Malaysia’s political climate is currently experiencing a massive wave of changes. In the midst of this political turmoil, the stock market has been put in a very vulnerable situation. The abrupt resignation of Tun Dr Mahathir as Prime Minister has created instability for the Malaysian economy.
According to an article published by the Malay Mail, the uncertainty had an immediate effect on the Malaysian Stock Exchange (Bursa Malaysia). The wavering political climate has made investors withdraw their shares from the market. This pullback caused a huge loss to the Malaysian economy. It was estimated that RM43 billion in value has been lost in the span of one night as investors were quick to withdraw their shares.
“Uncertainty and instability are one of the worse obstacles to the economic growth of any country. And there is already a slowdown due to the novel coronavirus (Covid-19) and the current world economic situation,” said Tan Sri Ramon Navaratnam, an experienced economist. He further stated that Malaysia may go into a recession if this uncertainty carries on.
Prior to Dr Mahathir’s resignation, he was scheduled to announce and talk about a stimulus package that aims to improve the tourism industry. The tourism industry has taken a massive nosedive recently due to the global spread of COVID-19. Travel restrictions placed on citizens from China have played a massive role in the dwindling economy.
Even Bank Negara has predicted that Malaysia’s economic growth forecast for 2020 will be slower compared to the estimates given last year. Reuters stated that Malaysia will now have a difficult time to convince foreign investors and investors would much rather prefer to invest their money in a more stable neighbouring country.
Oh Ei Sun, a political analyst, gave reassurance that these negative impacts are short term. According to him, this shock will only last for a short while before a rebound happens. Experts also stated that change in government may serve as a better prospect for future investments.
“Investors are not saints, they just want to make money one way or another,” said the Senior Fellow at Singapore Institute of International Affairs.
Political uncertainty has a major impact on the country’s economy. However, experts believe investors will place more emphasis on profit and revenue. This perspective will eventually lead them to look at the situation realistically.
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