KUALA LUMPUR: Prominent economist KS Jomo today warned Malaysians to brace for tough times ahead, saying the economy is facing real problems amid an intractable external situation which is deteriorating on an almost daily basis.
Jomo, a senior adviser at Khazanah Research Institute, said many of these problems are beyond the control of the government and that the people need to prepare themselves for hard times ahead.
“The economic war is not about the trade between the US and China, and we cannot run away as it is also part of our economy.
“We are also going to be caught in the situation as China is our major trading partner, and there are a lot of Malaysian investments with China as well, as we are tied up in joint ventures such as Proton and Geely,” he told reporters on the sidelines of the Malaysian Economic Convention 2019 here today.
He said it is important for the nation to recognise the problem and deal with it together as a country. He also urged the people to forget about their political differences and unite.
He said the country should start thinking about domestic investments instead of focusing on foreign investments as its economic saviour.
He added that the effects of the economic slowdown on commodity prices can already be felt.
“We are not a low-cost oil-producing country like Saudi Arabia, but even the Saudis are also revising their policies due to the current economic situation,” he said.
Asked whether the economy needs a new stimulus, he said the country has been stimulating the economy for the last 20 years since the Asian financial crisis with a lot of borrowing. He also said there had been a lot of nonsense going on in the name of stimulus.
He said the country needs to improve in terms of accountability and transparency.
On the country’s reform agenda, he said reform is not easy and the list is long. He suggested that the government give priority to urgent problems despite what others such as the World Bank say to do.
He said dealing with 1MDB and the national debt should be a priority for now.
“I cannot say what the government is doing is wonderful as there is a lot more to be done. But where they are trying to bring about reform is where there is a strong vested interest by those who are going to resist reform, therefore it is not easy,” he added.