Latest news with #MalaysianAcademyofSMEandEntrepreneurshipDevelopment
New Straits Times
31-07-2025
- Business
- New Straits Times
13MP must ensure effective execution to narrow rural-urban gap, says expert
KUALA LUMPUR: The 13th Malaysia Plan's (13MP) emphasis on rural development and affordable housing is a step in the right direction to address the socio-economic gap between urban and rural areas, an expert said. Universiti Teknologi Mara's Malaysian Academy of SME and Entrepreneurship Development coordinator Dr Mohamad Idham Md Razak said the plan's focus on basic infrastructure such as roads, water supply, electricity, and digitalisation initiatives could stimulate economic growth in rural regions. "This focus is timely and much needed to balance development between urban and rural areas. "However, the success of these initiatives will depend on transparent and effective implementation, as projects of this nature have often faced issues such as cost overruns or delays," he told the New Straits Times. Earlier, Prime Minister Datuk Seri Anwar Ibrahim said the government would improve basic infrastructure and stimulate the economy in rural areas and development zones under the 13MP. He said that strategic investments in these areas would be encouraged in an effort to narrowing development gaps between regions to ensure that rural communities benefit equitably as the country develops. On the government's target of building 500,000 affordable homes by 2030, Idham said while it was a commendable goal, lessons must be learned from previous programmes such as Perbadanan PR1MA Malaysia (PR1MA). "The quantity of homes matters, but location and quality are equally critical. If houses are built in remote areas without adequate transport links and social amenities, demand may remain low. "The government must ensure these projects are planned holistically, with access to jobs, education, and healthcare services." Idham said that several aspects required close attention to ensure 13MP delivers its intended outcomes. "Firstly, strict monitoring mechanisms are needed to ensure projects achieve their targets without wastage. "Secondly, collaboration between federal and state governments must be strengthened to avoid bureaucratic hurdles. "Thirdly, private sector participation through incentives can accelerate development. "Finally, skill training programmes for rural communities must be intensified so that economic growth can be shared inclusively," he said. He added that while 13MP carried good policies, its true impact would hinge on how well it was executed. "If implemented properly, RMK-13 has the potential to reduce inequality and raise living standards. But without efficient execution and strong accountability, it risks becoming yet another plan that fails to meet expectations," he said.
New Straits Times
04-07-2025
- Business
- New Straits Times
Malaysia may secure partial US tariff exemptions, say economists
KUALA LUMPUR: Malaysia may secure partial carve-outs from potential United States tariffs due to its critical role in global supply chains, particularly in electronics and key commodities such as palm oil, an economist said. Universiti Teknologi Mara's Malaysian Academy of SME and Entrepreneurship Development coordinator Dr Mohamad Idham Md Razak said Malaysia's position as a supply-chain hub for multinational producers could support its case for exemptions in specific sectors. "Partial or conditional carve-outs, such as lower negotiated tariffs or phased implementation, are more realistic, especially if Malaysia can leverage its bilateral relationships or regional platforms like Asean," he told the New Straits Times. He said countries with significant trade dependencies, such as South Korea, which relies heavily on semiconductor exports to the US, have successfully negotiated exemptions in the past, although these were often limited to high-priority sectors. However, Idham said a full exemption was unlikely, as tariffs are typically imposed to serve domestic policy objectives rather than being negotiated broadly on a country-to-country basis. This comes as US president Donald Trump announced that his administration will begin issuing letters to foreign countries starting next Friday, outlining new tariff rates on goods imported into the United States. In Malaysia's case, several rounds of discussions have already been held with Washington, including a delegation led by Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz. The country faces a 24 per cent tariff on certain exports to the US unless both sides reach an agreement before the 90-day pause ends on July 8. Idham said that electronics and electrical goods, which make up nearly 40 per cent of Malaysia's exports, would be the most vulnerable if the new tariffs are imposed, followed by downstream products such as petroleum and palm oil. He said the imposition of tariffs could disrupt existing supply chains, reduce export revenue, and dampen foreign direct investment (FDI). "A 10 per cent tariff shock on critical sectors could shave off between 0.3 and 0.5 percentage points from gross domestic product (GDP) growth, given that trade accounts for around 70 per cent of the Malaysian economy. "Secondary impacts could also affect employment, particularly in manufacturing-heavy states like Penang and Johor, potentially widening regional economic disparities," he said. Universiti Putra Malaysia Business School economist Dr Ida Md Yasin said that if Malaysia's negotiations with the US do not lead to favourable outcomes, the country could face serious trade challenges amid a shifting global landscape. She said the world is moving towards "friend-shoring", where major powers prioritise trade with trusted allies, and regionalisation, rather than relying on global free trade frameworks. "This shift could pose challenges for the Asean region. "Countries like Vietnam and Malaysia may gain some short-term advantage due to their integration into Western tech supply chains, but others that are less diversified could be left behind," she said. Ida said that if countries like Malaysia are unable to secure tariff carve-outs or exemptions through negotiation, they may face economic pressure and a loss of competitiveness. "The region must urgently strengthen the Asean Economic Community (AEC) and negotiate as a bloc. "Otherwise, each country risks being sidelined one by one in future trade talks," she said. She said that Malaysia must diversify its export markets and explore trade opportunities with non-traditional partners, including the Middle East and Africa. "We also need to upskill our workforce so we can move from simply assembling chips to designing them."
