Govt needs to relook at business challenges to tackle inflation, says an economist

KUALA LUMPUR - The government needs to relook at the challenges faced by businesses in their operation and find ways to help them in order to tackle the rising cost that caused the higher inflation, an economist said.

AmBank Group chief economist and Economic Action Council secretary Dr Anthony Dass said there are two types of inflation, one came from the demand side and the other from the supply.

He said Bank Negara Malaysia’s (BNM) move to increase the Overnight Policy Rate (OPR) would reduce the household spending and suppress the demand side as more people would want to keep their money in the bank.

The increase in OPR would also give a positive booster to the ringgit and consequently, drop import costs and reduce the selling price, he said during a webinar on Malaysia’s market outlook for the second half of 2022 here today.

However, he said to ensure the effectiveness of tackling inflation for Malaysia, there is a need to look at the source of the rising inflation which is not much due to consumer spending but more from the rising costs which had prompted businesses to transfer pricing.

"This is where again, we have to go back and relook at what the businesses are doing and what are the challenges and I always said that Putrajaya cannot act like they know everything on how to do business.

"They are a platform and a conduit, so let the businessman do the business. Listen to them so that you can set the right policies,” he said.

He said one of the examples is stopping the foreign workers’ policy which had contributed to the rising cost.

"So, the whole thing on the supply side is a huge structural issue. Malaysia’s policies are more reactive and always moving in that direction. It is a big challenge, but we need to put a balance to it,” he added. - BERNAMA