ECONOMISTS have expressed mixed views over the “recycled” cabinet appointed by Prime Minister Ismail Sabri Yaakob, with some saying that economic recovery and growth should be measured by the new government’s ability to handle the Covid-19 outbreak in Malaysia, rather than the composition of the cabinet.
 
Experts are divided on whether the new cabinet composition should be lauded or criticised. While some view the similarity in minister line-up as a sign of continuity, others are sceptical of the new government’s intent and competence to resolve the economic crisis faced by the people.

According to associate professor Dr Shri Dewi Applanaidu, the appointment of Khairy Jamaluddin as the health minister is one of the highlights of Ismail’s new cabinet line-up, seeing as the former science, technology and innovation minister had proved himself as the coordinator of the national vaccination programme.
 
The academic from Universiti Utara Malaysia (UUM) School of Economics, Finance and Banking called Khairy’s appointment “a brilliant move” which will help Putrajaya be more focused and efficient in fighting the virus.
 
“Herd community can be achieved at a much faster rate which will allow economic sectors to reopen, significantly contributing to economic recovery,” Shri said. 

Khairy will continue to handle all vaccination-related matters, which has recently been placed under the Health Ministry’s purview, according to the prime minister.
 
Penang Institute chief executive officer Dr Lim Kim Hwa said the composition of the new cabinet is unlikely to affect short-term economic growth.
 
“It will be mainly driven by the ability to control the pandemic and have economic activities resume in a fair way.
 
“(Growth will also be determined by) external demand factors such as oil price and the ability to live with the virus, as it is unlikely to be eradicated completely,” he said. 
 
University of Malaya (UM) economist Prof Dr Rajah Rasiah also agreed that the focus should be on bringing down the number of Covid-19 infections and fatalities.
 
“Unless we reverse this trend, it will not be possible to unleash the productive capabilities of the country to revive economic growth,” he said.
 
Rajah said Putrajaya should focus more on the positivity rate of the virus and ramp up Covid-19 testing. 

He added that the country is losing the battle against coronavirus due to poorly thought-out standard operating procedure and regulations.
 
“Why is there a need to prohibit non-essential services if they do not directly affect the pandemic? 
 
“It has become all the more of a problem because a lot of the non-essential services actually function as inputs for essential services,” he said.
 
“Even if we take the ‘living with the virus’ stance for the future as several countries are doing now, it can only be taken seriously when the cases and deaths fall below a certain threshold level,” he said, referring to the government’s stance on Covid-19’s endemicity.
 
Continuity or preservation of status quo?
 
The government departments integral to Malaysia’s economic growth and recovery are the Finance Ministry, International Trade and Industry Ministry, Human Resource Ministry, and Entrepreneur Development and Cooperatives Ministry.
 
With the exception of Noh Omar, who is the newly appointed Entrepreneur Development and Cooperatives minister, the new minister line-up is the same as the previous cabinet under Muhyiddin Yassin – Tengku Zafrul Aziz was reappointed as finance minister, Azmin Ali was reappointed as international trade and industry minister, and M. Saravanan was reappointed as human resource minister. 

UM’s Rajah said his biggest concern is that Finance Minister Tengku Zafrul seems more fixated on protecting the interests of financial institutions like banks.
 
“I certainly believe that the moratorium should be returned, and all efforts must be taken to assist the ravaged masses and the small and medium enterprises (SMEs).
 
“Banks can handle zero profits,” Rajah said.
 
“Bank Negara Malaysia’s barometer of success now must be the successful recovery of firms and clearing of household debt, rather than profits of commercial banks,” he added.
 
Rajah said most countries usually adopt Keynesian recovery policies to help individuals and companies recover from debt. 
 
“(That was) what we did in 1998 with capital controls. While banks were merged, the government also forced commercial banks to lend a certain portfolio of their funds with capped interest rates to SMEs to come out of the 1997-1998 Asian financial crisis. 
 
“Perhaps one cannot expect anything new from the virtually same cabinet to do something different,” he said. 
 
Penang Institute’s Lim believes that the new cabinet may be more focused on winning the election, which may happen within the next two years.
 
“The general election is due in mid-2023 (at the latest). So, the current government is more likely to focus on that rather than other factors, given the thin political margin it commands,” he said.
 
Mohd Sedek Jantan of UOB Kay Hian Wealth Advisors, however, felt that a similar cabinet line-up can ensure the continuity and improvement of existing plans.
 
He predicts that there will be economic growth as the same ministers were reappointed to what he termed as “essential ministries” for stimulating growth and recovery – health, finance, entrepreneur development and cooperatives, human resources and women, family and community development.

These ministries play a direct role in the progress of vaccination, the economic stimulus packages, supporting SMEs, and societal issues like the mental health wellbeing of vulnerable groups, Sedek said.
 
“For Malaysia to recover quickly within the next six months, we are prioritising public health, especially the vaccination program and controlling the spread of Covid-19, social growth and the economy,” Sedek said.

He added that the upcoming Budget 2022 is crucial to securing a sustainable recovery. 
 
“First, the budget needs to be aligned with the eight stimulus packages. Second, it needs to be comprehensive and cover all economic and social sectors.
 
“The country may need another round of stimulus packages, possibly as part of Budget 2022, to support the recovery program,” Sedek said. – September 3, 2021.