- 1 year ago
Just hours before RMK13 is tabled, we unpack the bold promises, fiscal dilemmas, and policy trade-offs shaping Malaysia’s next chapter. Dr. Rosnani Rasul, CEO of BIMB Securities Sdn Bhd joins us to explore tough questions on wage reforms, subsidies, social protection, and industrial resilience in a world of rising inequality and geopolitical uncertainty.
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00:00We're just hours away from the unveiling of the Malaysian 30th plans with burden, we can say expectations with sorry expectations, bold promises and inevitable policy trade-off as fiscal constraints tighten.
00:25Inequality deepens and global uncertainties are getting louder. RMK 13 lands at a very pivotal crossroads for Malaysia's future.
00:34And we talk about this isn't just about big announcement or five-year target, it's about resetting the economics or the nation economic compass.
00:42With us today is Dr. Rosnani Russell, Chief Economist at BIMB to help us unpack the critical dilemma, strategic bets and even long-overdue reforms that will define Malaysia's next chapter.
00:55Thank you Dr. Rosnani for joining me. We can say that RMK 13 is being formulated at a significant fiscal strain.
01:01What principles or economic priorities that you see should anchor the plan to ensure we stay on the course of long-term growth without exacerbating our debt levels?
01:12Thank you, Awani, for inviting us to be on this program. RMK 13 is just around the corner.
01:23We would certainly like to see the report card for RMK 12.
01:27We believe that the government at the very least will show what would have been our achievement for RMK 12.
01:36We know that 31 July is the day where the government will reveal the 13 MP.
01:43Now we are actually at the intersection on what would be the blueprint of Malaysia for the next five years.
01:50Now, the current situation that's quite pressing is actually Malaysia that will become an age population by 2043.
01:58Age population means the economic pie either stagnating or decreasing or getting smaller.
02:04So, that is something by 2043, Malaysia may become age population.
02:10That is less than 18 years from now.
02:12I think the transformation, economic transformation or restructuring must come now to actually address this.
02:18Otherwise, we are going to log in a very small growth in line or similar to the advanced economies that we are seeing today.
02:29The line of America growing only about 2% to 3%, Japan is even worse.
02:34So, we would like to actually avoid making the same mistake.
02:38Now, whether what would be the blueprint, one, you got to address the size of the labor and of course the productivity that will come in together.
02:47As we know, Malaysia productivity actually is not stuck in a thing but actually what they call is slightly smaller compared to the regional peers.
02:59Our productivity is in the range of 2% to 3% compared to the light of Philippines about 5% to 6%.
03:05So, now, that is something that we need to look at about the labor quality of Malaysia, whether what is the size of the unskilled labor, the skill labor.
03:14So, we know that the unskilled labor, we cannot, what they call, we cannot develop their skill for them because of the lower value chain in terms of education.
03:25So, therefore, we need to move up the value chain of the labor quality to increase a lot of our skill labor.
03:33So, this is where the blueprint is very important.
03:37Now, how and what would be the GDP makeup in the next five years?
03:41It depends on, in many situations, depends on whether the economy currently, is it resilient or is it moderating?
03:48Is it below potential, above potential, the level of inflation, the labor condition, are we full labor?
03:56If we full labor, full labor condition, what will be the supply of labor going forward?
04:03Again, globally, we know that the investment in ICT is very rapid because we know that by investing in what they call labor in ICT sector,
04:14you will get a higher multiplier for your economy.
04:18That's why you can see that the government is very active in actually quoting or footing or getting the investment in ICT.
04:26We have heard the government announce investment from Google, for NVIDIA, in the light of 8 billion, 10 billion in data center,
04:34cloud computing, AI, sub-securities.
04:37This actually set the center, set the stage for the government to be able to address the less than encouraging productivity level of Malaysia.
04:47We also have to address the fact that we need more supply, talent for what they call TVET.
04:57That is very important.
04:59That would have to start from school, go up to the university.
05:02We know that to become a developed nation, there are certain parameters that you need to meet among others.
