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Malaysian Reserve
3 days ago
- Business
- Malaysian Reserve
Interest rate cut needs institutional follow through to be adequate
The OPR cut is important, but banks and govt machineries at the federal, state and local level need to make a paradigm shift to promote expansionary sentiments LAST week, Bank Negara Malaysia (BNM) duly delivered what was expected from the central bank, lowering the banking system's interest rate to promote spending and investment — in theory, at least. The benchmark Overnight Policy Rate (OPR) was cut down for the first time since July 2020, by 25 basis points (bps) to 1.75%, heralding an incoming economic slowdown and trade headwinds. With the global economic growth expected to moderate in the second half of the year (2H25) against the backdrop of trade tensions and geopolitical risk, Malaysia cannot afford to allow domestic demand to be weighed down by external factors. The Malaysian economic growth is already projected to slow down to around 4% this year, from 5.5% in 2024 as US President Donald Trump's tariff tantrum continues, dampening export momentum. Nonetheless, economists are confident that domestic demand, driven by labour market improvements and tourism recovery, will remain resilient. Upward sentiments in the labour market are underlined by the unemployment rate holding steady at a decade-low of 3% in May 2025, supported by the stable growth pace of the labour force (0.2% month-to-month) and decline in loss of employment (-14%). The tourism industry, in the meantime, is estimated to record up to 7.8% growth, or 26.9 million tourist arrivals this year, marking a full recovery to pre-Covid-19 levels in 2019. The World Travel & Tourism Council projects that the tourism and travel industry will contribute 11.3% to the national GDP, or RM332 billion, in 2025, significantly higher than last year's RM218 billion. However, economists have cautioned that policy interventions by the central bank would be useless if the banking system and the whole government machinery — either at federal, state or local govt level — fail to shift-up and follow through. The lowering of OPR will only affect consumers' pockets positively if banks decide to channel the savings to real loan rates. An economist also cautioned that despite OPR being cut down to 2.75% the real interest rate stood at 1.55%, which is still high by historical standards. The long-term average real interest rate in Malaysia is 0.88%, which means borrowers are still paying an expensive cost for loans in real terms, he argued. Monetary policy needs to be accommodative, and business policy needs to be entrepreneur and people-friendly for consumer confidence to flourish and spending to grow. Unbeknownst to the public, local governments are especially influential in determining spending patterns among their constituents, as they have wide-ranging, self-interpreted local laws at their disposal, which, in some occasions, are ridiculously baffling and beyond common sense. Take, for instance, one particular state city where its enforcement division is making restrictive interpretations of the law governing food kiosks, which, in effect, sabotage genuine entrepreneurs and discourage customers from frequenting the joint. This kiosk, selling toasts and simple breakfast delicacies at a local lake park, was a hit and went viral even before the word 'viral' was invented. It was, however, recently slapped with a weird ruling by the local authority, banning it from placing tables and chairs for its customers, even though the area in front of the kiosk is vacant and clearly designed to accommodate dining chairs and tables. Weird, to say the least. But frankly speaking, it clearly looks like spiteful sabotage by the very people who are supposed to promote and support entrepreneurship. Now, with the aligning of powers between the state and federal, the government might want to consider covering these local councils as part of the economic support system. It is developmental economy on a longer horizon, which should be a priority for the nation. Asuki Abas is the editor of The Malaysian Reserve, and a former entrepreneur disillusioned with bureaucracy. This article first appeared in The Malaysian Reserve weekly print edition
Daily Express
22-06-2025
- Daily Express
RM332,440 Tawau smuggled goods seizure
Published on: Sunday, June 22, 2025 Published on: Sun, Jun 22, 2025 By: Lagatha Toyos Text Size: Enforcement officers inspecting and seizing controlled goods during Ops Tiris in Tawau. TAWAU: Three locals suspected of attempting to misappropriate controlled goods were arrested during Ops Tiris raids at two separate locations with total seizures valued at RM332,440. Eastern Sabah Security Command (Esscom) Commander, DCP Datuk Victor Sanjos, said the suspects were aged between 31 and 37. He said the operation was conducted by Esscom's Security Division in strategic collaboration with the Ministry of Domestic Trade and Cost of Living (KPDN) and the Royal Malaysian Customs Department, aimed at combating cross-border criminal activities. In the first operation, three individuals were detained along with a large quantity of diesel stored in a modified four-wheel-drive vehicle equipped with a special tank. The vehicle also carried several barrels of diesel stored around a petrol station area along Jalan Apas. 'The raiding team also seized mobile phones, receipts and two four-wheel-drive vehicles believed used in the illegal activity,' he said. Advertisement The suspects were handed over to KPDN's Enforcement Division for investigation under the Control of Supplies Act 1961. Victor said in a second operation near the Batu 3 Jetty, Jalan Apas, the enforcement team detected a suspicious boat entering Malaysian waters from the Indonesian maritime border. However, the boat's skipper and several passengers jumped into the sea and fled after realising the presence of authorities. Upon inspection, authorities found a local woman passenger along with cargo, and it was determined that the boat was used for cross-border smuggling. The woman failed to provide any Customs declaration documents for the items onboard. 'The authorities seized the boat with its outboard engine, several food items and a suspicious lorry parked near the jetty,' he said. Further investigation of the woman is being carried out by the Royal Malaysian Customs Department under the Customs Act 1967. Victor said the aim of the operation was to curb the smuggling of controlled, subsidised, and untaxed goods, as well as to prevent the entry of illegal immigrants. He affirmed Esscom's commitment to fighting cross-border crime, especially in the Eastern Sabah Security Zone (ESSZone), in support of national development initiatives and the strengthening of the community's socio-economic wellbeing, grounded in compassion, security, confidence, and sustainability in line with the aspirations of the Malaysia Madani agenda. He also urged the public to channel any information related to security incidents in the ESSZone to the Esscom Operations Centre via 089-863181 or WhatsApp at 011-63311072. * Follow us on our official WhatsApp channel and Telegram for breaking news alerts and key updates! * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available. Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia
