KUALA LUMPUR: The country should have short and long-term solutions in preparing to become an ageing nation, say economists.
The experts believe as the country moves towards such status by 2030, it is imperative to make preparations as the demography change will affect not just the economy, but across all layers of society.
Putra Business School lecturer Associate Professor Dr Ahmed Razman Abd Latiff said an ageing nation means the country would have less productive labour.
"So, we may then need to have foreign workers to replace the ageing workforce as we don't want to disrupt the lives of the younger generation.
"The country may also need to impose higher taxes on the current workforce to support older generations who are no longer working, to cover the rising costs of health and welfare," he said.
When asked if the country's retirement savings were enough, he said only 10 per cent of citizens were able to save a sufficient amount by age 55.
Razman said this would have greater implications for our country's social and welfare benefits as many will be classified as poor or hardcore poor in the future.
He also suggested the Employees Provident Fund (EPF) to make room for third-party contributions in retirement savings.
"This will allow close individuals such as spouses, parents and their children to contribute to the savings account, instead of relying solely on employers and voluntary contributions," he said.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said that the opening of Account 3 in EPF would become a challenge for the members to have enough savings for their retirement.
"As EPF states they need to have at least RM240,000 to retire comfortably where they can withdraw the money of RM1,000 per month for the next 20 years.
"For me, it is quite tricky because individuals need to find the right balance between the present needs to pay off all the expenses and sufficient funds for the future needs," he said.
He added that the trend could be reversed if the government emphasised on efforts to build family institutions that facilitated the process of how the country could repopulate.
"In view of the rising cost of living, which may also include the cost for childcare and education, we could see our society, especially the young generation, may have reservations to start a family.
"The government should promote and foster the building of family institutions as a whole, ensuring that all necessary infrastructure, especially childcare centres and education is in place to encourage and incentivise people to start families."
He said that with declining fertility rates, there should be efforts to promote work-life balance and encourage female employees to return to the workforce.
"If we fail to address the ageing population, it will inevitably strain government resources, making tax collection and expenditure planning more challenging," he said.
Yesterday (May 14), the Department of Statistics Malaysia (DOSM) reported that Malaysia's population reached an estimated 34 million in the first quarter of the year.
This represented a 2.3 per cent increase compared with the 33.2 million recorded in the same period last year
However, chief statistician Datuk Seri Dr Mohd Uzir Mahidin said live births in the first quarter had fallen by 9.4 per cent or 106,386 births, compared with 117,413 births recorded in the same period last year.
