Latest news with #MohamadIdham
The Sun
14-05-2025
- Business
- The Sun
M'sia's wage policy falling behind economic realities
PETALING JAYA: Malaysia's approach to minimum wage revisions remains largely reactive, despite the rising costs of housing, healthcare and education. The result is a diminished purchasing power that disproportionately affects low- and middle-income households, said Universiti Teknologi Mara Academy of SME and Entrepreneurship Development coordinator Dr Mohamad Idham Md Razak. He stressed that the country's emphasis on capital-intensive growth, coupled with limited investment in research and development, which stands at just 1.4% of the GDP, has slowed progress towards a high-skilled, high-wage economy. 'Government policies have not kept pace with the changing workforce. 'Outdated labour laws, such as the Employment Act 1955, and weak protections for gig workers, who now account for 26% of the labour force, reflect institutional inertia.' Mohamad Idham said although nominal wages have risen from 3% to 4% annually since 2000, real wage growth averaged only 1.1% from 2010 to 2020. This, he said, lags behind the annual productivity improvement rate of 3.5% over the same period. 'Manufacturing productivity saw a 60% increase between 2005 and 2019, while real wages only experienced a 25% growth. 'The current situation demonstrates fundamental unfairness in how profits and capital-focused economic strategies distribute wealth.' Mohamad Idham attributed the wage stagnation to Malaysia's economic structure over the past 40 years, citing dependence on low-skilled industries, slow productivity in non-tradeable sectors and a mismatch between workers' skills and market needs. He also said the 1980s shift to manufacturing, which focused on attracting foreign investment in low-value-added sectors, reinforced a cheap labour model. 'The influx of low-cost migrant workers has driven wages down, made automation less attractive, and treated workers more like commodities. 'With weak unions (only 6% of workers are unionised) and unchanged minimum wage rates, the issue worsens, causing wages to lag behind countries like South Korea and Singapore.' He said low-cost foreign labour, comprising 15% to 20% of the workforce, plays a major role in holding down wages, especially in plantation, construction and manufacturing sectors. 'The preference for migrant workers stems from their lower wage expectations and lesser benefits requirements. 'For example, the palm oil industry depends on foreign workers, which results in wages remaining constant between RM1,500 and RM2,000 per month even as global demand soars, thereby continuing low-value economic practices.' He warned that this stagnation risks locking Malaysia in the middle-income trap and limiting domestic consumption, which accounts for 60% of GDP. 'The outflow of skilled talent is accelerating, with 1.7 million Malaysians now working abroad. Many professionals, especially in Singapore, cite higher wages as the main reason for leaving. 'Low salaries at home reduce the motivation to upskill, which in turn holds back productivity and keeps the GDP per capita stuck at USD12,487 (RM56,191) in 2022, still below high-income levels.' He recommended urgent reforms such as linking wages to productivity, strengthening technical and vocational education and training programmes and promoting automation. He also urged the government to introduce sector-based minimum wages, provide R&D tax incentives and empower unions. 'Without reforms, M'sia risks deepening its middle-income trap and losing more skilled workers to neighbouring economies,' Mohamad Idham added. Former Bank Negara governor Tan Sri Muhammad Ibrahim previously said graduate salaries today should be between RM7,000 and RM8,000 per month if they had kept up with the 5% annual inflation.
