A New Political Landscape
April 2008
In what was billed as a political tsunami by local media, the Opposition coalition parties swept into power in five states, while the establishment Barisan Nasional (BN or National Front) Government lost its entrenched two-thirds majority for the first time in four decades to end up with a simple majority in Parliament, in Malaysia's 12th general elections.
Although BN retained power, winning 140 of the 220 parliamentary seats and securing majorities in several states, and Abdullah Ahmad Badawi was sworn in again as Premier, the shift in the political landscape unnerved foreign investors and rocked the market.
The Kuala Lumpur Stock Exchange plunged by more than 10% on the Monday immediately following elections due to concerns on government-linked companies (GLCs) and the fate of mega projects announced during the previous Government's regime. Hard-hit stocks included government-linked construction companies Malaysian Resources Corp Bhd (MRCB) and UEM World Bhd, which are involved in the Monorail and Second Bridge projects in the prosperous Opposition-held state of Penang and property developer Equine Capital Bhd, linked to the controversial Penang Global City Centre project. Other affected stocks were Kumpulan Perangsang Selangor Bhd (KPS) and Puncak Niaga Holdings, which have interests in the water treatment sector in Selangor, another wealthy and populous state which fell to the Opposition.
Since then, the political flux has continued to pound stocks, and the situation is exacerbated by jitters about a pending US recession. However, the Prime Minister has reassured investors that Malaysia's business and investment friendly policies would stay and that federal projects still had the green light. Nevertheless, it remains to be seen if projects in Opposition-controlled states might be delayed or even derailed, since there have been signals that contracts affecting these states might be reviewed if they were awarded by executive fiat, through political connections or closed tender or, in other words, via a less than transparent process.
In what was billed as a political tsunami by local media, the Opposition coalition parties swept into power in five states, while the establishment Barisan Nasional (BN or National Front) Government lost its entrenched two-thirds majority for the first time in four decades to end up with a simple majority in Parliament, in Malaysia's 12th general elections.
Although BN retained power, winning 140 of the 220 parliamentary seats and securing majorities in several states, and Abdullah Ahmad Badawi was sworn in again as Premier, the shift in the political landscape unnerved foreign investors and rocked the market.
The Kuala Lumpur Stock Exchange plunged by more than 10% on the Monday immediately following elections due to concerns on government-linked companies (GLCs) and the fate of mega projects announced during the previous Government's regime. Hard-hit stocks included government-linked construction companies Malaysian Resources Corp Bhd (MRCB) and UEM World Bhd, which are involved in the Monorail and Second Bridge projects in the prosperous Opposition-held state of Penang and property developer Equine Capital Bhd, linked to the controversial Penang Global City Centre project. Other affected stocks were Kumpulan Perangsang Selangor Bhd (KPS) and Puncak Niaga Holdings, which have interests in the water treatment sector in Selangor, another wealthy and populous state which fell to the Opposition.
Since then, the political flux has continued to pound stocks, and the situation is exacerbated by jitters about a pending US recession. However, the Prime Minister has reassured investors that Malaysia's business and investment friendly policies would stay and that federal projects still had the green light. Nevertheless, it remains to be seen if projects in Opposition-controlled states might be delayed or even derailed, since there have been signals that contracts affecting these states might be reviewed if they were awarded by executive fiat, through political connections or closed tender or, in other words, via a less than transparent process.
posted by Toyers at
8:34 AM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home