“The Hit Group”

Idris Jala is a person I respect, even though I do not necessarily agree with his views, especially in the past year or so.

I have written an article praising him some time back: Success story of a Bumi CEO.

He is also one of the few that warns that Malaysia can be a bankrupt country in a few years time, if we do not do away with subsidies. Indirectly, by saying so, he actually hinted that wastages and leakages may lead this country to bankruptcy, hence there was so much of reaction against him then..

Today, he was quoted to say that the economy can absorb an official inflation of 5%.

In the Malaysian context, a 3% inflation is already very high, since i have a feeling, and a lot of people agree with me, that the CPI does not really reflect market prices.   Whenever there is a 3% increase in CPi, you can be sure that many things go up more than 3%.  Food prices, house prices and rentals, electricity tariff, transport costs and entertainment costs (Astro for example) are among some of the things that have gone up a lot. A lot of other things have gone up too.

An example is that medicine prices have gone up;  even colds medications have gone up 300% in the past year, because of the Ministry’s directive to restrict import  , sales and production of a component called pseudoephedrine , and thus there was an artificial shortage of colds medicine containing pseudoephedrine in the market, and thus prices went up almost 3 times. It is a drug that can be abused of course, just like any other drugs, but because of the abuse of a small group of patrons at certain night spots, the ministry imposed restriction of import and production of a drug that is being used by so many others..

This is a mentality that sounds similar to that of banning file sharing sites. Just because some info in these sites infringes on copyright, there is a blanket block of these sites… The correct things to do is to inform these sites of those materials that infringes on copyright and ask that these materials be deleted, as many sites have done in the past.

The correct things to do,  with regards to colds medication, is to have strict law enforcement, and not by restricting a medicine which is used by so many for relief of colds and nose blocks. Nab the culprits that abuse the drugs by all means and let others who need them have access .

Now, back to inflation and the economy!

The 7% rise in electricity tariff is said to affect only a quarter of users.  But many of these quarter of users actually run the retail businesses and manufacturing businesses, and hence these increase will be translated as increase costs for goods and services.

I realise that all the increases actually hit at the same  group, which I would like to called ” The Hit Group”,  more than anyone else. This is also the middle income group.

While the rich has plenty of reserve to cushion them of any ugly  inflation, and the poor are sometimes helped by some of the government programs, it is this group that are worst hit in any inflation situation.

This group is among the one million who pay income tax to support the other 26 millions. Majority of this group stay  in urban areas, and are also the group that is hit by increase in electricity tariff. This group, because of its work nature, is also the group hit most by increased hawker-food prices since because of the nature of their work, they have to eat a meal outside..

This group is also among those who subscribe to  internet, astro and hence are hit by increase in Astro fees (I concede that Astro  can actually be done without). This group is also worse hit by house prices or rentals, and rising bank interest and petrol price increment.

This group, unfortunately is also the group that does not qualify to apply for a low cost home, or study loan for children.

Now, back to Idris Jala’s figure of 5% inflation that we are going to face.  The econmy can withstand this 5% increase, says Idris. Our experience tells us that a 5% increase in inflation rate means that most things will go up more than 5%. Many things will go up more than 10– 20%

If things go up more than 5%,   I doubt that this middle income group can withstand anymore .  As I have mentioned in another article ” when belts cannot be tightened anymore”, their belts have already be pulled to the limit and cannot be tightened anymore.

I suspect Idris is trying to prepare the populace for another subsidy cut.

What this group of people hopes is that the government be more understandable of their woes. Have more incentive and tax break for this group, too.

Money can actually be found if there is less wastages and leakages. There is really no need to squeeze this group any tighter..

17 Comments (+add yours?)

  1. Kenny
    Jun 24, 2011 @ 13:19:45

    5% CPI can mean 15% on the street and Idris is saying the people can absorb this for 3 years running. The way the CPI is calculated does not reflect market prices because many items in the basket are controlled goods with high weightage. Some items such as toll, Astro and electricity are also not captured. People cannot live on controlled goods alone.

    Now Idris is trying to sell GST to Malaysians which will increase the burden to the low and middle income. If BN wins the next election GST will certainly be imposed.

