PETALING JAYA: The rise continues Overnight Policy Rate (OPR) to reduce excess demand will cause big loss to the industry in the medium term, said Malaysian Small and Medium Entrepreneurs Association (Samenta).
Speak to Utusan MalaysiaSamenta Pusat Chairman, Datuk William Ng said, The global economy is in a transition phase, which means that monetary policy that worked in the past may be less appropriate for the current extraordinary circumstances.
“As you know, inflation and the relatively high cost of living now is due to disruption of the supply chain due to the Covid-19 pandemic as well as previously pent-up supply and demand.
“Malaysia is one of the last economies to reopen. Therefore, it is difficult for the country’s manufacturing sector to meet domestic demand because it has to fight with other economies for raw materials that are also limited at the moment.
“This is coupled with the sudden increase in the minimum wage and costs such as electricity, making the cost and price of goods soar,” he said when contacted.
Bank Negara Malaysia (BNM) is expected to announce the first OPR increase this year at the Monetary Policy Committee (MPC) meeting to be held on 19 January.
The increase will bring the OPR to 3.0 percent compared to the 2.75 percent announced in November last year.
William insists, psmall and medium enterprises (SMEs) will continue to face ongoing supply chain disruptions, skilled labor shortages and digital disruptions to business operations this year.
According to him, he expects disruption to the supply chain to continue until the end of 2023.
“This means that the cost of raw materials will continue to be relatively high compared to before.
“However, we see some relief in terms of the supply chain, especially with the re-opening of the border in China as well as the simplification of supply and pent-up demand due to the closure of the border and the economic sector before,” he said.
He added that SMEs also face a shortage of skilled workers, not only foreign workers, but especially local workers.
“These two factors, namely the high cost of raw materials due to supply disruptions and lack of workers will continue to restrict the ability of SMEs to recover to pre-pandemic levels or expand their businesses.
“Most importantly, I hope that local politics will remain stable so that the confidence of consumers and foreign and local investors will return and further help the national economy and all businesses, especially SMEs,” he said. – MESSENGER
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