Sungai Bakap poll defeat won’t stop PM from focusing on economic growth

SOME have interpreted Pakatan Harapan (PH)’s defeat in the Sungai Bakap by-election on July 6 as a sign that Malaysians are rejecting the economic policies introduced by Prime Minister Datuk Seri Anwar Ibrahim.

The most controversial issue was the introduction of the targeted diesel subsidy policy on June 10. Subsequently, the by-election result was seen as evidence that Malaysians had rejected the targeted diesel subsidy policy.

It’s not true.

In fact, this is a continuation of the trend of maintaining the status quo in all by-elections after the 15th General Election (GE-15) in November 2022 and the state elections in five states in August last year, irrespective of whether they were general elections or state legislative assembly (SLA) elections.

Pas won the Kuala Terengganu by-election on Aug 12 last year, as well as the Kemaman by-election on Dec 2 last year, followed by PH-Barisan Nasional (BN) winning the Pulai and Simpang Jeram by-elections on Sept 9, 2023, the Pelangai by-election on Oct 7 last year and the Kuala Kubu Baharu by-election on May 11.

In addition to the continuation of the status quo trend, internal and external factors also affect the outcome of the by-elections. Weak mechanisms or internal sabotage caused by factors unrelated to the government’s economic policy but related to factional politics are also possible causes.

Therefore, it is unreasonable to blame the government’s economic policies for the failure of the Sungai Bakap.

At the same time, calling on the government to halt or review its economic policies, especially the targeted diesel subsidy policy and the proposed targeted petrol subsidy policy, following the Sungai Bakap election defeat is neither appropriate nor logical.

The most solid evidence that the government is implementing sound economic policies is Malaysia’s continued good credit ratings by international rating agencies such as S&P Global Ratings (S&P), Fitch Ratings (Fitch) and Moody’s. These reflect the confidence of international stakeholders in Malaysia.

S&P based its assessment on the country’s strong external position and monetary policy flexibility. In addition, the pace of economic growth is faster. It also expects Malaysia’s fiscal deficit to narrow thanks to planned subsidy rationalization measures.

Fitch also forecasts Malaysia’s GDP growth at 4.4% in 2024 and 4.5% next year.

Additionally, the government’s economic performance was praised by Rajiv Batra, head of Asia-Pacific equity strategy at JP Morgan, in an interview with CNBC on July 10, where he stated that JP Morgan had raised Malaysia’s rating from “underweight” to “neutral.”

Batra said policy reforms, including fuel subsidies, data-focused investments and ongoing infrastructure development in Malaysia, led JP Morgan to be positive on Malaysia. He added that what was more surprising was the rapid pace of progress, with GDP growth of 4.2 percent in the first quarter of this year prompting the update.

Batra also said JP Morgan expects the MADANI government to “deliver on its promises” in its nearly one-and-a-half-year term by introducing tough policies and reforms and most importantly, committing to fiscal consolidation without sacrificing growth, which will lead to increased interest from foreign investors and a return of foreign investment.

Meanwhile, Dr. Benjamin Laker, professor of leadership at Henley Business School at the University of Reading in England, in his July 10 article titled “Malaysia’s Economic Recovery Under Anwar Ibrahim’s Leadership” published in Forbes magazine, also praised the prime minister’s economic reforms.

It refers to the introduction of new taxes, rationalisation of subsidies, progressive wage policy, adoption of the Public Finance and Fiscal Responsibility Act (FRA), acceleration of approval of foreign direct investments and investments in high-value sectors considered key to economic recovery.

He noted that the Prime Minister’s leadership and political acumen in managing public discontent, including the impact of economic reforms on people — especially in terms of the cost of living — will be key factors in determining the long-term success of his economic policies, potentially making Malaysia a model for other countries undergoing post-pandemic recovery and similar structural transformations.

Recognition from international rating agencies and international experts is the clearest signal that the Prime Minister’s economic policy is right and should be continued.

* The author is Deputy Vice-Chancellor (Academic and International Affairs) at University of Malaysia Pahang Al-Sultan Abdullah (UMPSA)