Latest news with #YeahKimLeng
The Star
4 days ago
- Business
- The Star
‘Boost pension income through productivity'
WITH rising household debt, stagnant real wages, and a rapidly ageing population, Malaysia faces growing pressure to reform its wage and retirement policies. Some experts are saying that boosting people's incomes through improved productivity and strenghtening reskilling are also crucial to ensure long-term financial security for Malaysians especially as the country prepares to review its retirement age limits. Sunway University economist Prof Dr Yeah Kim Leng points out that increasing wages and extending the retirement age are both needed as part of a comprehensive and holistic approach to addressing the multi inter-dependent challenges. Prof Yeah, who also sits on the Finance Minister's panel of special advisers, says these challenges are posed by population ageing, income inequality, depressed wages and inadequate retirement savings. He also points out that policy- wise, the increase in wages can be done by reskilling and upskilling workers to add value to their portfolios. 'To ensure the majority of Malaysians are able to achieve post-retirement financial security, boosting income through productivity enhancement and reskilling or upskilling programmes are among the top policy priorities.' His comments came on the heels of reports highlighting Malaysia's growing household debt and financial insecurity, with many unable to save adequately for retirement. Recently, former Bank Negara Malaysia governor Tan Sri Muhammad Ibrahim in an interview said Malaysians' real wages have shrunk almost threefold in four decades – he pointed out that based on simple calculations, the starting salary of a university graduate today is only around RM2,000 to RM3,000 a month – his starting salary was RM1,300 a month in 1984, so that's not much of an increase. At the same time, the government is also reviewing the possibility of raising the retirement age from 60 to 65; it has yet to confirm whether, if this is implemented, there will be a flexible scheme to allow early retirement. When it comes to structural reforms that can help Malaysians achieve financial security post-retirement, Prof Yeah says such measures must include the need to raise the quality of education at all levels and ensure the curriculum and teaching staff are upgraded continuously. 'Likewise, financial literacy programmes need to be stepped up to equip all Malaysians with adequate financial knowledge and competency to achieve post-retirement financial security.' AI, automation and productivity Productivity, and in turn wages, can also be improved with automation, especially as Malaysia advances toward a high-income, digitally integrated economy. With rising operational costs, including an imminent increase in the national minimum wage, manufacturers are accelerating the adoption of Industry 4.0 technologies to maintain competitiveness and sustainability. Productivity, and in turn wages, can also be improved with automation, especially as Malaysia advances toward a high-income, digitally integrated economy. — 123rf According to the Federation of Malaysian Manufacturing (FMM) this shift is not merely reactive but strategic, with nearly half of surveyed companies already embracing automation and smart factory initiatives. Yet, while digital transformation enhances productivity and aligns with national goals under the New Industrial Master Plan 2030, it also raises questions about wage equity and the future of work. For FMM president Tan Sri Soh Thian Lai, automation and digital transformation have become crucial strategies for Malaysian manufacturers to adapt to rising labour costs and broader operational challenges. Through the adoption of smart technologies such as automation, system integration, robotics, IoT (Internet of Things) and data analytics, Soh says companies have significantly enhanced productivity and optimise resource use. He also refers to the to the FMM Business Conditions Survey 2H2024, in which it finds 44% of member companies have adopted factory automation and Industry 4.0 initiatives. "The main drivers for this shift are the pursuit of greater operational efficiency and productivity (cited by 60% of respondents) and the need to reduce operating costs (58%), clearly reflecting the industry's strategic focus on sustainable cost-saving and competitiveness-enhancing measures." Soh tells the Sunday Star that the survey findings also show that System Integration is the most widely adopted Industry 4.0 technology (63%), followed by Cloud Computing and Autonomous Robots (45% each), IoT (43%), and Big Data Analytics (34%). "These trends highlight an accelerating shift toward digitalisation, automation and connectivity, with manufacturers prioritising smart technologies to future-proof their operations and build resilience." He points that the digital transformation digital transformation momentum directly aligns with the goals of the New Industrial Master Plan 2030 (NIMP 2030), particularly the Mission-Based Project (MBP) aimed at establishing 3,000 smart factories nationwide. "In support of this national agenda, FMM is playing an active role in encouraging and assisting manufacturers to embark on the smart factory journey. "FMM's initiatives include advocating for greater Government support through enhanced tax incentives, Industry 4.0 adoption grants, and workforce upskilling programmes, as well as providing capacity-building programmes, technical advisory services and knowledge-sharing platforms tailored to the needs of manufacturers, especially SMEs (small and medium entrepreneurs)." But concerns on the implementation of automation and AI over job security remain, especially after it was reported that 300,000 job losses in Malaysia since 2020, particularly in manufacturing and retail. When asked what policies should be in place to ensure that automation leads to fair wage growth rather than increased job displacement or labor exploitation, Sunway University's economist Professor Dr Yeah Kim Leng says workers are protected under the existing employment acts against unfair dismissal or retrenchment. "To counter the job displacement effects of AI and automation, job creation, however, will need to keep pace through increases in investment and entrepreneurship in emerging industries and new economic activities. "There will be rising jobs and skills mismatches that will require re-skilling and upskilling programmes for the affected workers while ensuring the tertiary education institutions are able to supply the relevant skilled graduates to meet the changing industry demand," says Prof Yeah, who also sits on the Finance Minister's panel of special advisers. Yeah stresses that workplace restructuring and adoption of flexible compensation schemes and best practices in response to technology advancement – particularly the use of artificial intelligence, automation, and communication technology – are still crucial. 'This is to ensure employees are fairly remunerated and have job security that enables them to achieve financial security when they retire," he says. He adds besides enforcing policies to ensure fair compensation payment for retrenched employees and adequate employment insurance coverage, employers could be incentivised to undertake placement and reskilling programmes before undertaking automation-related retrenchment exercises. "Tax incentives could also be offered to affected employees to undergo upskilling programmes in collaboration with employers that require trained and experienced staff." The second phase of the mandatory increase in the minimum wage to RM1,700 for employers with fewer than five workers is set to take full effect in August. There have been concerns raised about this, such as wage compression and even the effectiveness of the minimum wage policy. In response, Prof Yeah says the minimum wage ensures that no employee receives an income below subsistence or poverty level. 'The minimum wage increase takes into consideration the rise in living costs as well as increases in labour productivity. 'The minimum wage increase will exert upward pressure on salary structures but adjustment varies by individual organisation's compensation structure, practices, and prevailing industry salary wage trends. 'With the rise in salaries, both employer and employee contribution to EPF will increase, resulting in faster accumulation of retirement savings.' He says although it adds to cost pressures faced by employers and businesses – amid worries from the impending Trump trade tariffs, expansion of the sales and service tax, and petrol subsidy rationalisation – only those that are unable to enhance productivity and profits will be negatively impacted. He notes that, 'with an increase in disposable income through wage increases, there will be stronger household spending that will in turn benefit businesses, although not equally across the various types of industries.'
The Star
20-06-2025
- Business
- The Star
DC outlook intact for now
Sunway University economics professor Dr Yeah Kim Leng. PETALING JAYA: There is a possibility that the firms involved in the alleged breach involving Nvidia-powered artificial intelligence (AI) chips may face US sanctions, but such measures are unlikely to be applied to Malaysia, says Sunway University economics professor Dr Yeah Kim Leng. Yeah said this is given that many existing data centres (DCs) and those in the pipeline are US-based companies. 'Nvidia, a US company, is seeking new markets to offset its loss of China's market as the Chinese government has banned the use of its chips. 'China is accelerating development of home-grown AI chips, thereby offering an alternative supply unless companies that use them are also sanctioned by the United States,' he told StarBiz. Yeah opined that despite the uncertainties caused by the technological rivalry between China and the United States, the outlook for DCs in Malaysia remained positive given the rising local and global demand for cloud and AI services. 