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New Straits Times
4 days ago
- Business
- New Straits Times
US-China renewed dialogue seen lifting Malaysia's trade outlook
KUALA LUMPUR: Renewed trade talks between the United States and China are expected to boost investor confidence and strengthen Malaysia's trade momentum, an economist said. Putra Business School economist Professor Dr Ahmed Razman Abdul Latiff said any move to reduce tariffs between the two economic giants could steady the sails for Malaysia by boosting confidence and trade visibility. "If the US and China agree to resume talks and reach a deal to reduce tariffs on each other, Malaysia's trade environment and investor sentiment will become less volatile and uncertain," he told Business Times. "This would boost investor confidence and encourage continued investment in Malaysia," Razman added, noting that while tensions persist, Malaysia is taking steps to shield its economy. Razman also expects Malaysia's export markets and supply chains to remain competitive, although growth may moderate slightly. This, he said, is supported by ongoing efforts to diversify export destinations, grow the country's trading partnerships and enhance intra-Asean trade. Should US-China negotiations break down again, he said the impact on Malaysia would likely remain limited. "There will be some negative impact but it will be minimum as majority of Malaysia's products such as semiconductor will not be subjected to higher tariffs by the US," he said. Trump and Xi held a 90-minute phone conversation on Thursday, marking their first direct dialogue since Trump resumed office. The call, widely viewed as a positive step towards easing the prolonged trade tensions between the world's two largest economies, laid the groundwork for renewed bilateral cooperation and the resumption of high-level trade negotiations. Both leaders agreed to restart trade talks, with senior US officials, including Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, expected to meet their Chinese counterparts. The timing and venue for these negotiations have yet to be finalised but are anticipated to be announced in the coming weeks. Although the call sparked market optimism, US stocks closed lower as a sharp decline in Tesla shares outweighed the positive momentum from progress in US-China tariff negotiations. Tesla shares plunged over 14 per cent in heavy trading as the escalating public feud between Trump and businessman Elon Musk rattled investors, wiping out about US$150 billion in market value. Razman downplayed concerns over the spat saying, "The impact on Malaysia will be minimal, as the fallout primarily affects the SpaceX program and Tesla production."
The Star
24-05-2025
- Business
- The Star
Inflation also bites into food prices
PETALING JAYA: As we continue to dig into our favourite food and essentials, there is a looming essence – inflation. Inflation is defined as the increase in the prices of goods and services over time, says the country's chief statistician, Datuk Seri Mohd Uzir Mahidin. 'It is commonly measured by the consumer price index (CPI). The CPI measures the percentage change over time in the cost of purchasing a constant 'basket' of goods and services, which represents the average pattern of purchases made by a particular population group in a specified period,' he said. 'The Food and Beverage group represents the largest component of household spending in Malaysia with a contribution of 29.8% of total CPI weight. 'In March 2025, inflation for this group increased to 2.5%, the same rate as recorded in February 2025. In 2024, this group recorded a slower increase to 2% in 2024 as compared to 4.8% in 2023,' he added. At the end of April, the Statistics Department's Analysis of Annual Consumer Price Index 2024 report highlighted a gap between real-world food prices and the official measure of inflation long felt by Malaysians. The CPI, which tracks the average price changes for goods and services, climbed from 103.2 points in 2011 to 132.8 points in 2024, with staple food items seeing sharper rises. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said food inflation is definitely high as the prices of several food items have already been growing above the national inflation rate over the past few years. 'From 2010 to 2024, Malaysia's inflation rate has been growing at a rate of 2% per annum based on the Compounded Annual Growth Rate. 'However, food which accounted for 29% of CPI grew by 3.2% per annum during the same period,' he said. Providing a breakdown, he said meat grew by 2.9%; fish and seafood (+3.6%): milk, cheese and eggs (+2.7%); fruits (+2.8%); vegetables (+3.2%) and sugar, jam, honey, chocolates and confectionery (+2.7%). Putra Business School director of MBA programmes Prof Dr Ahmed Razman Abdul Latiff said the CPI reflects the prices of raw food such as chicken, meat and eggs which are subject to price control mechanisms, which in turn reflect a lower inflation rate. 