KUALA LUMPUR – Economists are urging the government to consider alternative measures to ensure economic recovery.
Former deputy director-general (Macro) of the Economic Planning Unit in the Prime Minister’s Department, Datuk K. Yogeesvaran said the current precarious situation has resulted in higher inflation, which disproportionately affects those with lower incomes.
He explained that the introduction of subsidies is a short-term measure that would temporarily resolve the issue, so a more constructive measure must be taken to combat inflation.
“When we discuss subsidies and targeted groups, we are already working on targeted subsidies, and there are a number of options on the table,” he said during a session held in conjunction with the Malaysia Economic Summit 2022, themed Accelerating Structural Transformation, Driving Economic Growth, here, today.
The second session, themed Economic Outlook 2022 and Beyond - Challenges Ahead: Inflation, supply chain, labour shortages and now Omicron, also featured Malaysia Venture Capital Management and former Alliance Bank Malaysia Bhd chief economist Manokaran Mottain, as well as Putra Business School associate professor Ahmed Razman Abdul Latiff.
Yogeesvaran said that despite the rosy national economic data, the majority of the population is struggling to overcome day-to-day challenges.
“We should not look at self-sufficiency data alone. We need to review the affordability and the quality elements too,” he said, adding that there is a clear dissonance between macroeconomic data and microeconomic data.
The United States reported on June 10, 2022, that consumer prices climbed 8.6% in May, China’s consumer price index rose by 2.1% in April, and the Monetary Authority of Singapore predicted that the republic’s annual headline inflation would be at 5% this year.
Malaysia’s inflation, as measured by the consumer price index (CPI), is projected to increase but remain relatively manageable at between 2.5% and 3.5% in 2022 compared to 2.5% in 2021.
Razman concurred, stating that the government should start looking at alternative measures such as a voucher system or even virtual currency to address the current domestic situation, in addition to price capping and subsidies.
“Malaysia is facing multiple issues at once, including labour and food issues, and despite taking the same usual measures such as raising interest rates, subsidies and what not. Maybe it’s time for us to look at alternatives,” he said, quoting Albert Einstein’s famous saying: “Insanity is doing the same thing over and over again and expecting different results.”
Razman also emphasised that the country’s CPI basket components need to be reviewed, as the CPI does not reflect the real cost of living.
Bank Negara Malaysia had put the country’s food price index at over 4% for 2021.
“Thus, the current CPI data might not be reflective of the actual situation,” he added.
Meanwhile, Manokaran noted that policymakers need to be firm in implementing any policies and programmes and consider bringing back the Buku Hijau (Green Book) policy to address the current food shortages.
In December 1974, Malaysia’s second prime minister, Tun Abdul Razak Hussein, launched Buku Hijau, an initiative to encourage every citizen to take up short-term gardening or farming. – Bernama, June 14, 2022