    Although GST widens the tax base it unfairly shifts the burden of tax to low income earners. The poor spends almost 100% of their income which is subject to GST. The rich spends only a portion of their income. Hence the rich are taxed on only a portion of their income while the poor are taxed in full and both groups are taxed at the same rate.

    BN also seems to be obsessed with GDP and per capita income figures which are averages which can mean nothing if there is a large income gap. 90 people earning RM1500 a month and 10 people earning RM20,000 a month will give an average income of RM3350 which looks decent but 90% of the people are hardcore poor.

    Like

  2. Richard Loh
    Jun 24, 2011 @ 13:46:06

    I am no economist nor understand all the figures that leaders and experts are talking about. What I know is to compare the price of same products over the years.

    As late as 1970, one cup of coffee is 10 cents and now the same cup costs RM1.20 to RM1.40 depends on where you are.

    A datsun 1.3 cost 7.5k in 1974, a toyota 1.3 cost 17.5k in 1984 and what is the price now, I don’t know because I didn’t border to check because I could not afford it.but I know proton saga 1.3 cost 42k now.

    The same brand of rice I bought 6 years ago price at RM18 for 10 kg and now cost RM36.

    Do we want to talk about salary? I doubt better not..shameful….

    Like

  3. YW
    Jun 24, 2011 @ 17:09:36

    I shed a drop of tear reading this article describing my situation.
    My friends and I are getting royally screwed by the gahmen’s mismanagement.

    I seriously dare not look forward to the future.

    Like

  4. CYC
    Jun 24, 2011 @ 17:13:59

    Don’t worry, we have 1Malaysia Retail Shop to bring down inflation. What a brilliant strategy. Another brainchild from the Lab, I presume.

    Inflation, another creation to take away wealth from the poor. The elites and cronies love it.

    Like

  5. CYC
    Jun 24, 2011 @ 17:39:34

    CPI only 5%. But when it comes to revising mega project budget, it will 15 to 50% and reason remained the same : due to hike in material cost. So, which set of inflation cost is correct. Economists are liars, aren’t they?

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  6. monsterball
    Jun 24, 2011 @ 18:01:15

    The inflation has hit hard on the poor and the so call middle class Malaysians slowly guiding down to be poor …saving every ringgit they can…..which was at one time….tip money given out for various small excellent services.
    I Malaysia shops….is just another cheap stunt to cover up massive corruptions..and diverting Malaysians attention to vote the out gettng rid of a very corrupted government.
    This is slowly come out one by one…more and more….until all Malaysias picture the government is caring and so…all will vote for BN again.
    However..time is against Najib to make this stunt work…UNLESS he already planned for Emergency Rule….to brainwash all for few years.

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  7. disgusted
    Jun 24, 2011 @ 18:02:55

    Economists are cold blooded and not just liars….they talk about figures and statistics, not about human sufferings. The “middle-men” (those distributive trade) are also the crooks that pushed prices. All in all, not just factor causing the misery. A combination of factors and some of you are right, the BN really raped this country and mismanage the resources. Corruption runs deep in this country already.

    Like

  8. klm
    Jun 24, 2011 @ 19:32:57

    Dr. Hsu. I cannot agree with you in Idris Jala. To me he is out of his depth. He is causing miseries to Malaysians. I wish he will go to Africa and never come back, I despise him.

    Like

  9. Kenny
    Jun 24, 2011 @ 22:10:53

    There is very little that Idris Jala can do to revive the economy. Our economy is caught in the quagmire of racial policies but they cannot be removed as they form the bedrock of Umno’s political hegemony. These policies result in falling standard of education, kulitocracy instead of meritocracy, breed corruption and result in skilled people leaving in droves. The economy becomes uncompetitive, incomes stagnant and rent seeking flourish. Idris Jala should not have left his cushy job in Shell to join the Cabinet and take on an impossible task. Now he becomes a liar and window dresser for this corrupt regime.

    Now we still have maids from Indonesia, prostitutes from China and mail order brides from Vietnam. In another 5 years there will be no more of these. Add another 5 years and the flow will reverse. Even now, maids from Indonesia are finding Malaysia less attractive to work due their improving economy. They are moving forwards while we are going backwards. One day we will hear of Malaysian maids abused in Jakarta.

