Thursday 09 Jan 2025
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KUALA LUMPUR (Jan 9): BMI, a Fitch Solutions company, expects Prime Minister Datuk Seri Anwar Ibrahim’s reform agenda to be hindered by ongoing signs of friction between the component parties of the unity government.

In a commentary on Jan 8, the firm cited recent tensions, including Umno's opposition to rumours of Investment, Trade, and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz joining Anwar's PKR, prompting calls within Umno to reassess its support for the unity government.

BMI said that these challenges reflect rising governance risks, as it revised Malaysia's governance risk index upward to 28.2 in January 2025 from 27.5 in January 2024. It believes this trend is likely to remain elevated in the coming quarters.

BMI also foresees Anwar facing growing challenges in the year ahead, despite an opinion poll showing the prime minister’s approval rating improving to 54% by late 2024, as concerns about economic issues, particularly the cost of living, persist.

"The impending RON95 petrol subsidy cuts, due by mid-2025, will pose a further headwind," BMI noted.

On the international front, BMI said that as Malaysia formally assumes the Asean Chair in 2025, it will face significant challenges, including territorial disputes in the South China Sea, Myanmar’s humanitarian crisis, and balancing relations with the US and China.

It highlighted Anwar’s appointment of former Thai prime minister Thaksin Shinawatra and former Cambodian prime minister Hun Sen as his personal advisers, underscoring the complexity of these issues.

As US President-elect Donald Trump’s administration is expected to adopt a more confrontational stance towards China, BMI said this will further strain Asean, given China’s role as its top trading partner.

Edited ByIsabelle Francis
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