ECONOMIC growth will be “likely affected” by the new government’s drive towards reforms, said Economic Affairs Minister Azmin Ali.

However, the government is confident the impact will be short-lived as the economy is fundamentally strong, he said in a speech at a World Bank function in Kuala Lumpur today.

The short-term pain, however, is necessary in order to repair the government’s finances and ensure that the economy remains strong and can grow sustainably, Azmin said. 

“While it is very likely that economic growth may be affected by various reforms, it is expected that the impact is short-lived,” Azmin said his remarks to the launch of the World Bank’s Malaysian economic monitor: navigating growth.  

“This trade-off is necessary to strengthen the fiscal position of the government, to return the economy to a sturdier position and sustainable growth path.”

Some policies of the new the Pakatan Harapan government have roiled the stock market while foreign investors are worried that certain big-ticket projects will be cancelled.

The new administration’s announcement that the country’s debt is close to RM1 trillion and its review of two China-driven rail projects are examples of decisions that have spooked investors.

Ministers, however, have defended these decisions, saying the government wants to be truthful about the true state of the country’s finances.

PH said it also wants to end lopsided public-private deals, which were a feature of the previous Barisan Nasional administration that led taxpayers to bear the burden of inflated costs.

Azmin also referred to these initiatives, saying there will be a mid-review of the 11th Malaysia Plan (11MP), which will be tabled on October 18.

“Besides reviewing existing policies, the new government will also explain our manifesto and new policies,” Azmin said.   

“The focus on the review is to ensure we can sustain the FDIs (foreign direct investment) and we want investors to retain Malaysia as a destination for their investment.

“Investments in the country must create value for local players. They must be innovative instead of focusing on labour-intensive industries.”  

Earlier, Azmin said the mid-term review will address growth disparities between states, income inequality, youth unemployment and the high cost of living.

“These initiatives are targeted at ensuring sustainable and quality growth that benefits the people beyond 2020.” – July 2, 2018.