Quora Answer: Has the New Malaysian Government Improved the Standard of Living?

The following is my answer to a Quora question: “Has the new government of Malaysia improved the standard of living?” 

No, and that is why some analysts predict that UMNO – whether with the rump Barisan Nasional, or with an new alliance with PAS – will come back to power.  However, it would not be fair to blame all of it on the Pakatan Harapan government. 

Firstly, we have to consider that Malaysia’s economy was already in dire straits before the PH took power.  In fact, it was PH campaigning on cost of living issues that moved the Malay heartland.  However, despite lofty promises, they have not actually resolved these issues.  The ringgit has been losing value, Malaysian bonds have lost credit rating, and exports have shrunk.  The shrinking of exports, and the lowering of market sentiment, is in line with the global market sentiment due to the American-China trade war.  Malaysia, like many developing economies, is caught up in this. 

That being said, Mahathir bin Mohamad, the Prime Minister, has been found wanting in addressing this.  He is still using his 1990s playbook.  For one thing, he picked fights with Singapore, to play to the ultranationalist gallery, and deflect public attention to the failings of his own government.  Instead of wasting time talking about the Water Agreement, creating a maritime dispute, and suggesting a renegotiation of the CPTPP, he should have worked at rallying ASEAN to address international uncertainty. 

Instead of appointing a strong federal cabinet to give foreign investors market confidence, he filled his cabinet with loyalists who are sycophants, or idiots such as Mohamad bin Sabu, as the Defence Minister, and Syed Saddiq bin Syed Abdul Rahman, as the Minister of Youth and Sports.  His people are woefully out of their depth, and have managed to make disgraced UMNO ministers look credible. 

Mahathir threatened to boycott the European Union over palm oil exports.  That was a laughably empty threat, and did not address the issue.  He turned the public perception of the 1MDB investigation into a witch hunt.  The coalition is needlessly squabbling. 

Bank Negara is broke.  They do not have enough foreign reserves.  The current account is painful reading.  And they are beholden to Chinese funding for large infrastructure projects, which forced Mahathir into several embarrassing U-turns. 

In light of all this, there is no scope for the standard of living to be improved.  All political parties, including the opposition, are racing each other to the bottom with divisive politics.  This makes it difficult for investors to see Malaysia as an attractive venue for foreign direct investment.  Vietnam and Indonesia are far more attractive alternatives at the moment.