Will we see the day?

In early 2007, I wrote this:

This is a common complaint that I hear day in and day out : that although the official growth rate for the third quarter is 5.8%, why are people still feeling that the economy is stagnant?

I am not an economist, but just use common sense and some elementary mathematics:

 

          growth rate : 5.8%

    inflation rate : 3.5 %

   actual growth is only = 5.8 -3.5 =2.3%

So the cake is expanding at a rate of 2.3%. But population growth rate is 1.8% meaning that there is now 1.8% more mouth to eat the cake.

So, if you take this arithmatical calculation,

 the cake has actually grown 2.3%-1.8% = 0.5% which is negligible.

cake.jpgmore people (1.8%) are eating this slowly expanding cake (5.8%) which also cost more now (3.5%) -(pic fr teenytinytur flickr.com)

Which is why you feel that although the growth figure is still good, you are not getting any benefits.

Just like if you earn 100 dollars a year and your increment is only $5.8, and things you spent on now costs $3.5 more, your actual increase is only $2.3. But your children now spends $1.8 more than last year, so you actually have  $0.5. more to spend than last year, a very negligible amount.

Coupled with that, you have life style changes. You spend more on handphone bills, internets bills, Astro bills, cafe bills and so on. So with this life style changes, your $0.5 increment is not going to cover this . You therefore feel that your saving rate has gone down and you have less money to use.

The above scenario was when the growth rate was 5.8% and the inflation is estimated to be 3.5%. And that was in early 2007. Most people then were already cutting down on expenses. Now, just replace the above figure with these: inflation rate of 8-10%, growth rate of 5% and population growth of 1.8%. With these figures, it means that the actual growth is in the minus territory.  Many businesses will face bankruptcy and closure and many people will become unemployed.

So what have you? We have a scenario that everyone is feeling the pinch, except the very rich or the very top. The very rich will have plenty of reserve whereas the very top will have lots of allowances, so they have nothing to worry about. It is the common people that are struggling.

Well, people are actually very understanding . If they know the country is facing a crisis  and the leadership is good and have tried their best, the people will still stand behind the government even during the time of hardship. Like the Singaporeans did in 1965 when their country was expelled from Malaysia, the whole country stood behind LKY and his government. Like the British people during the second world war….

But when people are fed up because of so much of mismanagement, abuses, misuse of funds, corruptions, wastages and what have you… any economic hardship will not be well tolerated. People are not stupid, especially now with all the info they can gather from the net.

People do not mind the hardship, if the government can really repent , do away with the corrupt culture, the culture of patronage, the culture of commission and middle man, the culture of abuses, the culture of self enrichment, the culture of selective prosecution, the culture of what have you………….

Will we see that day?

 

 

 

25 Comments (+add yours?)

  1. folo4
    Jun 24, 2008 @ 16:35:20

    nope, we’ll never see the day.

    from the looks of things, it will take 150 years for Malaysia to even start to look dignified.

    It’s “Corruption here, Cronyism there” .

    Again, I repeat my question asked here; Did Malaysia ever did anything good worth talking about?

    Like

  2. monsterball
    Jun 24, 2008 @ 17:48:21

    In Singapore…PAP keep winning because it is a proven non corrupted government.
    People may not like PAP..but do admire the great reputation PAP is showing to the whole world.
    Doc…your commonsense is fantastic!! right or wrong…your explaintions make a simple Malaysian..understand the logic. You can be a great teacher too………hahahahahaha
    The chocolate cake looks delicious!
    So……now we have the real truth of out so call growth….painted by UMNO…..which we know….no growth at all.
    Are we feeling things are getting dearer and dearer each day and hard to manage or budget monthly?
    If there are so call 5% growth…are CEOs …so cruel…..not increasing the salaries of the low income groups? Are they increasing their salaries?
    One guy said..that RM2000 per month is needed for the low income group…and he is right!
    I did increase the salaries of my low income workers…yet few are still earning less than RM2000 per month. They are grateful for the increase….and will accept their fates…based on what UMNO did…not what I did not do …to help them…..as much as I can.
    For that ….I do have a team of good understanding and hardworking assistants. I am lucky!
    Now focus and picture all low income workers…..many still..less than RM1000 per month. These were considered low income group…previously. No more!!
    These have no become… the poorest of the poor.
    So did the fuel increases created thousand…maybe a million more poorest of the poor Malaysians? Yes they did!!
    Just watch….few great pretty daughters …sacrifice themselves…to become prostitutes…to save her family. UMNO is the caused of all this…and if my predictions is correct..I hope many of their own daughters will give those UMNO ministers….a hard and difficult life….shaming them…where no money can solve the problem at all….and their sons….simply spend and spend…all their ill forsaken money acquired through corruptions. God does work in mysterious ways…and sometimes….a reaction maybe like so….is seen…to complete…every action has an equal reaction…for the powerful…the kingpins…of UMNO.
    Making others suffer…..their filthy rich family will suffer too..one way or another.
    Otherwise…..Malaysia is completely under the control of Satan.
    To Buddhists….it really means the forces of evil is greater than the good ones.

