Latest news with #MohamadIdhamMdRazak
Sinar Daily
26-05-2025
- Business
- Sinar Daily
Malaysia should leverage US-China tariff pause to reposition itself
KUALA LUMPUR - The 90-day tariff pause between the United States (US) and China offers Malaysia a critical opportunity to reposition itself economically, according to economists. After their first round of talks in Switzerland over the weekend since US President Donald Trump initiated tariffs on April 2 on every country, the US and China have struck a deal to reduce reciprocal tariffs by 115 percentage points. Under the deal, the US will lower its tariff on Chinese imports from 145 per cent to 30 per cent and China will reduce its tariff on US goods from 125 per cent to 10 per cent. Dr Mohamad Idham Md Razak, a senior lecturer at Universiti Teknologi MARA's department of economics and financial studies, told Bernama that Malaysia must capitalise on this period of relative stability to diversify its trade portfolio and strengthen its economic resilience. He said key strategies include deepening ASEAN-led partnerships through the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to reduce reliance on US-China trade. "Malaysia should (also) enhance export competitiveness by attracting firms looking to diversify their supply chains, particularly in high-value sectors such as semiconductors and renewable energy, while also advancing domestic reforms to position itself as a regional production hub through improved business operations, digital infrastructure, and workforce development,' he said. He also stressed the importance of monitoring geopolitical risks and preparing for potential disruptions. He said firms need to develop contingency strategies to address possible US-China decoupling scenarios by exploring new export markets and creating supply chain buffers. "A proactive approach will help Malaysia manage trade uncertainties and seize emerging global opportunities,' he said. Commenting on the broader implications of the deal, Idham said the 90-day suspension offers temporary relief to global trade tensions and could revive activity in sectors like electronics, agriculture, and manufacturing. However, he cautioned that the pause alone does not guarantee stability. Although the 90-day period provides an opportunity for dialogue, it fails to secure lasting peace without meaningful concessions, which could lead to a resumption of the trade war while at the same time expanding limitations on technology and investment. "Malaysia should remain vigilant, as the end of the truce could lead to renewed trade tensions, disrupting regional exports and investment flows,' Mohamad Idham said. Meanwhile, Center for Market Education chief executive officer Dr Carmelo Ferlito said Malaysia should respond to the development by actively pursuing new free trade agreements (FTAS) with global partners. "Malaysia should avoid taking sides in the ongoing trade tensions and instead focus on advocating clear, consumer-benefiting free trade policies that foster innovation. "This situation presents an opportunity for Malaysia to push for new FTAS, not just to lower tariffs, but also to tackle non-tariff barriers - such as regulations and quotas - that can hinder trade. He further emphasised that the 90-day pause represents a highly positive signal. "Trump shook the table and now the players are about to sit down for a new round of cards, trying to define new rules. "Trump was not aiming at tariffs per se but at pushing other countries to negotiate with him to reshape global trade,' he said. Lee Hwok Aun, a senior fellow at the ISEAS-Yusof Ishak Institute's Malaysia Studies Programme in Singapore, said the 30 per cent tariff on China remains substantial. "It is unclear whether this reprieve will avert a US recession and wider global contagion,' he said, adding that the truce reflects domestic pressures faced by the US and China. "Countries negotiating trade deals, especially Malaysia and its Southeast Asian neighbours caught in the US-China rivalry, should proceed tactfully and bide their time while awaiting greater clarity on the direction and substance of US-China negotiations,' he said. - BERNAMA
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.
