Malaysia’s 2021 GDP growth rate of 3.1% is disappointing compared to the earlier overly optimistic projections by the Muhyiddin Yassin administration of up to 7.5%. Even the Department of Statistics (DOSM) admitted that the economic performance in 2021 is still below its pre-pandemic level in 2019. By not being able to reverse the 5.6% contraction in 2020, Malaysia’s economy is still smaller in 2021 as compared to 2019, the final year that PH was in power.
The economic performance in 2022 and handling of the new wave of a milder Omicron variant of COVID-19, will pose a litmus test for Prime Minister Ismail Sabri as to whether he is committed to address the economic woes plaguing the Malaysian economy or indulge in unrealistic projections to generate a feel-good factor to face the coming Johor state general elections. Ismail must not repeat the past mistakes of overly optimistic projections that not only failed to pull the economy out of its recession but affected economic confidence by missing many economic targets.
2020 was already a year of missed economic targets when Malaysia suffered a budget deficit of 6.2% of the GDP as compared to the initial projection of 6%, unemployment rate at 4.5% compared to the projected 4.2% and GDP growth at (-5.6%) compared to the projected (-5.5%). With continued Ministerial incompetence, political instability, and the surge in the COVID-19 infections, Malaysia’s economic targets for 2021 is a sad repeat of the missed targets of 2020.
For 2021, the budget deficit will not be scaled back to 5.4% as projected but likely increase to more than 7%. The unemployment rate will not be reduced to 3.5% but likely to be at 4.3%. GDP growth dropped to 3.1% despite 8 separate economic stimulus packages of RM530 billion on top of the 2021 Budget.
PH and DAP had tried to assist the rakyat and businesses, especially SMEs, by compelling the government to agree to an additional RM45 billion fund injection and a three month interest waiver for the poorest 50% of the population by signing a Memorandum of Understanding (MOU) with the Prime Minister in 13.9.2021. The aid that the rakyat and businesses receive now is the result of this MOU.
To avoid 2022 to descend to be another lost year of missed economic targets, Ismail must undertake institutional reforms that resolve the workers shortage faced by many businesses through the offering of wage and hiring monthly incentives; check rising inflation and prices of food, commodities and materials especially reversing the rise in electricity tariffs for 1.6 million businesses and industries; and combat corruption as well as reduce bureaucratic red-tape and inefficiency.