Malaysian economy, the balancing act

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KUALA LUMPUR: The year did not take off as rosy as one would have wanted it to be, with the global stock markets stuck in the red, no thanks to the shockwave created by China and the fast plummeting oil prices.

The call for adjustment to the 2016 Budget came less than three months after it was tabled on Oct 23 last year – a clear sign of another difficult year ahead.

The Malaysian Budget was based on an average oil price of US$48 per barrel, which has now crashed to US$33 and expected to go lower than US$18.

Although the country’s economy has largely diverted from heavy dependency on oil revenue, it nevertheless still has a big role.

Prime Minister Datuk Seri Najib Tun Razak was being direct when he said that the government would state the reality, “let us be frank and honest and state that this year is going to be a challenging one.”

Najib, who is also Finance Minister, announced yesterday that adjustments to the Budget 2016 will be tabled soon.

A second dose of bitter pill not only for the ‘man on the street’ after a bumpy ride in 2015 but also for the government.

The big question now is how will the government keep to its promises without compromising the basic needs of the country such as sustaining good infrastructure, healthcare and welfare of the people.

The budget deficit is among those that will be closely monitored as the government has promised to bring it down to 3.1 per cent of Gross Domestic Product (GDP), a notch lower from 3.2 per cent last year.

Malaysia’s projected GDP growth for 2016 is between four and six per cent with the World Bank forecasting it to grow 4.5 per cent in its latest outlook, and OCBC Bank nudging it a little higher at 4.7 per cent.

The declining ringgit, currently hovering at RM4.37 versus the US dollar, has been a cause for concern as it is far from correcting itself any time sooner.

Although the latest data from Ministry of International Trade and Industry (MITI) revealed that Malaysia sustained 217th consecutive months of trade surplus since November 1997, it slipped by 6.9 per cent to RM10.23 billion in November 2015.

But honestly speaking, for ordinary Malaysians, the global fuel price, trade figures and budget deficits are least of their concerns.

The only thing that is worrying them is whether the price of bread, butter and fuel will remain the same tomorrow.

Although the Goods and Services Tax (GST) has been touted to be the saviour of the national economy and financial position, it had, without doubt, affected the bulk of 30 million Malaysians.

To be fair to the government, it has exempted a long list of essential items from GST – Malaysia has been unique in this sense as no other country that has taken the GST path, has done this before.

Perhaps what is lacking is proper vigilance on those who are profiting from the GST and more stern action by the government against the culprits.

In a difficult situation, the ordinary man wants solutions to the problems instead of screaming slogans. — Bernama