Malaysia’s new prime minister, Ismail Sabri Yaakob, has been sworn in, but analysts warn that political and economic uncertainties remain as the country faces its worst Covid-19 outbreak.
Ismail Sabri took office as prime minister following the resignation of Muhyiddin Yassin last week, after a harsh 17-month period of political struggles within the ruling coalition. Ultimately, it cost Muhyiddin his position.
The new prime minister now faces an immediate challenge of domesticating Covid’s growing infections in Malaysia and increasing the death toll, as well as reviving an economy that has suffered multiple lockout wheels.
“The political drama since last year has hit Malaysia at a very unfortunate time,” Wellian Wiranto, an economist at OCBC Bank in Singapore, wrote in a report on Friday.
Daily Covid cases reported in Malaysia exceeded 20,000 earlier this month and have since remained close to that level. The country reported more than 1.5 million cumulative cases of Covid on Sunday, while the death toll topped 14,000, according to health ministry data.
Adjusting for population size, the daily reported Covid cases in Malaysia are among the highest in the world, according to data collected by the Our World in Data online repository.
In his first national speech as prime minister, Ismail Sabri said on Sunday that he would invite the political opposition to join the government’s special committees tasked with fighting the Covid-19 crisis.
Getting to the opposition will be “crucial” for the new leader, given his meager majority in parliament, said Tricia Yeoh, chief executive of the Malaysian Institute of Democracy and Economic Affairs.
… it is unlikely that the market perception will change that the country’s political landscape would remain fractured, with political uncertainties that will remain a defining feature of the economy for some time to come.
Wellian Wiranto
economist, OCBC Bank
Ismail Sabri has the support of 114 lawmakers, just three more the 111 needed for the simple majority.
Yeoh told CNBC’s “Street Signs Asia” on Monday that gaining broader political support will help the new government continue previous efforts to increase vaccination against Covid and boost economic recovery in Malaysia.
About 40% of Malaysia’s population has received two doses of Covid vaccines as of Sunday, according to data from the health ministry.
Political uncertainty continues
Analysts said a new prime minister may not end political uncertainty in Malaysia.
“Overall, the fact that a new prime minister can be found in a relatively short time after Muhyiddin’s resignation … is in itself a good thing,” Wiranto said.
“However, it is unlikely that the market perception will change that the country’s political landscape would remain fractured, with political uncertainties that will remain as a defining feature of the economy for some time.”
Malaysia’s benchmark index, KLCI, has been one of the worst performers in Asia and has lost around 6.7% so far this year. The currency, the Malaysian ringgit, has lost about 5% against the US dollar over the same period.
Yeoh said the “main thing” that will return the country to political stability in the immediate future is “returning the vote to the people.”
“And that would happen in the form of general elections that will take place, probably sometime in the first or second quarter of 2022,” he added.