'Therefore, this makes eating out such as buying nasi lemak or even getting roti canai more expensive than buying food to cook at home,' he said when contacted. When asked about the main drivers that caused prices of goods such as fish, vegetables and dairy products to increase, Prof Ahmed Razman said there are several factors such as climate change, higher dependency on imported products, weaker ringgit and disruption to the supply chain logistics. He also highlighted that the government had already implemented a price control mechanism on a majority of essential food items. 'The rationalisation of subsidies will release more funds to help the affected groups in ensuring they will have access to affordable food and improve their quality of life,' he added. Among the measures that the government has taken is gradually reducing subsidies to promote market-driven pricing such as the subsidy on eggs. The subsidy on eggs was reduced from 10sen to 5sen per unit starting May 1, with plans to fully remove it by Aug 1. Meanwhile, research fellow at the Institute of Malaysian and International Studies, Universiti Kebangsaan Malaysia, Dr Muhammed Abdul Khalid emphasised the need to compare the rising cost of goods to the current wages. 'It should be based on purchasing power and not expenditure alone,' he said when asked about Malaysia being the South-East Asian country with the highest grocery bill and food price inflation.
Free Malaysia Today
23-05-2025
- Business
- Free Malaysia Today
Targeted subsidies can strengthen nation's finances
Economists believe delaying proactive measures such as targeted subsidies could be detrimental in the long run, especially in increasing national revenue. PETALING JAYA : Economists are urging the government to continue strengthening the country's fiscal position to ensure sustainable finances for ongoing aid programmes and to prepare for the impact of global trade tensions. Speaking to FMT, Ahmed Razman Latiff of the Putra Business School warned that delaying proactive measures such as targeted subsidies could be detrimental in the long run, especially in terms of increasing national revenue. He said implementing targeted subsidies for RON95 petrol could save the government at least RM8 billion annually while also curbing subsidy leakage to groups such as foreigners and the wealthy. 'The government has already assured the public that the vast majority of users will still benefit from subsidies once targeted subsidies are implemented. Ahmed Razman Abdul Latiff. 'Although 15% will no longer receive subsidies, the savings could amount to RM8 billion or more,' he said. 'These funds can then be channelled for more beneficial fiscal management of vulnerable groups, including increased aid for the Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) programmes.' Ahmed also linked the need for proactive fiscal steps to current geopolitical tensions, particularly the trade war between the US and China, suggesting that any savings could help support those affected by the situation. Previously, the government decided to shift from blanket subsidies to targeted ones to manage expenditures more prudently and strengthen the nation's finances. In June last year, targeted diesel subsidies were introduced in Peninsular Malaysia, which finance minister II Amir Hamzah Azizan said could save between RM7.2 billion and RM7.5 billion — a figure larger than the RM4 billion initially projected. When announcing the tabling of the 2025 budget last year, Prime Minister Anwar Ibrahim, who is also the finance minister, said the government planned to implement targeted RON95 petrol subsidies by the middle of this year. He said 85% of Malaysians would not be affected by this move. Reducing budget deficit with subsidy reforms Aimi Zulhazmi Abdul Rashid. Aimi Zulhazmi Rashid, from Universiti Kuala Lumpur, said RON95 rationalisation needs to be implemented immediately as fuel subsidies represent a large part of the total operating expenditure. He warned that delaying targeted subsidies could jeopardise the government's goal of reducing the budget deficit to 3.5% by 2027, thereby impacting long-term financial resources. Last year, the budget deficit was 4.1%. Aimi acknowledged that while the move could negatively affect domestic economic growth for a year or two, it would yield long-term benefits. 'Government finances can be restructured in the short term for long-term prosperity for both the nation and the people. 'It's a case of 'short-term pain for long-term gain',' he said, adding that inflation is expected to rise for goods and services during the early phase of the subsidy restructuring. Aimi also suggested that the government announce the implementation mechanism early, giving more time for those affected to prepare in advance. 'People are eagerly awaiting details on how RON95 will be implemented — whether it will involve using MyKad and how the enforcement will be carried out at petrol stations,' he said. 'This is crucial as it directly impacts their daily living expenses.'
