Two-year Madani govt: Turning challenges into accomplishments

KUALA LUMPUR - In just two years of being in power, the Madani government has reached a pivotal turning point in Malaysia's economic reforms, alongside efforts to address inefficiencies in state-owned entities, building on the resilient economic foundation laid in its first year.

Prime Minister Datuk Seri Anwar Ibrahim's administration has doubled down on efforts toward fiscal discipline, reducing leakage, improving tax collection, enhancing government efficiency and increasing transparency.

Through these efforts, the Madani government has set the stage for a more equitable future for Malaysia, which deserves recognition.

While challenges remained, the government’s focus on inclusive growth has positioned Malaysia for continued stability and progress in the years ahead.

In conjunction with the Two Years of Madani Government (2TM) Programme from Nov 22 - 24, the government has lined up initiatives to showcase ministries’ and agencies’ testimonials and achievements to be shared with the rakyat.

Anwar, who is the Finance Minister, is expected to officiate the programme organised by the Prime Minister's Office through the Performance Acceleration Coordination Unit (PACU), in collaboration with the Malaysia Productivity Corporation on Nov 23.

The Political Force Behind Fiscal Reforms

The Prime Minister has been at the forefront of several economic reforms aimed at making the nation viable and putting it on a growth path, while championing his ‘tatakelola’ principle to ensure efficiency and integrity since taking office in late 2022.

Although these reforms may be painful in the short run, they are necessary for Malaysia's long-term economic health, which includes reforming subsidies and new revenue-raising measures such as the expansion of the Sales and Service Tax (SST) and the enforcement of capital gains as well as low-value goods taxes.

The enhancements to the SST, effective from March 1 this year, which allow for revenue growth without distorting its economic impact, are expected to add another RM3 billion to the government’s coffers.

The next expansion, effective May 1, 2025, may help generate an additional RM5 billion in revenue, bringing the total to RM51.7 billion next year.

Meanwhile, Finance Minister II Datuk Seri Amir Hamzah Azizan revealed that the rationalisation of diesel subsidies has been effective, with the latest preliminary data indicating that the measure has generated monthly savings of approximately RM600 million.

He said that over RM250 million in diesel leakages due to smuggling or misappropriation at petrol stations along Peninsular Malaysia's borders have been prevented since the implementation of targeted subsidy measures on June 10.

Although the move triggered heated debates, the nation's inflation rate remains under control, thanks to the government's continuous aid measures.

The government is now looking into rationalising RON95 subsidies, emphasising that the necessity for fiscal reform in the country stems from the commitment under the Fiscal Responsibility Act to meet fiscal deficit targets by 2028.

To achieve these goals, the government has launched the Central Database Hub (Padu) under Economic Minister Rafizi Ramli to help identify those in need of financial support and ensure that subsidies are distributed accurately, while enabling the government to improve policymaking in strengthening socio-economic dynamics and bridging the income gap.

From Red Tape to Efficiency: Tackling Bureaucracy and Overlap

In late 2023, the Invest Malaysia Facilitation Centre (IMFC) was established under the Ministry of Investment, Trade, and Industry, led by its Minister, Tengku Datuk Seri Zafrul Abdul Aziz.

The centre serves as a bridge connecting the government and investors, expediting various approval processes, and reducing bureaucratic hurdles.

According to Tengku Zafrul, in the first quarter of 2024 (1Q 2024), the centre resolved 81 per cent of the 464 cases reported, accelerating the realisation of announced investments.

Given the ministry’s commitment to creating a pro-investment, business-friendly environment that fosters industrial transformation and economic growth, approved investments this year could potentially surpass 2023’s approved investments of RM329.5 billion, he said.

He added that clear policies such as the National Semiconductor Strategy (NSS) position Malaysia as a key player in the booming semiconductor and data centre industries, attracting investors amidst the significant advancements in the arena of artificial intelligence (AI).

Meanwhile, the Ministry of Digital was established in 2023 to spearhead Malaysia's digital transformation, focusing on accelerating AI adoption through initiatives such as the Malaysia AI Roadmap 2021-2025 and the National Industrial Master Plan 2030, led by its Minister Gobind Singh Deo.

The government is also undertaking the merger of Malaysia External Trade Development Corporation and the Halal Development Corporation to enhance Malaysia's leadership and competitiveness in the global halal market, which is projected to reach US$5 trillion by 2030, reducing overlapping roles.

Malaysia's Economic Growth on Track, Ringgit Shows Signs of Resilience

In terms of economic growth, Anwar believes that the country is on the right track, given the 5.3 per cent growth rate in 3Q 2024.

He said this robust performance reflects both business and consumer confidence in the government’s economic management.

"This solid footing positions us well to end the year on an ebullient note as we advance essential economic reforms to elevate Malaysia’s economic stature and complexity,” he said in a statement recently.

Anwar envisions Malaysia becoming one of the world’s top 30 economies within a decade, up from its 37th ranking in 2022 based on World Bank’s data, and aims for the country to be among the top 12 in the Global Competitiveness Index while achieving fiscal sustainability.

Meanwhile, the ringgit has also shown resilience, bolstered by investor confidence in Malaysia’s reform agenda and a shift in the United States (US) Federal Reserve towards a more accommodative monetary policy.

Recently, Bank Negara Malaysia Governor Abdul Rasheed Ghaffour highlighted that the ringgit appreciated by 14.9 per cent against the US dollar in 3Q, and by 3.1 per cent year-to-date as of Nov 13.

Malaysia has also recently been removed from a US currency manipulation watch list, thus affirming the ringgit’s market-driven status. - BERNAMA