KOTA KINABALU (Sabah, Malaysia), June 13 (NNN-Bernama) — Banning exports is not the answer to consumer goods price hike in Malaysia and it must not be seen as a long-term action to resolve the problem, said World Bank Group lead economist Dr Apurva Sanghi.
He said although the move can put a (degree of) control to the hike in prices, continuing the export ban on consumer goods over the long term will hurt the country and the economy, thus doing more harm than good.
Giving an example, he said the chicken export ban had caused a domino effect, one of which is the chicken shortage in Singapore. There have been reports of late that Singapore is seeking to source chickens from other countries other than Malaysia, for example Brazil.
An export ban (may) help to control prices and may seemingly increase the availability of food, in this case chickens, but Malaysian producers would be denied a wider market and a higher price for their products. When producers are denied from benefiting from higher prices, they will reduce investments domestically, he said.
“There are also the poor who rely on farming and they will be hurt (in the process) because the benefit from lower prices is outweigh by their declining income, while the average income of a farming household in Malaysia is less than typical B40,” he said in an online press conference.
The press conference was held in conjunction with the launch of the Malaysia Economic Monitor report entitled “Catching Up: Inclusive Recovery and Growth for Lagging States” scheduled for this Thursday (June 16) in Kota Kinabalu.
Also present at the press conference was World Bank country manager for Malaysia Dr Yasuhiko Matsuda.
Sanghi said a definitive answer to the problem is not easy, but a focus to increase food production, promoting food security and tapping into digitalisation can help Malaysia to overcome the hike in prices.
He said it is interesting (that) 88 percent of agricultural projects (in Malaysia) focus on rice and are rice-related; 40 to 45 percent of subsidies go towards rice imports, and rice production in Malaysia is falling. So the provision of subsidies is something that has to be looked into, he said.
He said the war in Ukraine had shown that Malaysia has to look for alternatives for products which have been effected by the war, like fertilisers for example, in order to lower food production cost.
Meanwhile, Matsuda said investments in public infrastructure and human capital are vital for states which are lagging in the country, such as Sabah and Kelantan if their economies are to recover well in the post-COVID-19 pandemic era.
He said Sabah is currently an agricultural producer and over the long run, Sabah can diversify and catch up with industrialisation, and so attract more investments from other countries.
For example, right now there are investment opportunities from China but is the state ready to be an investment destination?, Sanghi asked.
“Investments in public infrastructure and human capital — especially in education — are important. So this is an important policy question for the government,” he said.
— NNN-BERNAMA