    Like

  3. petestop
    Jun 24, 2008 @ 18:23:37

    Gerakan….Gerakan…. still haven’t taken the cue from SAPP ah ?

    Want to wait till PRU-13 to test and see how you will perform ? You must be blind to even think that can gain back your credibility by sticking to your political master, UMNO.

    Might as well Gerakan merge with UMNO… but wait… you are not accepted as your skin colour does not match.

    Like

  4. folo4
    Jun 24, 2008 @ 19:41:17

    ” Otherwise…..Malaysia is completely under the control of Satan. ”

    oh no; Satan never controls anyone; he INFLUENCE God’s greatest creation to do the inhumane.

    We’re being associated with African countries now. Next up, uncontrollable outbreaks of STD cases.

    Like

  5. monsterball
    Jun 24, 2008 @ 20:43:18

    STD…Shit Tonic Drug?

    Like

  6. jeff
    Jun 24, 2008 @ 21:08:48

    0.5 % economy cake expansion is not within the reach of ordinary Malaysians, it is only avail to those who had the means and connection, my friend. So basically, one has to think outside the nutshell, the expansion cake ratio is not the right measure of Malaysia economy success, unless and until that benefit can spread n elevate the living standard of low income and indigent Malaysians in general.

    Like

  7. folo4
    Jun 24, 2008 @ 22:05:48

    yes, everyone knows that Malaysia’s wealth distribution is obviously crooked beyond gradual repair.

    That doesn’t help the have-nots any much better.

    Life in Malaysia was said to had gone tumbling down since 40 years ago. Basically, I was Born Screwed.

    Ah well, we may suck at all levels of international competition, but at the very least, we learn to eat less. Cut corners. Pirate everything to save money on entertainment. Do questionable things Just To Live.

    Because I know, I suck at international competition at all forms. At all levels. At all times.

    And It is too late to do anything now.

    Like

  8. Phelps
    Jun 25, 2008 @ 00:28:39

    I think the 5.8% growth rate is the real GDP growth rate. It has factored in changes in the price level.

    The reason why many people don’t feel the growth is because the growth emanated from commodities sector and the income go to a small segment of the society. The money is trickling down to the masses.

    The hike in the price of petrol and diesel squeezed further the buying power of the people. Unless the billions of savings in subsidy is used wisely, and not leak out to rent seekers who then park the money in Swiss banks, the situation may deteriorate further.

    It is true subsidy is bad for the economy.
    It distorts allocation of resources. But leakage to rent seekers is worse. Of the two economic evils, I will take the former anytime.

    It is ridiculous that wage has change much over the last 15 years. A fresh business graduate earned about RM2000 a month in mid 1990s. Today, the starting pay still remain largely unchanged.

    I am earning about 70% of what I was earning in the mid 1990s despite prices all going up.

    The reason lies in too many people chasing too few jobs. New jobs are not being created fast enough to absorb the expanding labour force. That explain the rising crimes level today.

    Foreign direct investments are going elsewhere. Our government is not willing to bite the bullets. The NEP or NDP is a hindrance to the inflow of foreign investments. There is a hidden cost in doing business in Malaysia in the form of corruption and bumi equity requirements.

    Singapore is 5 times richer than us in terms of per capita income despite having no natural resources. By right, we, endowed with rubber, palm oil, oil, gas, timber and land, should be 5 times richer than them.

    Sometimes, I wonder what is there left for the future of our children.

    Like

  9. romerz
    Jun 25, 2008 @ 01:54:29

    It will happen one day, of that I’m sure, but at what costs?

    Unfortunately, I don’t think we will evolve to that corrupt free stage naturally but there will come a time when the rakyat will tolerate no more and lose heart with the system and revolt.

    Dr Hsu, sometimes I feel so tired thinking about the future. I feel so frustrated that I’m so helpless to prevent this country from sliding further down the pits!

