PETALING JAYA: MCA vice president Datuk Seri Fong Chan Onn said Malaysia must do away with the subsidy and ceiling price systems and open up the market while slowly moving towards a high income society.
He said this should be the fundamental solution to boost Malaysians' incomes to tackle rising inflation, and as we are practising free trade, it is therefore not viable to fix the prices for controlled items or provide subsidies in a bid to suppress goods prices.
"If the government did not implemenent price control mechanisms back in the 1970s in light of rapidly rising goods prices, but instead opted to put more money into the people's pockets, we should be very rich by now.
"Singapore dollar used to be traded on par with the ringgit, but today, one Sing dollar can be exchanged for RM2.50."
A doctorate holder in economics, Fong said during an exclusive interview with Sin Chew Daily that when Singapore adopted the high income policy in 1992, employers were forced to increase their employees' salaries by 50%, and this increased the incomes of Singaporeans, adding that the policy also compelled employers to look to machines instead of manpower to boost their productivity.
Fong said to enhance its competitiveness, it is essential for Malaysia to fully open up and liberalise its market, and growth inhibiting policies such as bumiputra quotas must all be abolished.
He said Vietnam is fast catching up with us, while Thailand and Indonesia are doing just as well. If we stay put, it is a matter of time we will fall behind our neighbours.
Anticipating that the current crisis would only be resolved in two to three years' time, Fong said cash-rich regional countries such as China, Hong Kong, Taiwan, Japan and the Middle East must look for counter-measures to tackle the existing problem.
"Investors must be prudent when economic prospects are gloomy, while wage earners and pensioners must adopt a more conservative approach in their investment."
Fong said Malaysia is like eastern African states which were ignorant of and indifferent to the disaster befalling them.
"During the Indian Ocean tsunami, news reports said the giant waves would engulf the east coast of Africa. Many Africans did not take the advice seriously and continued to frolic in the beaches, and get washed away."
"What happens here is exactly the same," Fong said. "Even with the fact that many countries have rushed to map out rescue plans for their banks, our leaders still say the economic fundamentals are strong. They haven't woke up to the real-life scenario."
He emphasised that we are only a small country, and when the locomotive of growth has stopped chugging forward, no countries could be spared.
He said it is useless for the government to keep stressing how good the national economy is, for the people in the street do not feel that.
He said many businessmen have told him that exports have fallen sharply, and even goods sent overseas have not been picked up by the importers.
He said the government wants Malaysians to have faith in the country's financial system, and has introduced measures such as full guarantee of bank deposits.
"Many people are not aware that the government only provides up to RM60,000 deposit guarantees. If anything goes wrong with the bank, the government will only pay RM60,000, even if we have RM100,000 in the bank."
He said the most important thing during this crucial time is the people's confidence. If everyone rushes to the bank to withdraw their money, the entire banking system will come tumbling down, and this will invariably deal a serious blow on the national economy. (Translated byDOMINIC LOH/Sin Chew Daily)