Rafizi: We are trapped in the old model of economy

 

Economy Minister Rafizi Ramli said this was one of three structural problems faced by Malaysia which had caused the country’s economy to lag behind other nations. - NSTP/MOHD FADLI HAMZAH

KUALA LUMPUR: Malaysia has been "too comfortable" with economic spillovers from the oil and plantation industries, causing the country to neglect and ignore other sectors.

Economy Minister Rafizi Ramli said this was one of three structural problems faced by Malaysia which had caused the country's economy to lag behind other nations.

He said as a result, the wages of workers in vital sectors such as manufacturing and services had not seen an increase.

"We have been comfortable with existing economic activities with low labour cost which will still yield good returns.

"However, this is where we are facing a problem, because if we rely on low wages (to attract investors) alone, we will have to compete with neighbouring countries such as Indonesia, Vietnam, and the Philippines who are also offering low wages to investors.

"Only then do we realise that we are behind in terms of technology and expertise.

"We should be in the group of economies such as South Korea, Japan, China and Europe, but we are trapped in the old model of economy."

He said this in a live televised debate titled 'Debat Model Baharu Ekonomi Malaysia' (Debate on Malaysia's New Economic Model) against Bachok member of parliament Mohd Syahir Che Sulaiman, aired on RTM1 and Astro Awani tonight.

Rafizi, who is also Pandan MP, said the issue caused the second structural problem which was extremely low wages.

He pointed out that the people's salaries did not increase in line with the rise in the prices of goods since 20 years ago.

Citing the Employee Wages Statistics (Formal Sector) Report launched last week, Rafizi said 50 per cent of the country's workers were being paid RM2,600, which was only RM20 higher than the household income poverty line of RM2,580.

"The median wage for youth aged between 20 and 24 entering the labour force for the first time is only RM1,682 monthly, only RM182 more than the minimum wage.

"These low wages cause our economy to face difficulties in developing talents that could produce innovative and high-value economic products, which could leave us trapped in the middle-income economy."

This in turn, he added, caused the government's weak financial position, as slow economic growth forced previous administrations to rely on borrowing money to finance projects that stimulate the economy.

Taking a jab at former prime minister Tan Sri Muhyiddin Yassin, Rafizi said: "He really liked announcing stimulus packages, including announcing one for Selangor, recently.

"But the people should know that stimulus packages by borrowing money will only leave a plague (bala) for future generations."

Rafizi added that when economic growth is slow and wages are low, the government's tax collection would also be limited.

"It is worse when the government continues to give cash handouts and provide untargeted subsidies to appease the anger of the people on the cost of living without solving the root problem.

"All three problems cannot be solved with old ways, which is to borrow to cover up the country's economic problems, we need radical approaches to resolve them," he said.

Rafizi said the recent efforts of the unity government up to now have already shown results.

"The monthly inflation rate has gone down since the first month we took over and is now the lowest it has been in the last 12 months."

He said the direction of the people's salary and income has also been materialised.

"The people will enjoy higher salaries next year when the PM announces the government is allocating more spending on boosting the people's income in the budget.

"So has our economy recovered? Of course not yet. But we are already on a good platform and if we stay on this platform." he added. - NST