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Barnama
26-05-2025
- Business
- Barnama
KL Declaration, ASEAN Community Vision 2045 Mark New Chapter For Southeast Asia - ASEAN Sec-Gen
By Nurul Hanis Izmir KUALA LUMPUR, May 26 (Bernama) -- The Kuala Lumpur Declaration and the ASEAN Community Vision 2045 (ACV 2045) signed and adopted by the ASEAN leaders today mark a bold new chapter for the regional bloc as it embraces long-term strategic planning that is vital in dealing with rising global uncertainty, ASEAN Secretary-General Dr Kao Kim Hourn said. He said the Kuala Lumpur Declaration and ACV 2045 collectively represent the first-ever 20-year vision adopted by ASEAN leaders - the ASEAN 2045: Our Shared Future - a significant departure from previous shorter-term frameworks. 'There is a major difference in the sense that the first phase (of the previous vision) was initiated by Malaysia. And this time again, Malaysia has been in the works from the very beginning as the co-chair and until the country has been leading the whole process,' he told Bernama on the sidelines of the 46th ASEAN Summit here. Calling the ACV 2045 'very bold' and 'strategic', Kao also said that the long-term vision was indeed timely as it comes at a time of global disruptions, including political and security dynamics, the aftermath of the COVID-19 pandemic and the escalating climate crisis. He also praised Malaysia's chairmanship this year, describing it as being 'very dynamic and strategic,' hence reflecting the theme of 'Inclusivity and Sustainability'. Backed by four strategic plans, he said ACV 2045 will shape ASEAN's priorities over the next two decades, a step forward in the bloc's commitment to being more transparent, open and inclusive. 'This Kuala Lumpur Declaration, along with the ASEAN Community Vision 2045, is what Malaysia is doing now and a new chapter for ASEAN,' he said. Echoing the sentiment, Senior Fellow at the Singapore Institute of International Affairs, Dr Oh Ei Sun, said ACV 2045 introduces 17 new elements that reflect ASEAN's evolving socio-economic landscape.
New Straits Times
02-05-2025
- Business
- New Straits Times
Cost of living in Malaysia rises moderately despite low nflation
KUALA LUMPUR: Malaysia's cost of living, as indicated by the Consumer Price Index (CPI), is on the rise, influenced by global economic uncertainties and domestic policy challenges. However, inflation remains relatively low. In March 2025, Malaysia's inflation rate eased to 1.4 per cent, slightly down from 1.7 per cent in January and 1.5 per cent in February, according to the Department of Statistics Malaysia (DOSM). The CPI rose to 134.1 points in March, compared to 132.2 points in the same month last year. DOSM reported that this year's rising cost of living is primarily driven by price increases in several categories, including food and beverages, accommodation services, personal care, education, and insurance and financial services. Economists suggest that this trend reflects a delicate balancing act between external economic pressures and Malaysia's efforts to stabilise its domestic market. To address the rising cost of living, Dr. Oh Ei Sun, Senior Fellow at the Singapore Institute of International Affairs, calls for comprehensive structural reforms to ease the financial burden on citizens. He emphasises the necessity of reducing regulatory burdens by reforming tax and subsidy systems, enhancing public services, and simplifying compliance processes. These measures aim to bolster productivity, foster competition, and fortify economic resilience. Dr Oh said that Malaysia's heavy reliance on imports for essential goods, particularly food and energy, makes local prices susceptible to global market fluctuations. He said that this dependence exposes Malaysia to international price volatility, affecting domestic costs. Fluctuations in global fuel prices and a weakened ringgit further exacerbate the cost of imported goods, impacting daily expenses, he told Business Times. Retailers and businesses, facing increased operational costs, often pass these expenses onto consumers, contributing to the overall rise in living costs, he said. Dr Oh warns that as worldwide prices increase due to geopolitical concerns, local prices are likely to follow suit. He said that by implementing structural reforms, Malaysia can work towards achieving high-income status and improving the standard of living for its citizens. Bank Negara Malaysia (BNM) has emphasised the importance of continuing structural reforms to achieve high-income status, despite short-term risks such as potential global trade wars and rising geopolitical tensions. The central bank maintains its economic growth forecast for 2025 between 4.5 per cent and 5.5 per cent. It anticipates sustained strong economic activity driven by domestic demand and manageable inflation despite external uncertainties. The World Bank's Economic Outlook for Malaysia indicates a moderation in economic growth to 3.9 per cent in 2025, with headline inflation expected to increase to 2.6 per cent. This reflects several domestic policy reforms amid moderating cost conditions, mainly due to lower commodity prices . Challenges faced by households According to Dr Oh, food expenses alone can constitute up to 20 per cent of household income, rendering price increases in this sector especially burdensome. He noted that inflation in Malaysia tends to be gradual but persistent, often outpacing wage growth and leading to affordability challenges for many households. "So when worldwide prices of these rise, local prices rise as well," he said. Government measures, such as subsidies, have been implemented to mitigate these challenges. However, fiscal constraints have led to a shift towards targeted subsidies, aiming to reduce expenditure and minimise leakages. Despite these efforts, wage levels have not kept pace with the rising cost of living, with many workers experiencing stagnation despite increased expenses. Additionally, he said that speculative activities in the property market and the phenomenon of price stickiness—where prices remain elevated even after initial hikes—exacerbate the situation. "Evidently the levels of wage rising are not enough. The cost of living rose manyfold over the past decades, but wages are still stagnating at similar levels to the end of last century," Dr Oh said. "Inflation tends to creep in Malaysia. Although it doesn't spike suddenly, people feel prices of essential goods and services rise steadily, much more than their incomes rise. So it's a question of affordability." Dr Oh said the impact is particularly severe on lower-income households, which allocate a larger share of their income to necessities, leaving little room for savings. He emphasised that the levels of wage increases are not sufficient, as the cost