Selangor Journal

Promising Economic Outlook


By Batrisyia Jay

 

For many years, the cost of living in our country has remained the topmost concern for a substantial segment of the public. In 2017, research house Ipsos Malaysia said that 55 per cent of its survey respondents, involving Malaysians aged 18 to 74, desired the government to reduce the cost of living within the country. Meanwhile, 42 per cent of them also wanted the government to provide affordable housing while another 37 per cent called for a tax rebate.

With a new government at its helm, these economic issues within the nation are being addressed and tackled, particularly regarding the affordable housing and house ownership sector, as mentioned in the Budget 2019 tabled on November 2, 2018.

Be that as it may, certain economic issues, such as the slowing down of economic activities, the skyrocketing national debt and the rising cost of living are still factors that remain a concern to the people. Moreover, a rise in the unemployment rate of 3.3 per cent, with youth unemployment three times higher than that, is also proving to be a matter of apprehension.

These problems that are arising, and the drag in the nation’s growth momentum, are no doubt mainly due to external sources, primarily the United States – China trade war and the uncertainties of Brexit. However, a solution must be presented in order to resolve the slowing down of Malaysia’s economy amidst the uncertainty of the global economy.

Combatting the Rise in Cost of Living

On February 11, the Prime Minister’s Office (PMO) announced the establishment of the Economic Action Council (EAC), to respond to and act to address economic issues faced by the public, based on their feedback. With new problems arising amidst old ones in the economy, the move to form the council is indeed reassuring as they can help combat the rising cost of living.

“The main objectives of the council are to stimulate economic growth, ensure fair distribution of wealth and improve the well-being of the people. The council will also focus on issues related to cost of living, labour, poverty and home ownership,” the PMO said in a statement on February 11.

Members of the council include Prime Minister Tun Dr Mahathir Mohamad as chairman, along with Economic Affairs Minister Datuk Seri Azmin Ali, Finance Minister Lim Guan Eng, International Trade and Industry Minister Datuk Ignatius Darell Leiking and the Prime Minister’s economic advisor, Dr Muhammed Abdul Khalid.

Besides these, other members of the council include former International Trade and Industry Minister Tan Sri Rafidah Aziz, Permodalan Nasional Bhd. chairman Tan Sri Zeti Akhtar Aziz and Council of Eminent Persons member Prof. Dr Jomo Kwame Sundaram.

To ensure that the council consists of the cream of the crop, a list of corporate leaders was also added as members of the EAC. These are Public Bank Bhd. managing director Tan Sri Tay Ah Lek, Majlis Amanah Rakyat chairman Dr Hasnita Hashim and Bursa Malaysia chairman Datuk Shireen Ann Zaharah Muhiudeen.

Regarding the formation of the EAC, Prime Minister Tun Dr Mahathir explained that its main role is to act as a channel for the public to stream in their feedback. “It is important that the government listens to the people and this is the role of the EAC. Things will go wrong when the government does not listen to the people,” he said.

Assisting the Nation

The 16-member council, chaired by the Prime Minister, will examine and make decisions on economic and financial matters, as well as look into problems faced by the public. As such, stakeholders and experts have suggested several measures for the EAC to help combat the rising cost of living.

As the first measure, Yeah Kim Leng, a lecturer at Sunway University Business School, suggests reducing the cost of doing business and helping players in key sectors like telecommunications, education, medical care and housing with initiatives that will reduce their costs and increase their productivity.

On the other hand, the Institute for Democracy and Economic Affairs (IDEAS) urges the government to avoid price controls and blanket subsidies. IDEAS chief executive Ali Salman proposes that the government instead lower the cost of public transport, communications and housing by encouraging more competition in the said sectors.

Besides those, he also advises the government to simplify the recruitment process for foreign workers as the existing mechanism is too costly and complex, which contributes to the hiring of illegal immigrants. This will in turn lead to lower wages for legal workers in industries like construction and agriculture.

“Bringing in formalised labour will put pressure on employers to increase wages,” said Ali, adding that this would definitely help to ease the cost of living.

A Promising Future

With all the uncertainties and rising headwinds, it is a given for the public to feel anxious of the coming times. However, Bank Negara Malaysia (BNM) governor Datuk Nor Shamsiah Mohd Yunus believes that Malaysia is able to weather the storm ahead on the back of a current account surplus, adequate total reserves, and the fact that banks are in a strong position in terms of capital and liquidity.

On that account, the Malaysian economy is expected to remain on the growth path driven by the resilience of private consumption and the continuation of civil engineering projects, as well as the recovery from supply side shocks.

Nor Shamsiah added that the moderation in economic growth would not lead the country into a recession, as many are wont to believe, and notes that global growth is reverting to a long-term trajectory. She also elaborated that Malaysia has diversified its economic structure. For example, the oil and gas sector now account for only about 8 per cent of the total economy.

“I don’t think that there will be a global crisis. It’s a normalisation of global growth after the weaning impact of the various impetus that have been introduced by countries around the globe, like the US,” she said.
On February 14, the governor had announced that the country’s gross domestic product (GDP) expanded 4.7 per cent in the fourth quarter last year, noting that the annual GDP growth for 2018 was also at 4.7 per cent.

With the establishment of the EAC, made up of capable and experienced members, as well as a good balance of public officials and members from the private sector who are tasked to look into issues relating to the cost of living, employment, poverty and home-ownership, the likelihood of a more stable and prosperous economy does not seem far-fetched.

Hence, with a diversified export sector that will act as a buffer and a council that is overlooking and ensuring that the economic growth, equitable distribution of wealth and the well-being of the people are taken care of, it can be said with confidence that the nation’s economy will continue to positively grow in time to come.

 

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