KUALA LUMPUR (Bloomberg): Malaysia’s ruling coalition is confident in its ability to complete its full five-year term, according to Transport Minister Anthony Loke. He attributes this confidence to the coalition’s ability to overcome suspicion among its members, which include former political rivals.
Loke stated, “The fact that the government has survived almost a year is an achievement by itself. You have to do a lot of firefighting.” Anwar Ibrahim, the Prime Minister, formed a pact between his Pakatan Harapan coalition and the former ruling Barisan Nasional coalition to create the government after a hung parliament in last November’s national elections.
However, Loke refrained from making assumptions about the coalition’s future beyond its current term, which ends in 2027. He stated, “If you can run through your full term government with good results, then you have a future. So I want to take it step by step.” Loke is the secretary-general of the Democratic Action Party (DAP), which holds the most seats in Parliament.
Anwar is Malaysia’s fourth prime minister in four years, with all three of his predecessors lasting less than two years due to defections and narrow majorities. Anwar’s support comes from at least two-thirds of Malaysian lawmakers through an alliance with long-time rivals and regional parties from Sarawak and Sabah.
The political uncertainty has caused concern among investors and has contributed to the weakening of the ringgit. The currency has depreciated 7.3% against the dollar this year, presenting challenges for a government dealing with high living costs and a substantial subsidy bill of RM81 billion to narrow the budget deficit.
According to S&P Global Ratings, political stability is crucial for sustainable measures to reduce the budget deficit and lower the government’s net debt to below 60% of GDP. Malaysia currently holds an ‘A-‘ investment-grade credit score from S&P Global Ratings.
The frequent changes in government since 2020 have also affected major infrastructure projects such as the proposed high-speed rail with Singapore and the RM50.3 billion East Coast Rail project. Loke, who aims to revive the canceled high-speed rail through a private sector-driven model, assures investors that Malaysia will honor contracts regardless of future governmental changes.
Loke acknowledges public discontent over the alignment of the East Coast Rail decided by the previous government, but Anwar’s administration chose not to make further changes due to the disruptive nature and cost implications. Loke emphasizes Malaysia’s commitment to the rule of law and the sanctity of contracts, stating, “Even though it’s a different party, whatever contract signed by the previous government, we have to live with it. That is a guarantee by itself.”
– Bloomberg
