KUALA LUMPUR – Despite delays in fulfilling its promises, economists remain confident with the Pakatan Harapan (PH) administration led by Prime Minister Tun Dr Mahathir Mohamad who aims for a country which is corruption-free and economically vibrant.
As August 18 marks the first 100 days of PH ruling after winning the 14th General Election (GE14), they said that the time frame was too short to fulfil its election pledges, see changes and bring about significant reforms.
Hence, they felt that the PH government should take the opportunity to plan for the country’s future direction and not only focusing on their promises made during the election.
According to Bank Islam Malaysia Bhd Chief Economist Dr Mohd Afzanizam Abdul Rashid, given the sheer size of economic uncertainties brought by external factors, it would be almost unrealistic to expect changes to happen immediately.
“Malaysian economy is very open to global conditions and at the moment, risk aversion has increasingly become more apparent. So this may impact markets and business sentiment as well as demand.
“The PH government needs to work around with the constraints that they have now such as the fiscal position and challenging economic prospects.
“However, the zero-rated Goods and Services Tax (GST) and the subsequent reintroduction of Sales and Services Tax (SST) in September suggest that the government is committed to implementing its election promises,” he told Bernama.
In addition to the fuel subsidy whereby RON95 continues to remain stable, this move had also helped the people to contend with the rise in the cost of living, he said.
“Obviously this is not easy especially when dealing with the credit rating agencies, and the risks of sovereign rating downgrade is something that the government needs to acknowledge.
“So we can see that the PH government is being pragmatic in implementing their election pledges as some of it are still pending,” he said.
Concurring with this view, Malaysian Institute of Economic Research Executive Director Emeritus Professor Dr Zakariah Abdul Rashid opined that the price control on RON95 (RM2.20 a litre), RON97 (RM2.65) and diesel (RM2.18), would help reduce household burden on fuel expenditure.
“It helps a bit to lower the cost of living but the long run solution is not in the policy of retaining the price of RON95 and diesel,” he said.
Abolition of GST, stabilisation of fuel prices, postponement of the National Higher Education Fund Corporation’s (PTPTN) loans, investigations into 1Malaysia Development Bhd, and Employees Provident Fund (EPF) contributions for housewives were among the immediate accomplishments under the PH's manifesto of 10 promises.
To recap, two months before the GE14, PH had unveiled its 60-point election manifesto that set out its policies which were divided into two broad categories – the first covering 10 promises within PH’s first 100 days in government and the second which spelt out the remaining pledges with a fulfilment deadline of five years.
During question time in the Dewan Rakyat recently, Dr Mahathir gave the assurance that the government would adhere to the promises in the PH manifesto for GE14 and was committed to fulfilling them.
He also said that the focus of the government was not just on implementing the promises but also improving the government administration.
Meanwhile, when asked on whether the zero-rated GST from June to August had reduced the cost of living, Mohd Afzanizam said the effect was not really broad-based.
“Perhaps, business practices are also the main contributing factor for the rise in the cost of living. This is especially true when the Malaysians tendency to spend is quite high, and to some extent, they are just price-takers.
“So this would allow businesses to maintain or even raise their prices. Therefore, the enforcement of the existing laws such as Price Control and Anti Profiteering Act holds the key to stabilising prices,” he added.
On the government’s move to re-implement SST starting next month, Top Glove Corporation Bhd’s Executive Chairman Tan Sri Lim Wee Chai said it seemed positive for businesses as this would eliminate the outstanding input tax refundable issue.
“SST is also more direct, simpler and easier to understand, compared with GST (for example: technical terminologies like blocked input tax, exempt supply and zero-rated supply).
“Furthermore, we understand there will be a “My SST” website where everything will be done online, which will result in more efficiency,” he said.
However, Dr Zakariah said the reinstitution of SST after a period of tax holiday would mean a fresh addition to cost.
“Certainly, it will increase goods prices in the short term because of the additional cost as sellers maintain their mark-up pricing,” he pointed out.
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