A COMPETITIVE STICK UP?

The domino effect has started since the Malaysian government hiked the fuel price of around 40% on 5th June.

The lorry transportation association had announced an immediate increment on the transportation charge of at least 45%.

We can expect, the overall effect can be heavily felt in the coming months; with less money to spend, the whole internal economy in Malaysia may slow down drastically. An average working person in Malaysia has an income of around Rm2000 per month and with this increment, the government is removing at least Rm500 additional spending power from him, i.e. 25%.
Food and other essentials will also take its toll and we can anticipate a slowdown of more than 35%. Businesses that had cash flow problem will have to close down and individuals that have just enough to meet their credit commitment will default.
We can only hope that there is no financial fallout from this move by our government.

Malaysia is a net exporter of petroleum. No doubt, this product may not last forever, but given another 6 years or so, we still have the time to correct our strategy for our future requirement and stability.
We were jolted to the reality that our basic necessity investments were neglected.
There were a huge sector of our people trained with the wrong disciplines and capabilities; our industries had the wrongly emphasized.
In fact, what we can do, can be done in any 3rd world country but only maybe slightly better, there is nothing to shout about. The industries we have were non-competitive and will be the first in-line to be affected, should there be any adversity.

For what reason, that Malaysia cannot attract high calibre form of investment (FDI).
The people that had been in the government should know it by now. It takes more than 25 years to feel the effect now. We had the wrong set of policies then.
We had not emphasised on what malaysians and our climatic conditions allow us to do best, we copied developed country set of data, which was already in the stage of phasing out. The car industry itself was the biggest mistake of all.

We could have opted for hefty income tax increment to solve our problem.
There must be quite a bit of personal reasons as to why the government is not taking this approach.
The majority of industries are already not competitive enough? The government wants more billionaires in Malaysia? Or these rich people will just run off to another country? Or the government has to protect the cronies.

The world runs on meritocracy, protection, incentive and fair distribution of wealth, any effort to hinder this will affect the country and render it uncompetitive.
Malaysia will continue to suffer if the mindset of its lawmakers does not understand this.