The government must think outside of the box and not rely on old methods to address the rising cost in food prices that is being felt by Malaysians.
Veteran economist Tan Sri Ramon Navaratnam said radical changes, including forward open market policies, must be introduced as the country is in a state of “crisis”.
“The rise in food prices is due to the shortage of supply, while demand still exists. People need to eat … it’s not rocket science. To get equilibrium, you have to make sure demand and supply are in balance.”
He said the increase in the prices of food items that is being passed down to the consumers may result in people cutting back on their purchases, causing the market to shrink further.
“If you are trying to improve the cake by improving the icing, the cake will still taste the same. Similarly, if you want to battle inflation, you need to get to the core of the problem.
“The Russia-Ukraine war is an external cause that has disrupted the supply of some goods, including wheat, but vegetables and fish do not come from Ukraine,” he said.
Navaratnam said the shortage of land for vegetable cultivation, licensing, and land alienation for farming were among the long-standing problems that have not been addressed.
“We must also ask fishermen and farmers about their problems. If fertiliser, transport, and even marketing is a problem, then the government must be clear and tell the people how they plan to resolve these problems.”
Navaratnam said if the government could do away with approved permits (AP) for Malaysians to import food from abroad, introducing other policies to ensure that the people are not further burdened by the rising cost of food items, can be done overnight.
He also said not reintroducing the Goods and Services Tax (GST) was not a step in the right direction.
“The GST can be introduced in stages. Of course, there will be some impact on prices, but the government can ensure that basic items are exempted from GST.”
“Then, how do we get money to offer aid to those in the B40 group? Where is the government going to get the money to finance subsidies? There are ways of going about it, but those in power do not want to be seen to be making an unpopular decision.”
He said, as an economist, he was concerned about the structure of the economy – is it competitive, what are the bottlenecks, and what are the possible implications that the current situation will have on the nation’s budget?
“We must use economics to solve problems related to the economy. We cannot simply be making decisions to remain popular,” he said.
He added that broader consultations, including getting experts within the government and having open discussions with all stakeholders was necessary to ensure that any solution to address the rising cost of goods is done holistically.
“We also cannot just be giving out aid all the time. Ask the people what kind of aid they want, need, and have been getting all these years … this is something the government ought to do right now,” he added.