The Federation of Malaysian Consumers Associations (Fomca) was concerned that the record growth has not translated into many tangible benefits for the people.
The SME Association of Malaysia is equally pessimistic. It expressed doubt that small and medium-sized enterprises would enjoy much growth in 2023.
Bank Negara Malaysia (BNM) announced earlier today that Malaysia’s GDP had expanded 8.7% in 2022, the highest in 22 years.
The economy also saw a 7% growth in the last quarter of the year, boosted by a recovery in domestic consumption and resilient sales in the electrical and electronics sector.
Fomca secretary-general Paul Selva Raj said that while the macro-economic indicators showed the country was doing well, it did not mean that the people at the grassroots would experience a better quality of life.
“As far as the general economy is concerned, these figures are good, but our interest is in the impact it will have on the ordinary people,” he told FMT Business.
He pointed out that it was no longer just the B40 group who were struggling to make ends meet. “Even the middle-income earners, those in the M40 category, are experiencing the same problem,” he said.
“Growth must translate into a better quality of life. What does it mean to an ordinary person when we have (an 8.7%) growth?” he asked.
Selva Raj said the government must look for ways to mitigate the impact that the rising cost of living has on the people, particularly those in the lower-income group who have already taken out loans.
SME Association of Malaysia secretary-general Chin Chee Seong said the 7% growth in Q4 2022 was “just a spike of good business flow”.
“We were just released from the full MCO (movement control order) and China was just starting to lift its Covid-19 restrictions,” he told FMT Business.
Chin said he does not expect the SME sector to continue to enjoy the same level of growth in 2023. “It could be just 4% to 5%,” he said.
He attributed his less optimistic forecast to two factors.
“Firstly, higher electricity bills will hinder growth for the SMEs. For many companies, the bill has risen up to five-fold in January,” he said.
Secondly, he said, the cost of living has also risen and so has interest rates. “As a result, people will not spend so much,” he said.
However, he is less pessimistic about the impact of a global recession on SMEs. “About 40% to 60% of SMEs in Malaysia are mainly in the service industry, which is still essential, no matter what,” Chin said.
“Even if there is a cash flow problem, the demand will still be there,” he added.
Unlike Fomca and the SMEs, the Malaysian International Chamber of Commerce and Industry (MICCI) has chosen to take a positive view.
Its executive director, Shaun Cheah, agreed that Malaysia is already experiencing growth at that level.
“There is certainly more optimism and confidence in the domestic market. With political and economic stability, local businessmen are more confident about spending money to expand their businesses by, for instance, building factories,” he told FMT Business.
“The high rate of growth is also a good sign. It means that post-pandemic recovery will remain robust and sustainable,” he added.
However, Cheah said, some challenges remain. He cited supply chain disruptions due to external trade wars and attempts by some countries to apply non-trade barriers to cushion their economy as some of those challenges.
“But given the (high) GDP growth figure, I believe the impact of a global recession on Malaysia will be mitigated,” he said.
He attributed his optimism to China’s move to reopen its economy. “The arrival of Chinese tourists and businesses will be a boost for our economy. They will be buying Malaysian products and investing in Malaysia,” he added.