New Straits Times
23-06-2025
- Business
- New Straits Times
Hormuz crisis could shake Malaysia's supply chains, inflation stability, experts warn
KUALA LUMPUR: The potential closure of the Strait of Hormuz could disrupt Malaysia's supply chains, fuel inflation and strain small businesses, economists have warned. Universiti Teknologi Mara Malaysian Academy of SME and Entrepreneurship Development coordinator Dr Mohamad Idham Md Razak said a shutdown of the vital shipping lane could cause far-reaching economic shockwaves. "Some 21 million barrels of oil pass through the Strait of Hormuz daily. If that flow is disrupted, vessels will be forced to divert around the Cape of Good Hope, adding 10 to 15 days in shipping time. "These delays will result in higher freight costs and fuel prices, which would directly impact Malaysia's just-in-time production processes, especially in manufacturing," he said. He added that rising import costs would squeeze margins for SMEs and raise inflationary pressures on consumers. While Malaysia may benefit from higher oil prices as a net energy exporter, Idham cautioned that the gains could be offset by rising import costs and the spill-over effects of global trade and supply chain dysfunction. "Malaysia imports roughly 30 per cent of its refined fuel, so petrol and diesel prices may rise by as much as 20 sen per litre. This could push overall core inflation up by one to two percentage points, disproportionately affecting lower-income households," he said. He said downstream sectors, particularly agriculture, logistics, and manufacturing, would face cascading cost increases, driven by higher fuel and transport expenses, he added. Port Klang, a key regional hub, could also see a decline in throughput as global shipping routes are disrupted and regional trade logistics become more volatile. "Malaysia's export base is diverse, but the manufacturing sector makes up about 31 per cent of GDP. "With limited fiscal space, such as the government debt standing at around 64 per cent of GDP, there is little room to provide broad subsidies or wage relief," he said. He warned that SMEs, which generally have less pricing power and thinner margins, are likely to bear the brunt of volatile input costs. "SMEs don't have the capacity to absorb price shocks the way large corporations do. Many are already operating in a tight environment. "A prolonged crisis could see closures or workforce reductions, further straining the economy." Idham added that the economic impact would extend beyond Malaysia, affecting many Asian economies heavily dependent on Middle Eastern energy imports and export-driven manufacturing. "Countries like China, Japan, and South Korea import large volumes of crude oil and liquefied natural gas from the Middle East. "A disruption would drive up their energy costs, widen trade deficits, and trigger inflationary pressure across key sectors," he said. Rising shipping costs and longer delivery times would also weaken Asia's export competitiveness, leading to higher prices for finished goods such as electronics, vehicles and machinery. Meanwhile, Universiti Utara Malaysia School of International Studies senior lecturer Asrar Omar said Asean countries would face both immediate and long-term consequences if the strait was closed. "The strait accounts for about 20 per cent of global oil shipments, much of which is destined for Asian markets including Asean. "A disruption would cause an immediate spike in oil prices, particularly in liquefied petroleum gas (LPG)," he said. Vietnam and Malaysia, he added, would be among the hardest hit due to their reliance on energy for manufacturing and semiconductor industries. "Higher fuel costs will drive up production costs and undermine competitiveness. "Asean nations would have to seek alternative and more expensive energy sources, compounding inflationary pressure," he said. He added that the tourism industry in Thailand could also be affected due to higher transport costs, while delays caused by shipping reroutes may lead to congestion in the Straits of Malacca. "Asean economies rely heavily on exports, which in turn depend on smooth imports. Rising freight rates and delays will increase trade costs, affecting everything from industrial production to consumer goods," Asrar said. He said that prolonged price shocks could lead to economic slowdowns across the region. "In import-dependent Asean countries, sustained inflation will reduce consumer spending and deter business investment. "If the crisis persists, the long-term effects on consumer prices could be severe." With many Asean nations still lagging in energy transition efforts, Asrar said diversifying supply chains would be difficult. "Asean may have to invest more aggressively in renewable energy and explore alternative trade routes. "There also needs to be a shift from a consumption-based to a production-based mindset to ensure long-term energy and economic security," he said.
