By Datuk Seri Wong Chun Wai, BERNAMA Chairman
Bad news travels fast on social media. Good news, however, gets less attention, unfortunately.
Malaysia has taken the right step to rebuild its external reserves through repatriation and conversion. The subsidy rationalisation exercise, while politically unpopular and a disadvantage, to the MADANI government is the right thing to do.
It is courageous of Prime Minister Datuk Seri Anwar Ibrahim to reduce the subsidy bills as if ignored, as a populist decision, they would have surely harmed the country’s economy in the long run.
There will never be a right time to carry out such an exercise but with the next general election still 3 years away and a stable government, this is surely the best window period.
Look at the figures. Putrajaya had allocated RM64 billion for subsidies in 2023 but spent RM81 billion, 26% higher than projected, because of the rise in fuel prices amid the Ukraine-Russia war.
As Anwar rightly said at a dinner organised by the National Chamber of Commerce and Industry of Malaysia, although it is economically rational, it is politically difficult.
In May, Anwar said Putrajaya would save around RM4 billion a year with targeted diesel subsidies, which began on 10 June.
This saw the price of diesel fixed at RM3.35 per litre in Peninsular Malaysia, with the price maintained at RM2.15 per litre in Sabah, Sarawak and Labuan.
Subsidies are being distributed to those who are eligible through the Budi MADANI initiative and fleet cards under the subsidised diesel control system.
These are not the kind of topics that can hold the audience at political talk, especially in justifying economic decisions.
Taking rhetorical political swipes and attacking the government would be more entertaining but the huge debt that we have today is, unfortunately, a legacy of the past administrations which refused to tackle them.
The Forbes financial magazine, in an article on 10 July, reported that Anwar has rightly carried out many economic decisions.
“On the cost optimisation front, Anwar’s administration undertook the politically challenging task of rationalising subsidies and managing civil service costs.
“Transitioning new civil servants to an Employees Provident Fund scheme – projected to reduce long-term pension costs – was a significant step.
“This move aimed to alleviate the financial burden on the government by shifting future pension liabilities to a more sustainable model,” it reported.
Forbes also pointed out that the administration has expedited foreign direct investment approvals and improved the ease of doing business in Malaysia, with particular reference to high-value sectors such as semiconductor fabrication and digital technology.
A Reuters report on 17 May, headlined ‘Malaysia’s economy grows faster than expected, inflation risks cloud outlook’, stated that our good performance in the first quarter of 2024 was helped by household spending and a turnaround in exports.
Bloomberg reported on 19 April that ‘Malaysia’s economy quickened by the most in a year, signalling that firmer recovery is underway in the Southeast Asian nation’.
In a report titled ‘Malaysia Growth Accelerates, Signaling Recovery in 2024,’, it said that ‘the growth print suggests Malaysia’s economy is regaining momentum after moderating last year on a tepid global demand.
“The trade-reliant nation is poised to benefit should China, which is Malaysia’s largest trade partner, continue to build on its surprise strong start. Bank Negara Malaysia expects gross domestic product (GDP) to expand between 4% and 5% this year on improving external demand”.
Let’s hope that the momentum will continue and that we can hear greater details when the annual economic report and Budget are presented in Parliament.
Give credit to the government when it’s due.
