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KUALA LUMPUR: With its leadership thrown back into uncertainty, Malaysia risks delays and loss of new investment, analysts and business groups say, as anxiety bubbles among foreign investors concerned about policy disruption and stagnant rates reforms.
A week after opposition leader Anwar Ibrahim claimed the post of prime minister citing enough parliamentary support to form a new government, the political situation is fluid and the power to decide what happens next rests with a king who is currently hospitalized. .
Fitch Solutions said the turmoil since March was risky for Malaysia’s long-term growth at a time when its neighbors are competing for investment from companies diversifying manufacturing outside of China.
“Malaysia could have a difficult time presenting its appeal to investors given lower-cost hubs like Vietnam and Indonesia, on the one hand, and more stable policies in countries like Singapore,” said Darren Tay, senior analyst for Asian country risk. . Reuters.
The power struggles that have occurred since the end of decades of uninterrupted rule by one party in 2018 could undermine confidence among multinationals beset by coronavirus-related issues, the U.S. Chamber of Commerce of Malaysia said.
“Political instability ranks high in corporate considerations because it would have a domino effect on policies,” said CEO Siobhan Das.
Muhyiddin Yassin unexpectedly emerged as prime minister in March after forging an alliance with opposition parties to win a parliamentary majority.
He was accused of stealing power by swapping alliances rather than winning an electoral mandate and has rejected Anwar’s claim of legislative backing.
Long-standing Japanese firms in Malaysia are watching closely and decision makers at home are concerned that it could complicate future plans, said Daiji Kojima, vice president of the Japan Chamber of Commerce and Industry.
Bank Islam economist Adam Mohamed Rahim said equity investors were anxious about the possibility of a new election, while Jeffrey Halley, a senior market analyst at OANDA, said a change in government could pose problems for new investments.
“Malaysia can have a difficult time attracting foreign inflows when the governance of the country is in a constant state of flux,” he said.
However, a smooth transition of power could restore Malaysia’s appeal in about six months, Halley said. – Reuters
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