No honeymoon for new Cabinet


  • Nation
  • Tuesday, 10 Mar 2020

Important roles: (From left) Zafrul Aziz now helms the Finance Ministry while Mustapa is Minister in the PM’s Dept in charge of economy.

PETALING JAYA: The newly formed triumvirate of Cabinet ministers overseeing the economy would need to hit the ground running to boost the country’s economic growth, which might be in jeopardy coming from recent external and domestic woes.

Threats such as the outbreak of the coronavirus outbreak (Covid-19), plunge in commodities prices including crude oil, the weaker

ringgit and the risk of global economic slowdown have dragged sentiment.

That would mean International Trade and Industry Minister (Miti) Datuk Seri Azmin Ali, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz and Minister in the Prime Minister’s Department in charge of Economy Datuk Seri Mustapa Mohamed would need to get working quickly to sort out the various issues plaguing the country.

Analysts have said the appointments were timely given the enormous challenges ahead. With Azmin helming the Economic Affairs Ministry before, he is no stranger to the workings and demands in setting GLCs and the economy on the right footing.

Zafrul brings with him a name recognition with international investors, much like how Malaysia benefited from when Tan Sri Abdul Wahid Omar was in charge of the Economic Planning Unit. His depth in understanding finance matters and running a large bank would help in the budgetary needs of the country too.

As for Mustapa, his reputation as a technocrat and history of successfully running and implementing policies when heading Miti would mean that crafting sound economic policies, which was a criticism borne by the previous government, would be essential in steering the country forward, especially in crafting the 12th Malaysia Plan for next year.

Executive Director of Socio-Economic Research Centre, Lee Heng Guie said that the new Cabinet line-up needs to quickly implement the RM20bil stimulus package to help cushion the economy, and ensure that the policies remain intact.

“We need to formulate credible and implementable policies to reassure investors’ about policy continuity and also boost investors’ confidence, ” he said.

“A flip flop in public policy would hurt businesses and worry investors, ” Lee said.

The role of the Finance Minister would be the most crucial one especially with the local stock market

yet to find its bottom, and after a terrible plunge yesterday and the past couple of weeks could pose risk on the returns of government-linked investment companies such as the Employees Provident Fund and Permodalan Nasional Bhd.

Since 2014, the FBM KLCI, which represents the 30-stock of Malaysia’s largest listed companies in terms of market capitalisation, closed lower in five of the past six years.

“The global markets, including ours, seem to be in panic selling due to the crash in crude oil prices and the pricing because of the impact of the Covid-19, ” said Rakuten Trade Sdn Bhd research vice president Vincent Lau to StarBiz.

He pointed out the market is now waiting to see if there are changes in the Budget 2020 especially with the plunge of the global crude oil.

“A recovery in oil prices and sound policymaking by the new Cabinet will be a boon for the overall market, ” he said.

Crude oil price suffered a huge decline of 25% after Saudi Arabia shocked the market by launching a price war against Russia.

The shock has rattled the equity markets, which are already in panic due to the novel Covid-19.

The plunge in the global crude oil price coupled with weak crude palm oil prices would impact government revenue this year and that could mean a revision to Budget 2020.

“Plunge in global oil price will suppress Malaysia’s fiscal capacity given that the previous Budget 2020 is based on the assumption of US$62/bbl, ” MIDF Research said in a report yesterday.

It said that Malaysia’s gross domestic product (GDP) growth will be “under pressure” this year, following the continuous slump in crude oil prices, which worsened yesterday.

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