The Malaysian Insight

THE government must look into food security, creating new jobs and industries, and revamp institutions to tackle inflation and high prices of food, Muda vice president Teo Lee Ken said.

Speaking to The Malaysian Insight, Teo these measures are for the medium term, but in the short-term subsidies are still needed to get people through.

“They will have to continue unfortunately, because coming out of the pandemic we are, as a society, not prepared for this rise in prices,” he said.

“Subsidies for basic essential items should be kept, and to a ceiling. The more important debate that needs to happen is: what are we doing in the long-term?”

The inflation rate grew 2.8% in May, compared to the same period last year.

Meat showed the highest increase – at 9.5% – of all the food groups,.

The subsidy for bottled cooking oil was scrapped on July 1, while the government also raised the ceiling price for chicken by 50 sen to RM9.40. Meanwhile, grade A chicken eggs now cost 45 sen each.

While subsidies work as a stop-gap measure, Teo said a comprehensive study needs to be carried out to track who actually benefits.

“If we were to reform the tax system, if we were to have subsidies, who gets them? To whom are they channelled?” Teo asked.

“We know that there are reports of criminal elements existing within the food industry. Who are these people? Has there been a transparent exposure of who benefits from all these subsidies and expenditures?

“If we don’t address this, there will always be leakages, no matter how much we subsidise, how much the government spends and how much is channelled. It will always be siphoned off elsewhere.”

Teo said that Malaysia also needs to build its agriculture and food industry to avoid relying on imports.

He said fuel subsidies also have to be overhauled because research has shown that they only benefit the wealthy, he said.

Fuel remains subsidised, even though the government said it is studying the possibility of removing it in the near future.

“However, there has to be a timeline, tempered with a gradual systematic plan. 

“It cannot be just taken away. It will involve increases in other items because everything is tied to petrol.”

Economic reforms

Teo said while the government raised the minimum wage to RM1,500 a month from May 1, it neglected to look at other factors driving up cost of living.

Most important, it has not looked into economic reforms that will help grow the economy, create jobs and raise wages.

“It has become even more pressing now because we realise that you can advocate a minimum wage increase but if you don’t address the other issues, then they don’t change, in the sense that we are not creating enough jobs for our graduates. 

“There is a stagnancy of wages that means the economy is not growing. Its run is based on labour intensive, low wage jobs. The government is aware of this, but it takes a lot of political will to create new industries.”

These industries, such as in the energy sector, medical cannabis and industrial hemp, alongside traditional arts, are things in which the government should invest, Teo said.

This, he said, means that at least when subsidies are scrapped in a few years’ time, there is a back-up plan.

“If we were to take away subsidies and remove price ceilings in the next three to five years, we would then have a projection of how many jobs we can create in the new industries that are more high paying and that will be able to cater to the needs of society.”

In this vein, he said there is a need to also strengthen institutions – such as security, banking and economic development – to convince investors to put their money in Malaysia.

“People will not invest if there are no strong institutions,” Teo said.

“Strengthening them would create a conducive business climate in which people are trustworthy.

“If there is continuous political interference, we will always be on the losing end, there will be no investments and the economic sector cannot grow,” he added. – July 14, 2022.