Rising prices, inflation rate indicate Malaysia in state of ‘near crisis’, says economist

The rising prices of consumer goods, high inflation rate, weakened ringgit and a plunge in foreign direct investment are signs that the country is in a state of “near crisis”, says a senior economist.

Asian Strategy and Leadership Institute’s (Asli) Centre for Public Policy Studies chairman, Tan Sri Ramon Navaratnam added it was baffling that Malaysia continued to trail behind other Southeast Asian nations in securing investments into the country.

“Prices of goods and services are rising because people have less confidence in the ringgit. While export prices are better when the ringgit drops, import prices are worse,” said Navaratnam.

“The business community wants stability, certainty, and a good business environment. What is happening now is the direct opposite. You will find that foreign direct investment is not at the rate it should be now, despite Covid-19 being under control.”

Malaysia’s inflation rate, measured by the Consumer Price Index (CPI), rose 2.9 per cent in October 2021, compared to the previous year.

Navaratnam added that politicians had made the business atmosphere “toxic”.

Commenting on the recent spat between former prime minister Tun Dr Mahathir Mohamad and lawmaker Tony Pua over the awarding and revoking of contracts, Navaratnam said such exchanges were “very negative”.

“(Tony) Pua has opened up a can of worms. But why is he only speaking up now?” Navaratnam asked.

Without naming Pua, Dr Mahathir, in his latest book, Capturing Hope: The Struggle Continues for a New Malaysia, had said that a former political secretary had gone around acting like a minister.

Pua later shot back at the former premier and released an open letter he wrote in 2018 related to the nature, and the awarding of the Klang Valley Mass Rapid Transit (MRT) project to MMC Gamuda, in response to Dr Mahathir’s accusations.

The entire affair, Navaratnam said, was a good case study, for the business community.

“It shows you can squeeze them (businessmen) and they will accept it. But in the long term, they will say, ‘Why should I stomach this nonsense?’.

“If I won a contract in a fair manner, then I should be provided with the encouragement to carry on,” said Navaratnam, a former deputy secretary-general of the Treasury.

He added the rise in religious extremism and racial tensions had also cast the nation in a bad light.

He said plans to enforce liquor licence requirements on the retail sale of alcoholic beverages was a “complete waste of time”.

“Non-Malays are finding it increasingly difficult to do business in Malaysia … They are telling me this.

“The government may not have the same level of empathy because of the current racial composition in the Cabinet,” he added.

Navaratnam said although the government of the day was led by Barisan Nasional (BN)-Umno, it was no longer the BN-Umno of before, due to Pas’ presence.

“We should be focusing on bigger issues like poverty, cost of living and addressing corruption. We need to instill confidence in our economy and market.”

He said, Malaysia needed a strong, reliable, honest, and sincere leadership, and a better standard of governance.

“This country is blessed with all types of resources, yet we cannot hold a candle to Singapore, South Korea, and Hong Kong. In fact, we are behind Vietnam and Indonesia,” he added.

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