WHEN talking about economic reform, it should be mentioned that our economy can be strengthened with structural tweaking.
We are addicted to labour-intensive industries and over-dependent on low-cost businesses. The plan to migrate to a high- technology industry remains lethargic.
Wages have not kept up with inflation. Though our cost of living is among the lowest in the region, many struggle to meet expenses.
We subsidise goods to ease people's struggles, but subsidies are costly. Targeted subsidies have been suggested as more realistic. Implementing them, though, is not easy.
Our fiscal health is not in the best of shape. Reducing the deficit is a struggle. Experts say our taxation system is not the most efficient.
The Goods and Services Tax (GST) would be a better option. But this was manipulated for political gain during the 14th General Election.
Most economists disagree with the claim that GST was the reason for rising costs.
All agree we need to structurally reform the economy to grow.
A challenge to economic reform is the lack of public understanding about the economy.
The government is serious about instituting reform. But acceptance by the population is a struggle.
We saw this in the rationalisation of the diesel subsidy.
Many people looked only at the immediate pain that they had to endure.
This was because of the poor understanding of the economic role of subsidies.
In a proper economic structure, subsidies should be a temporary measure to address issues, including boosting investments and taming inflation.
It is not permanent. Subsidies are deployed to incentivise new investments.
A good example is the energy transition roadmap: subsidies are given to motivate businesses to shift to sustainable energy.
This is where economic literacy of the population can make a difference.
People who understand basic economic principles can make informed decisions when voting or supporting specific reforms.
This reduces the likelihood of endorsing policies that may have negative long-term economic consequences.
Next is accountability. Economically literate citizens are better equipped to hold their leaders accountable.
They can assess the promises and performance of their representatives, pushing for transparency and honesty in economic matters.
Economic literacy promotes the creation and support of sustainable policies.
Understanding concepts like budget deficits, inflation and taxation helps in recognising the need for balanced and forward-thinking economic strategies.
With the global economy evolving, economic literacy enables people and businesses to adapt to changes.
This includes understanding market trends, technological advancements and international trade dynamics.
There will be reduced inequality.
Educated citizens can advocate for fair economic policies that address inequality and social justice.
They are better positioned to understand the implications of wealth distribution and the benefits of inclusive economic growth.
Studies have shown that economic literacy empowers people to manage their finances better, leading to improved personal financial stability and reduced reliance on social safety nets.
This individual empowerment contributes to a more resilient economy.
A society that values and understands economics is more likely to encourage innovation and entrepreneurial ventures.
This drives economic growth, job creation and competitiveness in the global market.
Economic literacy is not just a personal asset but a societal necessity that underpins governance, sustainable development and economic wellbeing.
We must get serious to strengthen people's economic literacy.
Education can start from school. Economists must communicate more about economic instruments.
Instruments, including subsidy, taxation, investment and budget preparation, must be communicated in simple terms to the public.
Only through better economic literacy can the government move with economic reform that the country desperately needs.
The writer is professor at the Tan Sri Omar Centre for STI Policy, UCSI University and associate fellow, Ungku Aziz Centre for Development Studies, Universiti Malaya