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  10. monsterball
    Jun 24, 2011 @ 22:38:33

    Problems caused by liars and crooks and Economists are chosen to be the scapegoats for the day.
    It is the singer not the song that makes a person good or bad singer.
    It is not the degree but one who uses the degree to do good or bad.
    It is unfair to lump and label all Economists into one. kind…..as liars and cheaters.
    We have a famous doctor that kills.
    We have lawyers that God help us all to find the right one to defend smartly and lawfully.
    We have a dentist that does not pull one tooth and yet is a multi millionaire.
    And who are going to defend the animals that are killed more than being cured by irresponsible Vets?
    Liars and cheaters….why focus on Economists only.

    Like

  11. KeyStone
    Jun 25, 2011 @ 04:13:42

    The rakyat are like frogs in a pot of cold water over a slow fire !
    In the end, from time point zero to current time on humanity, it is all about distribution of resources for consumption and survival. This simplicity has been lost in the complexity of modern economics bullshits. Inflation increases the gap of distributions of resources compatible to the rakyat labor of works.Subsidies is like applying glue to a ever enlarging hole in a punctured tyre !
    The only way to correct this situation is to effectively plugged all the leaks, wastages, and be realistic about the real cost of living and the rakyat need to learn to cope with that.
    Places like Hong Hong, South Korea, Japan and Singapore are societies without any natural resources, all their incomes, and GDP come from creative and hard work of their rakyat, life is very tough for many people in this societies, but the difference is they know distribution of resources is compatible to the labor of works and the creativity. We have to respect the people in Hong Kong and Singapore, like it or not, they work very hard, live in small places, most of them do not own a car, they do not know subsidies. And yet, they are more motivated as a whole and prosper. We can learn from them in terms of the resilience they have. Must of some vitamin they eat that we we do not. What is wrong with us?

    Like

  12. Li Li Fa
    Jun 25, 2011 @ 09:47:35

    I can’t help but to suspect that IdrisJ ; the so-called government economic advisers and the power-that-be are working in cohort to cast a mental net over the populace with the purpose of fulfilling their own ulterior motives. IdrisJ predicted the nation can be bankrupted in time to come, and then come up with a statement that his Gomen can cushion the inflation rate of 5%, thus protracting on his words.

    The ‘Hit Group’ (HG) is clearly sandwiched between two other groups which can survive either on their own or assisted by various bodies.

    The HG is the bigger bracket of the tax-paying community. It seems ,therefore, has to be controlled, manipulated, coerced into obedience under the auspices of the power-that-be so that power remains in the hands of the incumbent, at the expense of the people.

    As the patience wears thin, and the belt cannot be tightened any further, the populace should and must take action.

    Can we change all this in the coming 13GE?

    .

    Like

  13. Phua Kai Lit
    Jun 26, 2011 @ 21:31:05

    1. When our oil runs out, we will be in really serious trouble.

    2. Our EPF money is already being raided

    3. Ever worsening govt deficits and govt borrowings.
    If money is borrowed from citizens, will be repaid through deflated ringgit
    If money is borrowed from outside the country, we will be in really serious trouble as the debt needs to be repaid in hard currency. The IMF will come in and help foreign creditors extract their pound of flesh from Malaysians (like what is happening to the people of Greece).

    Like

  14. Kenny
    Jun 27, 2011 @ 10:55:22

    There are many parallels between Malaysia and Greece.

    1. High govt deficit and borrowing
    2. High corruption
    3. High income tax evasion
    4. Bloated civil service
    5. Lot’s of govt bureaucracy
    6. Spending on grandiose and useless projects
    7. Govt keep issuing bonds
    8. Govt keeps telling the citizens everything is alright until the crash came.

    Greece has the euro and the European Bank to prop it up, Malaysia will not be so lucky. In the event of a crash ringgit will depreciate to a fraction of its value.

    Like

  15. Phua Kai Lit
    Jun 27, 2011 @ 13:39:19

  16. Phua Kai Lit
    Jun 27, 2011 @ 14:56:59

    The people of Greece, at the mercy of the IMF and the ECB:

    http://www.commondreams.org/view/2011/06/24-6

    Like

  17. Kenny
    Jun 27, 2011 @ 15:47:43

    Another parallel between Malaysia and Greece

    9. High defense spending

    If ever Malaysia is at the mercy of the IMF and World Bank to prevent a default there is a sliver lining – the force abolishment of bumiputra special privileges.

    Like

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