KUALA LUMPUR: Malaysia remains resilient despite global supply constraints and energy price volatility, thanks to its focus on fiscal discipline and economic reform.
Finance Minister II Datuk Seri Amir Hamzah Azizan said the country is undergoing an economic reform journey, focusing not only on improving the country’s economic mix and increasing economic complexity, but also on addressing fiscal burdens in a responsible manner.
"We have made great progress. We used to have a fiscal deficit of 6.4 per cent, and last year we came in at 3.7 per cent. Now, (we are) on track towards 3.5 per cent, and hopefully in another two years or three years, we will be below three per cent.
"I think that it is important. The government has taken a principal decision to add better fiscal discipline and make sure that it becomes a guiding principle moving forward,” he said during an interview with CGTN in Washington after the IMF Spring Meetings yesterday.
Amir Hamzah said that as part of economic reform, the government is shifting from blanket subsidies to a targeted mechanism to reduce fiscal burden while protecting vulnerable groups.
"When we focus on putting better discipline, reducing the burden of subsidies when we reform it (the economy), we build buffers; and as you can see, when we had a fiscal deficit drop, the government now has better buffers to support these anomalies temporarily that we are going through,” he added.
Meanwhile, he highlighted that while global energy supply shortages are also contributing to inflationary pressures and higher prices -- securing supply is key to sustaining economic activity.
"It is important that we all rally together to find a better outcome, and I am hopeful that we can de-escalate issues because the world will not (take pleasure in what we are) going through.
"I think we have seen good signs of late, and we are hopeful they will actually lead to better long-term permanent solutions that will anchor the world in a better state,” he said.
Responding to questions about the high cost of shipping, insurance premiums, and freight rates, Amir Hamzah said logistics costs will reflect demand conditions, but they are not expected to outweigh the underlying growth in the respective segments.
"I think the underlying businesses in Malaysia have the capacity because overall demand for the segments that we are in is still strong; electrical and electronics (and) semiconductors are still strong; data centres are still big in the Malaysian context; and we are in a big build-up mode.
"I think that the strength of the Malaysian economy is the diversification of the product mix -- diversification in terms of products and market; so, we have the latitude to start moving things around a little bit,” he said.
Meanwhile, Amir Hamzah said Malaysia has always been an open trading nation with strong trade ties with countries and regions such as China, the United States, ASEAN and the European Union, and continues to welcome partnerships from all countries. - Bernama