of living has risen significantly over past decades, while wages remain relatively stagnant. Dr Oh pointed out that sectors like food and accommodation are experiencing above-average price increases, intensifying the financial strain on these communities. To cope with rising living costs, he advised individuals to reduce non-essential spending, though this approach can diminish quality of life. Economist: Malaysia's inflation rate lowest among Asean nations Putra Business School economic analyst Associate Prof. Dr. Ahmed Razman Abdul Latiff said Malaysia's inflation rate is considered among the lowest compared to other Asean nations. He attributed the rising cost of living to a combination of external factors, such as global economic uncertainties, and internal factors, including domestic policy challenges. External factors like climate change have disrupted agricultural yields, leading to increased food prices, while geopolitical tensions have contributed to supply chain disruptions, further elevating costs. At home, a weaker ringgit has made imports more expensive, affecting the prices of essential goods and services. Dr Razman also observed that domestic factors, including increased material costs and heightened consumer spending, have put upward pressure on prices. He anticipates that the cost of living in Malaysia will continue to rise annually. Dr Razman emphasised the necessity of long-term solutions, such as monetary system reforms and initiatives to boost income levels, to address the underlying issues contributing to the increasing cost of living. The government's decision to raise the minimum wage from RM1,500 to RM1,700 in February 2025 aims to improve income levels. However, Dr Razman pointed out that many workers still lack the bargaining power to negotiate better wages, and the increase may not be sufficient to offset the rising cost of living. He highlighted that wages have been increasing gradually on a yearly basis, but such increments among low-level wages are not enough to cover the rising cost of living. "The rising cost of living not only caused the lower-income households to have very minimal disposable income but also caused some to resort to taking debts to survive," he said. Dr Razman noted that the increase in food prices plays a significant role in the overall cost of living in Malaysia, as food costs constitute a substantial portion of the inflation rate calculation. In response, the government has implemented price controls on basic goods and services, such as rice, cooking oil, and electricity tariffs, to keep inflation in check. Efforts are also underway to rationalise subsidies, focusing on targeted assistance for lower-income groups through programs like Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA). Riding the wave Samuel Tan, chief executive officer of Olive Tree Property Consultants, said that imported inflation is a key factor driving the rising cost of living in Malaysia, particularly when the ringgit weakens against the currencies of exporting countries. This causes the prices of imported goods to rise. "The weakening of the ringgit against foreign currencies contributes to imported inflation, making imported goods more expensive. This has a significant impact on the cost of living in Malaysia, especially for items that rely on foreign sourcing," he explained. Tan pointed out that sectors such as housing, food, and transportation have experienced the most significant price increases. Additionally, occasional hikes in utility tariffs further add to the financial strain. Urban areas, such as Kuala Lumpur, Johor Bahru, and Penang, have felt these price increases more sharply than rural areas, he added. "As the prices of individual components rise, the ripple effect results in higher costs across various sectors. This interconnectedness means that price increases in one area often lead to higher prices in others," Tan said. Tan said that as the prices of individual components rise, the ripple effect results in higher costs across various sectors. This interconnection means that increases in one area often lead to price hikes in others. "The government is working to reduce the cost of doing business by eliminating unnecessary costs and taxes, which ultimately burden consumers. There should be a strong focus on sourcing products and services locally to mitigate the impact of imported inflation. "For vulnerable groups, such as the poor and marginalised, the government provides cash assistance or vouchers to help offset rising expenses," he said. Tan noted that wages have not kept up with the increasing cost of living. "Wage growth typically follows improvements in productivity and profitability, but not all companies are adjusting wages to align with rising living costs. Some businesses offer Cost of Living Allowances (COLA) for employees transferred to areas with higher living expenses, but this is not consistent across the board. "Lower-income households, particularly those in the B40 (Bottom 40 per cent) income group, are the hardest hit. This group, with households earning up to RM5,249 per month, benefits from various government subsidies and assistance programmes. "However, the M40 (Middle 40 per cent) group, which earns between RM5,250 and RM11,819 per month, faces a particular challenge, as they receive fewer subsidies and their income often falls short of meeting rising costs. Greater support for this segment is needed," he said. He pointed out that as of 2024, Malaysia has a relatively lower cost of living compared to many other Asean countries. While Malaysia provides a good balance of affordability and quality of life, regional differences in costs—particularly for housing, transportation, food, and healthcare—should be considered when comparing various locations, he said. In terms of steps to be taken to mitigate the effects of rising living costs in Malaysia, Tan said, "Financial literacy should be taught from an early age, ideally integrated into school curricula, to help individuals plan their finances effectively. As people grow older, they can learn to spend wisely and pursue financial independence by diversifying income sources through side businesses, investments, and savings. Building a savings habit is essential for managing unexpected events and ensuring financial stability." Tan added that young Malaysians face challenges in raising the initial deposit for homes due to escalating house prices. While government schemes exist to help bridge the gap, the rising cost of homes is still a barrier for many. Tan said state governments should prioritise the development of affordable housing options, and financing should be made more accessible for qualified individuals. Renting may be a more flexible and realistic option for many until they can afford homeownership, he said.
