BMI Research said the unrealistic nature of PH's manifesto made its credibility among voters questionable. — Picture by Yusof Mat Isa

KUALA LUMPUR, March 21 — Pakatan Harapan’s (PH) election pledges would harm ongoing efforts to cut Malaysia’s chronic overspending and weaken the country’s business environment, said BMI Research today.

In a note critical of the Opposition pact’s promises due within 100 days of winning the general election, the Fitch Group unit also questioned the deliverability of the pledges.

Among pledges in the pact’s manifesto announced this month include removing the Goods and Service Tax (GST), abolishing toll concessions, and writing off outstanding study loans under the National Higher Education Corporation (PTPTN).

Prime Minister Datuk Seri Najib Razak previously said these pledges would cause federal debt to climb to RM416 billion.

“We believe that PH will struggle to implement its ambitious 10 promises in 100 days, with all of its promises being populist and aimed largely at addressing the population’s complaints against the ruling government,” it said in the note.

BMI Research felt that while the pact’s pledges would be popular, their delivery would be detrimental to the Malaysian economy.

Among others, it noted that the pledges did not come with clear descriptions on how a PH administration would pay for any of the measures, many of which would remove existing and vital sources of federal revenue.

“Considering that GST accounts for 17.9 per cent of the government’s revenues and has been growing steadily since the share of 13.7 per cent in Q215, the abolishment of GST would place downside pressures on the government’s revenues.

“The increasing of subsidy payouts would also present additional pressures, with the share of subsidies falling to 5.3 per cent of the total in Q317 from 16.8 per cent in Q210 as part of the Najib Razak administration’s subsidy rationalisation efforts (which started in July 2010),” BMI Research continued.

The unrealistic nature of the manifesto, despite the popularity of the pledges, also made its credibility among voters questionable, the research unit added.

Businesses, in particular, were unlikely to be receptive of the pact’s pledges, especially with existing reports of smaller firms struggling to cope with the current minimum wage, which PH vowed to increase further.

Promises to review existing contracts for large infrastructure projects could also jeopardise the country’s currently balmy relations with China, it said.

China is one of Malaysia’s largest investors and trade partners, and is involved in several key projects that are ongoing or being planned.

“The detailed probe into foreign-funded mega projects could also strain ties with China and potentially alienate the Chinese-majority Democratic Action Party (DAP)’s support base,

with many Chinese supporters having a favourable view of Beijing,” it said.

BMI Research suggested that PH would have done better to focus its manifesto on institutional reforms, which it said had served the defunct Pakatan Rakyat pact well in the previous two elections.

“However, we believe that the implementation of many of these reforms will be extremely challenging, especially since many of these systems were implemented under Mahathir,” it said.

Tun Dr Mahathir Mohamad was prime minister from 1981 to 2003, but is now the chairman of PH.