Survey: SST, debt revelation dampened Malaysian optimism over economy

MTEM attributed the dip to the implementation of the SST on September 1 and Putrajaya’s declaration that its liabilities have exceeded RM1 trillion, on the back of the weakening ringgit and slower economic growth. ― Reuters pic
MTEM attributed the dip to the implementation of the SST on September 1 and Putrajaya’s declaration that its liabilities have exceeded RM1 trillion, on the back of the weakening ringgit and slower economic growth. ― Reuters pic

KUALA LUMPUR, Oct 15 — Malaysian confidence in the country’s economic prospects took a dip in the last quarter as Pakatan Harapan’s (PH) lustre started to wear off, the Malay Economic Action Council’s (MTEM) Economic Confidence Score (MECS) survey has shown.

The survey done with research house Kajidata Research showed that the general economic confidence of Malaysians dropped to 36.6 over 100, after reaching a peak of 39.3 in the second quarter of 2018 — both in the range of “weak” confidence.

MTEM attributed the dip to the implementation of the Sales and Services Tax (SST) on September 1 and Putrajaya’s declaration that its liabilities have exceeded RM1 trillion, on the back of the weakening ringgit and slower economic growth.

“The rakyat’s perspective regarding the national economy has been affected by policy changes like the potential reduction of rates for cash transfer and the increase to minimum wage by only RM50,” its chief executive Ahmad Yazid Othman said in a statement.

When compared between ethnic groups, respondents from the Bumiputera group had their MECS dropped the most by 3.4 points to 37.3, compared to just a 1.4-point drop to 34.2 among the ethnic Chinese, and 2-point drop to 39.8 among the ethnic Indians.

Bumiputera respondents were also the most worried about the future of the economy, with a massive drop of 11 points, compared to the ethnic Chinese (7.5 points) and Indians (5.9 points).

Those earning less than RM2,000 per month registered the biggest drop in MECS at 6.1 points to 29.4, more than the national drop of 2.7 points.

By comparison, those with the highest income and earning more than RM7,000 are the only ones whose confidence has increased over the period, although still in the “weak” range.

Following the results, MTEM listed several suggestions, including urging Putrajaya to increase the total procurement value reserved for qualified Bumiputera firms, claiming Bumiputera contractors and communities still rely on the public sector to generate earnings and sustain their family.

It suggested increasing the share of wages in the national economy — pointing out that as much as 60 per cent of the national gross domestic product goes to companies, and only 35 per cent to workers.

Additionally, MTEM called for an increase in the new financial aid programme, the cost of living aid, free from political elements and targeted at those in need.

Following Prime Minister Tun Dr Mahathir Mohamad’s announcement of new taxes being planned, MTEM said it hopes Putrajaya will introduce Inheritance, Wealth and Capital Gains taxes.

The survey polled 1,537 Malaysians above 21 through the telephone between September 12 and 27 this year.

The results released last week came just prior to Khazanah Research Institute’s “State of Households 2018: Different Realities” report published today that pointed out that the income divide between the rich and the poor in Malaysia may widen.