MALAYSIA: 10 BIGGEST ECONOMIC ISSUES

10 The issue of the Malaysian economy in 2015
By: Dr. Nazri Khan
Complaints and grievances brave challenge in 2015.
To all Malaysians, ready to face the challenges of TEN largest economy next year:
1. INCREASE IN THE COST OF LIVING
Government measures to raise the price of petroleum (an increase of 20 per cent), electricity (up 15%), sugar (up 30 sen), the price of flour (up 20 sen) and toll rates (minimum 50 per cent) or less will boost the cost of living all people. The latest official inflation level has already risen to 3.4%, the highest in a year. The unofficial inflation / real may triple over 10% per annum.
The average price of a cup of coffee now is RM1.60, RM1.80 price of rice is rolled while a piece of bread has reached RM1.20 excluding GST.
2. GOVERNMENT DEBT LEVELS HIGH

Government debt levels have increased since 1970. The Federal Government debt in 1970 was RM2 billion, in 1999 amounted to RM95 billion but now has reached RM568.2 billion or 53% of GDP is approaching the ceiling of 55%. Foreigners also owns approximately 15% of total debt in the country. This condition can affect the exchange rate of the country.
MalaysiaFor record, the government spent more than RM10 billion a year just to pay interest on debts that have been taken by the Federal Government.
3. THE HOUSEHOLD DEBT LEVELS OF HARMFUL
Malaysian household debt has doubled to RM750 billion or 76.2% of GDP in July this year. Large fraction is 29% housing loans, vehicle loans, 51%, 15%, personal loans and student loans by 33%.
This means that Malaysians are generally made with wasteful spending and reckless.

If not controlled, five years household debt in Malaysia exceed 100% of GDP means that the country earned income is insufficient to pay the outstanding debt remedy.

4. ECONOMIC GROWTH DECADE THAT MORE SLOWLY

The total economy (GDP) in 2014 was RM1.07 trillion. Although the global economy is expected to increase, Malaysia's GDP growth average of the last ten years, only slower by 5% and more driven by domestic demand. Compared to an average GDP growth of 7% in 1990, driven by exports and external sector.

For the record, since 1945 to 1998, Malaysia is one of 13 countries which have achieved growth of over 7 per cent for more than 53 years. However, after 1998, economic growth has fallen gradually.

5. MANAGEMENT OF THE HIGH COST

From 1970 to 2013, total administrative expenses increased from RM2.2 billion to RM216.2 billion. The largest component is the salary of civil servants. To note, Malaysia has the highest ratio of civil servants in the world 1.4 million or 10% of the total workforce in Malaysia.

6. HIGH COST OF GOVERNMENT SUBSIDIES

The total amount of government subsidies has increased significantly from RM1.1 billion in 1999 to RM44.1 billion in 2013.

This means that 20% of the taxes collected will be used to subsidize people. Subsidy is like a weed because it is addictive when it has been given. The termination of subsidies could also lead to a political cost to the government of the day.

Basic subsidies are not an effective policy for the poor. People like to use fuel more than the poor on a motorbike. This means that subsidies be enjoyed by the wealthy.

7. EMPLOYEE PRODUCTIVITY IS WEAK

Only 80 percent of workers nationwide have education up to Secondary Education Certificate (SPM). According to the Malaysia Productivity Corporation (MPC), the country's labor productivity level is much lower than countries like the United States, Japan, United Kingdom, South Korea and Singapore.

Average labor productivity only registered value of RM43,952 per annum.

Compared to the United States topped the list of employees with a productivity level of RM285,558 per annum, followed by workers in Japan Hong Kong RM229,568 and RM201,485. This means that workers in Malaysia work in a longer period than any other country, but produces lower returns.

8. MALAYSIAN BUDGET DEFICIT EVERY YEAR SINCE 1998

Despite having such commodities as oil and palm oil, the State Budget deficit remains for 16 consecutive years since the Asian financial crisis. For the record, spending on subsidies to people reduced by £ 7.3 billion for 2014.

While the overall deficit level of countries have gone down but still high at about £ 36 billion.

At the same time, the current account surplus (exports minus imports) was reduced from RM102 billion in 2012 to RM37 billion in 2013. This means that the surplus of 3% of GDP at present is small because Malaysia had registered a current account surplus of 10 %.

9. leakages and TRANSPARENCY OF STATE

In the Corruption Perceptions Index or Corruption Perception Index conducted by Transparency International, Malaysia ranked 53rd out of 177 countries. This position is not as commanding as in 2003, Malaysia was ranked 37th.

For the record, the Global Financial Integrity report, Malaysia was ranked 4th in terms of total cumulative outflow of illegal funds amounting to RM880 billion between the years 2002-2011. This means that illicit outflows from Malaysia may be greater than countries like the Philippines, Nigeria and Venezuela.

10. The weakening of the ringgit AND SALARY INCREASE SLOWLY

With Ringgit Malaysia remained weak compared to the US Dollar (lowest in six months) and Singapore Dollar (lowest in 15 years) also contributed to the surge in prices and the cost of living in Malaysia.

The effect of the weakening ringgit causes a decrease in the purchasing power of individuals. That means every ringgit of revenue will be able to buy some imported goods and services than ever before.

The increase in the cost of living which occurred was also not consistent with the slow rate of wage increases.
According to Payscale.com, the average salary increase Malaysia is only around 3.5% compared to 9.8% Indonesia, Singapore and Thailand 12% to 5.8% in the same period.

In conclusion, the backbone of the economy is fluctuating society, nation and state. I am confident that this issue can be dealt with ten, sustainable government, the economy and people's scintillating effort. Amen.
* Dr. Nazri Khan is the President, Malaysian Association of Technical Analyst (MATA) and Exco, Malay Chamber of Commerce Malaysia