Addressing rakyats financial strain

THE high cost of living in Malaysia since the onset of the Covid-19 pandemic has become a concern, leading to a decline in income or reduced salaries for many individuals. As a result, people are facing difficulties in coping with the escalating prices of commodities and services.

According to the World Bank’s High-Frequency Phone Survey, almost 70% of the lower-income households in Malaysia have insufficient financial resources to cover their monthly necessities, and more than 60% have reportedly no savings.

Prime Minister Datuk Seri Anwar Ibrahim has proposed RM64 billion in subsidies, assistance and incentives to aid the populace in coping with the growing cost of living.

Anwar, who is also the finance minister, said recently the government hopes to eradicate poverty across all socioeconomic groups.

To successfully handle the rising cost of living issue, the government must move past the current subsidy-based approach and come up with ways to pay a living wage.

According to forecasts from 2022, inflation will remain at 3.3%. However, the prime minister has emphasised that if global supply chain problems intensify, the situation could get worse.

To address and prioritise the issue of eradicating poverty, it is essential we rationalise the supply chain to reduce the cost of living.

This process involves optimising and improving the efficiency of the supply chain to reduce the costs of goods and services. This can be done by reducing the number of suppliers, consolidating suppliers and improving logistics.

The strategies that can be used to achieve supply base rationalisation include choosing a single or dual source of supply, creating an approved or preferred supplier list, outsourcing a variety of services to do away with individual suppliers and grouping purchases with other customers to make larger suppliers more economically viable.

When faced with inflation, it is advisable to avoid buying imported items as Malaysia has a plentiful supply of these components.

According to Bank Negara Malaysia, a review of the supply chain is necessary to manage prices, which includes varying the sources of goods imported to reduce concentration.

Supply chain rationalisation will help improve the procurement process – from procuring goods and services to delivering the finished product.

By putting this strategy into practice, duplications can be decreased and efficiency increased, resulting in companies running more smoothly and, eventually, cost savings for both business owners and customers. Hence, poverty can be reduced through a reduction in the cost of living.

According to the Malaysian Investment Development Authority, Malaysia needs to focus on fostering domestic small and medium-sized company growth through automation and digitalisation to reduce reliance on foreign sources of funding due to the decline in foreign direct investments.

By utilising technology and automation, processes may be made more efficient, and the cost of manual labour can be decreased.

Optimised supply chains generally have 15% overall costs, less than 50% inventory holdings, and a faster cash-to-cash cycle by nearly three times compared with under-optimised supply chains. This may be achieved in several ways, including by putting warehouse management systems into place, using robots to do picking and packing duties and utilising transportation management systems to plan delivery schedules and optimise routes.

Automation and technology can help in decreasing labour costs while accelerating and improving decision-making, speeding up processes and minimising waste and mistakes. This may result in additional supply chain cost reductions, leading to a reduction in price and cost of living, hence, achieving the Sustainable Development Goal One.

The writer is the Director at Ungku Aziz Centre for Development Studies, Universiti Malaya. Comments: letters@thesundaily.com

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