About 25 years ago, when I was a director of Perak Community Specialist Hospital, I invited a Cancer Palliative care expert from Australia to teach our hospital staff how to take care of cancer patients. After her long lecture, I asked what dying patients would usually say before they die. They had 2 regrets; one they should have live a life to please themselves instead of pleasing others. The second regret was that they should have pointed out someone’s mistake but didn’t do it. I am 91 years old and my life expectancy is short. To avoid regrets when I die, I want to write this article although many of our political leaders may not like to read it.

Before voters cast their votes they always look at the performance of the current Government.

How the Unity Government was founded?

The 2022 general election resulted in no coalition winning enough seats to form a government in their own right. Anwar managed to form a Unity Government which comprised the progressive Pakatan Harapan (PH) coalition, UMNO's long-dominant Barisan Nasional (BN) coalition, and an East Malaysian block that included Gabungan Parti Sarawak (GPS), Gabungan Rakyat Sabah (GRS), and Warisan.

As you can see, the Unity Government is loosely tied together. It will lose in the next general in February 2028 if the Unity Government cannot show economic improvement.

Why Sarawak and Sabah will likely leave the Unity Government?

Where is oil found in Malaysia?

The Sarawak Basin is a prolific oil and gas producing basin. The 20% royalty or higher revenue share has for some time been the point of contention between the federal government and the oil-producing states, notably Sabah and Sarawak.

They will have more benefit if they leave the Unity Government.

My concern: Managing Malaysia is like managing several business operations in every town and city in the country. If the Government can reduce overhead charges or management cost, Malaysia can improve its economy.

Currently Malaysia has the most civil servants per capita in the world as shown below.

We have a lot more civil servants per capita than any other country in the world. Why should Malaysia have 1 civil servant for every 19 citizens? Are we so stupid? 

USA which is the richest nation in the world, has 1 civil servant for every 114 citizen.

While writing this article, I see the announcement by PM Anwar below:

The annual increase in civil servants’ salaries in Malaysia has recently seen a significant boost. Prime Minister Datuk Seri Anwar Ibrahim announced that civil servants will enjoy a salary hike of more than 13% starting from December this year. This increase is the highest in the nation’s history and involves an allocation of over RM10 billion. Anwar emphasized that the government aims to ensure that the minimum income for civil servants exceeds RM2,000 per month, which is currently at RM1,795 per month. The implementation of this increase will take into account overall aspects, and it won’t apply to those with poor work records or lack of focus.

This move reflects the government’s commitment to recognizing the importance of civil servants and their contributions to the country’s economy. Private companies are also encouraged to follow suit in raising salaries to acknowledge the productivity of their workers.

How can the Government improve its economy if PM Anwar continues to increase expenditure on civil servants?

Prime Minster Anwar and all politicians must realize the increase of the number of civil servants and their salary are reducing Malaysia GDP growth rate in the last 30 years as shown below:

Malaysia posts weakest GDP growth in nearly 2 years as exports slump

Malaysia's economic growth hit the lowest in nearly two years in the second quarter dueto sliding exports and a global slowdown, prompting the central bank to warn that full-year growth will come in at the lower end of its previous forecast.

The weaker outlook does not change most economists' expectations for the central bank to keep policy rates on hold this year as the Southeast Asian economy confronts weakening global demand and a slowdown in main trading partner China.

Malaysia National Government Debt reached 255.4 USD bn in Dec 2023, compared with 246.4 USD bn in the previous quarter. Malaysia National Government Debt data is updatedquarterly, available from Mar 1978 to Dec 2023. 

Moreover, Malaysia’s Government Debt to GDP ratio stood at 60.40% in 2022.

This means that the country’s total government debt was equivalent to 60.40% of its Gross Domestic Product (GDP) during that year. Let’s break it down a bit:

• Average Debt to GDP: Over the years, Malaysia’s average Government Debt to GDP ratio has been 54.22% from 1970 until 2022.

• Historical Extremes:

o Highest: The highest recorded debt-to-GDP ratio was 103.40% in 1986.

o Lowest: The lowest recorded ratio was 31.90% in 1997.

• Significance: Investors often use this ratio to assess a country’s ability to make future payments on its debt. It can impact borrowing costs and government bond yields 

Malaysia’s government debt has been a topic of interest, especially given the economic challenges posed by the COVID-19 pandemic. Let’s explore the key drivers behind Malaysia’s government debt:

1. Economic Impact of COVID-19:

o The pandemic led to economic disruptions, necessitating stimulus packages and financial support for businesses and individuals. Malaysia rolled out approximately 305 billion Malaysian ringgit ($73.3 billion) in stimulus packages to boost the economy1.

o The resulting budget deficits contributed to increased borrowing and government debt.

2. Oil-Related Revenue Dependency:

o Malaysia’s government is fairly dependent on oil-related revenue. However, Fitch Ratings expects oil prices to decline to US$80 per barrel in 2024 and US$70 per barrel in 2025.

o Fluctuations in oil prices can impact government revenue and fiscal stability.

3. Historical Trends:o Between 2012 and 2019, government debt increased by an average of 7.5% annually, rising from RM501.6 billion (51.6% of GDP) at the end of 2012 to RM793.0 billion (52.5% of GDP) at the end of 20193.

o These trends highlight the gradual accumulation of debt over time.

4. Debt-to-GDP Ratio: As of December 2023, Malaysia’s government debt accounted for 64.3% of its nominal GDP4.

The debt-to-GDP ratio is a critical metric used to assess a country’s ability to make future debt payments. A higher ratio indicates greater debt burden relative to economic output.

Weak Ringgit

The persistent decline of the ringgit brings it perilously close to reaching a historic low, with the combined factors of Malaysia's weakening exports and the strength of the US dollar potentially propelling the currencybeyond that threshold. The Malaysian ringgit has depreciated by almost 4 percent since the beginning of the year. There exists a looming possibility that the ringgit could plummet to a new record low of USD5, fueled by the sluggish recovery of exports compared to other Asian economies and the likelihood of lackluster economic growth.

In summary, Malaysia’s government debt has been influenced by economic shocks, revenue dependencies, historical trends, and the need for fiscal support during challenging times. Monitoring debt levels and ensuring sustainable fiscal policies remain crucial for the country’s economic stability.

My suggestion:

I hope I am wrong in saying that the Unity Government will lose in the next election.

I am aware of the sensitive feeling of voters if PM Anwar openly declares that he wants to reduce the number of civil servants. But he can do it quietly by not employing replacements when old civil servants retire.