KUALA LUMPUR: International research firm BMI Research believes that Pakatan Harapan’s (PH) 14th General Election manifesto would be detrimental to the Malaysian economy.
The firm, a unit under Fitch Group, said the oppositon pact will struggle to implement its ambitious pledges, with all of its promises being populist and aimed largely at addressing the population’s complaints against the ruling government.
The firm said the unrealistic nature of the manifesto, despite the popularity of the pledges, also made its credibility among voters questionable.
“Considering that goods and services tax (GST) accounts for 17.9 per cent of the government’s revenues and has been growing steadily since the share of 13.7 per cent in the second quarter of 2015, the abolishment of GST would place downside pressures on the government’s revenues,” BMI said in a note.
The increasing of subsidy payouts would also present additional pressures, with the share of subsidies falling to 5.3 per cent of the total in the third quarter of last year from 16.8 per cent in the second quarter of 2010 as part of the current administration’s subsidy rationalisation efforts (which started in July 2010), BMI added.
BMI said businesses, in particular, were unlikely to be receptive to the pact’s pledges, especially with existing reports of smaller firms struggling to cope with the current minimum wage, which PH vowed to increase further.
Citing China as an example of one of Malaysia’s largest investors and trade partners, BMI said promises to review existing contracts for large infrastructure projects could jeopardise Malaysia’s good relations with the country.
“The detailed probe into foreign-funded mega projects could also strain ties with China and potentially alienate the Chinese-majority Democratic Action Party (DAP)’s support base, with many Chinese supporters having a favourable view of Beijing,” it said.
BMI Research suggested that PH would have done better to focus its manifesto on institutional reforms, which it said had served the defunct Pakatan Rakyat pact well in the previous two elections.
“However, we believe that the implementation of many of these reforms will be extremely challenging, especially since many of these systems were implemented under (former prime minister, now Parti Pribumi Bersatu Malaysia president) Tun Dr Mahathir Mohamad,” it said.