The Truth Revealed

Thursday, February 8, 2007

Malaysian reform inertia threatens growth -- and PM


(Reuters) - Malaysian builder Roslan Awang Chik has been waiting almost a year for some state construction projects to kick off. Interminable government procedures are slowing the process, a reflection of poor execution by the state machinery that is hampering Malaysia's efforts to overhaul its economy and eroding support for Prime Minister Abdullah Ahmad Badawi.

Three years after sweeping into office with a record majority, Abdullah is struggling in the face of criticism that he has failed in his promise to tackle corruption and red tape.

Malaysia risks seeing a significant slowdown in economic growth unless some urgency is shown, analysts say.

"If the projects don't kick in, it's going to take its toll on the performance of the economy in terms of GDP growth. It will probably make a difference of one or two percentage points," said Mohamed Ariff, head of the independent Malaysian Institute of Economic Research.

POLITICAL IMPACT

The lacklustre reform effort also threatens to eat into the support of the ruling coalition in the next election, expected by early 2008.

Civil servants shuffling paperwork and seeking favours to expedite approvals are blamed for holding up business matters.

If Abdullah fails to deliver on his promises of reform, he could lose much more than investors' interest, some analysts say.

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