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5 Economic Challenges for Malaysia in 2023 According to the Prime Minister

Search by : Pn. Marziati Md Din (Pegawai Kewangan)

Article by : Ku Syafiq Ku Fozi

Source : Relevan.com.my


PRIME Minister, Datuk Seri Anwar Ibrahim began the presentation of the 2023 Budget on 24 February by outlining five economic challenges that have, are and will be faced by the country.

The economic challenges are partly the impact of the Covid-19 pandemic that began to hit the world about three years ago. Even though the country is recovering, the effects are still felt today.

Listed below are the five economic challenges Malaysia has to face as shared by Anwar.


1. Debt burden

According to Anwar, the national debt will reach RM1.2 trillion or more than 60 percent of the Gross Domestic Product (GDP) this year.

In fact, if calculated together with liabilities, the value reaches RM1.5 trillion or 81 percent of GDP.

This causes the debt service payments that need to be borne this year to reach RM46 billion or 16 percent of revenue. This exceeds the maximum limit of 15 percent that has been practiced so far.

"This RM46 billion payment is only for the interest rate or loan interest. This noble House should be reminded that for 25 years the government has spent deficits, and the national debt continues to increase.

"We used to go into debt to develop Felda land and that is not upset, but going into debt to finance a mega project without interest raises the question, are we betraying the trust if the younger generation is burdened with debt?" he said.


2. Administrative decline

Anwar also raised the issue of problematic governance, as shown in several reports.

He said the 2022 Corruption Perceptions Index (CPI) had plummeted to 61 compared to 29 in 1998. The decline was due to the failure to curb political corruption, he explained citing Transparency International Malaysia.

"The Auditor General's report 2020 and 2021 revealed a leakage of almost RM3 billion covering the loss of public money, waste and irregular payments.

"For example, the issue of under-collection of vehicle import duty, the government has lost RM72 million just because of the weak import duty collection process.

"In addition, there is also a leakage in the implementation of the diesel subsidy with an estimate of almost RM10 billion worth of diesel subsidy being misappropriated last year," he said.


3. The uncertainty of the world economy

The inflation rate continues to be depressed due to the still high world commodity prices and disruption of the food supply chain as a result of the Russia-Ukraine war.

This is reflected in the world economic growth forecast this year by the World Monetary Fund (IMF) which is expected to moderate at 2.9 percent compared to 3.4 percent last year.

In fact, the world trade sector is also projected to slow at a rate of 2.4 percent compared to 5.4 percent in 2022.

As for Malaysia, GDP growth in 2022 jumped 8.7 percent, but it was due to the low GDP base in 2021 due to the Covid-19 pandemic.

"In order to give a full picture of the economic performance, it needs to be seen together with the quarterly growth which recorded a decrease, namely the first quarter 3.8 percent, the second quarter 3.5 percent, the third quarter 1.9 percent and the fourth quarter -2.6 percent," explained Anwar.


4. Investment has not recovered

In terms of investment, Malaysia recorded RM297.5 billion in 2022, 9.4 percent lower compared to RM328.5 billion in 2019.

Malaysia's position in the World Competitiveness List by the Institute of Management Development (IMD) also dropped to 32nd place compared to the 12th place it had previously reached.


5. Challenge for the people

In 2022, national inflation is at a rate of 3.3 percent with food inflation recording a high rate of 5.8 percent. According to Anwar, this year's inflation rate is expected to be the same or higher than 2022, depending on the global supply chain.

The unemployment rate in 2022 will be at a rate of 3.6 percent compared to 3.3 percent in 2019. Unemployment of youth 25 years and below is over 10 percent. In fact, the average income of youth is also low, around RM1,700 in 2021.

"What is mentioned is an honest and clear display of the economic crisis that we have inherited together.

"Therefore, this MADANI Budget must have the ability to mobilize all strength and energy to translate ne

Date of Input: 15/05/2023 | Updated: 15/05/2023 | muhammad.isam


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