05:09For example, for engineering background or engineering degree, why China is so fast in actually developing their country
05:19is mainly because 3% of their graduates or their population will have to come from the engineering background.
05:26So we have to address this going forward.
05:30So it has to be holistic.
05:32This is something that we cannot run away because AI is gaining traction very, very fast.
05:38So we have to have a talent and a supply pool of this to ready ourselves for the eventual aging population.
05:48We are currently aging.
05:50We are going to age population.
05:51That means that, you know, the government have to address the pension scheme, the health care scheme, you know,
05:57because the social cost is going to be increasing.
06:00That is something that we have.
06:02We cannot look only five years ahead.
06:04We have to look five, 15, 20 years ahead because structural reforms takes many, many years to see the impact.
06:12But you cannot stop at RMK 13.
06:15You have to start looking at RMK 14, 15 to ensure that the quality of labour is there so that it will not become a burden to the government.
06:26Quality of labour, silver economies as we are heading to aging nations.
06:31You have just shared with us the reality of the capability of Malaysia currently and what are some of the challenges that we are facing.
06:41And this is some of the problems or issue that we need to establish and address immediately.
06:47And to take a look at the loophole, and every loophole is also an opportunity for us to grow.
06:54And Malaysia is facing two challenges, slower global growth and even domestic cost of living pressure.
07:02In your view, should the RMK 13 focus more on economic expansions or on resilience and distribution?
07:12Economic blueprint have to address three things.
07:15One is to address the cost of living.
07:18In my view, you are not in control of certain things.
07:23For example, food security.
07:26We actually import a lot of our food needs.
07:32So that is a major concern that we have not been able to address.
07:35Therefore, Malaysia is actually exposed to the external volatility.
07:39Yeah, the likes of, for example, the supply of sugar, the supplies of rice, eggs for exam at stand.
07:48So that you have to address the cost of living.
07:51Two, you have to address the current need for the productivity for the future.
07:58That is something that you have to put your focus.
08:01I have to give credit to the government because they have been able to state their ground to increase the productivity to the government.
08:11Yes, we note the fact that the government's fiscal debt is actually reaching its ceiling.
08:15I think about 63, 64, the ceiling is about 65, but we have to remember the government under PFFRA, the target is actually the government have to ensure the fiscal debt to be 60% or lower of GDP within three to five years.
08:31I think they are on track for that, but it's not the fiscal level debt that you have to be worried about.
08:40You have to worry what are they using the money for.
08:43So we know that the government has been investing a lot of money in MRT1, MRT2, MRTT is coming, on the LRT, on the ECRL.
08:53These are all our investment for the future.
08:56So we are actually establishing infrastructure for the investors to come in.
09:00You should not be taking this as a wastage, you know, because we are investing for the future.
09:05Otherwise, we are all, our productivity are all going to be affected by that.
09:10So again, we are investing in the productivity, we are investing in the capacity, so they have to put certain percentage depending on the current situation of the economy.
09:21Now, Malaysia is likely to record about GDP between 4 to 4.8% according to Bank Negara.
09:30That is actually slightly lower compared to RMK12 target.
09:34RMK12 target is 5.5.
09:37However, until last year, about four years target, we reached only, I think, about 5.2% on average.
09:45That is below the target.
09:46Now, again, we have to be mindful because nobody expects COVID to actually the global crisis to come in the form of COVID-19.
09:57That reset everything.
09:59So we still remember during COVID-19, our GDP dropped, I think, about negative 3.1% at the peak of it.
10:07And then before rebounding about 8%, that actually affecting the RMK12, to be fair.
10:13So we are also a nation in hurry, in a way, because we need to meet the high-incumination target that we have been missing the target since 2020.
10:26So now it's 25.
10:27So when putting the target for GDP, you have to be mindful of the external crisis.
10:34We know that external crisis always happen every 5 to 10 years.
10:39So if you put your GDP target, yeah, to achieve, you know, the economic pie, given the external challenges, the domestic demand, the current situation, you have to be mindful.
