In the following interview Gan Eng Peng, Director of Equity Strategies & Advisory, Affin Hwang Asset Management discusses the market outlook for Malaysia as Pakatan Harapan (PH) approaches its 100-day term in office.
1. Pakatan Harapan (PH) will soon approach its 100th day term on Aug 18 – what’s your assessment so far of the new government and has it sent the right signals to the market?
The way we look at this government is like a new management coming in, taking over and kitchen-sinking. Thus, the first 100 days is about pressing the reset button. But eventually, we need to move beyond this phase. Investors are very clear about what’s wrong with the country; the 1MDB scandal, high debt levels, and the fiscal deficit.
Where there is less clarity now is policies the government has to promote growth. For this, we are waiting for the 100-day Government of Malaysia Symposium which will be held for the first time in September and Budget 2019 that will be tabled on 2 November 2018.
2. PH has a long list of issues to address. From the RM1 trillion debt, narrower revenue sources, capital outflows and brain drain – what are the more pressing challenges ahead for the country and are we addressing them?
There is no doubt that Malaysia has high debt and a narrower revenue base. To allay these concerns, the government needs to show clear evidence of curbing wastages and leakages. We need to start to see this being reflected in better expense/capex control for government departments and government linked companies.
In addition, the government needs to be pro-growth as the risks of high debt and a narrower revenue base subsides significantly as GDP gains momentum. The key concern of the market is whether the country can continue to grow amidst all the kitchen-sinking.