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Current Situation with the Malaysian Economy

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One overarching element of a green economy is the government’s ability to finance the required changes, let alone reduce CO2 emissions. This is made more challenging by the lasting effects to Malaysia from the previous government under Najib Razak. It was concluded that the Prime Minister and other government authorities had been removing funds from the country’s development fund for personal uses, thus not being transparent about the government’s liabilities. As a result, the current total government debt surpasses 1 trillion Ringgit, or US$251 billion.

In addition, government revenue will also decrease with the removal of 6% GST policy, one of Mahathir’s most popular promises in winning the elections. Despite the plan to replace this with an SST policy, it is transparent that the current government’s aim to reduce this debt to a manageable level is a priority. In translation, this can result in the government being less ambitious with green projects or environmental policy which will require additional public spending since the returns on such actions are unclear; further making it unattractive for private bodies. Environmental protection pales in comparison to the other list of priorities that Mahathir has to tackle, such as weeding out “institutional corruption” and controlling the rising standard of living in Malaysia.

Therefore, democracy demands these problems take precedence or Pakatan Harapan may lose its popularity among Malaysians. In addition are other factors such as trade relations and volumes, the value of the Malaysian currency and the level of investment into Malaysia to power its economy. China will be used as an example as it is increasingly relevant to the variables affecting Malaysia’s wealth and the global economy. There is slight concern towards Mahathir’s withdrawal from the East Coast Rail project made with China worth US$13. 8 billion (one of the colossal deals with China Najib had struck). However, healthy trade between the two countries should mitigate a negative response from China. This is because China is Malaysia’s largest trading partner for the ninth year in a row, with the value of their bilateral trade set to surpass US$100 billion in 2018. The importance of this is that exports contribute 71. 5% of Malaysia’s GDP (using 2017 data). And China imported US$25 billion worth of Malaysian goods and services (January-May,2018), thus vital for Malaysian trade.

Furthermore, China’s foreign direct investment in Malaysia continues to be unhindered despite the lack in confidence by many other foreigners due to the unfamiliarity towards Mahathir’s government; evident by US$300 million worth of investments into Malaysia by three Chinese companies, in short notice after Mahathir was elected.

Although necessary as shown, over-investment from foreign bodies can cause long-run issues such as the leaching of capital from the Malaysian economy. Additionally, it has also not been conclusively decided how the hostile ‘trade war’ between the US and China will affect Malaysia’s trade economy. Moreover, if the Malaysian Ringgit continues to be undervalued (compared to its peak), this will only boost the demand for Malaysia’s exports. In the best case scenario, these other variables could help lift Malaysia out of its gargantuan debt. However, in the context of a green economy, this can be undesired as the bulk of Malaysia’s trade is inclusive of palm oil and fossil fuels.

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Current Situation With The Malaysian Economy. (2020, April 12). GradesFixer. Retrieved October 23, 2020, from https://gradesfixer.com/free-essay-examples/current-situation-with-the-malaysian-economy/
“Current Situation With The Malaysian Economy.” GradesFixer, 12 Apr. 2020, gradesfixer.com/free-essay-examples/current-situation-with-the-malaysian-economy/
Current Situation With The Malaysian Economy. [online]. Available at: <https://gradesfixer.com/free-essay-examples/current-situation-with-the-malaysian-economy/> [Accessed 23 Oct. 2020].
Current Situation With The Malaysian Economy [Internet]. GradesFixer. 2020 Apr 12 [cited 2020 Oct 23]. Available from: https://gradesfixer.com/free-essay-examples/current-situation-with-the-malaysian-economy/
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