In 2003, I submitted a memorandum on the proposed KL 2020 Structure plan to DBKL. Prior to that, in the process of gathering data for this memorandum I did some research and talked to some professionsals in the fields if architecture and town planning. I was called up to present the memorandum to DBKL but apart from that, I have not heard anything from DBKL again.
I mentioned then that one of the most disturbing features in KL was that the ratio of house price versus annual income. Kuala Lumpur has a average ration then of 3.27 which is considered high. The ration will be even higher now, because house prices has gone up since but not the income. What this means is that for most of the population, they are spending almost 30% of their annual income for housing , which is very high, when it should be about 5%.
Why is it so? It is because we have not enough medium as well as low cost housing. In year 2000, 51% of total housing in KL was of high cost units, whereas medium and low cost housing was 24.9% and 24.5% respectively. While the low income group is the majority in KL , there is just not enough low and medium cost houses . This also means that while the housing needs of the rich are more than taken care of, the needs of the poor are not tackled properly.
This also means that for a fresh graduate, it is almost impossible to own a house. For a fresh graduate working in Kuala Lumpur, the first thing that he needs to own is a car, given that public transport is so bad and often, without a car, he would need to take 2 or 3 change of buses to reach his place of work. That would mean that he would have to spend at least 3 hours on buses every day to and fro.
So a car is a necessity for those not living or working near a LRT line. And that goes for most people living in KL and PJ. A car is no more a luxury to these young people. But car prices are not cheap. Very often they have to spend 30-40% or even more of their income just to pay for car instalments, petrols, road tax and maintainance. RPK has written an excellent article on this titled: Back to basic 1968-2008 . I quote a part of it here:
As of last month a Toyota Vios would ‘cause a damage’ of about RM 89,000
In the international market, a Toyota Vios is about USD 19,000.
USD 19,000 = RM 62,700 (using the indicative rates of USD 1 = RM 3.30).
That makes Malaysian Vios owners pay an extra RM 26,300.
This RM 26,300 should be cost of operations, profit and tax because the transportation costs have been factored in to the USD 19,000.
RM 26,300 or RM 625 per year translates to a Vios being used for 42.08 years.
I do understand that the RM 625 is a rebate given by the government, but it also means that one has to use the Vios for 42.08 years just to make back the amount paid in taxes for the usage of a foreign car. Would anyone use any kind of car for that long?
Why is public transport so bad and why is car prices so high? We have to thank our Dr M again for his vision of having a national car project. To sell national cars , imported cars are purposely taxed until most people have no choice but to buy the lower quality national car. And why should public transport be improved when the idea was to sell more national cars? If the public transport was made good, then who would want to buy cars? How would crony companies sell parts to the national car company if everyone took public transport?
I have nothing against national cars, but at least, if you want to sell the national cars, you must make sure that it is of high quality (using high quality but competitively priced parts and not by using highly priced but inferior parts from companies owed by you-know-who) and able to compete with imports and not by taxing the imports so high that you have no choice but to buy the lower quality cars. That is against free market principles. To sell something, the thing must be of good value and must be good quality… any kid can tell you that. Protectionism for 5 initial years might be alright for the national cars, but to protect it for 20 over years is against any economic wisdom. I have written a few posts on the national cars, just use the search engine in this blog to do a search.
Now back to the young graduate. Apart from the hefty car instalments that a young graduate pays for in order to arrive in his work place punctually, he needs of course to pay parking which is again not cheap. Many people resort to parking illegally along road sides and in abandoned clearings, but the cost of paying summons (or tea money to enforcement) may even be higher than the legal parking fees. Then he needs to spend on petrol to make the car move… and petrol prices…….sigh!
Then they need to eat out for lunch at least. If they need to drive a car to work, the workplace must be far from home. To go home for lunch would not be economical. But to eat out means another 10% of pay gone. Factor in the handphones bill and internet bills, which are no longer considered luxurious items but necessities in modern living. There are other expenses of course, like clothing, entertainments etc… Some may even need to give some money to their parents but most parents, unless very poor, would not want to burden the children so maybe a token payment suffices. But for those really poor parents, the young man would have no choice but to support the parents…
For those who do not need to support the parents, how much is left?. Maybe 20 % of their pay or less to save for the rainy days… .(For those who need to support their parents, I can tell you they have practically nothing left, and they may be potential clients for Ah Long). How to own a house when the house price and annual income ratio is greater than 3 times and average person would be expected to spend up to 30% of his or her income on housing alone if he wants to owe a house?
So I really pity the young people coming out to work. They have practically no money left after all these expenses, and they cannot afford to be sick of course, being hospitalised in private hospitals is no joke!!!
One of the most important responsibilities of a good government is to ensure that people have a shelter above their head which they can called home. A shelter over the head is a necessity and if a person cannot even afford to own a house, then there is really something wrong with society.
Why spend billions on allowances/holidays on top officials and white elephant projects when these money can be better spent to build more medium and low costs houses for the needy, which in the present era, includes even the graduates and some professionals. Or use it to spend to improve the public transport system.
The modern poor is no more just the beggars in the streets (some beggars may even be richer than these young working people), but rather your children and my children. Sad? But true.
Does economic advancement mean anything to the people? Is our lives really better than 20 or 30 years ago? are our children richer than the children of bygone generations? I leave you to figure it out.