Tag:

Economy

Malaysia looks to India to superboost its socio-economy

by Adrian David 14 December 2023

written by Adrian David

PETALING JAYA, 14 DEC – Malaysia is strongly looking towards the imminent number one economy in the world – India – to shore up its own socio-economy.

And Malaysia’s equally emphatic bilateral trade with China is also expected to boost the country’s economy in the coming years.

The ever-increasing combined India-China bilateral trades – two of the largest populous economic markets in the world – is destined to give Malaysian Prime Minister Datuk Seri Anwar Ibrahim a strong footing to fortify the sagging ringgit.

Already, Malaysia’s is India’s largest trade partner, while India is Malaysia’s third largest.

At the two-day ‘India-Asean Startup Summit 2023’ (IASS) at the Sunway Pyramid Convention Centre, Datuk Arthur Joseph Kurup revealed that total trade between Malaysia and India for the first nine months this year accounted for RM56.51 billion (as compared with a total of US$20 billion in 2022-2023) – fostering a global environment that nurtured the entrepreneurial spirit.

Kurup was the former Science, Technology and Innovation Deputy Minister who was appointed as the new Agriculture and Food Security Deputy Minister, shortly after his keynote address, in Anwar’s ministerial cabinet shakeup.

“It is a testament to our shared belief in the power of ideas, the strength of innovation and the potential of startups to accelerate the impact of economic growth.

“Asean’s startup ecosystem has experienced accelerated growth to become a global focal point, the last decade.

“Asean’s technological startups were valued at US$340 billion in 2020 and is expected to prosper to an impressive US$1 trillion by 2025,” Kurup said, adding that the Science, Technology and Innovation Ministry had launched the ‘Startup Ecosystem Roadmap (SUPER) 2021-2030’ to enhance and transform Malaysia into a global top-20 country.

Kurup stressed the IASS would serve as a catalyst for collaboration and cooperation between Malaysia and India, as startups could leverage the potential of Malaysia as a springboard to expand into the Asean region and beyond.

“The startups are on par with the gross domestic product of a G7 economy with the amount of funding surpassed US$600 billion in 2021,” Kurup said.

“Thus, the IASS symbolizes our collective commitment of both Malaysia and India to fostering a global environment that nurtures these entrepreneurial spirits.

“We remain dedicated to fostering collaboration, innovation, and entrepreneurship within the startup ecosystem and look forward to collaborating with India and all Asean member states to create a vibrant regional ecosystem that propels our economies to new heights of success,” said Kurup.

India’s External Affairs vice-minister P. Kumaran revealed that trade between Malaysia and India for 2022-2023 reached US$20 billion (RM93.7 billion).

“The trade basket is expanding, given the contemporary and complementary nature of our requirements and emerging opportunities.

“Our investment ties are also strong and growing as evident from the recently held joint commission meeting on startups at New Delhi, co-chaired by the country’s two foreign ministers.

“The ties between India and Malaysia are centuries-old rooted in history and culture.

“While maintaining the cultural heritage and links, the partnership has evolved to become modern, contemporary and multifaceted.

“Today, the economic and business engagement between our two countries is an important driver of our bilateral ties,” said Kumaran.

He highlighted the investments from Malaysia’s Petronas and its renewable energy arm Gentari in India over the last six months, in areas of renewable energy and green ammonia.

Gentari was, thus, able to take advantage of the numerous opportunities available in the renewable energy sector in India, while also enabling it to meet its own strategic priorities and targets.

“There is a growing interest in Indian companies to expand into Malaysia, given its attractiveness for investors.

“A business-friendly environment, proximity to India, opportunities for investment and of course, the cultural connection and history also count” he said.

In Malaysia, more than 100 Indian information technology companies serve the Malaysian and world market.

“With the transformation brought about by digitalisation across sectors, I see a greater role for Indian IT companies including startups in Malaysia and in Asean,” said Kumaran.

IASS senior adviser Datuk Seri S.K. Devamany, a former deputy minister in Prime Minister’s Department, said that Asean was the next growth zone, with India and China becoming the next superpowers of the global economy.

Indian High Commissioner to Malaysia B. Nagabhushana Reddy saw the IASS as an excellent opportunity for developing a vibrant start-up ecosystem between India and Malaysia, and for Malaysia to become a robust hub for its expansion into the broader Asean region.

The mega event saw the participation of several start-ups, including 35 selected start-ups from India, including unicorns, led by Startup India under the Department of Investment and Internal Trade, the Department of Science and Technology, the Indian Institute of Technology Kanpur and T-Hub from Hyderabad

“These participating start-ups at the IASS represent diverse sectors of relevance to India, Malaysia and Asean.

“They represent the latest innovations in sectors, such as ESG (environmental, social and governance), waste management, Generative Artificial Intelligence, aviation and space technologies, edu-tech and health-tech,” said Reddy, calling on Malaysian businesses to forge beneficial collaborations and to explore attractive investment opportunities.

