Economist: People feeling the pinch, regardless of subsidies

The ringgit's depreciation, inflation and the rising cost of living negate the provision of any subsidies in services by the government, says economist.

Hoo: Providing subsidies will not help people much because of a few factors, including the depreciation of the ringgit.

PETALING JAYA: The depreciation of the ringgit, inflation and the rising cost of living negate the provision of subsidies to the people, says an economist.

Hoo Ke Ping said providing subsidies will not help the people much because of a few factors, including the depreciation of the ringgit.

To make matters worse, traders have used the introduction of the GST in April 2015 to illegally increase the prices of their goods.

Hoo was responding to a recent statement made by Treasury secretary-general Irwan Serigar Abdullah that Malaysians keep criticising the government, saying they do not feel the effects of the growth of the nation.

According to Irwan, the economy’s growth of 5.8% allowed the government to continue subsidising services such as medical, education and public transport facilities.

He pointed out that Malaysians only pay RM1 when registering at government hospitals. “Where in the world do you pay RM1 to get healthcare services?”

As for education, he said, the government provides subsidies for students from Year One to Year Six.

“Where is the money coming from? It is from the revenue and economic growth,” Irwan said.

Hoo said there is also an urban-rural divide situation when it comes to the effectiveness of the subsidies from the government.

He said those in the urban areas won’t feel it much as their expenses were much more, such as for food and rent.

These subsidies will be felt more by the rural folk who lead a simple life and could depend on their livestock and farm produce for their living.

Hoo reiterated that the government needed to address this matter.

He said Malaysia’s growth of 5.8% was justified as Malaysia’s economy is highly diversified.

“Growth is in the export industry. So people who are in the export sector will feel the benefits gained.

“For example, the palm oil industry. Felda settlers will benefit the most because of the current positive growth in the sector.

“The prices now are between RM2,500 to RM2,600 a tonne of palm oil. You can see places like Johor Bahru, Muar and Kulim doing well as a result of the prosperity,” he said.

Government data shows agriculture accounted for 8.9% of Malaysia’s gross domestic product in 2015, with palm oil making up 47% of that. Malaysia is also the second-largest producer of palm oil behind Indonesia.

There are more than 600,000 smallholders and four million workers involved directly and indirectly in the palm oil industry, according to the Malaysian Palm Oil Board.

Increase wages, government told

You can’t blame the millennials for demanding better salaries even though they are fresh graduates, says Yeah.

Meanwhile, an economics professor with Sunway University’s Business School, Yeah Kim Leng, said the government should consider increasing wages for Malaysians.

“Because of the depreciation of the ringgit and rising inflation rate, the cost of living is going to get higher. Just because there’s a growth in the economy does not mean that every Malaysian will get to feel its benefits.

“You can’t blame the millennials for demanding better salaries even though they are fresh graduates.”

Yeah said these millennials know the cost of living nowadays is steep and they didn’t want to depend on anyone but themselves. -FMT