PETALING JAYA: As tougher times are ahead following the increase in the Overnight Policy Rate (OPR), the public and industry players are bracing for the worst.
For the public, they are curating important steps which include slashing expenses to reduce the impact of the readjustment.
Businesses, however, are hoping that the government would address the shortage of labour to allow them to get back on track.
SME Association president Ding Hong Sing said the government should expedite the recruitment of foreign workers to allow businesses to improve their production rate to make profits.
This, he said, would allow businesses to adapt to the readjustment.
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He said the readjustment would definitely affect business loans and increase overhead costs.
“If we have workers, we can improve our production and output, but now we don’t really have enough manpower, so how can we survive?” he asked.
On Wednesday, Bank Negara raised its OPR by 25 basis points (bps) to 2.0% after two years anchored at 1.75% due to the pandemic.
In a previous report by StarBiz, experts said that despite the surprise move, it was necessary to contain capital outflows and support the ringgit.
Furthermore, they added that Bank Negara did not want to be left behind the curve in raising interest rates in line with other global banks due to rising inflationary pressure and geopolitical risk.
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Real Estate and House Developers Association (Rehda) acting president Datuk NK Tong said that as inflation issues would not recover in a short time, providing faster approval of development would help in cutting down the costs.
“Inflationary pressures that are taking a blow globally will take years to resolve. In order to address the rising costs of production, the authorities can look into reviewing the regulatory framework that sometimes could take years.
“As time goes by, once approval is received, the cost would already increase and to resolve this is by streamlining the processes and looking into unnecessary or hidden taxes imposed by the authorities,” Tong said.
He also added that the demand for housing would remain strong in the coming months despite the latest developments.
“The economy is just reopening and there has been pent-up demand for those who have been waiting to visit property galleries physically or the virtual showroom viewings that were conducted during the two years of pandemic.
“So it is likely that demand will remain strong in the months to come as the economy continues to open up,” he added.
Asked how the public could cushion the impact of rising interest rates, Tong said financial literacy among the masses was crucial.
The public should be knowledgeable in managing their finances, whether by increasing revenue or reducing cost, he said.
Echoing the same sentiment, financial planning MyFP Services co-founder and chief executive officer Robert Foo said the public should always monitor their financial plan regularly before planning to apply for more loans.
“Clients can apply for the loans they can get but to also ensure these loans when added to their comprehensive financial plan are monitored to achieve their short, medium, and long-term life goals.
“The latest OPR will mean the inflation rate we will use in our client’s financial planning will be a bit higher and clients should also expect the inflation rate in their financial planning should be higher,” the financial planner said.
He added that to ensure individuals achieve their financial goals, a better return from their investments should be secured while controlling expenditure.