Hamzah needs to learn basic economics

Domestic Trade, Co-operatives and Consumerism Minister Hamzah Zainudin has a lot to learn about basic economics, especially when it involves the retail business.

No business entity would consider downsizing or totally shutting down an outlet unless it is not able to rake in the desired profit.

Recently, Giant had to close some of its outlets as part of the company’s rationalisation programme, and this is the only logical thing to do when the company is performing badly.

One would expect at least Hamzah to be more knowledgeable than someone than the likes of Federal Territories Minister Tengku Adnan Tengku Mansor, who is already well-known for his bizarre comments, when it comes to assessing the economy or explaining why Giant had to close some outlets.

Sadly, even Hamzah is acting like the Emperor in the short tale written by Danish author, Hans Christian Andersen. Pretending that he was wearing the most expensive gown sewn by his best tailor in the country, the Emperor failed to realise that he was naked when the rest of the world could see it.

From the layperson’s viewpoint, the country’s economy has lost its direction.

The real property market is soft. Developers are going after the same group of people with cash. Rental income has gone down a lot in the past few years. Prices of basic necessities have gone up, pushing up the cost of living in Malaysia.

If the people are not affected by the prices of petrol going up by a couple of sen, why the long queue at petrol stations on the eve of an oil price hike?

Just going to the supermarkets would mean the average household would be spending a minimum of RM200 per week.

In the past, RM200 was able to buy you a lot more things; now, it is able to buy much less.

All this is happening within just a few years after the implementation of the goods and services tax (GST). How are we not to tighten our belts, especially with the uncertainty in the current economic condition?

The rakyat can see that our economy is worsening. Therefore, it is a big disappointment that the very people entrusted to lead the nation appear to be oblivious to the market sentiment.

I refer to Prime Minister Najib Abdul Razak who talked about the price of kangkung (water spinach) and buying chicken for RM1.

And, now, Hamzah is saying that downsizing a supermarket chain has nothing to do with an economic slowdown.

Tell-tale signs

Rationalisation and downsizing are strategies adopted by the management only when the company is not performing well. When the economy is still strong, no one will talk about downsizing.

About two years ago, when I did an interview with the Small and Medium Enterprises Association of Malaysia president Michael Kang, their survey already showed that the retail market was in the doldrums with sales in most shopping malls having dropped by about 50 percent.

Hamzah, being a cabinet minister, should get his facts right instead of trying to give some lectures or pep talks about Giant’s latest move.

I would prefer that we acknowledge that the economy is now in very bad shape, so that the right measures can be put in place to fire up the economic engine once again.

This is the failure of the Najib administration, which did not address a number of real issues such as corruption and leakages in the recent budget. One would have expected the government to pour in more resources into the MACC instead of the Prime Minister’s Department.

This is what we have contributed to the current state of the economy. Despite the huff and puff of the election budget announced by Najib last Friday, I can see that we are heading for a greater financial and economic disaster if nothing is done to fix the economy.

The GST should be abolished altogether. After three years since its implementation, we are now beginning to feel the impact of the GST on the market sentiment. Cuts in fuel subsidies and the escalating cost of living have also taken a toll on us.

Most people, including the middle-income wage earners, are trying to cut their household expenses in order to stay afloat. Saddled with hefty loans for the purchase of overpriced homes in the Klang Valley, a number of households are having to survive on lower disposable incomes.

Besides a weaker ringgit, causing the prices of imported goods to be higher, Hamzah’s ministry has also not been very effective in controlling the prices of domestic goods and services.

Based on my observations, these are the tell-tale signs that the economy is going to get worse by 2020, if the status quo remains and Putrajaya stays under the current regime.

The very people who are supposed to lead us out of the doldrums, are in fact crashing our economy against the hard rocks.

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STEPHEN NG is an ordinary citizen with an avid interest in following political developments in the country since 2008.- Mkini