KUALA LUMPUR (March 1): Large scale structural changes are needed to weather difficult economic times, failing which Malaysia risks greater economic consequences in the future, said Economy Minister Rafizi Ramli.
“If we choose to return to business-as-usual and avoid the politically difficult choice of economic reforms, then we risk a larger economic consequence,” Rafizi cautioned at the HSBC Asian Business Forum 2023.
He pointed out that a tight cash flow would make Malaysia vulnerable to another economic shock wave, noting the billions of ringgit now spent on servicing debt could be better used for building schools, roads, hospitals, and technology.
“Our fiscal space has now become highly limited from a high Covid-19 expenditure and decades of high subsidy and import bills,” he stressed.
Malaysia’s quarter-on-quarter gross domestic product (GDP) growth from the fourth quarter of 2021 has slowed down in five consecutive quarters, with private consumption decreasing and the national debt currently standing at RM1.5 trillion or 80% of Malaysia’s GDP.
“For a long time, reforms have been regarded as politically costly.
“We see reforms and popularity as compatible, and we shall commit to the structural reforms with the decisiveness and creativity necessary to renew our economy,” Rafizi emphasised.
He highlighted several initiatives under the Economy Ministry including the People’s Income Initiative, Academy in Factory (AiF) programme and the reactivation of Pemudah or the Special Task Force to Facilitate Business.
“Although the government can lead the charge, we cannot do this alone. We will make decisions on key reforms and move swiftly into implementation in the first year, so that the reform momentum and sense of urgency could carry us through, and the effects would be closely felt on the ground.”