The Sun
05-05-2025
- Business
- The Sun
‘Malaysia must rethink long-term role in global economy'
PETALING JAYA: As trade tensions with the United States escalate, Malaysia stands at a crossroads, not just in terms of immediate policy response but to rethink its long-term role in the global economy. The situation has prompted broader questions about Malaysia's economic resilience and its heavy reliance on traditional export markets. Universiti Teknologi Mara Department of Economics and Financial Studies senior lecturer Dr Mohamad Idham Md Razak said Malaysia must respond with a clear and phased strategy that provide immediate relief, midterm adjustments and long-term transformation. He warned that without swift intervention, vital sectors such as electronics, palm oil and rubber could face significant losses, while low-income workers and small businesses risk being left behind. 'In the short term, the government must urgently roll out targeted subsidies to protect affected industries while actively negotiating tariff exemptions for critical goods. 'At the same time, we need to divert exports temporarily to untapped, tariff-free markets to cushion the immediate impact.' Mohamad Idham also called for direct financial support to small and medium enterprises (SMEs), alongside renewed diplomatic efforts to secure fairer trade terms with Washington. Over the next 6 to 12 months, he said Malaysia could reduce its dependence on the US by strengthening trade ties with Asean neighbours, East Asia and the Middle East. 'We need to broaden our export base and introduce tax incentives to encourage research and development, particularly in automation and sustainable production. 'Building resilient regional supply chains will also be key to reducing long-term vulnerability. 'Malaysia must build a more self-sufficient economy by investing in value-added sectors like renewable energy and digital services while also strengthening STEM education, infrastructure and industrial capacity to reduce reliance on external markets,' he added.
The Sun
05-05-2025
- Business
- The Sun
Special Dewan sitting to discuss US tariff fallout
PETALING JAYA: Parliament convenes today for a rare special sitting as Malaysia confronts a critical economic flashpoint – the newly imposed US tariffs on Malaysian exports. The urgent session is expected to be a watershed moment, drawing lawmakers from across the political spectrum into what could be a heated debate over the far-reaching consequences of the tariffs and the government's strategy in response. The atmosphere is tense. Businesses are increasingly anxious, economists are scrambling to assess the fallout, and the public is eager for answers. At the heart of today's session will be high-level ministerial briefings offering the first comprehensive look into the government's internal assessments. Which sectors will bear the brunt of the tariffs? How severe will the economic shockwaves be? Key industries — from electronics and manufacturing to agriculture — are in the spotlight as MPs demand clarity on which products are affected, the scale of the duties and whether recent reports of a temporary suspension hold any weight. This special sitting is not just about identifying the problem — it's about finding solutions and forging a path forward. With jobs at risk and investor confidence wavering, all eyes are on Putrajaya. What levers can the government pull to cushion the blow? Is there room for renewed diplomatic engagement with Washington? What domestic policy recalibrations are needed to help local industries remain competitive? These are the urgent questions dominating the national discourse. Malaysians expect more than vague assurances — they want a concrete, forward-looking plan. Ahead of the sitting, Universiti Teknologi MARA (UiTM) Department of Economics and Financial Studies senior lecturer Dr Mohamad Idham Md Razak flagged several critical blind spots in the current discourse on the tariffs. Chief among them, he noted, is the impact on low-income workers and small businesses — the groups most likely to be hardest hit. 'The conversation so far has largely overlooked the vulnerability of low-wage workers and small enterprises. 'If there are no safeguards, the tariffs could deepen the already widening gap in income inequality. It is crucial that we consider the social consequences of these trade measures.' Mohamad Idham said Malaysia must not sacrifice long-term sustainability for short-term gains in the rush to mitigate the economic damage. 'The environmental costs of shifting towards cheaper, less sustainable production models have barely been discussed. 'We need a strategy that combines social protection for vulnerable workers with incentives for green transitions. If we're not careful, we risk trading long-term economic resilience for short-term ecological harm.' Mohamad Idham's concerns echo those of many Malaysians who will be closely following the proceedings. Businessman Arief Abdullah said today's parliamentary session is no ordinary sitting. 'It marks a critical juncture in the country's economic and political journey — one that demands more than theatrics. It calls for unity, clarity and firm resolve. 'The stakes are high. Malaysia's future in an increasingly volatile global trade landscape hinges on the decisions made today. Partisan squabbles must give way to a cohesive national response. The country needs a unified strategy that restores business confidence and safeguards its economic foundation,' he said, adding that Parliament must rise to meet the moment.