10:51If you put a high target, you have to be mindful that there could be some external challenges in the form of crisis that I mentioned externally.
11:00Yeah, so meaning your target, for example, you put, you know, RMK12, you put the target 5.5, but actually in actual fact that you're going to be achieving between 4.5 to 5%.
11:12Yeah, so you have to put a target that is actually achievable, not something that is over-promised, under-deliver.
11:22I would think it has to put under-promised and over-deliver.
11:27So that is very important.
11:30So far, we have seen RMK10, 12, 11 and whatnot, the GDP target came in lower compared to the government projection.
11:40That is a concern because this is a blueprint.
11:43And when you have a blueprint, you have to ensure that there is some margin of error there that you may not be able to achieve your target.
11:51So that is very important.
11:52So we hope that the government is able to address many factors.
11:55One is the aging population.
11:57Two, the need to address the productivity.
11:59Because when you are aging population, meaning your labor size is getting smaller and your cost is getting higher.
12:06Okay, so you have to address this.
12:08Yeah, so how are you going to do this?
12:11You know, it's either you increase the retirement age or you increase the wage.
12:16I have to give a credit to government when it's due.
12:20If we look at the average monthly wages, these are one of the things that the government able to achieve.
12:27Because the target is about 2,700 and we achieve as of last year is about 2,790.
12:32So the housing for the rakyat, they achieve their target.
12:38And certain target they hit, certain target they miss.
12:42So we hope that the government is able to table their report card.
12:47We want to see the report card.
12:485 years has come to an end before you're putting another report card for the RMK13.
12:57Unless and until you are able to come to terms with your achievement and also failure,
13:02you will not be able to, what do you call, be comfort of your next 5 years target.
13:11So next 5 years is also very important because we are very nearing to our 17 United Nations SDG target.
13:20Remember, so we have to achieve many things.
13:24The zero property, the healthcare for all, our net zero target by 2050,
13:32that we have a 7% target for renewable energy target by 2050.
13:37That is quite a tall order because 40% of our electricity supply come from coal.
13:45So that we require a lot of planning, re-planning, re-adjusting.
13:51So this is something that we have to address.
13:55And Malaysia is a bit behind in quite a number of, for example, carbon tax.
14:01We are not there yet.
14:04That is something that we have to address.
14:05And we hope the government also put at the pedestal certain things
14:11that will help in the climate change, in the pollution.
14:15We know that what they call certain targets for EV charger, they miss.
14:21I think the EV charger, we have a lot of model for EV car,
14:25but the charging station is remain a very pressing issue.
14:30Otherwise, we will not be able to achieve our target by 2030.
14:33So this RMK 13 not only need to push us to become high incarnation,
14:41but also the closer gap on the 17 sustainability target by 2030 and 2050.
14:48And this is a very important aspect that we should take a look at.
14:53Talking about the wages you have been mentioned,
14:55can Malaysia afford not to talk about the new wage models in RMK 13?
14:59How do we reconcile stagnant median wages with rising costs and aspiration
15:05to become a high incarnation, as you just mentioned?
15:09It has been multi-pronged.
15:11We have to look first, what costs the high cost of living?
15:17So in that score, what they call the highest cost for everyone is food.
15:24So food, now where do we get the food supply from?
15:26Do we have it? Do we generate ourselves locally or do we get it externally?
15:32And as I mentioned, food security is something that we cannot take it lightly.
15:37For example, if there is drought or somewhere around the world,
15:41we cannot get supply of rice, for example.
15:44So that would mean that the staple food is actually under attack.
15:48So that is something that you need to address
15:51because you cannot address wages alone
15:52because you got to address the income part and the cost part.
15:57So that is the cost part.
15:58Yeah?
15:59So the cost part, I think among other things,
16:03I have been saying this,
16:06that there must be a program to push people
16:10to go to work using public transportation.
16:12We have been building high, world-class transportation system.
16:18As you know, LRT, LRT extension, MRT 1, 2, 3, ECRL.
16:24But people say you got to work driving car.
16:26So that is something that is just not right.
16:28Yeah?