India’s unprecedented growth of start-ups, now ranking third globally with 116,000 recognised start-ups and 111 unicorns with a valuation of over US$350 billion, offered productive engagement during the IASS, with stakeholders in the start-up ecosystem – start-up founders, venture capitalists, policymakers, accelerators and incubators.

“The start-up revolution in India is one of the most visible manifestations of our Prime Minister Narendra Modi’s vision announced in January 2016 to transform India into a country of job creators instead of jobseekers through the launch of the ‘Government of India’s Start-up India’ initiative.

“This vision catalysed a start-up culture and built a strong and inclusive ecosystem of innovation and entrepreneurship in India.

“It is backed by the development of Digital Public Infrastructure (DPI), comprising the “Digital India” initiative – a sustained push towards improving digital infrastructure through ‘India Stack’, a collection of comprehensive technology applications covering digital identity, digital payment through Unified Payment Interface (UPI), and a personal data management system without compromising privacy,” Reddy said.

He added that Malaysian startups could benefit from India as the country offered a large market and several incentives for doing business in new and emerging sectors, and was an optimal environment for tech startups to thrive.

“India has the third largest startup ecosystem in the world with a consistent annual growth of 12-15 per cent.

“Currently, there are over 115,000 startups in India recognised by the government with 110 startup unicorns, up from 11 in 2015, with valuation of over US$1 trillion,” said Reddy.

Meanwhile, IASS chairman Datin Malliga Subramaniam said that the summit bridged and boosted bilateral ties, attracting investments of RM500 million into Malaysia’s startup ecosystem.

“The substantial investment is expected to flow either directly or through strategic partnerships between Malaysia and India and is a testament of immense faith in the collaborative potential of the India-Malaysia startup landscape.

“With over 600 startups participating, IASS is not just a gathering but a melting pot of ideas and opportunities.

“It is a platform where cross-border collaboration is not just encouraged but actively facilitated,” she said.

Malliga added that as a key driver in the landscape, fostering innovative ventures and partnerships, the startups would have the opportunity to tap into India’s digital technology sector as the event featured export-led workshops, networking with industry leaders and interactive panel discussions.

“A special focus of the summit is to empower women-led startups, addressing challenges and opportunities in this sector, to learn from the thriving startup ecosystem in India.

“We aim to create a nurturing and supportive environment tailored specifically for women entrepreneurs.

“Women often encounter hurdles in their entrepreneurial journey, and our summit is designed to address these issues head-on,” said Malliga.

She revealed how from five years ago, there were only a few thousand startups in India, but today there were about 115,000 (as well as 100 unicorns) startup companies valued at over US$1bil.

“Unsurprisingly, India has already overtaken China in terms of their growing consumer market. We see huge potential to tap into this, hence the need to bridge the gap between Malaysia and India in particular,” Malliga said.

Malliga said it is important for businesses here to know which market they want to enter, and what the requirements are.

“The experts from India are the best people to guide local businesses in the facilities needed, policies and grants to access, the best tactical approach to launching a business and understanding how to address funding.

“We have our own financial roadmap and we want to continue creating a ripple effect among women-owned businesses because there is value and potential in what they do,” she said. – airtimes.my

#AirTimes #Malaysia #India

14 December 2023 0 comment

Columnist: Is Minimum Wages a Reason for Inflation?

by Dr. Hj. Ahmad Zaharuddin Sani Ahmad Sabri 27 September 2022

written by Dr. Hj. Ahmad Zaharuddin Sani Ahmad Sabri

Malaysia’s annual inflation rate increased to a 16-month high of 4.7% in August of 2022 from 4.4% in the prior month, matching market consensus. Food prices rose by 7.2 per cent, the most on record, after a 6.9 per cent gain in July. Additional upward pressures also came from cost of housing (4.1% vs 3.8%), transport (5.2% vs 5.6%), alcoholic beverages & tobacco (0.7% vs 0.6%), furnishing & household maintenance (4.3% vs 4.2%), clothing (0.3% vs 0.3%), health (0.9% vs 0.8%), recreation (2.7% vs 2.5%), education (1.2% vs 1.2%), restaurants & hotels (6.4% vs 5.8%), and miscellaneous goods & services (2.4% vs 2.1%). Core consumer prices, which exclude volatile items of fresh food and administered prices, rose 3.8%, the steepest gain on record, after a 3.4% rise in July. Every month, consumer prices were up 0.2% in August, the least in four months, after a 0.4 per cent rise in July.

Economic uncertainty, global political unrest, and the ripple effects of Covid-19. These are just a few factors in the rise of the inflation rate.

Nonetheless, the inflation rate in Malaysia was one of the lowest in the world.

