Economic changes: No need for Malaysia to panic, says MEA

This is because our economic fundamentals and banking systems are very strong, said Malaysian Economic Association (MEA) president, Tan Sri Mohd Sheriff Mohd Kassim.

"It is very reassuring to know that Malaysia is not in an economic crisis, as said by the Prime Minister (Datuk Seri Najib Razak) today.

"With the decline in oil prices, I agree that we must continue with the fiscal consolidation... measures that have been introduced by the government such as the fuel subsidy," he said when contacted.

When questioned about the major cuts in the government's operating expenditures, he said the amount of money saved from entertainment expenses and grants allocated for various government statutory bodies, among others, can now be spent in a much thriftier manner.

"The good news is, the development expenditures are retained. With developmental projects, particularly those pertaining to urban transport, infrastructure and health not being affected by the current economic turmoil, growth is ensured in future," he said.

When asked if there is a possibility that the prime minister might have to make another announcement in the near future with regards to the volatile global oil price, Mohd Sheriff said, "Some analysts have said that the current price drop is temporary and can be recovered.

"We may not recover to the initial oil price which was around US$115 (RM415) per barrel, but for the price to increase to some US$70-80 (around RM250 to RM290) per barrel is a likely situation."

Mohd Sheriff pointed out that although the oil and gas sector is an important one, it is not the biggest.

"Lower price means lower tax and lower revenue, but as we have a diversified economy together with the GST (Goods and Services Tax) and various measures to cut unnecessary expenditure, the deficit can slowly be reduced," he said.

The tourism, manufacturing, export and construction sectors are still seen as very strong areas for economic performances, he said.

He said, the 4.5 percent to 5.5 percent projected GDP growth is a reasonably good figure even if the initial range was between five and six percent.

Mohd Sheriff added that Malaysians should be confident in the government's capacity in solving this issue.

In a special announcement today, Najib had outlined several measures by means of modifications and interventions to strengthen Malaysia’s economic resilience, following a change in the global economic scenario.

Among the measures, the government's development expenditure for 2015 would be fully maintained, but its operating expenditure is expected to be reduced by some RM5.5 billion.

The country's fiscal deficit target would also be revised to 3.2 percent of GDP in 2015 – higher than the three percent set out in the Budget, but lower than the 3.5 percent in 2014, and in line with the government’s continuing commitment to fiscal consolidation.

Also, the 2015 National Service Training Programme (PLKN) will be deferred to enable the programme to be reviewed and enhanced with savings expected at RM400 million.