FITCH Solutions Country Risk and Industry Research has forecasted a Barisan Nasional (BN) win during this Saturday’s (Nov 19) 15th General Elections (GE15), although significant risks of a hung Parliament persist.
In making its house view, the research house pointed to BN’s performances during the recent Melaka and Johor state polls, where the coalition won 21 of the 28 seats and 40 out of 56 seats, respectively.
“These state election results likely serve as a bellwether for the upcoming general elections, and suggest that BN has likely regained significant political momentum,” Fitch Solutions said in a statement today.
It added that BN has the advantage of being the longest-ruling political coalition in Malaysia, having ruled the country for 61 years since independence until its fall from power in 2018.
“This has benefited them, both in election promises that they have more actual governing experience over the other political coalitions as well as realistic expectations that they would be able to fulfil their promises once elected.”
As for Pakatan Harapan (PH) and Perikatan Nasional (PN), Fitch Solution’s Country Risk team puts a win by both coalitions at a slightly under 25% probability.
It said despite PH’s watershed victory during the last elections, its political momentum has “significantly waned” since then, following infighting that led to its chairman-cum-prime minister Tun Dr Mahathir Mohamad resigning and his Bersatu party exiting the coalition.
PN, on the other hand, performed poorly during the Melaka and Johor state elections, which Fitch Solutions believes will have a mirror effect on the federal elections.
Meanwhile, Fitch Solutions said a new BN term would lead to an expansion of racial affirmative action policies, which previously entailed preferential access for Bumiputeras to tertiary education, entry to professional and managerial positions and ownership of equity and assets.
“Pragmatic and open governance”
“Nevertheless, we expect the BN coalition Government to govern relatively pragmatically and continue its policy of openness to foreign investments,” it said.
“Our country risk team also believes that the BN coalition may bring back the Goods and Services Tax (GST), which bodes well for Malaysia’s medium-term fiscal outlook,” it added.
The abolishment of the contentious tax policy by the Pakatan Harapan (PH) Government back in June 2018 reportedly cost the government around RM20 bil in annual government revenue.
Besides that, Fitch Solutions said it believes BN’s GE15 victory will lead to the consumer and retail sector being impacted through the income-boosting policies the coalition promised to implement, which will see support provided for the continued expansion of the middle-class and higher consumption growths.
“We expect policy continuity to extend to Malaysia’s long-standing efforts to alleviate poverty and achieve the “high-income nation” status first set out in the Wawasan 2020 (Vision 2020) goal,” it added.
“BN has set out a programme with a few key pillars in order to achieve this goal. The programme is made up of several benefits, ranging from a guaranteed national monthly income to tax relief to both consumers as well as companies to boost employment and production.”
However, while PH’s election promises largely have the same projected positive effects for the economy as BN, Fitch Solutions noted they have been accused of populist election promises that do not have long-lasting positives for consumers.
Getting rid of the highway toll charges, for instance, only minimally benefit the rural poor as they are unlikely to use highways on a regular basis, and it will also be an indirect burden on the lowest-income demographic because the government will have to take on the additional expenses borne as a result of such a decision.
“Ultimately, the positives of the policies put forth by… PH and PN are limited by their slim margins of victory at the November polls,” Fitch Solutions concluded. – Nov 17, 2022
Main photo credit: Reuters
