by : bumno Economy, Energy

Govt keeps electricity costs low. But suppressing prices is not good for the economy and your income.

Nice to read that the Government has decided to keep electricity costs low. Good that Government is talking about targeted subsidies.

This is welcomed in the short-term, but we all need to be wary of the long-term effects.

Electricity costs are driven by global energy supply and demand factors. I’m not an economist, but I don’t think anyone can propose an alternative to how energy costs are priced. Of course, this can be subsidised but the costs can run into billions of dollars. Quite expensive.

The danger of continuous energy subsidies is perpetuating the expectation that energy costs can be “adjusted” by the Government. This is not a realistic situation in the long run. As consumers of energy, we need the right price signals to ensure behaviour changes when it comes to consumption of energy.

When there is no incentive to save energy, then there is not opportunity to invest into new technologies that can drive energy efficiencies, alternative sources of energy etc. And this in the long-run creates an economic system that becomes increasingly more stagnant which will hurt income growth.

by : fazz27 Economy

Beware of those who propose to cut their own salaries.

Those who come out with public-pleasing statements such as cutting their pay, are insidious and subtle inference that you should also consider reducing your own pay so to help the economic problems we are facing in Malaysia.

Unfortunately cutting pays is not going to solve our economic problems. It is also incorrect in Malaysia’s case to focus on salaries and wages as an economic lever.

The real issue for Malaysia is the economy is stagnating. There are very little growth catalysts, not many new future-ready sectors as compared to the many old economy sectors that dominate the market.

Training the focus on salaries and wages also completely ignores that fact that costs of goods, such as commodities, finished goods globally are high, or represents a higher portion of one’s income than in many other countries.

It is better to focus attention on helping create or facilitate more economic activities especially in the future ready sectors to really help Malaysia get out of its middle income trap!