3 Sep 2014
ACCCIM Media Conference on Survey Report on Economic Situation of Malaysia for the 1st Half of Year
ACCCIM Media Conference on Survey Report on Economic Situation of Malaysia for the 1st Half of Year 2014
Speech by Dato’ Lim Kok Cheong, President of ACCCIM
1. First of all, I would like to express my appreciation to all media representatives for your presence this morning.
2. The Bank Negara Malaysia announced last month that the Malaysian economy expanded by 6.4% in the second quarter of 2014. Some economists however have projected that the economic growth of Malaysia in the second half of 2014 will moderate to 5.0 to 5.5%, and projected an overall growth rate of 5.5% for year 2014. The economic growth of Malaysia in the first half is better than other ASEAN countries, however, the continuous rising costs of doing business in Malaysia has become one of the main concerns encountered by businesses, which included the increase in cost of utilities and fuel prices, implementation of minimum wages, increase of raw materials prices, various fees levied by some Government Ministries or Agencies such as the increase in foreign workers work permit processing fee, inspection charges for exportation of processed fishery products and import service charge for fishery products, permit for exportation of timber etc.
3. On 10th July 2014, Bank Negara Malaysia decided to raise the Overnight Policy Rate (OPR) by 0.25%. Within the next few days the major commercial banks revised the basic lending rate (BLR) and announced its BLR increased from 6.60% to 6.85%. This measure indirectly added burden to the cost of doing business, causing inflationary pressure. Higher interest rate has lowered the distributable income of some businesses, particularly the property sector, automotive and consumer goods. How to save costs has become the biggest problem for most SMEs, but the situation getting intensified, in order to survive, businesses would have no choice but to pass on cost increased to consumers.
4. The two recent measures imposed by the Malaysia and Singapore Governments to significantly increase toll charges and Vehicle Entry Permit (VEP) fees have sparked an outcry among the public. Although the increase in the Vehicle Entry Permit (VEP) fee and toll charges will increase Government revenue, reduce vehicular flow and traffic congestion, these drastic increases could deal a big blow to businesses of both countries, especially the transportation industry, tourism, restaurants, hotels, retail business, manufacturing etc. It would also affect the industrial and business development. At the same time, these drastic increases will have a domino effect on the prices of consumer goods, add to the burden of people, and have a definite impact on their consumption ability. The Malaysia and Singapore Governments should consult the business community to solicit relevant views and feedback, understand and consider the difficulties encountered by the business community and the general public, and conduct a comprehensive study on the issues concerned before implementing the policies so as to mitigate the overall impact on various sectors.
5. The ACCCIM support the Government Transformation Programme and the Economic Transformation Programme that vigorously promoted and implemented with the objective to realize our Vision as a developed and high income country. However, due to the escalating cost of doing business, the national economic growth has yet to penetrate to all industries, especially the SMEs. The Malaysia business community is looking forward to the implementation of more business friendly policies, to improve the efficiency and procedure of the Government and enforcement agencies, to stabilize the economy growth of the country and at the same time reduce the costs of doing business.
6. This year marked the 40th anniversary of the establishment of diplomatic relations between Malaysia and China, unfortunately, two sad incidents had happened to Malaysia Airlines. The Malaysia Government has put more efforts to ensure the economic and trade relations between Malaysia and China is not affected, which included the Official Visit by Y.A.B. Prime Minister of Malaysia to China. The ACCCIM has spared no efforts in enhancing bilateral friendship and trade relations between Malaysia and China and actively build more platforms for business collaborations and networking.
7. The economic survey of ACCCIM for the first half of 2014 outlined some Government policies and current issues that affected the development of business sector, such as the concerns on increase of cost of doing business, the Malaysia Airlines’ incidents, have the visit by Y.A.B. Prime Minister of Malaysia to China improve the economic and trade cooperation between Malaysia and China, what should the Malaysian Government do to attract more Chinese investors, such as allow visa-free entry, provide employment pass to solve labour shortage issue, allow more zero-tariff import from China, provide more cheap industry land etc.
8. The ASEAN Economic Committee (AEC) will be realised in 2015, by then it will lead to a single-market and production base, a high competitive region, an equitable economic development region and the region which fully integrated into the global economy. However, our business community do not seems to understand much about AEC, ACCCIM suggests the Government to take more effective actions to increase the awareness of the business community towards the realisation of AEC, the benefits and the impacts which might brought by the neighbour competitors, and to make preparations before the term, not to be left behind, and take immediate measures to seize this economic potential benefits that would brought.
9. This is one of the important issues of the survey. Dr. Leong Kai Hin, the Chairman of Commerce Committee will then brief on the outcome of the survey. ACCCIM commend the Commerce Committee and UTAR for their efforts in preparing this survey report. I also take this opportunity to thank the media for your support and cooperation in giving continued coverage on this survey exercise.
Thank you.