16:29Yeah, I agree with the government,
16:32what do you call target or plan to restructure the subsidy.
16:39The next will come in the form of RON 95.
16:43The 85, however 85 population will not get hit,
16:47only the 15%.
16:48But more importantly,
16:49we know that Malaysia is home
16:51to a quite accessible number of foreigners,
16:55foreign labor that use our resources.
17:00These people must pay the global price for fuel.
17:05So just take it like one or two million of foreign labor
17:08using our petrol for RON 95.
17:12So that's a lot of saving.
17:13By our calculation,
17:15the government is able to save about half a billion
17:17in terms of when they refloat the RON 95.
17:21The 15% of population paying the global price
17:25plus the foreigner,
17:27the government can save a lot.
17:28Yeah, so you address on that.
17:30You know, you have a program
17:32to make people go to work
17:34by public transportation.
17:36It will save you a lot of costs.
17:38Secondly, the food security,
17:39you have to address that.
17:40And then thirdly,
17:41I think the government have the aspiration
17:43to increase the minimum wage
17:45to, I think,
17:46above 2000 by 2030.
17:49I think we are on the right track.
17:51Currently, the minimum wage is about 1,007.
17:56We still have five years to go.
17:58I think adjusting that to above 2000,
18:01I think it's just a matter of time.
18:04Additionally,
18:05maybe we have to address
18:08what they call the average monthly wages.
18:12Now, how to address the monthly wages
18:14is actually by getting more
18:16labor into what they call
18:20high-impact sector,
18:21as I mentioned.
18:23High-impact sector.
18:23That's very, very important
18:24because high-impact sector
18:25will give you
18:26with knowledge,
18:29with education,
18:30they will be able to give you
18:31more,
18:32what they call,
18:33better prospect
18:34in terms of wages
18:35and for the whole
18:37of your package.
18:39So that's very important.
18:40So we must address
18:43not only the income side,
18:45but also the cost side.
18:46Then you'll be able
18:47to get more
18:48happy,
18:50what they call,
18:51happy population.
18:53That,
18:54you know,
18:55as you mentioned,
18:56how do you,
18:59what they call,
18:59what is the yardstick
19:01of what they call the,
19:04is it the yardstick
19:05better we evaluate
19:07the economy through GDP
19:09or do we use
19:11another yardstick
19:11to evaluate the happiness
19:13in the Malaysian?
19:14It was something
19:14that the government
19:15have to figure out.
19:17We can say that
19:19we can push,
19:20boost them forward
19:21to push in the high-value sector,
19:22but we also heard a lot
19:23about high-value investments.
19:25But our productivity
19:26has been stagnant.
19:28So what are some
19:29of the missing policies
19:30within RMK13
19:31to push for a high-value
19:33investment?
19:35Okay.
19:35This is something
19:37that has been discussed
19:38more than,
19:39I think,
19:39more than 10 years ago.
19:41Our productivity
19:42has been in the range
19:43of 2 to 3 to 4
19:45at most percent
19:46compared to the like
19:47of Philippines
19:48as I mentioned just now.
19:49It's about 5 to 6 percent.
19:51Now, what went wrong?
19:52We know that
19:53manufacturing
19:54contribute about 35%
19:56of the GDP.
19:57sorry,
20:0035%
20:00of the
20:01yes,
20:02GDP.
20:05However,
20:06we are actually
20:07at the water value chain
20:08of the manufacturing.
20:10We are just
20:10manufacturer.
20:13Meaning,
20:13we use a lot
20:14of
20:15unskilled labor.
20:17Unskilled labor
20:17that you cannot
20:18you cannot
20:19what you call
20:20teach them
20:22or give them
20:24higher skill.
20:25So,
20:26a lot has been said
20:27that we
20:27actually
20:28have to automate
20:30to be able
20:32to reduce
20:32our dependency
20:33on our skill level 1.
20:35And we have to start
20:36becoming
20:37the brain
20:38of the manufacturing.
20:39Meaning,
20:40we have to involve
20:41starting to increase
20:42the value chain.
