This article first appeared in The Edge Financial Daily on August 17, 2018

KUALA LUMPUR: With today being its 100th day in power, Pakatan Harapan’s journey thus far can be likened to walking on a tight rope, as the coalition makes the transition from the opposition to the government of the day.

Pakatan’s “10 Promises in the First 100 Days” manifesto has been subjected to much scrutiny and may been seen as a double-edged sword that reminds the rakyat of promises made good by the government they voted in but at the same time serves as a checklist for critics quick to point out promises not kept. The government has a fine balancing act ahead as it strives to make good on its self-imposed time-bound promises, and at the same time ensure the country does not run into a deficit.

However, economists said, a gradual implementation of the manifesto promises is key. Affin Hwang Capital chief economist and head of research Alan Tan said this needs to be done to maintain fiscal discipline.

“While Pakatan’s manifesto is supportive of domestic demand, especially on private consumption, we believe that some of the promises made should only be implemented gradually because from an investor’s point of view it is important for the new government to ensure that it remains committed to fiscal discipline in government finances. It also should be noted that the global economic environment has deteriorated and is not as strong compared with the first half of 2018.

“If the government were to accelerate on all promises, this will create a situation where the dependency on government revenue may not be enough to cover the operating and development expenditure, leading to a higher fiscal position which would not be too positive on the sovereign rating side,” he told The Edge Financial Daily.

Socio-Economic Research Centre (SERC) executive director, Lee Heng Guie concurred. “The government has to weigh fiscal and debt sustainability, economic and business implications as well as other non-economic considerations when fulfilling the promises. The implementation of programmes and projects as well as tax measures as outlined in the manifesto will have to take into account the government’s financial position and debt sustainability given the RM1.03 trillion debt or 82% of gross domestic product [as] at end-2017,” he said.

Lee pointed out that while there have been some accomplishments, there are also disappointments or hurdles and challenges that overshadowed the government’s efforts within the first 100 days.

“While the electorate [want to make] political parties accountable to their election promises, we need to apply some objectivity and also assess how realistic the promises are in terms of being implemented after an election.”

Institute for Democracy and Economic Affairs chief executive officer Ali Salman said populist moves, such as the abolishment of the goods and services tax (GST), are viewed as bold though they create bigger fiscal challenges.

“It has helped the public to increase their level of trust in the leadership and this is the political capital that the government needs to use to take some important steps. It’s high time for the government to announce a clear roadmap for inclusive economic growth and restore the sentiment of the private sector by bringing in more certainty in their policy announcements.

“While corruption needs to be tackled systematically, the ministers should be seen announcing positive, forward-looking steps in their respective portfolios.

“One positive example is that the housing minister has announced that a new housing policy is to be unveiled next month. Similarly, all ministers should come up with their respective plans while mostly reaffirming the manifesto but at the same time, must do a reality check,” he said.

Associate professor of political science at John Cabot University Bridget Welsh asserted that there are still economic problems that the Pakatan government would need to fix.

“Domestic business is lacklustre and many investments have yet to be approved, slowing the economy in a less than favourable global situation. The new government has to lay out a proper economic plan and win the confidence of businesses in its own right,” she said.

Improving transparency and accountability

UOB Malaysia senior economist Julia Goh believes that the government’s progress within the first 100 days has been commendable, given the challenges from both the domestic and external fronts.

“The priority has been set on abolishing the GST, stabilising petrol prices, and investigating 1Malaysia Development Bhd. Those were delivered within the first 30 days.

“We should also consider the other reforms and work initiated to improve transparency and accountability. These include the formation of the Institutional Reforms Committee, electoral action plan to reform the electoral and parliamentary processes, submission of recommendations to achieve zero-corruption which include reforms in enforcement and government agencies, revamping the structure of judicial appointments, limiting concentration of power and the vetting process for key public appointments.

“These reforms may not bring immediate economic value but are important to restore confidence in the country’s key institutions and judiciary system, and restoring checks and balances in the system,” she said.