The Sun
22-05-2025
- Business
- The Sun
ASEAN urged to unite on US tariff response
KUALA LUMPUR: The ASEAN bloc should adopt a unified stance when negotiating retaliatory tariffs imposed by the United States (US) to ensure equitable benefits for all member states, said Putra Business School (PBS) MBA Programme Director Associate Professor Dr Ahmed Razman Abdul Latiff. He said Malaysia should take the lead in persuading fellow ASEAN nations to speak with one voice in negotiations over the tariffs introduced during the administration of US President Donald Trump. 'Individually, ASEAN countries lack the economic clout to counter US trade measures, but a united front would represent a formidable regional force,' he said during a special broadcast on the 46th ASEAN Summit aired on Bernama TV on Wednesday. Ahmed Razman said ASEAN needs a consensus-based strategy. 'Imagine a region aiming to strengthen ties with China, but if each country goes it alone, we are simply playing by the US's rules. 'There is a saying, 'united we stand, divided we fall' – and now is the time to make that real. This is something Malaysia, as ASEAN Chair, must fully embrace,' he added. Ahmed Razman also stressed that boosting intra-ASEAN trade must begin with increasing domestic demand across the region, home to about 700 million people. 'Demand stems from consumers' purchasing power. If people cannot afford goods, or demand is weak, trade cannot grow,' he said. Malaysia, as Chair and host of ASEAN 2025, will convene the 46th ASEAN Summit and Related Summits at the Kuala Lumpur Convention Centre from May 26. Two high-level meetings are also scheduled alongside the summit, the 2nd ASEAN-Gulf Cooperation Council (GCC) Summit and the ASEAN-GCC-China Summit, both seen as key platforms for strengthening regional and inter-regional cooperation.
The Sun
22-05-2025
- Business
- The Sun
ASEAN to unite on US tariff response, says economist
KUALA LUMPUR: The ASEAN bloc should adopt a unified stance when negotiating retaliatory tariffs imposed by the United States (US) to ensure equitable benefits for all member states, said Putra Business School (PBS) MBA Programme Director Associate Professor Dr Ahmed Razman Abdul Latiff. He said Malaysia should take the lead in persuading fellow ASEAN nations to speak with one voice in negotiations over the tariffs introduced during the administration of US President Donald Trump. 'Individually, ASEAN countries lack the economic clout to counter US trade measures, but a united front would represent a formidable regional force,' he said during a special broadcast on the 46th ASEAN Summit aired on Bernama TV on Wednesday. Ahmed Razman said ASEAN needs a consensus-based strategy. 'Imagine a region aiming to strengthen ties with China, but if each country goes it alone, we are simply playing by the US's rules. 'There is a saying, 'united we stand, divided we fall' – and now is the time to make that real. This is something Malaysia, as ASEAN Chair, must fully embrace,' he added. Ahmed Razman also stressed that boosting intra-ASEAN trade must begin with increasing domestic demand across the region, home to about 700 million people. 'Demand stems from consumers' purchasing power. If people cannot afford goods, or demand is weak, trade cannot grow,' he said. Malaysia, as Chair and host of ASEAN 2025, will convene the 46th ASEAN Summit and Related Summits at the Kuala Lumpur Convention Centre from May 26. Two high-level meetings are also scheduled alongside the summit, the 2nd ASEAN-Gulf Cooperation Council (GCC) Summit and the ASEAN-GCC-China Summit, both seen as key platforms for strengthening regional and inter-regional cooperation.