20:43Meaning,
20:43the value added
20:44and also
20:45the R&D part.
20:46The fact that
20:47Apple,
20:49despite that
20:50Apple is
20:5185%
20:53of the production
20:54of Apple phone
20:54is from China.
20:56But,
20:56US is able
20:57to boot in
20:58the largest income
20:59of this
20:59Apple phone
21:00production
21:01is mainly
21:02because the R&D
21:03is actually
21:04in the US.
21:05That is where
21:06the value is.
21:07So,
21:07I guess the government
21:08is doing that
21:09currently.
21:10I think they have
21:11been investing
21:11a lot
21:12as I mentioned
21:13AI,
21:14subway security
21:15and whatnot.
21:16But,
21:17we have to be
21:18patient
21:18because economic
21:19transformation,
21:21economic restructuring,
21:22it will take
21:23more than
21:24five years
21:24for you to
21:25see the impact.
21:26Therefore,
21:27this blueprint
21:27will be very
21:28important for the
21:29government
21:29to set it
21:30right,
21:31to set the
21:32center,
21:33to set the
21:35economic
21:36platform
21:36right.
21:38Before we
21:39can see the
21:39impact by
21:402030,
21:41we have to
21:43ensure
21:44that we
21:46put the
21:47right investment
21:48at the
21:48right sector,
21:49the high
21:49impact sector
21:50as I mentioned.
21:51We can no
21:52longer
21:52depend on
21:54manufacturing
21:54sector
21:55as I mentioned,
21:57mainly because
21:57we are
21:58exposed
21:59to the
22:00tariff
22:01risk
22:02as you
22:03all aware.
22:05You know
22:06that Malaysia
22:06has been
22:07actually
22:08slapped
22:09with
22:09tariff
22:10above
22:1020%.
22:11And then
22:13this
22:14all
22:14uncertainty
22:15is actually
22:16a threat
22:17to our
22:17manufacturing
22:18sector.
22:19So
22:20like it
22:21or not,
22:22where
22:23the point
22:24of export
22:24of this
22:25product
22:25will be
22:26slapped
22:26with
22:26higher
22:27tariff.
22:27So
22:28what can
22:28we do?
22:29What
22:29can we
22:30do?
22:30We
22:31need
22:31to be
22:32the
22:32one
22:32that
22:33take
22:34charge
22:34of the
22:35R&D
22:35as I
22:36mentioned.
22:37You
22:38will not
22:38be
22:38slapped
22:39with
22:39tariff
22:39because
22:40there's
22:41something
22:41that
22:41they
22:41cannot
22:42charge
22:42us
22:42on
22:42that.
22:43So
22:43I
22:43guess
22:43this
22:44is
22:44one
22:44of
22:44the
22:45things
22:45that
22:45the
22:45government
22:45can
22:46look
22:46into.
22:47You
22:47cannot
22:47depend,
22:48no
22:48longer
22:48depend
22:49on
22:49manufacturing
22:50because
22:50of
22:50the
22:51current
22:51landscape
22:52that
22:52is not
22:52conducive
22:53for
22:53our
22:53economy.
22:55That
22:55is
22:55actually
22:56what
22:57you
22:57call
22:57an
22:58immediate
22:58threat
22:58that
22:59government
22:59have
22:59to look
22:59into.
23:00Dr Nani,
23:02probably
23:02my last
23:03question
23:03from
23:04high-value
23:04investments
23:05and wage
23:06reforms
23:07to
23:07subsidy
23:09rationalisation
23:09and social
23:10protection
23:10for a
23:11changing
23:11workforce.
23:12What
23:12is your
23:13hope
23:13for
23:13RMK
23:1413
23:14for it
23:15to be
23:15more
23:15meaningful
23:16than
23:16the
23:17previous
23:17RMK?
23:20One,
23:21I have
23:22a lot
23:22of hope
23:23and a
23:23lot
23:23of
23:23investors
23:24out
23:24there
23:24have
23:25a lot
23:25of
23:25hope.
