The Malaysian Insight

ANWAR Ibrahim’s decision to reject the prime minister’s salary, reduce the size of the cabinet and cut the salaries of his ministers was met with different views by economists.

They were, however, of the same view that the effort does not have major implications on the economy, but differed in their views on the indirect effects of the decision.

Some see it as a major effort to gain the people’s confidence in implementing prudent spending to ensure fiscal stability in administrative matters.

Universiti Utara Malaysia economic researcher Irwan Shah Zainal Abidin said the move was populist.

“If you really want to solve the problem, reducing the size of the cabinet will not really have any effect,” said the former director of the Asean Research Institute of Banking and Finance, Universiti Utara Malaysia.

He said Anwar also knows that the move is just a populist act because the prime minister himself is aware that the national debt level is expected to reach RM1 trillion.

“This is not 2018 and we see the ratio and GDP is still around 60%, which is still below the ceiling that is set,” he said.

The figure of RM1 trillion was quoted by Anwar when he announced the austerity measures he would implement once he took over as prime minister last month.

In addition to rejecting his salary and shrinking the cabinet, Anwar also re-examined large projects approved by the previous government and has called for a review of flood mitigation projects worth RM7 billion.

Irwan Shah said Anwar should develop economic policies to increase investment, possessions and national productivity.

The policy should attract more selective foreign investors or implement tax reforms and abolish the unprofitable sales and service tax (SST), he said.

“It can’t be like the 1990s anymore. It’s true that there was high investment at the time, but what kind of investment?” he said.

“The country, on the other hand, needs high-quality and sustainable investments that can add value and provide job opportunities and high incomes to graduates today.”

He said the action will give long-term returns to the country.

“That’s why I said I don’t really support (the effort to shrink the cabinet size) because from an economic point of view, it’s not necessary, it doesn’t have implications from the national debt point of view either,” he said.

“The main thing is to focus on how to increase the country’s income.”

Economist Yeah Kim Leang also said reducing the size of the cabinet did not have a big impact because it did not provide significant savings to the country.

However, the effort gives great meaning to the people who will see that this new government will apply the value of transparency in the administration and spending of the country, he said.

“For me, this is in line with his commitment to ensure good governance and no leakages. I see it as the tone set by Anwar for all his ministries to follow,” he said.

“Anwar gave the right tone to ensure that the government implements more careful and transparent spending, most importantly, to ensure fiscal stability in administrative affairs.”

The Sunway University economics professor said fiscal stability means managing the country’s funds or the people’s money transparently.

“This is necessary for the government to focus on maximising national spending more effectively, dealing with the rising cost of living and generating job opportunities,” he said.

“Most importantly, it can also be seen as Anwar’s way to maximise the support of the people, especially from households, traders and entrepreneurs.”

As for the long-term solution, Yeah thinks Anwar needs to ensure the political stability of the government before setting the direction of the country’s economic agenda.

These measures include policies to attract or increase the confidence of foreign investors and support the right sectors to generate jobs and boost national growth in key areas.

“This includes support from the private sector as a whole involving all industries, and focusing on small and medium enterprises,” he said. – December 17, 2022.