    I have been nothing less than a faithful supporter of Gerakan but I’m sorry to say that I’m coming close to breaking point. And the alternative of PR doesn’t appeal to me either. Perhaps an NGO to divert my energies?

    Back to corruption.

    Let me share with you what a relative of mine found when looking through the Petronas Annual Report 2007.

    From page 18 of the report.

    “Liquefied natural gas (LNG) continued to be the third largest revenue contributor for the Group. Sales volume increased by 2.1% from 23.6 million tonnes to 24.1 million tonnes on the back of higher volume produced from the Group’s Egyptian LNG (ELNG) plant. The Group also realised a higher average LNG price of USD328.97 per tonne during the year compared to USD310.04 last year, resulting in an increase in revenue from the sale of LNG by 1.4% from RM28.5 billion to RM28.9 billion.”

    This doesn’t make sense!

    Sales Volume up by 2.1%. Realized average price improved to USD328.97 from USD310.04 (improvement of 6.1%) BUT revenue only increased by 1.4%.

    How is this possible? We are talking about revenue here and not costs! Are they stupid or am I stupid?

    Here’s the link to Petronas Annual Reports from 2002 to 2007.

    http://www.petronas.com.my/internet/corp/centralrep2.nsf/Src/WebDoc*Investor+Relations+Default/?Open

    I would appreciate it if more knowledgeable people could look at them and give their comments.

    My one wish for Gerakan now is to leave the BN and focus on the bigger picture of national issues and forget about Penang.

    They may huff and puff about Penang but they are not going to get it back and there are bigger issues at stake which affects the whole country!

    Maybe then we might be just able to avoid that revolution which is coming!

    Like

  10. novice101
    Jun 25, 2008 @ 06:05:38

    The cake in your photo tells the whole story – the 5.80% growth rate given is just the icing. Never really believe the figures churned up and served to us all along.

    The actual reactions of the public is a much accurate indicator of the health of the nation.

    Like

  11. Steven
    Jun 25, 2008 @ 12:34:01

    The number for GNP n GDP in Malaysia do not tell the whole story, as far as we are concerned, certain segment of the population pretty much guarantee to reap the benefit of the economy expansion due to their race n religion, n umnoputra are definitely going to get a large portion of that , so in actual term, economy cake expansion achievement boosted by BN really mean nothing to average Ah kaw or Kurma in the street, as they can only wait for the mercy of the well connected datuk , or tan seri to pass them few percentage point.

    Like

  12. nick
    Jun 25, 2008 @ 14:27:20

    Romerz, if sales vol up 2.1% and unit sales value up 6.1%, then the Total Revenue should go up. nearer to 6%, all things being equal. However, what was not disclosed is “Sales Rebates” or even “Volume discounts” or “Credit Notes” given for something something. Hence, it is possible that Revenue is only up 1.4%.

    Phelps, you wrote that graduate salaries have not risen by much from the 90’s. You are darn right. This was because the country manipulated its “inflation index” by subsidizing fuel, essentail food items, chicken, etc. After the recent hike, I would expect Salaries to start adjusting in the next 12 months. The MEF has already issued guidelines to private sector employers this week to give 6% cola (if I am not mistaken).

    I read in the Star paper (under IT pullout section) that we are in the K-economy. The economic resources of land, labor, materials are no longer so important. “Knowledge” holds the key to future productivity in the new economy. You see this in the economy activities of NY, London, Singapore, HK, etc.

    Dr. Hsu, I enjoyed your article. It makes us wonder how Malaysia even after 50 years seem to be struggling, especially the middle class. The 2nd Finance Minister said that our savings rate is 30%. I was surprised when I read that. maybe, our 23% EPF have a lot to do with that. But this leaves nothing left for spendings.

    Like

  13. pohwatchdog
    Jun 25, 2008 @ 20:09:07

    Malaysia economy is not moving. Ask around and the business people will tell you about the real situation. Prices of various good is raising and salary is not going up. Where are our country moving? Are we still hoping for miracle? What have the government in the Federal or State doing to improve the people lot? Some of us here have give the Pakatan Raya a chance to admister. look what outcome we got? Bickering and sharing of loot among them. It is still the same. We the rakyat want a betterment and qualities of life.

    What alternative we really have? We cannot blame entirely on the Pak Lah government and his team.
    He needed to juggle with various responsiblities. He need to delegate part of his Ministry with capable, dedicated and proactive official that have the heart and concern of the rakyat.

