2022 Malaysian General Election: Economics and Climates policy in GE15
This article is part of a mini-series covering Malaysia’s 15th general election (GE15). The election will see radical new constitutional amendments come into play, as well as a plethora of familiar figures at the helms of competing coalitions. This election comes after four years of political breakdown, corruption charges, and instability.
Macroeconomic Issues
As Malaysia heads into the 15th General Election, set to take place on November 19, 2022, it is worth recounting the political turmoil and social ripples that took place since the Sheraton Move and the COVID-19 pandemic. In 2021 alone, Malaysia has seen a wave of unrest stemming from wide-ranging issues such as food insecurity as seen in the #BenderaPutih (White Flag) movement, the nationwide workers’ strike organised by medical officers in the Hartal Doktor Kontrak, and the #Lawan protests following a trend of popular expressions of discontent in times of economic crises, to name a few. Through three different prime ministers in four years, rampant party-hopping, and intense inter-party conflict that has plagued Malaysia’s political scene, the pandemic has further worsened conditions in the country. Poor economic conditions were exacerbated by inadequate and counterproductive state response. The ruling Perikatan Nasional (PN) government allocated financial resources equal to about 3.8% of GDP, ranking second lowest in terms of financial aid provided in the ASEAN region behind Vietnam. On top of that, the government moved to allow citizens to withdraw from what is essentially their retirement funds to carry them through the crisis instead of greater direct aid as seen elsewhere in the world.
The future of Malaysia’s economy is promising, with estimates projecting the country’s growth by 4.6% in 2023. Additionally, Malaysia currently ranks 1st in Global Islamic Fintech (GIFT Index) and the 3rd “richest” in ASEAN. However, many major issues could potentially harm Malaysia’s economic prospects. First, graduate employment fell by 4.1% while skill-related underemployment widened by 14.4% in 2021. This is harmful in the long run as it can reduce Malaysia’s economic growth, lower economic and productivity output, and reduces investor confidence paving the way for a lower investment. Second, unemployment has risen within the context of the recession. Rising global interest rates and speculation has prompted businesses to lay off workers, particularly in the technology sector. This was observed in Malaysia, where large tech companies such as Carsome and Shopee, have begun laying off vast numbers of their employees.
The Brain Drain
Lastly, the issue of a “brain drain” has been a persistent problem. A decade ago, the National Economic Advisory Councilwarned the government that the brain drain phenomenon in Malaysia was reaching a “dangerous stage,” thereby causing a lack of a critical mass of highly skilled individuals who are essential to the country’s growing economy. Currently, 2 million Malaysians reside overseas, with 55% of Malaysian ex-pats located in Singapore. EMIR Research estimates that the talent drain will lower Malaysia’s GDP growth by 2%. The perception of large numbers of talent leaving the country could also lead to decreased investment from non-government entities and foreign companies. Reasons for the brain drain are vast, including the Malaysian youth's perception that the job market in Malaysia favours more “traditional” jobs such as doctors, lawyers and engineers, dissatisfaction with the low pay and benefits, complicated bureaucracy for business operations, and firms tending to prioritize foreign over local talent. Subang MP Wong Chen commented that despite having a high human development index, Malaysia is unable to exit the middle-income trap due to a plethora of factors, with the migration of graduates being one of them. He, along with other MPs of the PH coalition, has advocated for increasing the wages of graduates, as well as transforming the economy into one that practices a system based on social needs and does not discriminate based on race and gender.
Rice-Bowl politics
Perhaps the most pressing social issue facing Malaysians presently is the rise in the cost of living. Food inflation in Malaysia averaged 3.62% from 2011 until 2018, while it reached an all-time high of 7.2% in August 2022. To look at it another way, a basket of groceries that would have cost RM100 in 2012 now costs RM119.52 in 2022. Housing prices have also increased significantly – the average house price in KL for the year 2000 was RM245,249. In contrast, the average house price in Q1 of 2021 was RM708,812, thereby making it significantly harder for the average Malaysian to own a home. Some reasons for these drastic increases in prices include a weakening Malaysian Ringgit and the Russian invasion of Ukraine, which has led to supply chain disruptions and food security issues. Inflation also disproportionately affects low- and middle-income households more. This is primarily because price inflation often outstrips growth in wages and transfers, while self-employment and investment income may be more likely to keep pace with inflation. Therefore, inflation can reduce the incomes of poorer households relative to those of the richest. In Malaysia, the “chicken shortage” in July 2022 affected B40 and M40 (low-income bands) communities the most, as this staple food became much more expensive
Climate Change in Malaysia
Additionally, issues of climate change have become more prevalent in Malaysia. This is reflected in issues of rapidly rising temperatures by 0.2 °C – 0.32°C per decade, significant increases in rainfall and floods, large tracts of deforestation, rising sea levels of around 3.3mm per year east of Malaysia and around 5mm per year west of Malaysia, and the adverse effects on crop growth processes. In 2019 alone, Malaysia emitted 313,020 kilotons of greenhouse gasses, making it a ‘moderately’ polluted country within the Air Quality Index. Erratic climate patterns can pose a direct health risk. The WHO estimates that climate change is responsible for approximately 250,000 additional fatalities per year between 2030 and 2050 from malnutrition, malaria, diarrhoea, and heat stress.
Additionally, property damage and subsequent displacement of people have become increasingly frequent in Malaysia. For instance, the December 2021 landfall on the eastern coast of Peninsular Malaysia brought torrential downpours throughout the peninsula for three days. The resulting floods affected right states across the peninsula, left at least 54 dead and 2 missing, caused the concurrent displacement of more than 71,000 residents, and have affected over 125,000 people overall. Moreover, climate change poses a direct threat to food production and supply chains globally. In a recent study based on the microdata on paddy field of Integrated Agricultural Development Area at North-West Selangor, a 1% increase in temperature will lead to a 3.44% decrease in current paddy yield and a 0.03% decrease in paddy yield in the next season. A 1$ increase in rainfall will also lead to a 0.12% decrease in the current paddy yield and a 0.21% decreased in paddy yield next season. The shift towards renewable energy (RE) and sustainable development remains a salient problem in Malaysia. For instance, Bakri MP Yeo Bee Yin and Bangi MP Ong Kian Ming have commented that Malaysia needs more commitment from the government. They suggested proposing a Climate Change Act, similar to the one passed in the UK in 2008 and updated in 2019 to be tabled and passed in Malaysia so that there will be a legally binding “carbon budget” that Malaysia must achieve by 2050.