Most economists expect inflation to trend higher this year to reflect the rise in commodity prices and wages, but do not expect inflation to accelerate rapidly like in the US as domestic fuel subsidies limit the upside.

I believe the minimum wage policy is one of the key drivers of inflation which ultimately create a labour cost “snowball effect” for employers, pushing labour costs higher across all positions. But I am not denying global supply chain disruptions, escalating commodity prices, labour shortages and expiry of the government’s price control schemes, and potential subsidy rationalisation programmes contribute to this hike.

Businesses must plan for increased inflation and interest rates in this environment. Inflationary pressures reduce consumer spending and force firms to face greater business costs. If they are unable to fully pass on expenses, earnings will suffer.

Globally, there is a possibility of high inflation, prolonged periods of inflation, and decreased (economic) growth. This situation makes me very concerned if the government’s poor policies lead to a recession.

And it’s not going away anytime soon. With rising food, gas, and utility prices throughout the world, it’s no wonder that the workforce is feeling the pinch of inflation.

Employees’ psychological safety is jeopardised due to economic stress, leading to lesser involvement, silent resignation, and an increase in turnover. According to a Merdeka Centre in 2021 and Mindshare research, Malaysians with low income faced economic difficulty owing to price increases a year ago and may picture the scenario currently.

We urge the government to find a solution to the instability of inflation and to get through internal bureaucratic roadblocks so the measures may be implemented as soon as possible, giving the industry an instant boost to get over the inflation “hump.”

In the context of the COVID-19 incident, companies that act promptly succeed and endure. I sincerely believe that the present government must act quickly before businesses follow the layoff procedure and further destabilise our economy. – airtimes.my

DISCLAIMER: Air Times News Network is not responsible for opinions expressed through this article. It’s the columnist’s personal view and doesn’t necessarily reflect our stance.

27 September 2022 0 comment

Diskusi Ekonomi

Columnist: Inflation and food prices in Malaysia

by Dr. Hj. Ahmad Zaharuddin Sani Ahmad Sabri 8 June 2022

written by Dr. Hj. Ahmad Zaharuddin Sani Ahmad Sabri

The international economy is jolted by the drumbeats of war, rising commodity prices, and the return of the inflation bugbear, just when the pandemic seems to be giving way to optimism and healing.

When Russia invaded Ukraine in February, the first panic was largely felt in global energy and financial markets. However, as the carnage continues, people all around the world are horrified not just by the human tragedy of the war, but also by the mounting cost of feeding their families.

The Consumer Price Index (CPI) in April 2022 climbed by 2.3 percent to 125.9%, up from 123.1 % the previous month, according to the Malaysian Department of Statistics. While food inflation grew by 4.1 % in April 2022, with increases in 89.1 % of food and beverage items.

The irony is that Malaysians continue to enjoy a low inflation rate of less than 3%, compared to the US’s more than 8% and other less fortunate nations such as Venezuela (1,198%) and Sudan (340%), whose rates are significantly higher than the global average of 7.4%, according to a world population survey conducted in January of this year.

Indeed, based on the previous month’s CPI or the inflation rate, experts estimate consumers’ purchasing power will continue to shrink in the future months.

In layman’s terms paying more for food and other basics is inflation. It has contributed to increased household expenditure and shrinking savings.

Food and other basic item prices, which have allegedly risen by 60%, are causing alarm since the consequences are being felt not just by B40 households but also by persons in the middle-income group, particularly those residing in larger cities.

We don’t want such issues to persist since it might lead to more M40 people sliding into the B40 group, as happened during the epidemic’s peak.

According to the government’s Household Income Estimates and Incidence of Poverty Report Malaysia, 2020, 12.8% of T20 families and 20% of M40 households have moved into the low-income group.

As a result of layoff exercises and wage cutbacks, 600,000 to one million M40 households have transferred to the B40 category, according to its data.

Price increase in poultry products may have impacted lower-income households.

It wouldn’t surprise if some B40 families have begun to practice food rationing, which is something Malaysians should not be doing. As a result of the current scenario, some households may be forced to give up some of the foods they have been enjoying for years.

Those on the lowest end of the income scale would be the worst hurt when food costs rise. When compared to middle- and high-income families, low-income households spend a larger percentage of their income on food. In addition, low-income households spend more on food items that have seen the greatest price increases.

Poor households, for example, consume a greater proportion of staple items such as rice, cooking oil, and chicken, all of which have experienced rapid price increases.

With rising food prices, we must promote inexpensive nutritious food through public awareness campaigns to maintain a healthy and balanced diet.

We should assist non-governmental organizations’ efforts to provide a social safety net for people living in poverty to prevent famine and malnutrition.

As a result, the government must develop an efficient system to manage growing costs and shortages in the supply of particular food products, as well as implement new policies to combat hunger among citizens.

8 June 2022 0 comment