23:25One,
23:26we
23:26hope
23:27that
23:27the
23:27government
23:27is
23:28able
23:29to
23:30close
23:30the
23:30gap
23:31on
23:31the
23:3117
23:32SDJ
23:36target.
23:38We
23:38have
23:39to
23:39help
23:39the
23:40states
23:41that
23:41are
23:41actually
23:41a bit
23:42backward.
23:43The
23:43ones
23:43that
23:43have
23:43no
23:44access
23:44to
23:44clean
23:45water,
23:46electricity
23:46because
23:48these
23:48are the
23:49states
23:49that
23:49are
23:49going
23:49to
23:50drag
23:50the
23:50whole
23:51economy.
23:52That
23:53is
23:53something
23:54that
23:54we
23:54cannot
23:54deny.
23:55We
23:55know
23:56which
23:56states
23:56are
23:56dead.
23:57We
23:57know
23:57that.
23:58Secondly,
23:59we
23:59hope
24:00that
24:00the
24:00government
24:00is
24:01able
24:01to
24:01address
24:02again
24:03the
24:03aging
24:03population
24:04that
24:04I
24:04mentioned
24:05is
24:05fast
24:05coming.
24:07We
24:07are
24:08aging
24:08population
24:09and
24:09we
24:09are
24:09going
24:09to
24:10be
24:10age
24:10population
24:10one.
24:11Two,
24:12three,
24:13we
24:14hope
24:14that
24:14the
24:14government
24:14is
24:16able
24:16to
24:16deliver
24:17development
24:18expenditure
24:19to
24:21the tune
24:21of
24:2190
24:22billion
24:22per
24:23year.
24:23That
24:24is
24:24based
24:24on
24:25our
24:25calculation
24:25is
24:26going
24:26to come
24:26up
24:27to
24:28based
24:29on
24:29the
24:293%
24:29GDP
24:30that
24:31could
24:31come
24:31up
24:31about
24:3290
24:32billion
24:33per
24:33year
24:34compared
24:34to RMK
24:3512
24:35of
24:3580
24:36billion.
24:37So
24:37there's
24:37a lot
24:38of
24:38hope
24:39on that
24:40part.
24:41Then
24:41we hope
24:42that the
24:42government
24:42is also
24:43able
24:44to
24:44address
24:44the
24:45quality
24:45of
24:45labor.
24:46The
24:46quality
24:46of
24:47labor
24:47is
24:47very
24:47important.
24:48We
24:48should
24:48reduce
24:49our
24:49dependency
24:49on
24:50unskilled
24:50labor.
24:50That
24:51is
24:51something
24:51that
24:52we
24:52have
24:52been
24:52hearing
24:54for
24:54so
24:54long.
24:55We
24:56hope
24:56also
24:56the
24:56government
24:57will
24:57be
24:57able
24:57to
24:57address
24:58the
24:59fiscal
24:59debt
24:59condition
25:00to
25:01below
25:0260%,
25:02reduce
25:03subsidy
25:03and get
25:06a lot
25:07more
25:07stretch
25:08target
25:08for
25:09the
25:09FDI
25:09because
25:10only
25:10FDI
25:11will
25:11be
25:11able
25:11to
25:12spin
25:12the
25:12economy
25:13higher
25:13because
25:13of
25:14the
25:14multiplier
25:14effect.
25:15So
25:15there's
25:16a lot
25:17of hope
25:17for
25:17RMK13
25:18but
25:19we
25:19hope
25:20that
25:20the
25:20government
25:20is
25:20able
25:21to
25:21give
25:21the
25:21clarity
25:21because
25:22we
25:22want
25:22the
25:22clarity
25:23and
25:23we
25:23want
25:23the
25:24report
25:24card
25:24for
25:24RMK12
25:25to
25:25be
25:25fair.
25:26Before
25:27you
25:27set
25:28you
25:28what
25:29you
25:29call
25:29table
25:30your
25:30new
25:31plan
25:32we
25:32want
25:33to
25:33see
25:33the
25:33report
25:34card
25:34for
25:34RMK12
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