House in Malaysia
Photo by Alex Block on Unsplash
By Dr Paul Anthony Mariadas

INSTABILITY of politics is defined as a tendency of government downfall. Political unrest is a severe disease that creates fears among the citizen, domestic industry, and trade investors. Generally, it is not favourable to economic performance.

The primary source for unstable government arises from increased competition among the political power of political parties. Malaysia remained an economically prosperous country in the Southeast Asia region for a long time. Malaysia had registered a robust economic performance in 2014, which saw a 6% of real gross domestic (GDP) growth, which is the second-highest growth rate in Southeast Asia.

Based on world-historical evidence, the change of government has increased the possibility of successive changes of governments in the near and long term. The property market in Malaysia is one of the main drivers of employment and an essential component in GDP.

However, since 2016, the Malaysian property market saw downtrend. Since 2016, the residential property transactions volume and value had declined.

Based on statistics reported by the valuation department, in the first half of 2017, the housing transactions fell by 7%, while global housing transactions fell by 6%. On the supply side, construction activity continued to slow down in the second quarter of 2019; new projects, completed projects, and supply of property projects experienced a decrease of 25.6% (2,734 units), 6.8% (2,943 units) and 60.8% (1,440 units), respectively. National political uncertainty is an essential factor for property investment.

The economy and political environment have a positive correlation with property investment. Political instability may adversely impact property investment in Malaysia and overall economic growth caused by increased uncertainty.

Political instability and politically motivated corruption are cited as significant reasons for the general declining trend in the property market among Asian countries. Although enjoying robust economic growth, Malaysia had its share of political instability experience.

For instance, from 1948 to 1989, Malaysia faced communist insurgence. Also, from 1963 to 1965, political conflict with Indonesia, which nearly headed to war and followed by a severe ethnic riot in the late 1960s.

Despite previous political turmoil and poor governance, Malaysia successfully transformed to achieve sustainable economic growth that only a few developing countries can achieve.

Thus, government, political parties, leaders, and people that a country’s internal stakeholders must work towards reducing all forms of political uncertainty by adapting wholesome and honest long-term approach in the interest of people, commerce, and the nation at large.

Besides, a nation’s abundant resources alone never guarantee its economic growth, but strong political stability has enormous potential to warrant a nation’s economic development.

 

Dr. Paul Anthony Mariadas

Dr. Paul Anthony Mariadas is a Senior Senior Lecturer of Economics at School of Accounting and Finance, Taylor’s University, Malaysia.

Leave a Reply