This is the time to take stock and discuss key measures to deal with the impending economic challenges. Read the report at Malaysiakini Abdullah launches mid-term review of 9MP and
Gov't injects extra RM30 bil into 9MP. -
Earlier I have commented on Malaysiakini's report on Beh Li Yi's report on EPU: Penang monorail, Porr shelved here.
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The debate on the 9MP mid-term comes at a time when the fuel price hike and rising food prices are impacting Malaysia. The economic situation has changed quite drastically from as recently as 12-24 months ago. Even Singapore, the pillar of inflationary stability in Southeast Asia is looking at 7% price inflation.
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As the debates begin in Parliament, what our politicians need to realise is:-
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1. Asset inflation is now replaced with consumer price inflation
Asset inflation is a sort of "happy" problem since wealth is created in the form of rising property prices. Many Malaysians get to enjoy capital gains. But consumer price inflation eats into the disposable income of Malaysians, especially those earning below RM5,000-00 a month (& who are married, with kids & paying mortgages & car loans!)
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2. Monetary policies cannot help consumer price inflation
No matter what Zeti & Bank Negara does with M'sia's money supply, consumer price inflation CANNOT be managed by monetary policies. Petrol prices and food prices are basic necessities that are consumed EVERYDAY.
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3. Fiscal policies on subsidies must be short-term
To alleviate the burden of consumer price inflation, I am prepared to accept that subsidies may be necessary to control food prices and other necessities. But they must have a SUNSET PROVISION to be removed when e.g. the price of crude oil goes down to, say, USD100-00 per barrel, or lower (is that possible?). As I have said before, subsidies distort the price mechanism. It has made us inefficient. But subsidies may be necessary during this difficult time for a short term.
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That is all I can say for now.
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