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Country needs to focus on inflation rate

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LOOKING at the world for the past few years, it is undeniable that we have been hit with various challenges and misfortunes everywhere.

Not only in terms of the pandemic, war, or natural disasters but also inflation. And as a developing country, this inflation has sparked concern among the people.

According to the Department of Statistics Malaysia, as of June this year, the nation’s inflation increased to 3.4 per cent compared to the first six months of the year where the inflation was around 2.8 per cent.

It stated that among all, the food index remained as the main contributor to the rise in the inflation during the month of June 2022.

The increase was mainly due to higher prices of meat and vegetables during the month compared to the same month last year, it said.

With that in mind, economic expert Professor Emeritus Dr Barjoyai Bardai from Tun Abdul Razak University (UniRazak) voiced out that the country should now be focusing on the inflation rate, as other countries are also experiencing it.

Professor Emeritus Dr Barjoyai Bardai

“It should be our main concern, especially the increasing food costs, particularly cooking materials, that has led to higher prices of food.

“Seeing our inflation rate as of now, it is not truly the real rate because it is a shielded inflation rate – shielded by a lot of subsidies and price control.

“If we were to take out all subsidies and price control, our inflation rate could be above 11 per cent.

“The subsidies and price control have actually helped fellow consumers as it does not dampen their confidence and sentiment about the market.

“That said, in terms of inflation rate it is quite under control,” he added.

Finance Minister Datuk Seri Tengku Zafrul Aziz had on Aug 4 stated that the level of inflation in Malaysia could have reached around 11 per cent if the government did not subsidise essential goods.

Datuk Seri Tengku Zafrul Aziz

He said that the government still had fiscal room, citing how the nation’s statutory debt stood at 60 per cent of the gross domestic product (GDP) currently.

He also pointed out that Parliament had imposed a debt ceiling of 65 per cent in October last year, so there was still fiscal space while the government maintained its targeted budget deficit of 6 per cent.

“If we didn’t implement these subsidies, our statistics department said our inflation could be around 11 per cent,” he said.

However, Tengku Zafrul reiterated that the current policy of giving subsidies to everyone was unsustainable, though necessary for short-term economic recovery.

Premier on inflation

Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg stated that the high rate of inflation is not just faced by Malaysia, but also the rest of the world due to the global economic uncertainty and the Russian invasion of Ukraine.

Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg. Photo by Ramidi Subari

He said, the Malaysian currency is also weak and this had led to the spike in the cost of imported goods, especially food items.

Due to that, he said there is no straightforward solution to overcoming the high cost of food items, except to have a national policy on food security.

“It is very important for us to have a commercial agriculture based on technology that will help to save costs and stabilise the prices.

“But at the moment, what the Sarawak government is doing is to increase the amount of electricity subsidies and reduce the rental on the use of government buildings,” he added.

He pointed out that the assistance given so far is what the state can do for the people as it is very complicated.

“Whether we like it or not, we must find temporary solutions because based on the economic cycle, we are bound to face, within the cycle, first inflation, and then recession.

“What is happening now is that it is moving towards recession, particularly in the western economies. What we have in Malaysia are the side effects of that,” he said.

Aid from the government

Thinking about the hardships faced by the people, the government had given the rakyat various assistance to ease their burden to go through this post pandemic period and the inflation.

Knowing that chicken and eggs are one of the many dishes served everywhere in Malaysia, in February this year, the government announced a subsidy to poultry farmers where it will subsidise the chicken RM0.60 per kg and eggs RM0.05 per egg regardless of the category.

According to the statement by Minister of Food and Industries (MAFI) Datuk Seri Dr Ronald Kiandee, the subsidy – which was given up until June 30 – is focused on the poultry farmers because the rising cost of poultry has reached an alarming due to farmers facing a tough environment maintaining the business, following the increase in costs, especially food costs which cover 70 per cent of production costs in addition to logistics costs, labour costs, utility costs and the cost of medicines.

