Malaysia's power struggle puts the economy's outlook at risk

The ruling coalition collapsed Monday amid a power struggle between 94-year-old Prime Minister Tun Dr Mahathir Mohamad and his planned successor. The political uncertainty is stalling economic policy, including a stimulus package that was due to be unveiled by Mahathir on Feb 27 to counter the coronavirus outbreak.

“There are a lot of issues that are bugging a lot of people, especially the cost of living, unemployment, inflation,” said Ahmad Martadha Mohamed, a professor of government at Universiti Utara Malaysia in the northern state of Kedah.Many people “see that whenever they go to the market the prices of goods are going up, purchasing power is becoming less, and younger people that graduated from university couldn’t find proper jobs and are complaining about being unemployed,” he said.

The cost of basic needs, unaffordable homes and a lack of job opportunities were Malaysians’ biggest concerns, replacing corruption and power abuse that were top of mind before the 2018 election, according to a Sept 5 to Oct 10 survey by EMIR Research, an independent think-tank based in Kuala Lumpur.

The actual cost of living can vary by almost 70% depending on where a person lives, according to a World Bank report. Based on its calculations, a household in rural Sabah has to earn about 4,300 ringgit a month to reach the same standard of living that 3,000 ringgit will buy in rural Kelantan.Homes remain unaffordable for many Malaysians, with the World Bank estimating that cumulative salaries and wages increased 59% from 2010 to 2018, while house prices surged 87%.

temporary set back, that’s normal. It will pass.

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