'Malaysia will also benefit from the global firms' diversification of DCs that leveraged on each country's growth opportunities and cost advantages such as availability of cheap energy, land and skilled manpower resources,' he said. According to a Wall Street Journal article, Chinese engineers reportedly flew to Malaysia in March with suitcases full of hard drives containing around 80 terabytes of data to train AI models at local DCs equipped with advanced Nvidia chips. In addressing the alleged breach, the Investment, Trade and Industry Ministry (Miti) said, in a statement on Wednesday, it is in the process of verifying the matter with relevant agencies. It reiterated that servers using Nvidia chips and AI chips are not classified as controlled goods under the Malaysian Strategic Trade Act 2010. 'Malaysia will cooperate with any government that requires assistance in monitoring trade in sensitive goods under the export control of their respective countries,' it said. Given that the allegations were made in March, MIDF Research said it could be a move to 'speed up the process', before the eventually rescinded AI Diffusion Framework that was expected to come into force on May 15. The research house is of the view that the pipeline of DC jobs in Malaysia is unlikely to be impacted by the alleged breach. It noted there is no slowdown or delay in ongoing projects and contractors are actively bidding for new DC construction jobs. 'Just last month, Gamuda Bhd sold 389 acres of land in Port Dickson to Google-linked Pearl Computing Malaysia Sdn Bhd and signed a RM1.01bil external infrastructure contract for enabling works for DC development, while Sunway Construction Group Bhd secured a RM1.16bil contract from a US tech giant to build two DCs,' MIDF Research said in a report yesterday. Microsoft recently reaffirmed its commitment to a RM10.5bil investment in cloud and AI infrastructure in Malaysia, including the development of hyperscale DCs in the Klang Valley. 'We also reiterate that not all DCs are AI DCs and while most of them are AI-ready, they may eventually be utilised for non-AI purposes,' MIDF Research said. It cited the example of YTL Power International Bhd which previously allocated 100MW for AI from its 500MW DC in Kulai, Johor. iFAST Capital research analyst Kevin Khaw Khai Sheng said the long-term prospects of the country's DC sector remains 'quite intact'. 'Ultimately, Malaysia continues to benefit from several competitive advantages –such as abundant water resources for cooling, land, skilled labour and a relatively weak ringgit, which makes the country cost-effective,' he said. Khaw added that, due to Singapore's limited access to such resources, he expected closer collaboration between Malaysia and the city-state. Asked if the alleged breach would affect ongoing tariff negotiations between Malaysia and the United States, Khaw said it would unlikely be a decisive factor given that the country is already negotiating from a weaker footing. 'The alleged breach may add a bit more pressure to our position in negotiations. But ultimately, it depends on how our government handles the situation and works toward securing the best possible outcome. 'From the United States' perspective, Malaysia is not their major competitor. It is actively trying to diversify its supply chain risks – especially in light of tensions with China – and is looking for more allies and partnerships with other countries. Given Malaysia's 'neutral' stance and our geographical advantages, we could still be seen as a potential partner for the United States,' he said. Khaw said the construction sector's outlook remained optimistic with the order book environment set to improve heading into the second half of 2025.
The Star
16-06-2025
- Business
- The Star
‘Don't delay RON95 revamp'
PETALING JAYA: The government should proceed with the targeted RON95 petrol subsidy rollout despite the recent spike in global oil prices due to escalating tensions in the Middle East, say economists. Sunway University economics professor Dr Yeah Kim Leng stressed that the surge in crude oil prices makes it even more urgent for the government to implement the plan. 'It will allow the burden of rising oil prices to be shared with consumers and businesses while preventing a ballooning subsidy burden to the nearly RM100bil incurred in 2020 during the Covid-19 pandemic,' he said. Yeah pointed out that unless absorbed by the government, higher global oil prices would lead to increased pump prices, putting pressure on national finances. 'This would require the government to cut other expenditures or incur a higher fiscal deficit, which will further raise the country's debt level,' he said, suggesting a gradual rollout to enhance the nation's resilience in coping with global uncertainties and oil price shocks. On Friday, global oil prices surged by over 9% to around US$75 (RM318) per barrel, the highest in nearly five months, following Israel's pre-emptive strike on Iran. Earlier in April, oil prices had dipped below US$60 (RM254) before climbing to around US$65 (RM275) by mid-month, still lower than December 2024's US$74 (RM314). Economist Dr Geoffrey Williams echoed the call to proceed with subsidy rationalisation, noting that higher oil prices would widen the gap between market prices and retail pump prices, increasing the government's subsidy burden. 