Govt should restructure economy, says MARC

PETALING JAYA: The government should be looking into restructuring the country’s economy starting with the 12th Malaysia Plan (12MP), says MARC Rating Corp Bhd.

Group chief executive officer Datuk Jamaludin Nasir said economic restructuring should be implemented in order for the people to shift to the middle and higher economic level, from the current low-level economy where it is still largely dependent on low production costs and foreign labour.

“We should relocate our resources to make sure that we are upping our economic value chain from the low-cost economy to the middle and higher economy by improving our local production, research and development and talent, parallel with how we are good at bringing good companies into the country.

“The restructuring (of the economy) should be taking place now when people are starting to be concerned about the country’s economy,” he told reporters after presenting the MARC Ratings’ Lead Managers League Table Awards 2021 yesterday.

For the upcoming Budget 2023, he said it was also important that the government seriously looked into implementing targeted subsidies so that the money could be used to help the growth of the country.

On a yearly basis, the government spends about Rm60bil to Rm80bil on subsidies.

Commenting on the country’s outlook, he said as the ringgit has been weakening against the dollar due to the rise in interest rates by the Federal Reserve (Fed), currently hitting over the 4.5 benchmark, there would likely be a concern about imported inflation next year.

He said this was because the country was heavily reliant on food imports, which took up over 50% of the food supply chain.

“Food security will be an issue, therefore we expect our economy to taper down, growing at a slower pace at below 5% for 2023, compared with this year’s overall improvement.

“Although a lower growth, it is a positive growth for Malaysia, better than other countries that may record a negative growth,” he said.

Jamaludin also expects Budget 2023 to continue to be an expansionary budget, with the focus to create more jobs and upgrade local talents’ skills and capabilities.

Meanwhile, on the performance of investment banks in the country this year, he said most of the investment banks were facing a challenge in view of higher interest rates.

“There is also less deal count as most potential issuers are taking a wait-and-see attitude. Following the Fed’s latest interest rate hike, we are also expecting the Bank of England to also increase its interest rate by another 50 basis points,” said Jamaludin.