New Straits Times
24-05-2025
- Business
- New Straits Times
RON95 subsidy to stay, but economists urge caution over long-term impact
KUALA LUMPUR: The government's decision to maintain the subsidised price of RON95 petrol for Malaysians is expected to shield lower- and middle-income households from immediate inflationary pressures. However, economists warn that the long-term implications of blanket subsidies could strain national finances and encourage illicit activities such as fuel smuggling. Universiti Teknologi Mara's Malaysian Academy of SME and Entrepreneurship Development coordinator, Dr Mohamad Idham Md Razak, said the continued use of blanket subsidies distorts resource allocation, weakens incentives for energy efficiency, and diverts funds from essential sectors such as infrastructure and education. He said that while maintaining the current system may serve short-term political interests, it risks worsening budget deficits, potentially forcing future tax hikes or cuts to critical public services. "The decision to keep RON95 petrol prices stable prevents immediate inflationary effects on lower- and middle-income Malaysian households, who are significantly affected by fuel price changes. "By selectively removing subsidies for foreigners while maintaining them for Malaysians, the government could enhance fiscal efficiency through reduced subsidy leakage, potentially saving up to RM8 billion annually. "This targeted subsidy approach supports equity by ensuring that subsidised fuel benefits those most impacted, rather than enabling cross-border arbitrage," he told the New Straits Times today. Idham added that targeted policies help curb wasteful spending and avoid direct financial burdens on domestic consumers, while also reducing inflationary risks. To address enforcement challenges, including smuggling and resale, he proposed mechanisms such as dual pricing or MyKad-based identity verification. "When properly implemented, such a system allows savings to be redirected towards social programmes or infrastructure projects, promoting broad-based economic growth. "This policy should be part of a wider subsidy reform strategy to avoid sudden market disruptions and ensure long-term stability in the energy sector," he said. Echoing his views, Universiti Putra Malaysia Business School economist Dr Ida Md Yasin said the inflation risk remains low, as most goods and services linked to RON95 prices are currently unaffected. However, she pointed to a more pressing concern, the wide gap between Malaysia's subsidised fuel price and global market rates. "The world market price of RON95 is around RM5 per litre, while the domestic retail price stands at RM2.05. This significant price difference encourages smuggling. "People are smuggling petrol out of Malaysia to sell it elsewhere, meaning the subsidy ends up benefiting non-Malaysians instead of Malaysians," she said. Earlier today, Prime Minister Datuk Seri Anwar Ibrahim assured that the government would not raise RON95 petrol prices for Malaysians. He said a proposal to raise the price had previously been presented to the cabinet, but he had rejected the suggestion. During the tabling of Budget 2025 on Oct 18, Anwar announced plans for targeted RON95 subsidies, expected to be implemented by mid-year. He said the measure could save up to RM8 billion annually, noting that 40 per cent of RON95 subsidies are currently enjoyed by foreigners and the ultra-wealthy. The savings, he added, would be channelled towards improving the people's well-being through investments in education, healthcare, and public transport.
