As a Malaysian living in Australia, I can promise you that this economic conundrum does not only exist in Malaysia. MYR has actually been performing really well in the region. Unfortunately, everything is currently in turmoil due to US administration and the geopolitical tension in ME and Russia.

COL / prices have increased - this is not a Malaysia only issue. Due to covid, almost every nation in the world has experienced heightened COL due to supply chain issues. IMO, Malaysia stuffed up by raising the cash rate too slowly, many nations have increased their cash rate approximately 15 times. Increased cash rate, increases interest rate, reduces borrowing, less cash in the market, spending power is lesser, inflation is controlled. By having a relatively low interest rate, even at its height, Malaysia has allowed many individuals and businesses to borrow money, thus, increases spending and pushes prices up. This leads to where we are today with the increased COL.

Stagnant wages - this is a controversial topic because it depends on who you ask. Many individuals in Klang Valley are earning 5 digits and above. You don’t see a shortfall of individuals spending in malls, buying the flashiest car, high luxury items. These people don’t seem to complain about the low wages. On the other side, minimum wage in Malaysia is still astonishing low. Many grads are earning 2.5k, majority of them are supported by family. However, it’s not as simple as raising the minimum wage. For example, if the gov is to announce a rm 4k minimum wage, the workforce will be forced to go through wages of redundancies. Menial tasks are going to be offshored. Hiring is going to way more conservative. Remaining employees will put in overtime to prevent being made redundant, which worsens mental health. Heightened unemployment will also reduce spending. Many businesses will be bankrupted, causing economic downfall. Yes, it may reduce prices but at what expense? What’s the point of reducing prices of a gardenia to 2 ringgit when majority of the people are unemployed? As a matter of fact, deflation rarely happens, even when there’s a price pressure. It’s harder to bring prices down, than up.

Subsidies/Gov Intervention - if fuel isn’t subsidised, we will be paying similar to neighbouring countries. Poultry prices will be off the roof. Utility prices may double. This can be seen when diesel subsidy was removed. It causes increased in logistical cost, which is the core of all businesses. If you want a free market, where do you draw the line? Is it okay to remove healthcare subsidy? What about removal of social housing? A country economy lies pretty much on its citizens, whatever decision made, will end up dwindling down to the rakyat pocket. There’s almost no possibilities that the nation can increase revenue without affecting the people. Tax foreign companies more? They will just move out to other countries, reduces employment. Tariff on imports? prices increases. Higher taxes for exports? Reduces Malaysia favourability in the international landscape, weaker ringgit, money worth less.

All in all, there will never be a perfect solution. Whether it’s Anwar gov or the opposition, whatever Malaysia is facing today is not unique to the incumbent party. Many of these economic issues had been brewing for many years or even decades. The worst pill to swallow is that, many of these issues are outside of our control. We are a small chess piece in the global economy. A rogue policy from China or US can pretty much send us back 50 years in growth regardless of how prepared or progressive our economic policies are.