Chinese businesses unhappy about subsidy cuts

More than 80 percent of the Chinese business community are convinced that the reduction of subsidies will cause higher inflation in the immediate term.

And, although cautiously optimistic about the economic outlook between now and 2013, they expect slower growth to be announced for the first half of this year.

This is because of government policies, domestic competition, increase in operating costs and price of raw materials, and the shortage of human resources.

These were among the main findings released at a press conference today by the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM), as part of a survey report.

“About 73 percent of respondents claimed that subsidy cuts would have a negative impact on business,” states the report revealed by Accim president William Cheng (left) and commerce committee head Leong Kai Kin. 

Cheng said there is much concern about the rising cost of living due to escalating food prices and adjustments to subsidy schemes and that “controlling inflationary pressures will be a major challenge for the government”.

The survey saw 670 questionnaires being sent out, of which 286 or 42.7 percent were returned.

The respondents are from the manufacturing, professional and business services, and the wholesale, retail, construction, agriculture, forestry and fisheries sectors.

Almost 77 percent of them represent the domestic market, while the rest are involved in the export trade to some extent.

In commenting on the minimum wage policy, 66.8 percent said they believed this would have a negative impact on their business.

The majority in this group (87.5 percent) represent the international trade sector; followed by tourism, retail trade, hotels, restaurants, recreation and entertainment (72.7 percent); manufacturing (71.7 percent); wholesale and retail trade (70.9 percent); and agriculture, forestry and fisheries (68.4 percent).

“ ... Input ought to be sought from interested stakeholders and long-term strategies (should be) developed to see how the minimum wage fits into and complements the various components of the government's Economic Transformation Plan,” notes the survey report.

Downside of 1Malaysia shops

The 'Kedai Rakyat 1Malaysia' scheme did not find many takers among the respondents, with 70 percent of the opinion that this will have an adverse impact on small retailers.

The government-endorsed 1Malaysia shops sell 250 basic items at prices reportedly 30-40 percent lower than market prices.

“Given the publicity and price advantage enjoyed by 1Malaysia shops, it would only be natural for shoppers to visit (such outlets) and not small retailers or sundry shops,” the report states.

“With such price differentials, it is not difficult for any party to envisage the adverse effects this would have on the livelihood and future operational ability of small retailers or sundry shops.

“As it is, their businesses are already affected by hypermarkets and supermarkets, and this would be an additional blow to them.”

Cheng said Accim does not oppose the government's moves to ease the burden of the people, but pointed out that it should also consider the problems of more than 30, 000 small retailers and sundry shop owners.

“The government could sell (the same) cheap items via the 30,000 sundry shops, so that the (products) can be provided nationwide and will benefit more people,” he suggested.