AFTER a series of political uncertainties that muddied the future of a post-Covid-19 Malaysia, the Anwar Ibrahim administration survived its first year in federal power in a paradoxical yet congruent bloc called the unity government.

The progressive Pakatan Harapan (PH) coalition, which Anwar leads, formed the government with assistance from his previous party the nationalist Umno, Gabungan Parti Sarawak and Gabungan Rakyat Sabah. Several smaller parties also pledged support to him.

The unity government passed several major political tests, including re-election in three out of the six state governments that went to the polls in 2023. A status quo outcome saw PH winning the more urban and richer state governments, while the conservative-leaning opposition retained dominance in the Malay hinterland. It went through several rounds of by-elections with mixed results, but none that caused any upsets.

More recently, Anwar as prime minister made his first cabinet reshuffle on December 12, with several of his ministers swapping portfolios and the creation of a couple of new ministries, which by and large have been well received, despite the reshuffling itself catching many by surprise.

The political outlook

Anwar’s first act after being sworn in as Malaysia’s 10th PM on November 24, 2022, was to call for a confidence vote. Anwar cemented his formidable two-thirds majority support – a feat unseen in over 15 years – granting his government the ability to amend the Federal Constitution.

In the first half of the year, Anwar’s cabinet grappled with adjusting to new roles and revitalising a sluggish post-Covid-19 economy marked by inflation. Gradually, the government improved its public service delivery through a high degree of good governance while simultaneously charming the civil service machinery to ensure cooperation in policy execution.

Anwar tabled and passed his maiden national budget as PM, it being the largest in history. The focus areas for Budget 2024 were eliminating hardcore poverty, laying the foundations for subsidy rationalisation, and restructuring the country’s economic model in line with previously announced government policies.

The above indicates Anwar and his unity government are poised for uninterrupted power for the next four years as it has achieved political stability until the next general election.

However, the upcoming Yang di-Pertuan Agong from Johor may prove a slight political risk. Sultan Ibrahim Sultan Iskandar’s colourful personality and strong views could hinder Anwar’s governance via direct intervention.

The international outlook

A key foreign affairs event set in 2024 is the 50th year anniversary of diplomatic ties between Malaysia and China. In 2023, Anwar attended several high-level meetings with Chinese leaders, and extended invitations to China’s Xi Jinping for an official visit to Kuala Lumpur.

Anwar has been consistent in maintaining diplomatic ties with China as an important trading partner and indispensable Asian power, an effort that can be perceived as a move to counter Western hegemony and position Malaysia as a neutral intermediary within the fierce US-China rhetoric.

Regionally, Anwar has emerged an elder statesman of sorts for Asean. He is one of the last Southeast Asian luminaries from the 1990s at the leadership position of the grouping. Many of his peers are facing the exit (i.e. Lee Hsien Loong and Joko Widodo) or were just elected (i.e. Srettha Thavisin and Bongbong Marcos).

An informal “troika” mechanism introduced to assist its 2024 chair, Laos, with consensus-driven guidance from previous chair Indonesia and next chair Malaysia presents Anwar with plenty of leverage to manoeuvre at the Asean level.

Anwar will continue to champion Asean as the region’s primary deliberative platform. He and Foreign Minister Mohamad Hasan will look at ways to maximise presence at next year’s United Nations General Assembly, exploiting the platform to continue his vocal stance on matters pertaining to the Muslim world.

The policy outlook

1. Energy transition

Anwar’s government actively developed renewable energy-related policies in its first year, especially by launching the National Energy Transition Roadmap (NETR). Now parked under Deputy Prime Minister II Fadillah Yusof, it will serve as a catalyst for Malaysia’s transition from non-renewables via a “just” transition.

The NETR outlines policy pathways to reach a net-zero or carbon neutral target by the year 2050. Phase 1 of the roadmap proposes regulatory reforms, best practices, and business thinking realignments to achieve a 70% renewable energy (RE) capacity target from the current 24%. It features 10 national flagship projects to be developed with participation of the private sector.

This venture into the energy transition space has attracted support from state governments, notably Sarawak, which aims to be a regional renewable energy hub. Sarawak’s recent import of the world’s first hydrogen-powered smart tram for deployment as an Autonomous Transit Vehicle exemplifies NETR targets to position Sarawak as the national hydrogen hub.

