(Bloomberg) -- Malaysia’s ruling coalition is “increasingly confident” it can last its full five-year term after the government led by Prime Minister Anwar Ibrahim survived the country’s fragmented political landscape for nearly a year, a senior minister said.
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Allies overcoming “suspicion” of each other’s intentions is what makes Transport Minister Anthony Loke optimistic about the stability of the coalition made up of erstwhile political rivals.
“The fact that the government has survived almost a year is an achievement by itself,” Loke said in an interview. “You have to do a lot of firefighting.”
Anwar had to cobble together a pact between his Pakatan Harapan coalition and the former ruling Barisan Nasional coalition — both rivals for decades — in order to form the government after last November’s national elections threw up a hung parliament.
Loke, however, didn’t want to jump to conclusions about the future of the political grouping beyond its current term in office ending 2027.
“If you can run through your full term government with good results, then you have a future. So I want to take it step by step,” he said. Loke is the secretary-general of Democratic Action Party, the outfit with the most parliamentary seats in the government.
Anwar is Malaysia’s fourth prime minister in as many years, with all three of his immediate predecessors lasting less than two years on the job — while being rocked by defections and slim majorities. Anwar commands the support of at least two-thirds of Malaysian lawmakers — albeit via a testy alliance with long-time rivals and regional parties from Sarawak and Sabah.
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The political uncertainty has unnerved investors, partly contributing to the ringgit’s slide to its weakest level since the Asian financial crisis of 1998. The ringgit has dropped 7.3% to the dollar this year, adding to the challenges of a government torn between the need to tackle high costs of living, as also pare a hefty 81 billion ringgit ($17 billion) subsidy bill to narrow its budget deficit.
Political stability is key to narrowing the budget gap sustainably, as also lowering the government’s net debt to below 60% of gross domestic product, according to S&P Global Ratings, which earlier this year reaffirmed Malaysia’s ‘A-’ investment-grade credit score.
The constant change of governments since 2020 has also resulted in policy changes that affected major infrastructure projects such as a proposed high-speed rail with Singapore and the 50.3 billion ringgit East Coast Rail project.
Loke, who is seeking to revive the now-cancelled high-speed rail via a private sector-driven model, stressed to investors that the country will honor contracts, regardless of any future government changes.
Loke admitted that despite prevailing unhappiness over the east coast rail’s alignment decided by the previous government, Anwar’s government decided against making any further changes as it will be “too disruptive and too much cost for the government to pay” for any amendments.
“What we want to impress upon is that Malaysia will stick to the rule of law. The sanctity of contract is important. Even though its a different party, whatever contract signed by the previous government, we have to live with it. That is a guarantee by itself,” he said.
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