PETALING JAYA: Although Malaysia is seeing an improvement in consumer confidence, business sentiment is still bad, according to economist Hoo Ke Ping.
“We’re not out of the woods yet,” he said in reaction to the release of the latest Mastercard Index of Consumer Confidence, which showed that consumer confidence in Malaysia had returned from the gloom of last year.
He noted that the prices of commodities had stabilised, retrenchments in the petroleum and banking sectors had slowed, consumers had adjusted to the Goods and Services Tax and the political situation was more stable.
These factors were encouraging people to spend more, he said. But he added that business sentiment was still poor and that this was mainly due to the Developer Interest Bearing Scheme.
“The rich people, who are the job creators and big spenders, who bought several properties two to three years ago, now find themselves stuck, because they cannot sell their homes and rental rates are low.”
This was due to the oversupply of high-end homes, he added.
Hoo said the rich were holding back on spending because they had to pay for the properties they purchased and could not get rid off.
He said one way the government could help ease the situation was to introduce more fiscal stimuli, but he conceded that this required a lot of money which the government did not have at the moment.
He said one likely way the government could get more money was to increase the GST rate by half or one per cent.
However, earlier this week, Second Finance Minister Johari Abdul Ghani said there would be no increase in GST rates for the time being, despite the RM30 billion shortfall in revenue expected this year from the oil and gas sector.
It is not all doom and gloom for Malaysia, Hoo said, as certain sectors, such as palm oil and manufacturing, were still going strong.
The Mastercard index measures consumer confidence of countries in the Asia-Pacific region and is conducted twice yearly.
The most recent index showed that consumer confidence in Malaysia recorded improvements of at least five points compared with the last survey in late 2015.