The government is also looking at allowing cross-border RE trade through an electricity exchange system. Ideally, this would position Malaysia as a regional hub for RE, complementing the Asean Power Grid initiative and the Lao PDR-Thailand- Malaysia-Singapore Power Integration Project.

Infrastructure promoting the use of electric vehicles (EVs) are expedited nationwide. Several government-linked companies such as Petronas’ Gentari and Tenaga Nasional Bhd are spearheading these initiatives for more EV uptake. We are also seeing hefty investments into research and development by corporate entities like automotive giant Geely in its EV plans with national carmaker, Proton.

2. Digital economy

The Malaysian government has been on the front foot in digitising nearly all aspects of public service and having local businesses adopt digital technology. All strategies have been comprehensively outlined in the Malaysian Digital Economy Blueprint (MyDigital) launched in 2021.

Since then, the Anwar administration has overseen the implementation of the 5G cellular network managed by Digital Nasional Bhd. Malaysia has also shown steady progress in the e-commerce sector, cross-border payment systems, the widely used DuitNow QR code banking option, and a greater uptake of virtual payments, especially among youth.

MyDigital has spawned and given rise to several new digital initiatives. Notably, MyStartup, a platform empowering the startup ecosystem by fostering emerging talents with the potential to create more tech “unicorns”. A concept paper by Economy Minister Rafizi Ramli on GovTech that seeks to integrate government operations into a single and seamless digital platform is also being developed.

Another is the inception of the government’s Central Database Hub, or PADU, set to be operational in this first quarter. The database seeks to consolidate all existing government datasets and help to accurately distil low-income households eligible for targeted subsidies.

There has also been a stark increase in data centre infrastructure and cloud-based technology investment into Malaysia, mainly due to the availability of land and cost-efficiency factors. As such, Digital Minister Gobind Singh Deo will likely be the government’s focal point from 2024 onwards.

3. Artificial intelligence (AI)

The Anwar administration has prioritised AI for the government, with a more pronounced focus expected in 2024. During the Budget 2024 speech in November, Anwar announced the establishment of a new faculty for AI at Universiti Teknologi Malaysia, along with appropriate seed fund allocations.

The ongoing groundwork of setting up frameworks for an AI code of ethics and governance was announced earlier this year, with expectations of it to be rolled out in 2024. The Science, Technology and Innovation Ministry alongside its agency Mimos are designated leads for this project.

However, AI legislation in Malaysia is still in its infancy, with the government cautious and awaiting developments in Europe and Asean.

Nvidia, one of the world’s prominent technology companies on AI development, met with Anwar to invest in future AI works and make Malaysia a regional leader. This indicates AI holds significant promise for growth in Malaysia.

4. Supply chains and foreign investments

The government released its New Industrial Master Plan 2030, setting milestones for industrial upgrades to align sectors with global supply chain demands. The plan outlines resilient business practices and encourages the upscaling of local entities for international competition.

Anwar’s government also made a significant move to streamline overlapping functions across different investment agencies to be consolidated under the Malaysian Investment Development Authority (MIDA) for better coordination. MIDA is now tasked as the sole agency to interface with all foreign and domestic investors.

This year presents many prospective opportunities for Malaysia’s Investment, Trade and Industry Minister Tengku Zafrul Aziz, as Malaysia enters its second year as a signatory of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, currently one the world’s largest free-trade agreements.

Cautiously optimistic for 2024

Overall, Malaysia’s outlook seems to be promising with a politically stable government, a conscious effort from all sides to revamp the economy towards becoming more sustainable, as well as bringing in high-quality investments to create more high-skilled jobs. The Anwar administration appears serious in its focus towards pushing for the energy transition agenda and is committed to pursuing the adoption of the latest technologies and the gradual digitalisation of both public and private sectors in Malaysia.

Some lingering points of concern would be the slow pace at which the government fulfils its original pledges for institutional reforms. Furthermore, there is a growing sense of creeping censorship on content-related matters in the online space – concerns the government should address.

Finally, Malaysia is still struggling to find an ideal formula to deal with the increasingly divisive issue of identity politics and its detrimental repercussions in polarising societies. – January 12, 2024.

* Halmie Azrie and Amelia Hew are analysts at Vriens & Partners, a government affairs firm providing political risk and public policy assessments for various multinational corporations in Asean.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.