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Economy, BN's biggest weakness

  • It is really frustrating that our politicians have wasted so much energy and time fighting over the Penang undersea tunnel issue without doing anything to mitigate the woes of the rakyat.

By LIM SUE GOAN
Sin Chew Daily

Despite the impressive economic data, government propaganda and buoyant stock market and the ringgit, the euphoria is obviously absent from most people in the street. Economy will remain the ruling coalition's biggest weakness.

Prices have gone up further since we stepped into the new year, including those of noodle. Unfortunately, our government is still unable to come up with effective solutions to address this issue.

More bad news in recent weeks that are not going to augur well for the country's economy, including a slump in palm oil and rubber prices.

The sharp decline in palm oil prices will deal a severe blow on some 650,000 smallholders and over 110,000 Felda settlers as well as related industries and people hired by them.

As this will affect the rural folks, BN will be in trouble if commodity prices do not rebound before the next general elections.

On top of that, businesses are widely anticipated to transfer any cost overrun to the consumers.

Beginning this year, employers must bear the levy for their foreign workers, conduct yearly health screenings, pay Employment Insurance Scheme (EIS), offer 90 days paid maternity leave for their female employees, and raise the minimum wages of their staff, among others.

Against the backdrop of declining business, these measures will put additional burden on the shoulders of employers.

Some other industries, meanwhile, are facing acute labor shortage, including the vegetable farms in Cameron Highlands, and hence the shrinking output and higher retail prices.

The retrenchment problem will continue to plague the local industry. For instance, banks are prepared to implement mutual separation scheme (MSS) to streamline their operations.

Even at such crucial moment the government has shown no let-up in its effort to go after tax defaulters or impose new taxes. The Customs Dept has adjusted upward its GST collection target for this year to RM43 billion from RM42 billion in 2017.

With so much cash flowing into the national coffers, the government has failed to mobilize the resources to lift consumer sentiment, forcing the rakyat to continue tightening their belts.

The government is also in a straitened situation in the handling of currency and oil price issues. The government has hoped for higher international crude prices to boost its tax revenue but this is not a good thing for the general public, as they have to dig deeper into their pockets to fill up their petrol tanks.

The International Energy Agency (IEA) has anticipated "explosive" growth in US crude production this year to effectively cap the upward swing of international oil prices. Drastic price fluctuations will make it difficult for local businesses and consumers to budget themselves.

The local currency has strengthened below the 4.0 mark against the greenback in recent weeks, but lest we forget, ringgit was traded at around 3.20 against the dollar in September 2014, and there is still a long way to go before the lost territories can be fully recouped.

The current strength of ringgit is mainly due to the weakness of the US dollar. Moreover, the rising goods prices as a result of depreciation-induced surge in import costs are hard to bring down to more tolerable levels.

If Bank Negara were to keep interest rates unchanged in Thursday's meeting, ringgit will invariably come pressure. If the rates are hiked by 25 basis points, the burdens of loan borrowers will be significantly heavier, and this will further impact the already sluggish property market.

All these issues need to be properly managed. If they go out of hand during the elections, especially goods prices and unemployment, the resultant frustration may swing the voting sentiment in favor of the opposition.

BN could have ample time to avert the current economic predicament but has instead wasted the precious time on unnecessary politicking at the expense of structural reforms of our economy.

It should have drastically slashed public and household debts and implemented automated production in a bid to reduce migrant workforce dependence in lowering production cost and goods prices.

If the government has actively developed value-added oil palm downstream industries, the potentials of palm oil could be maximized, and its value remarkably boosted.

If systemic corruption could be checked, we should have a more promising economic outlook today.

Not doing the right things gives the rivals good reasons to attack the government.

Tun Mahathir has pointed out that many university graduates have opted to become Uber drivers or nasi lemak sellers because the government has failed to create job opportunities for them.

The fact that some 400,000 Malaysians are currently working in Singapore shows that salaries back here have been too low. Meanwhile, the number of bankrupts has topped 294,000 as more and more people are unable to pay their debts.

If we can't even solve these pressing issues, what's the point of talking about TN50?

The National Cost of Living Action Council will only convene its first meeting in February. Before that we can only pin our hopes on BR1M to tame down public wrath.

It is really frustrating that our politicians have wasted so much energy and time fighting over the Penang undersea tunnel issue without doing anything to mitigate the woes of the rakyat.

 

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