'It's better to rationalise subsidies now if oil prices are expected to remain high for the rest of the year,' he said. The government stands to save at least RM8bil or more, he added, which could be redirected to critical areas such as healthcare, education and social protection. Williams also cited the success of earlier rationalisations in diesel and electricity subsidies, which raised RM11.5bil without triggering hostile market or public reactions. 'The government must push through with targeted subsidies now. There is no better time and any delay will signal weakness and damage credibility,' he added. Associated Chinese Chambers of Commerce and Industry of Malaysia treasurer-general Datuk Koong Lin Loong also supported a phased implementation, warning that any delay could significantly increase the government's subsidy bill if oil prices continue to rise. 'This is to avoid a sudden shock to the nation's economy, which is already grappling with the current geopolitical uncertainties,' he said. He also called for the Price Control and Anti-Profiteering Unit to be strengthened to prevent businesses from arbitrarily raising prices, which could drive up inflation and supply chain costs. Meanwhile, Federation of Malaysian Business Associations vice-chairman Nivas Ragavan cautioned that the timing of the rollout is crucial, particularly when global oil prices remain uncertain. 'Volatile oil prices can exacerbate the burden on the rakyat if not carefully managed. A sudden implementation during a price spike could be highly inflationary and politically sensitive,' he said. He noted the government's earlier decision to delay the e-invoicing initiative to ease the burden on businesses, and suggested a similar approach may be needed for the RON95 subsidy if global oil prices remain unstable.
Free Malaysia Today
03-06-2025
- Business
- Free Malaysia Today
Economist backs govt's LPG rule enforcement to optimise subsidies
All restaurants, cafés and hawker stalls are required by law to use commercial-grade 14kg LPG cylinders, which cost RM70 each. (AP pic) PETALING JAYA : An economist has expressed support for the government's decision to enforce existing cooking gas cylinder regulations, saying it is necessary to prevent the misuse of subsidised liquefied petroleum gas (LPG) and ensure they reach their intended beneficiaries. Sunway University's Yeah Kim Leng said the move would allow Putrajaya to reduce the RM3.4 billion it spends on LPG subsidies annually, allowing the savings to be reallocated to development programmes. 'The subsidy amount is sizeable and better used for health, education and other welfare development programmes. This should be communicated well, in line with the country's subsidy rationalisation reforms,' he told FMT. Yeah, however, said traders, especially small vendors and hawkers, should be allowed a grace period to help them adjust to the changes. Yeah Kim Leng. 'Rather than forceful enforcement, a more friendly and compassionate approach—such as warnings for first-time offenders and closer monitoring—would be desirable and less disruptive to small traders and hawkers,' he said. Last month, the domestic trade and cost of living ministry launched Ops Gasak in an effort to curb the misuse of subsidised LPG, particularly by industrial users and large-scale businesses. Businesses—including restaurants and cafés—are required to use commercial-grade 14kg LPG cylinders, costing RM70 each, and not subsidised household cylinders priced at RM26. Those that use or store more than 42kg, or three cylinders, must also obtain a scheduled controlled goods permit. Although introduced in 2021, the rule is only now being strictly enforced with the ultimate goal of reducing subsidy leakages. Domestic trade and cost of living minister Armizan Mohd Ali said the initiative aims to curb the misuse of subsidised LPG by ineligible sectors and prevent the illegal transfer of gas from subsidised cylinders to non-subsidised ones for resale at a profit. He also said enforcement officers were presently prioritising advocacy over punitive measures, and that no compounds will be issued or seizures conducted at this stage. Yeah said many traders may not even be aware of the regulations in question, and suggested that the government set a grace period before fully enforcing the law. He said small businesses, especially hawkers, may not be familiar with the law. 'Given that many small traders and hawkers are updated through word of mouth, a grace period coupled with well-crafted public communication and education programmes would be helpful in reducing misuse of subsidised gas.'
