Malaysia announces anti-inflation step
Malaysia announces anti-inflation step
KUALA LUMPUR (Agencies): Malaysian Deputy Prime Minister Anwar Ibrahim has unveiled several measures aimed at containing inflation and said more would be announced in the coming weeks.
Anwar said Wednesday that the Malaysian government would take stern action against profiteers who hike prices of goods unnecessarily.
The fast growth of Malaysia's economy, expected to hold to eight percent this year for the eighth straight year, has raised concern among some analysts that the economy may be overheating.
"The ministry will be very firm and tough and it will take action against unscrupulous businessmen who continue to exploit consumers," he told reporters after a cabinet meeting.
Anwar, who is also finance minister, was quoted by Reuters as saying that the government would remove regulations hampering imports of essential food items such as beef, fish and vegetables.
It would also increase the supply of medium and low-cost housing in the country to meet demand.
Regulations would be eased to allow increased imports of cement to meet demand in the burgeoning construction sector to hold down price pressures, he said.
Apart from a few measures he detailed on Wednesday, Prime Minister Mahathir Mohamad will also announce more anti-inflation moves in early June and again on July 1, Anwar said.
He did not announce any credit controls to limit domestic loans for car and housing purchases as analysts had expected.
Instead, he said the government was closely monitoring housing purchases by foreigners who bought property in Malaysia for speculative reasons, pushing up prices.
Malaysia's government has taken a hawkish stance in a battle to keep inflation below four percent. Last year, it freed import tariffs for more than 500 items and more recently issued stiff warnings to shopkeepers as public complaints mounted over a spate of post-election price hikes.
The government also acted swiftly in revoking an electricity tariff hike announced by listed state-owned power giant Tenaga Nasional, causing the company's share price to tumble on the stock exchange this month.
"We don't think it was proper for (Tenaga) to make an announcement on the price increase two days after the elections," he said, adding that the government wants the power giant to cut costs.
Inflation averaged 3.3 percent for the first quarter of this year. It was 3.7 percent for the whole of 1994.
Growth
Meanwhile, Rashid Hussain Securities, a top Malaysian brokerage, said in its economic update yesterday that Malaysia's economy grew by an annual rate of 9.8 percent in the three months to March, underpinned by buoyant exports and domestic demand, but inflation was still under control.
Manufacturing continued to lead the way, but overall growth was lifted by stronger expansion in agriculture and mining output, said Rashid Hussain Securities in its economic update compiled by its research unit.
"Private consumption remained strong, registering sharper increases in the sales of cars and higher demand for loans for business and consumption," the report said.
The Malaysian economy is officially projected to grow by 8.9 percent this year from 8.7 percent last year.
Although Deputy Prime Minister Anwar Ibrahim announced no new credit controls on car or housing loans, he said the government would not entertain appeals to raise prices, including the price of cement.
Property purchases by foreigners for speculative purposes would be closely monitored, he said.
Rashid Hussain economist Chua Hak Bin said current economic indicators did not yet suggest a need for credit controls or sharp monetary tightening.
"Inflation remains under control at 3.3 percent for the first four months of the year, compared with 4.4 percent in the corresponding period of last year," Chua told AFP.
Business loans picked up from 9.3 percent in the fourth quarter of last year to 12.2 percent in the first two months of the year.
Consumer credit was sustained at a high growth rate of 16 percent in the first two months from 16.3 percent in the fourth quarter of last year.