MALAYSIANS still struggle to live normal lives even though the country registered a relatively strong economic performance last year, economist Muhammed Abdul Khalid said.  

“Even though the economy (growth) rose last year, it does not mean that people’s lives are good.  

“If we look at the current unemployment rate, it is still high compared to pre-Covid-19. (As a result), per capita income is also still low.  

“So, even though the economy is bouncing positively, we have not yet recovered,” Muhammed told The Malaysian Insight.  

Muhammed, who served as economic adviser to former prime minister Dr Mahathir Mohamad, also predicted the economy would slow down this year.  

“It will not be a recession, or something extremely bad, but growth will slow down.  

“Why? One of the reasons is because there are no more Employees’ Provident Fund (EPF) withdrawals. This year there is nothing to support economic growth,” he said. 

Muhammad added that the unresolved Russia-Ukraine conflict would negatively affect the economy.  

“This has an impact on the price of commodities such as crude oil, for example. The price of crude oil rises as well as the price of gas. 

“So, the economy will slow down a bit this year. Not only in Malaysia, but all over the world, especially in developed countries,” he said. 

The Malaysian economy, as measured by GDP, grew by 14.2% year-on-year in the third quarter of 2022 on the back of normalising economic activity, but in the fourth quarter, it grew by only 7%. 

This brought 2022’s full year GDP growth to 8.7%. 

Muhammed said the moderation in GDP was due to waning base effects and support from stimulus measures.   

No to EPF special withdrawals 

He said EPF withdrawals had contributed to the country’s growth. 

“Our economy grew last year because we did something other countries didn’t do. We allowed EPF withdrawals. 

“Why didn’t other countries do it? Because it is an irresponsible act,” he said. 

A total of RM145 billion was withdrawn from the EPF by 8.1 million members during the Covid-19 pandemic.

The figure consisted of RM20.8 billion by 5.3 million members under the i-Lestari programme, RM58.7 billion by 6.6 million members under i-Sinar, RM21.4 billion by 5.2 million members under i-Citra and RM44.6 billion by 6.6 million members during an EPF special withdrawal programme last year. 

“This helped economic growth. Good for last year but difficult for the future because the demand to withdraw EPF comes desperate people. But the way to help is wrong. The government says use your own money, don’t ask the government,” he said.  

According to EPF data, 51.5% or a total of 6.67 million of its members under the age of 55 had savings below RM10,000 as of last year.   

The number increased by 9.7% or 591,000 compared to the same period in the preceding year. 

EPF said those who had withdrawn savings during the pandemic were largely made up of Bumiputera at 5.1 million or 76%. 

Relieving people’s burdens

With economic growth not looking so bright, Muhammed said the already curbed consumer spending power would reduce further.  

He said the government needed to play a vital role in helping Malaysians. 

“The government should try its best to help. We have money. Money is not the problem. 

The country has money, but it helps people who don’t require assistance, Muhammed said.

“For example, last year we spent approximately RM80 billion on fuel, electricity, and cash subsidies.  

“If we just take the fuel subsidy, which is around RM50 billion, about half of it goes to the rich group,” he said. 

Muhammed said the government and its ministers should restrain expenditure and pay their own bills to know how poor Malaysians feel. 

“The ministers should pay for their own fuel; pay their own tolls. Only then will they know the hardships of the people whereas now, toll, fuel and almost everything is free,” he said. 

Prime Minister Anwar Ibrahim will be re-tabling the revised Budget 2023 later today. – February 24, 2023.