New Straits Times
20-05-2025
- Business
- New Straits Times
Graduates in the wrong jobs: Experts push for urgent reforms
KUALA LUMPUR: The government must intervene to ensure that entry-level graduates are employed in roles that match their qualifications, say experts. Their concerns follow findings by the PNB Research Institute (PNBRI), which revealed that although higher qualifications have consistently commanded better salaries over the past 25 years, the rate of starting salary growth has been more significant for those with lower levels of education. "In some cases, we are seeing degree holders unable to secure suitable employment and being forced to accept roles intended for SPM-level qualifications. "This should not be happening and indicates a clear mismatch in the labour market," said Dr Ida Md Yasin, economist at Universiti Putra Malaysia Business School. She also described it as "disheartening" that entry-level salaries for graduates had not increased substantially compared to those of SPM holders over the last two decades. "We know that many students pursuing higher education must take out loans to fund their studies. "Imagine spending four to five years at university for a bachelor's degree, only to earn a salary barely higher than that of someone with only secondary school qualifications. "It simply does not seem worthwhile, especially when a portion of that salary must go towards repaying student loans," she said. Echoing her concerns, Dr Mohamad Idham Md Razak, coordinator at the Malaysian Academy of SME and Entrepreneurship Development, Universiti Teknologi Mara, said the declining returns on higher education in Malaysia highlighted deep-rooted structural issues within the economy and labour market. He stressed that this trend should not be interpreted as proof that higher education no longer facilitates social mobility. Rather, he said, it underscored a mismatch between the supply of graduates and the availability of high-skilled jobs. "Contributing factors include the expansion of low-value-added job sectors, dependence on foreign labour, and a persistent skills gap between graduates and industry demands. "Higher education remains vital for social mobility, but it must be better aligned with market needs and reinforced by policies that encourage the creation of quality jobs," he told the New Straits Times. Idham also called for greater collaboration between the government, higher education institutions, and employers to ensure investments in higher education remained relevant and impactful. Commenting on the rising salaries and employability of Technical and Vocational Education and Training (TVET) graduates, he said this clearly demonstrated TVET's strong potential as a practical pathway for school leavers — especially amid increasing demand for technical skills across industries. However, he cautioned that for TVET to become a mainstream option, it must be supported by robust infrastructure, recognised certification, and clear career pathways. "Effective policies such as the National TVET Plan 2030, alongside close cooperation with industry, are essential to enhance TVET's appeal and relevance to students and parents. "Moreover, active industry involvement in curriculum development and the provision of competitive wages are critical in dispelling the notion that TVET is a second-class option," he added.
The Star
14-05-2025
- Business
- The Star
Economists: Malaysia should leverage US-China tariff pause to reposition itself
KUALA LUMPUR: The 90-day tariff pause between the United States (US) and China offers Malaysia a critical opportunity to reposition itself economically, according to economists. After their first round of talks in Switzerland over the weekend since US President Donald Trump initiated tariffs on April 2 on every country, the US and China have struck a deal to reduce reciprocal tariffs by 115 percentage points. Under the deal, the US will lower its tariff on Chinese imports from 145 per cent to 30 per cent and China will reduce its tariff on US goods from 125 per cent to 10 per cent. Dr Mohamad Idham Md Razak, a senior lecturer at Universiti Teknologi MARA's department of economics and financial studies, told Bernama that Malaysia must capitalise on this period of relative stability to diversify its trade portfolio and strengthen its economic resilience. He said key strategies include deepening ASEAN-led partnerships through the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to reduce reliance on US-China trade. "Malaysia should (also) enhance export competitiveness by attracting firms looking to diversify their supply chains, particularly in high-value sectors such as semiconductors and renewable energy, while also advancing domestic reforms to position itself as a regional production hub through improved business operations, digital infrastructure, and workforce development,' he said. He also stressed the importance of monitoring geopolitical risks and preparing for potential disruptions. He said firms need to develop contingency strategies to address possible US-China decoupling scenarios by exploring new export markets and creating supply chain buffers. "A proactive approach will help Malaysia manage trade uncertainties and seize emerging global opportunities,' he said. Commenting on the broader implications of the deal, Idham said the 90-day suspension offers temporary relief to global trade tensions and could revive activity in sectors like electronics, agriculture, and manufacturing. However, he cautioned that the pause alone does not guarantee stability. Although the 90-day period provides an opportunity for dialogue, it fails to secure lasting peace without meaningful concessions, which could lead to a resumption of the trade war while at the same time expanding limitations on technology and investment. "Malaysia should remain vigilant, as the end of the truce could lead to renewed trade tensions, disrupting regional exports and investment flows,' Mohamad Idham said. Meanwhile, Center for Market Education chief executive officer Dr Carmelo Ferlito said Malaysia should respond to the development by actively pursuing new free trade agreements (FTAS) with global partners. "Malaysia should avoid taking sides in the ongoing trade tensions and instead focus on advocating clear, consumer-benefiting free trade policies that foster innovation. "This situation presents an opportunity for Malaysia to push for new FTAS, not just to lower tariffs, but also to tackle non-tariff barriers - such as regulations and quotas - that can hinder trade. He further emphasised that the 90-day pause represents a highly positive signal. "Trump shook the table and now the players are about to sit down for a new round of cards, trying to define new rules. "Trump was not aiming at tariffs per se but at pushing other countries to negotiate with him to reshape global trade,' he said. Lee Hwok Aun, a senior fellow at the ISEAS-Yusof Ishak Institute's Malaysia Studies Programme in Singapore, said the 30 per cent tariff on China remains substantial. "It is unclear whether this reprieve will avert a US recession and wider global contagion,' he said, adding that the truce reflects domestic pressures faced by the US and China. "Countries negotiating trade deals, especially Malaysia and its Southeast Asian neighbours caught in the US-China rivalry, should proceed tactfully and bide their time while awaiting greater clarity on the direction and substance of US-China negotiations,' he said. - Bernama
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.
