalition government with a simple majority.

No guessing on policy changes and impact of such a scenario. It will be a period of uncertaint­y but discovery for everyone including the economy and the market, he noted

Regardless of the outcome, fiscal consolidat­ion will remain a priority although the path could be different depending on which party or alliance that leads the government, said Suhaimi.

In terms of government expenditur­e, “people-oriented” measures will continue, especially the cash handout programme that has been in existence since the time of pre-ge14 Barisan government and went through name changes to reflect the government of the day.

“What we expect – as per the cash handouts – is for other assistance to become more targeted such as subsidy restructur­ing to a targeted mechanism from a blanket system and the rationalis­ation of various social safety net and welfare programmes.

“We also expect the post-ge15 government to proceed with the tabling of the Fiscal Responsibi­lity Act that was mentioned in the Budget 2023 speech.”

He said major infrastruc­ture projects would continue for projects now under constructi­on – East Coast Rail Link, Gemas-johor Bahru (JB) Electrifie­d Double Track, Jb-singapore Rail Transit Link, Pan-borneo Highway and SabahSaraw­ak Link Road – and for projects in which

tenders have started – the Klang Valley Mass Rapid Transit Line 3.

The expectatio­n is also for a higher share of the federal government developmen­t spending allocation to the less-developed states for basic infrastruc­ture.

“The new federal government is expected to focus on improving the quality and delivery of essential public services, especially education, training and healthcare, as well as realising higher and quality investment flows to the less-developed states for a more inclusive, equitable and balanced socio-economic developmen­ts.”

Newspapers in English

Newspapers from Malaysia