Syahredzan Johan, a lawyer and political secretary to Iskandar Puteri member of parliament Lim Kit Siang concurred, saying that there has been an improvement in transparency with the new government.

“For example, the revelations about the financial situation of the country may cause some discomfort to investors, but they are needed to ensure that the public know what exactly is going on. Under the previous regime we were always given a rosy picture, which is comforting to some but does not reflect the reality of the situation.

“I hope that this more transparent way of governing will be a prevalent feature of this government in the future,” he said.

There are also calls for a more transparent system in business conduct, via open tenders for contracts, for example.

“Open tenders should be reintroduced for new power-generation projects but all proposals must be considered in terms of practicality given the Malaysian environment. For example, the solar and wind availabilities in Malaysia are limited and these should be factored in without pandering to buzzwords and unrealistic environmental expectations,” said Etiqa Insurance and Takaful chief strategy officer Chris Eng Poh Yoon.

“Instead, overall energy efficiency should be promoted to better take care of the environment,” he added.

On another note, Eng added that the government has made bold moves with regard to the evaluation of some of the major infrastructure contracts. “My hope is that for those major infrastructure projects that have a clear multiplier effect such as the mass rapit transit, these should continue or restart once proper cost evaluation is in place.”

Quicker resolution of labour issues

The pace for human resource issues, especially those pertaining to the hiring of foreign workers needs to be sped up, according to Malaysian Employers Federation (MEF) executive director Datuk Shamsuddin Bardan.

“A lot of things need to be done. Many issues are not resolved as far as issues on human resources are concerned. This causes a lot of problems for employers.

“For example, when the government goes strong against the hiring of illegal foreign workers — that is of course the right thing to do. But on the other hand, legal foreign workers are not available, as currently we are not able to bring in new workers as it still under consideration and policies are still being discussed.

“In the meantime employers are left in the lurch, and in that way it is going to hit the industries very badly,” he said.

Shamsuddin added that the government’s move to break the monopoly of the hiring of foreign workers would not help to resolve the workers shortage issue.

“Opening up the hiring of foreign workers does not translate into cost going down for businesses. What the government needs to do is be proactive in reducing the costs of hiring foreign workers because with the presence of agents, the hiring costs per pax could cost up to RM10,000, but under a government-to-government system the costs are not above RM4,000 per pax,” he said.

According to MEF, another issue which needs urgent attention is employers’ contribution to the Human Resources Development Fund (HRDF).

To put things into perspective, employers have to contribute 1% of their monthly payroll to the HRDF as levy, of which 70% of the total fund is claimable via various training grants and schemes managed by the HRDF, where employers choose the programmes that suit their business needs. The remaining 30% of the levy goes towards the pooled fund to support strategic initiatives to achieve a 35% skilled workforce by 2020.

The Industrial-Based Certification Programme (Inbase) is one of the strategic initiatives that uses the 30% pooled fund.

“The Inbase programme is now suspended, but the 30% [contribution to the fund] remains, so employers don’t have the opportunity to use that 30% to train their employees. The 30% that employers contribute should not be hived off because currently there are no training programmes [which the pooled fund supports],” Shamsuddin said.

Democratic freedom

Rashaad Ali, a research analyst with the Malaysia Programme at the S  Rajaratnam School of International Studies of the Nanyang Technological University in Singapore, said he hopes the government will repeal undemocratic laws.

“Hopefully the government can turn their attention to democratic reform by repealing undemocratic laws, including the Printing Presses and Publications Act 1984, the Sedition Act 1948 and the Universities and University Colleges Act 1971,” he said.

Moving beyond the 100 days

Beyond the 100 days, SERC’s Lee said, the journey ahead is more challenging as the government strives to fulfil the manifesto promises.

“While the new government was elected with a strong mandate, it’s time to make more inroads into economic and institutional accomplishments in the years ahead.

“Post 100 days, the era of reforming government, public institutions, government-linked companies and government-linked investment companies as well as sweeping economic reforms and overreach programmes would take centre stage,” he said.