EVEN though Malaysia has appointed Datuk Seri Ismail Sabri Yaakob as its ninth Prime Minister (PM) – the country’s third PM in three years, concerns of political instability may not be resolved unless the new PM passes the “vote of confidence” litmus test.
In essence, CGS-CIMB Research is neutral on Ismail Sabri’s appointment which merely represents continuity in most of the previous Government’s policies in the near term as he was the former Deputy PM under Tan Sri Muhyiddin Yassin’s Government while the Perikatan Nasional (PN) ruling coalition has remained intact.
“Similar to his predecessor, Ismail Sabri holds a slim majority of four seats in Parliament,” observed head of research Ivy Ng Lee Fang in a Malaysia Strategy update. “If Ismail Sabri is able to work well with the opposition parties to address the COVID-19 pandemic, it will help to stabilise the Government which will be viewed positively by the market.”
The key task at hand for the new PM would be to choose a cabinet line-up that can regain public confidence in terms of its response to the COVID-19 pandemic and to boost the economy, according to CGS-CIMB Research.
“Daily COVID-19 cases have soared to a new record high of 23,564 cases on Friday (Aug 20) although 37% of Malaysia’s total population has been fully vaccinated,” noted the research house. “This could be due to the uneven vaccination rate and the more infectious Delta variant.”
Such development would definitely pose a threat to Malaysia’s recovery plan for a full reopening in November-December of this year.
“Ismail Sabri will likely face a confidence vote when parliament reopens on Sept 6 and we think the likelihood of 15th General Election to be held in 2022 remains,” envisages CGS-CIMB Research.
“The former Government had (also) indicated that it plans to table 12MP (Malaysia Plan) on Sept 20 and Budget 2022 on Oct 29.”
Meanwhile UOB Malaysia does not expect the political changes to derail current economic policies, recovery plans, and vaccination progress.
“Malaysia has one of the highest rates of vaccination roll-outs based on vaccination doses administered (per 100 people),” noted senior economist Julia Goh in a macro economy note.
“Based on the vaccination timeline disclosed last month (July), almost all states are expected to have 40% of their adult population fully vaccinated by end-August while the COVID-19 vaccination programme will be accelerated further to achieve the target of 100% of Malaysian adults fully inoculated by October.”
Going by this assumption, the bank expects most economic and social sectors to reopen by 4Q 2021 thus paving the way for a rebound in gross domestic product (GDP).
“We maintain our full-year GDP outlook of 4.0% for 2021 (Bank Negara Malaysia forecast: 3%-4%) and expect the key policy rate to be kept unchanged at 1.75% for the rest of the year,” added UOB Malaysia. – Aug 23, 2021