    What we need to understand the global oil price is killing many more world economy? Even Australia, Singapore, Thailand, China, India, Unites State, France, Israel and Britain have their internal economic crisis. We the rakyat should rally behind our government to save, travel less, eat smart and healthy. But leader too should show the example.

    Like

  14. Ah Pek
    Jun 26, 2008 @ 08:07:45

    Of course it ‘s not Pak Lah’ fault, his racist party was chosen by majority of people, it is Malaysians own making; even the PM n DPM believed they are the saviors of all Malaysians as “rakyat” wanted them badly.

    Like

  15. monsterball
    Jun 26, 2008 @ 08:50:31

    Doc remind me of one in the wilderness….crying for “repent..you sinners” by baptizing those who wish to repent at river sides.
    That blessed John was beheaded for doing a successful job.
    But that was 2000 years ago.
    Nowadays….desires like Doc…crying for repents will meet deaf ears from those sinners.
    That’s why streets demonstrations…so large in numbers is the only answer…to show those guilty ones…who behave.. bosses of the country…instead of elected servants.
    Malaysian UMNO and BN politicians seems to think we elect them to do as they like ….so much so….after 50 years…..comes a man…29 years ago…to show UMNO how to divide and rule…up dated…race and religion politics …instead of disbanding it…to move forward for a united Malaysia for Malaysians…and keep squandering the country’s wealth in such huge amount..never seems to be enough. Such a man is pure evil..and Mahathir is the one.
    Calling all these rouges to repent…when money is their God..is almost impossible.
    These are the sick…greedy lot…pampered to be so by 22 years of rule of the jungle….so successful …and so many of the faithful followers are still enjoying the established style of filthy rich lifestyle….with stolen money…you want these people to repent?
    They are the Datuks.. Tan Sri..and Tun… too!!
    No Doc….these people are drunk with false success….and is still effective…simply because they still have a slim majority….meaning majority Malaysians are still being fooled by them.
    The 12th election is a very good sign…people want a change in government.
    Actually head counts on voters…majority want a change…but UMNO is so smart to make sure…they win a Parliament seat with a small die hard members of their party…and group such a huge number.not so easy for any opposition to win…at place..they have less than 50% chance. This is a welknown fact.
    Crying for changes by UMNO..so that we all are prepared to suffer anything they rightfully or wrongfully put to us…will never work.
    These are the ungrateful politicians who are actually racialists and the worst part…supported by balls carrying BN parties….willing to call UMNO ministers…their Masters and Lords.
    Such low down scums of the Earth are infact….the biggest contributors towards what UMNO is today.
    Millions of votes are simple minded and the force of evil is so great….are too strong for them…still.
    Most of these BN scums are voted out. They are still thick skinned show dogs to UMNO..as seen in UMNO meetings….so many feeling so proud of being lap dogs to UMNO..meetings….showing their supports…for race and religion politics.
    So Doc…read what I have put out…correct me .if I am wrong. I sure don’t have your compassionate and understanding nature…inspired by your John the Baptist.. to you.
    Those were the jungle days…and people are controlled by guns and power..and at that time…the Earth is known to be flat…where certain point..one may fall to hell…was the accepted fact.
    Now…the whole world is a stone throw away from each other and educations is a must.
    It’s a mind game world now.
    The issue is….are Malaysians mind ..well balanced.

    Like

  16. jeff
    Jun 27, 2008 @ 00:39:16

    For another 50 years , Malaysia will never change, as the majority of Malaysian race-namely Malay insist on Umno gangster party to lead them the way to prosperity and progress, continue to oppress other Malaysian races n religions, all in the name of “racist n religious supremacy” over other, with no regard for universal value of compassion, love, human rights, equality, liberty and justice for all citizens of the land.

    Like

  17. petestop
    Jun 27, 2008 @ 10:35:02

    Mr pohwatchdog condemning PR when they only in state govt for 100 days and being sabotaged at every level by the federal govt.

    Must be laughable, when state govt only have limited powers, the inflation in Malaysia is solely to be blamed on the Federal govt.

    It is 50 years of plunder and looting that brings us to what it is today.

    Will Petronas perform a miracle bail-out again, like back in 1997 economy crisis ?

    Like

  18. jeff
    Jun 27, 2008 @ 10:46:40

    Which petronas director does not command hefty salary and benefit ? why they want to waste our nation oil money to help the ordinary citizen since umnoputra claimed our natural resources are solely belong to umno? It is very unlikely going to happen, when the purse string is with the “corrupt”.