The Star
24-05-2025
- Business
- The Star
INTERACTIVE: Malaysians have highest grocery bill in South-East Asia
PETALING JAYA: Malaysians are experiencing a heavy burden when it comes to rising food prices, with data showing that they spend more on groceries than any South-East Asian country. Data from the US Department of Agriculture (USDA) Economic Research Service shows that Malaysia's consumer expenditure on food at home was highest in the region in 2023 at US$1,940 per person per year. The USDA figures are not adjusted for inflation or differences in living costs between countries. According to Bank Negara Malaysia's exchange rate in 2023, the US$1,940 figure for Malaysia is equivalent to RM8,848. However, at current exchange rates, it is equivalent to RM8,286. Singapore was second at US$1,831, followed by Thailand (US$1,108), Philippines (US$1,070) and Cambodia (US$898). Experts said several factors explain why Malaysians spend a relatively high amount on food at home compared to other countries in the region. They include a reliance on food imports, a weaker Ringgit and farm labour shortages. Other reasons include the rising cost of input in food production such as fertilise and animal feed, monopolies and oligopolies in food production, as well as low farm productivity. 'Malaysia's elevated food cost per person relative to its Asean counterparts points to the need for concerted efforts by the government and private sector to expand food production and raise farm productivity,' said Sunway University economics professor Dr Yeah Kim Leng. He said other complementary actions include dismantling monopolies and liberalising food markets, reducing transport and storage costs and improving supply chain efficiencies to bring down food prices. He said Malaysia's higher food expenditure per person at home compared to Asean countries with lower per capita income can also be explained by its higher income level. 'However, despite income per capita that is in multiples that of Malaysia, Singapore's food expenditure per capita is about the same as Malaysia's during the 2017 to 2023 period, with the 2023 figure dipping below Malaysia's in 2023,' he said. While the data specifically does not take inflation into account, Yeah noted that the food component in Malaysia's consumer price index (CPI) basket has been experiencing higher inflation averaging 3.1% annually between 2020 and 2024 compared to the overall CPI inflation of 1.8%. Khazanah Research Institute's research associate Dr Teoh Ai Ni said the total amount spent on food consumed at home would vary depending on how frequently individuals spend eating at home. She said Malaysians also spend a larger portion of their monthly spending for food on food at home compared to Singaporeans. 'Data from the Household Expenditure Survey 2022 shows that Malaysian households spent about 48% of their total monthly food expenditure on food away from home, with 52% spent on food at home. 'In comparison, Singaporean households spent 68% of their food expenditure on food away from home.' 'This is why the consumer expenditures spent on food at home for Singapore is lower than that of Malaysia, and it does not imply that food in Malaysia is more expensive,' she said. She noted that the use of US dollar in USDA's data as the unit for comparison does not take into account the variations in the current strength or cost of living, nor does it equal purchasing power. Fellow research associate at KRI, Nik Syafiah Anis said Malaysia is also one of the more food import-dependent nations in Asean, which means its food system is vulnerable to global supply chain disruptions and external price shocks. She said other Asean countries such as Thailand and Vietnam have transitioned into major agricultural powerhouses, with Vietnam's food exports surging more than 15-fold between 1995 and 2018, driven by rice, seafood, and coffee. She in comparison, Malaysia's food import bill reached RM75.6 billion in 2022 and it remains a net importer of essential food items, particularly animal or vegetable fats and oils, cereals, and dairy products. 'One key dimension of this dependency is the country's reliance on imported animal feed - particularly corn and soymeal, which are key inputs in poultry, livestock, and aquaculture production. 'For example, Malaysia imports around 95% of its corn needs, largely from Argentina, Brazil, and India. This includes corn for feed and food, seed, and industrial (FSI) use,' she said. She said over-reliance on imported feed has a trickle-down effect on domestic food prices. She added that with global disruptions such as geopolitical tensions or poor harvest due to climate change, feed prices can spike, leading to higher prices for chicken, eggs, fish and meat at the consumer level. Meanwhile, Teoh said the share of income spent on food depends on wages and food expenditure. Malaysians' portion of food spending is comparatively lower than most other countries in the region. 'The differences are attributable to a combination of factors, including income level, food prices and food consumption patterns. She said that as income rises, the share spent on basic necessities like food would likely decrease while the share of spending on discretionary items like entertainment and recreation would likely to rise.
