PETALING JAYA: Newly-appointed prime minister Anwar Ibrahim will understandably have many things on his plate in the coming days. However, the most important decision he will have to make is who to appoint as finance minister.
The fate of the country’s economy may well be at stake as Malaysia grapples with a falling ringgit, inflation not seen since the 1970s, and the prospects of a severe economic downturn hitting our shores in 2023.
It is “absolutely essential” for Anwar to get the right minister of finance, Malaysian Institute of Economic Research (MIER) senior research fellow Shankaran Nambiar tells FMT Business.
“It should be someone who has had some exposure to the portfolio, who can stand above rhetoric, race and religion. And focus on efficiency and productivity.”
Asked who among Pakatan Harapan and its coalition partners would fit the bill, Nambiar said former second finance minister Johari Ghani would be the ideal choice.
“Johari would be an excellent choice. He would fit the bill to a tee. He has the exposure, the maturity, and although trained as an accountant, he has a good understanding of how the global economy works,” Nambiar said.
Johari wrested the Titiwangsa seat for Barisan Nasional-Umno in GE15. He was named deputy finance minister in 2015, and following a Cabinet reshuffle the next year was appointed as finance minister II by then PM Najib Razak, who was the finance minister at the time.
Given that Anwar also served for as finance minister for many years, Nambiar thinks he has all that it needs to take the economy forward. “Recent prime ministers have been groping in the dark (when it comes to the economy),” he said.
“Given Anwar’s track record and policy stance, I think his very appointment as PM will spur confidence in the market.
“Anwar being market friendly, his first order of the day will be to reassure foreign investors of Malaysia’s readiness to improve its standing as a destination for investments. I am sure he will undertake a quick overhaul of policies.
He added that Anwar’s top priority will be to restore the confidence of investors, the private sector and the Rakyat.
“This is the first thing to be done as we approach a pessimistic 2023,” he added.
Sunway University economics professor Yeah Kim Leng said it is imperative Anwar cobbles together a “capable and competent Cabinet” that can amplify the tailwinds engendered by his well-received appointment.
On the appointment of the finance minister, he said this is a critical position that “matters most for investor confidence”.
Having a finance minister with unquestionable integrity, competency and sensitivity to the multi-faceted demands of society and the economy will complement a reform-minded PM, he said.
“He will need to have not only a good ear for sound policy advice but also the ability to convince the public and conviction to implement fiscal and financial policies that strike a judicious balance between short-term pain and long-term gain,” he told FMT Business.
On Anwar’s top economic priorities, Yeah said he together with the appointed finance minister will have to focus on rejigging Budget 2023, which will need to be approved before year-end.
“It needs to reflect, as much as feasible, the campaign promises of his coalition whilst appeasing or balancing those tabled by its coalition partners in the unity government.”
Anwar’s topmost economic priority is to address the rising cost of living that has burdened a disproportionately large segment of the low- and middle-income population, he pointed out.
Second, is to strengthen the country’s growth conditions and market confidence so that wage, income and job levels are raised sufficiently for the economy to withstand the looming global downturn expected next year.
“The third imperative is to enhance government spending efficiency and effectiveness while improving budget allocations to where economic and social returns generated are the highest or where there are high multiplier effects,” he said.
Given the polarisation and sensitivities evident in GE15, Yeah said the new PM’s reform stance will likely be in the same mould of “feeling the pebbles while crossing the stream” that is emblematic of a gradualist approach.
In a series of tweets sent out a couple of hours before Anwar’s appointment, World Bank lead economist Apurva Sanghi listed the key priorities facing the new government.
These include re-tabling and passing Budget 2023 quickly with only necessary modifications, publicly signalling support for the 12th Malaysia Plan, passing the Fiscal Responsibility Act, and minimising disruptions in civil service functioning.
“All else is secondary, for the time being, and any major new policy directions can be saved for 2024 and other avenues,” Apurva said.
Source: https://www.freemalaysiatoday.com/category/business/2022/11/24/anwars-pick-for-finance-minister-pivotal-for-economy/