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Political Risk Alert: New Cabinet Appears Promising (Malaysia)

By Thursday April 9th, 2009 No Comments

The new cabinet line-up announced on April 9 by Malaysia’s newly appointed Prime Minister Najib Razak appears to be consistent with his claims for reforms and may signal the beginning of a shake-up in the ruling Barisan Nasional Coalition. Overall, the number of ministries has been reduced by two to 25. Likewise, the number of ministers in the Cabinet has been reduced to 28 from 32 previously. Sri Muhyiddin Yassin, the new deputy president of the ruling UMNO party, has been named deputy prime minister and education minister.

Najib retains his second portfolio as finance minister, while Ahmad Husni Hanadzlah was given the position of second finance minister. Mustapa Mohamed was assigned as minister for international trade and industry, and one of his key tasks will be negotiating free trade agreements. These appointments suggest that reforms may be more forthcoming during Najib’s term. Indeed, Najib was seen as the initiator of the MYR60bn (US$16.5bn) fiscal spending package and his economic team may inspire more public confidence in his ability to steer Malaysia through the current downturn. The appointment of Ahmad, who has a reputation as a reformer, and Mustapa – who is considered an economics expert – may be positive for Malaysia’s longer term economic development, as Najib tries to restructure Malaysia’s economy towards higher value-added products.

However, we caution against expecting immediate results. Malaysia is heading towards recession, and it would take results over the next few years to see if Najib can win over voters. Considering that the Barisan Nasional lost in two out of three by-elections held on April 7, which signal weak popularity, this will not be an easy task.

Source : Business Monitor Online

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