PETALING JAYA: The Institute for Democracy and Economic Affairs (Ideas) has urged the government to come up with a plan to reduce the national debt and to keep the public informed of its progress.
Speaking to FMT, the think tank’s external relations manager, Azrul Mohd Khalib, noted that the national debt was among the concerns highlighted in Bank Negara’s latest annual report. It now stands at RM648.5 billion.
“While it appears that the average Malaysian household has managed to reduce its overall debt, the federal government appears to be continuing to move in the opposite direction,” he said.
“The crippling federal debt service charges, which are projected to rise to RM28.87 billion this year, are symptomatic of the doubling of federal government debt compared with 10 years ago. It is now 52.7% of the GDP.”
Azrul said spending cuts and increased efficiency of federal government spending were necessary and “long overdue”.
“The position should not be for new or increased rates of taxation or additional entitlement programmes.”
Azrul also referred to the central bank’s mention of youth unemployment, which stood at 10.5% in 2016. He said urgent action was needed to reduce it but cautioned all parties against the urge to turn to the government to provide jobs.
He said job creation had to be an organic process. “It involves cultivating and encouraging the growth of small businesses and entrepreneurs. It involves promoting rather than curtailing competition and free markets through increasingly stringent regulations and government price controls.”
To ensure sustainable job creation and economic growth, he said, the government should introduce measures that would support the growth of businesses.
Meanwhile, Socio-Economic Research Centre executive director Lee Heng Guie said the Malaysian economy was generally “doing fine”, being neither too strong nor too weak.
“But while the better demand for exports is expected to continue to support the economy, this could be disrupted if importing countries – especially advanced countries – adopt protectionist measures that could disrupt global trade flows,” he said.
He said the government must closely monitor issues raised in the Bank Negara report, including inflation due to higher petrol prices, the inadequate supply of affordable housing, over-dependency on foreign workers and high youth unemployment.
He called for new policies to address these issues.