MALAYSIA POLITICS CHASED AWAY ALL INVESTOR FROM OUTSIDE MALAYSIA TO INVEST

Title: The Impact of Political Instability on Foreign Investment in Malaysia

Malaysia, a Southeast Asian country known for its diverse culture, vibrant economy, and strategic location, has been grappling with political instability in recent years. The country has seen a series of power shifts, scandals, and policy flip-flops, which have raised concerns among foreign investors. This article aims to analyze the impact of Malaysia's political climate on foreign investment and the potential consequences for the country's economic growth.

Political instability is a significant deterrent to foreign investment. It creates uncertainty and increases the perceived risk of investing in a country. In the case of Malaysia, the political turmoil has been a recurring theme, with the government changing hands multiple times in the past few years. The most notable was the ousting of the long-standing Barisan Nasional coalition in 2018, followed by the collapse of the Pakatan Harapan government in 2020, and the subsequent formation of the Perikatan Nasional government.

These political upheavals have had a ripple effect on the Malaysian economy. Foreign investors, who are crucial for economic growth and development, have been watching the situation closely. According to the United Nations Conference on Trade and Development (UNCTAD), foreign direct investment (FDI) in Malaysia decreased by 68% in 2020, from USD10.9 billion in 2019 to USD3.4 billion. While the COVID-19 pandemic has undoubtedly played a role in this decline, political instability has been a significant contributing factor.

One of the primary concerns for foreign investors is policy consistency. Inconsistent policies and frequent changes in government direction can create uncertainty and make it difficult for businesses to plan for the future. For instance, the Malaysian government's decision to abolish the Goods and Services Tax (GST) in 2018 and reintroduce a similar Sales and Services Tax (SST) a few months later caused confusion and added to the cost of doing business. Such policy flip-flops can deter foreign investors, who value stability and predictability.

Moreover, political instability can lead to a lack of investor confidence. When a country experiences frequent changes in government, it can create an impression of inefficiency, corruption, and lack of transparency. This, in turn, can deter foreign investors who are wary of getting embroiled in political scandals or legal disputes. The 1Malaysia Development Berhad (1MDB) scandal, which involved the alleged misappropriation of billions of dollars, is a case in point. The scandal not only tarnished Malaysia's reputation but also made foreign investors think twice about investing in the country.

The Malaysian government has recognized the importance of attracting foreign investment and has taken steps to address the issue. For instance, the government has established the Malaysia Digital Economy Corporation (MDEC) to promote the country as a digital hub and attract technology investors. The government has also introduced various incentives, such as tax breaks and investment allowances, to attract foreign investors.

However, these efforts may be undermined by the ongoing political instability. To regain the confidence of foreign investors, Malaysia needs to ensure political stability and consistency in policies. This can be achieved by fostering a conducive political environment that encourages dialogue, consensus, and cooperation among political parties. The government should also focus on improving transparency and accountability, which are key factors that foreign investors consider when deciding to invest in a country.

In conclusion, political instability has been a significant factor in the decline of foreign investment in Malaysia. The country's frequent changes in government, policy inconsistencies, and lack of transparency have created uncertainty and deterred foreign investors. To reverse this trend, Malaysia needs to ensure political stability, consistency in policies, and improve transparency and accountability. By doing so, Malaysia can regain the confidence of foreign investors and continue to attract the much-needed investment for its economic growth and development.