    Like

  19. Y C Chai
    Jun 27, 2008 @ 17:10:16

    When a company is facing with a crisis, it should first understand the root cause before dispensing a remedy. But we have a half past six government who are ill informed on current situation. So, who could we expect they are able to solve the problem.

    I am quite pessimistic in regards to our economic well being for the near future , to be honest. While we talk about the hike of fuel price, we should always remember the spiral effect it inflict on all other goods in our daily life. The multiplier effect will be severely felt by both national economy as well as our personal wealth. With the uncertainty we are facing now, new investment will halt and job prospect will decline. End result, income decline and cost of living goes up. This is a double edge sword that cuts both end, and the effect could be unbearable.

    The worst thing, our government did not respond fast enough to address or lessen the damage cause. We have not heard or seen a comprehensive measures to counter this inflationary problem. They are just busy trying to resolve political woes without paying attention to the rakyat’s predicament. Just look at how they propose to improve public transport, you will agree with me that they are such a bunch of idiots.

    Not only we will not see the day, we will see an increase of poverty rate in the next 1 or 2 years if we redefine and bring up the threshold of poverty monthly income to RM2,000. This should reflect the real situation rather than RM800 isn’t it.

    Good luck to fellow Malaysians.

    Like

  20. monsterball
    Jun 27, 2008 @ 20:14:34

    Poh… who is a watch dog for UMNO have no brain.
    Leave him alone to bark as much as he wants.
    At least he knows he is a dog.
    One such Malaysia Chinese dog……who sold off DAP is .. even decorated as a Tan Sri.
    Poh is inspired to be a.. balls licking dog of UMNO and BN.
    Do they taste nice …Poh??

    Like

  21. Dr Hsu
    Jun 27, 2008 @ 21:03:40

    y C Chai,yes, the Rm800 defination of poverty is too unrealistic. Today, for a city dweller, a correct baseline to be taken as poverty should be a household income of 2000 or even 3000. ANd that also depend on how much mouths are there in the family.

    Like

  22. jeff
    Jun 28, 2008 @ 23:21:49

    UMNO cybertrooper is around? gathering intel for his master or spreading rumors about PR governance? He probably believe every one in this blog is idiot can be easily fool!!!

    Like

  23. pohwatchdog
    Jun 29, 2008 @ 18:00:56

    Democracy, freedom of speech, transparency and justice is the keyword in any discussion. We can give our opinion on any issues whether we accept it or not. No point to blame other when they is many obstacles to bring development and betterment to our beloved country. The problems here is the implementation and the players involved in it. Our sincerity is to see our country move along the correct path to development. As you have see my comments, what we want is what alternative Pakatan Raya have for the people. Is it the same old tune of songs?
    Look what happen in Perak, Penang, Selangor and Kedah? Is UMNO really fool everyone through the blog or internet? PR gain victory through the internet or alternative media. Let us be the judge here.

    We have our choice and evaluate what is right or wrong. Charge those in court if there are elements of irregularities. We want to move on and see what alternatives that can provide for the people. After all, democracy mean by the people, for the people and to the people that was say by Abraham Lincoln.

    Inflation is moving very high in our country and the realistic poverty line is RM 2,000.00. This phemonenon happen throughout the world. But what we need is to stimulate the economy with more proactive spending by the government in various basic infrastructure development, creating jobs for the local, high time to tighten the foreigner workers, mission to woo investment and etc. We must not forget, PAKATAN RAYA is holding power in 5 States. They should know how to play their role to improve the qualities of life, people welfare, alternative ways to finance their programmes, no more as opposition in the state that they control, playing politic to hoodwink the people and even today, Perak still having problems to name their councillors. We have waste more than 3 months of local government admistration in Perak. Come and have a look at Perak especially IPOH. Comment by businessman, we are struggling to survive.

    Like

  24. jeff
    Jun 29, 2008 @ 23:15:00

    Monsterball; judging from this umno ball carrier comment, he probably working hard among blogs to spread rumor and untrue criticism about PR” 50 years of governance” to everyone, you shouldl not be surprised he is aiming for the fancy title of Datuk or Tan Seri recommended by his racist master in the coming royalty ceremony, another non -malay sell out our citizen right to his master.

    Like

  25. monsterball
    Jun 30, 2008 @ 06:14:38

    Yes Jeff…..pohwatchdog is trying to be too smart….with his pea brain.
    This inexperienced.. young fut…is trying to impress…someone.
    But…I will shut him up…if he goes too far.
    I do need guys like you to to the job….and let me relax a bit.
    Thanks.

    Like

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