Datuk Seri Dr Ronald Kiandee. Photo by Ramidi Subari

“After a series of consultations, the government decided to step in with the subsidy in its efforts to alleviate the burden of farmers,” he said.

Aside from aiding the farmers, the government had also helped to subsidise chicken and eggs for the benefit of the consumers.

However, the new ceiling price (from July 1 to Aug 31) has caused an uproar among the rakyat as it was an increase from the previous ceiling price set from Feb 5 to June 30.

As such, Kiandee clarified that the decision (of setting the new price) taken by the Cabinet was done after taking into account the Bantuan Keluarga Malaysia (BKM) announced by Prime Minister Datuk Seri Ismail Sabri Yaakob, where cash aid of RM500 will be given to eligible B40 and M40 groups.

“Some 8.6 million BKM recipients have been approved so far and they are slated to receive up to RM2,600 in aid this year alone.

“This is the biggest aid given by any government,” he said.

He stated that Putrajaya had allocated RM369.5mil for this cash aid, bringing the total amount spent on subsidies to RM1.1bil since Feb 5.

“The increase in prices of goods is an issue that is not just happening in Malaysia, but is a global phenomenon due to the supply chain disruption triggered by geopolitical conflict and climate change.

“Nevertheless, the government is trying its best to set a price control mechanism to ensure the Malaysian Family isn’t burdened by the challenges of the cost of living,” he added.

Following this, the Ministry of Domestic Trade and Consumer Affairs (KPDNHEP) had also clarified that the Cabinet’s move to set ceiling prices and blanket subsidies for chicken and eggs has been done in great detail for the benefit and well-being of the people from all levels of society in facing the rising global inflation rate.

It stated that this initiative was aimed at helping breeders, suppliers, retailers, and consumers especially those from the B40 and M40 groups.

“The new prices were the manifestation of the government’s concern to help reduce the burden faced by the people at all levels while ensuring the supply of protein sources for Malaysian families to maintain their level of nutrition and health,” it said in its statement.

Sarawak government playing its role

Although the states do not have the power over setting up the ceiling prices of the goods and whatnot, they each took their own initiative to help their people in any way they can to go through these difficult times.

On Sarawak’s side, Abang Johari disclosed that the state government had spent over RM5 billion from Bantuan Khas Sarawakku Sayang (BKSS) 1.0 to 8.0 to ease Sarawakians’ burden since the pandemic hit.

Infographic on BKSS 8.0

The financial aid does not only focus on the lower income groups but is also given to the small and medium-sized enterprises (SMEs) which are on the verge of shutting down.

Taking the BKSS 8.0 as an example, the state government provided a monthly electricity bill discount of between five and 25 per cent for domestic, commercial and industrial consumers until June this year.

For that, a total of RM285.47 million was allocated for BKSS 8.0 with electricity bill discount being one of seven measures to assist the people during the National Recovery Plan (PPN) Phase 4.

The discount had benefited 647,000 households as well as commercial and industrial consumers in Sarawak with the total cost of electricity bill discount amounting to RM166.8 million.

According to Abang Johari, BKSS 8.0 reflected the government’s commitment, as in previous BKSS packages, to restore the socio-economic well-being of the people.

“The Sarawak government is always thinking of the best ways to implement the initiatives to help ease the burden of the people,” he said at a press conference after announcing the aid package at Wisma Bapa Malaysia Jan 28.

Despite the financial aid being given since 2020, the state government did not stop the BKSS initiative.

Datuk Seri Dr Sim Kui Hian

On Aug 14, Deputy Premier Datuk Seri Dr Sim Kui Hian disclosed that Abang Johari is expected to announce BKSS 9.0 soon.

He said that the new package would include, among other things, discounts for monthly electricity and water bills.

“I have discussed with the Premier and he will make the announcement soon as a measure to help the people cope with the increase of cost of living,” he said.

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