Wednesday January 4, 2017
03:44 PM GMT+8

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JANUARY 4 — In his New Year address, Prime Minister Datuk Seri Najib Razak said it was the best time for Malaysia now, and that our economic growth rate was an envy of many developed countries in Europe and North America.

Ironically, Malaysians in general are still suffering from unbearable financial burden, and few could feel that this is the best of times.

At the dawn of the New Year, prices of both petrol and diesel are up by 20 sen per liter, while employers will now have to bear the levy for their foreign workers, signaling a tough year ahead.

The ringgit depreciation has far-fetching bearing on the lives of Malaysians. High fuel prices could be a result of rising international crude prices, but our unfavorable exchange rate is also one of the contributing factors.

In addition, making it compulsory for employers to bear the levy for their foreign workers and the falling ringgit will make the country less attractive to foreign workers if their benefits are not improved.

The government has time and again stressed that the country is on the right track of growth. As a matter of fact, we can prove that such a claim is unsubstantiated, and indeed the economy has deviated from the right path.

Firstly, operating expenditure has made up more than 80 per cent of the government budget, and the government looks set to continue upping the salaries of civil servants. To make up for the shortfall, it has to find ways to cut budgetary allocations elsewhere, further aggravating the plight of the people.

The government abolished cooking oil subsidy last November, and beginning this year first class wards in government hospitals, treatment, examination, laboratory and surgery fees will all be increased by 50 per cent while the fees for second class wards will be increased by 25 per cent. As if that is not enough, airport taxes will also be increased for a second consecutive year.

The effects of lower ringgit exchange rate will show up in the New Year as prices for goods and services become more expensive, squeezing further the people's wallets.

With the external risks intensifying, the national economy will have to look to domestic demand for growth. But, how can the economy recover given the depressed consumer and investment sentiment at this moment?

The government has not done enough to lessen the public's burden. The government should, for instance, promote agriculture development because food prices will be brought down once we are self sufficient in food production. This will in turn ease the inflationary pressure owing to rising imports.

Secondly, the operating cost of the private sector continues to climb. The foreign worker levy has already been increased early last year. The margin of increase for the manufacturing and construction sectors is 48 per cent, agriculture 56.1 per cent, and plantation industry 8.47 per cent.

The cost of doing business will be higher in the future. For example, the natural gas tariff will increase by approximately 23 per cent over the next three years, and the government is mulling higher deposits for local employers when hiring foreign workers.

The GST has already extracted a sum of RM39 billion from the rakyat's pockets, and the levy is draining another RM4 to 5 billion from the employers.

The money that flows into the treasury, unfortunately, is hardly used for development or R&D purposes.

While the lower ringgit is a boon to the manufacturers, export earnings are nevertheless thinning now while the cost of imports keeps rising.

Reduced profits will give rise to dwindling employee benefits, and in more serious cases could result in large scale retrenchments, forcing manufacturers to relocate their production lines overseas.

With the business sector hardly feeling the goodwill of the government and business environment increasingly challenging, how could the national economy be on the right track?

Thirdly, the government is stepping up its effort to pursue income tax arrears in a bid to fatten the treasury, but education allocation continues to be overlooked. This will not augur well for the economic transformation in the long run.

The internal revenue department has set up a task force to come after tax defaulters in a bid to recover some RM2 billion in tax arrears. Meanwhile, the customs department will carry on with the Ops CBOS to check on some 200,000 businesses already registering for GST collection.

The sad thing is, the increased revenue has not been allocated to areas that will improve the country's competitiveness. Allocations for public universities have been drastically slashed while the pledged allocations for Chinese primary and secondary schools remain undisbursed.

The government must adopt the right approach to kickstart the economy. When consumer sentiment is down, the government must try to stimulate consumption, and if the cost of living is high, then it must strive to bring goods prices under control. The economy will only be revitalised if a business-friendly environment is in place.

And since the government is largely ignorant of the various problems plaguing the national economy, how could it conclude that “we are at our best”?

Our political leaders can no longer afford to be complacent and self conceited in the New Year. Malaysians must strive to enhance their productivity while businesses must constantly adapt to the changing environment. We will only go down further if we keep basking in our comfort zone. — Sin Chew Daily

* This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail Online.

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