Greek tragedy

The facts below are  about Greece and taken from 2 online websites

A.  AFP news published in  France24,

1. “We calculate 1.2 million people including contract workers. The civil servants’ union says 700,000. The finance ministry says 800,000” –size of the civil service

(Greece has a population of 11 millions)

2. “And civil servants get bonuses for dressing well and reporting to work on time,”

3. “In parliament, staff work for 12 months but receive 16 (month) salaries.”

4. “This monster was created by politicians,”

(monster refers to the civil service)

5. Packed with political supporters of governments past and present — and often operating on its own rules — the Greek civil service has gorged itself to such a degree that even its nominal masters have trouble deciding where to start trimming waste.

B. Facts From Independent IE.

6. there were special payments for using computers, and there was a spinster pension for the unmarried daughters of deceased government employees.

7. Some civil servants were able to retire on a pension as early as their forties. Foresters received a bonus for working outdoors.

END RESULTS:   GREECE IS NOW BROKE AND IS THREATENING TO BRING DOWN WORLD ECONOMY

…………………………………………………………………………..

Malaysia:

1.3 million civil servants

Possible pay rise of 40%  to civil servants

Productivity increase not in pace with pay rise

More budget deficits

Higher inflation since more money in the system

Are we going the way of the Greeks?

92 Comments (+add yours?)

  1. klm
    Sep 30, 2011 @ 11:12:42

    Can we survive this? Well the answer is that Najib will survive this. We won’t.That is all that matters, isn’t it.

    Like

  2. monsterball
    Sep 30, 2011 @ 12:44:04

    Najib will be the last to survive.
    All the monsters created by UMNO b will become suicide bombers…nothing to loose…since no more easy money…no more money to pay all the installments…house taken back by back…cars…TVs furniture…all loaded in vans… taken back..and contractors come for payments..not forgetting “ah loongs”..
    Most will dare not return home at all…leaving children to be taken cared by maids……coming back late late at night….to check thing up and run again.
    Yes..Mahathir created all the monsters and Najib keep feeding them.
    Now these monsters are hungry…..will not listen and do as they like.
    Now all of you think back…have anyone contributed to what we are by being a two-timer…selfish person?
    Sure have….for most filthy rich friends are now supporting Najib…saying what a nice guy he is…all for selfish reasons…but no power to influence workers like before.
    The beginning of the end is slowly creeping in.
    Doc’s business will be affected too….no money to his clients to see him….self cure for poor folks….correct Doc?
    I know of one Indian Doc at Brickfield Rd…fantastic doctor….plenty clients..charge like hell on Chinese patients and allow Indians to pay whatever they can afford.
    I have seem RM1 being paid and take the medicine.
    The Doc told me…his race his very poor and he has to do his part to help.
    That should give Dr. Hsu a great idea to put out a sign .written in Mandarin only….”All poor Chinese…free medical treatments!!”….hahahahahahaha
    PS: My nick is “monsterball”….what do you expect?
    We do need alot of GOOD monsters to battle BAD monsters…to balance things up.
    Govt monsters?…..small matter…easy to handle….mostly no balls monsters..talk alot …no actions…unless protected by police….and the GOOD monsters are not afraid of policemen at all!!

    Like

  3. monsterball
    Sep 30, 2011 @ 13:05:53

    Greece is small fry…cannot bring down world economy.,,just hot air talk.
    Malaysia go down…also cannot bring down world economy…but all our poor folks…especially females ….prepared to be maids…but Malaysian Chinese and Indians have traditions to survive…working hard to bring food to the families and survive without being maids or servants elsewhere.
    If they leave…you can bet is for a good salary job…worth leaving.
    Indians love being Ship toilet cleaners and get to see the world…working in for ships…..owners of different trades.
    Malays will be the biggest sufferers for they are not trained to have strong minds and skills by UMNO b,
    That is why you see there are still 32% Malays supporting Najib….being programmed that ONLY UMNO b can save them.
    How cruel Mahathir was as PM….if you think back for his 22 years as PM….promoting corruptions ….race and religion…. dirty politics.
    Even smart Dr. Hsu is confused!!!……..hahahahahahaha

    Like

  4. monsterball
    Sep 30, 2011 @ 15:59:05

    “Are we going the way of the Greeks?” ask Dr.Shu.
    I hope not ..and Doc is doing his part..tirelessly trying to open minds and eyes.
    Me…a monster for sure…depending which side you are looking at.

    Like

  5. monsterball
    Sep 30, 2011 @ 16:22:12

    Forewarn by Doc is foretold
    Dr.Hsu can say to himself…”Don’t tell me I did not warn you!”
    Greece is a bankrupt country….but Greece has no oil.
    Yet no matter how rich Malaysia is….we are joining Greece..for when the government keep on stealing and stealing and spend People’s money like water…it will reach a stage..all wells dry up..no more water.
    Unproductive govt. servants eat up millions each week.
    The ordinary wage earners thinks Najib steal from the rich only….how sad..for it is the poor that the Govt stole from…as natural resources…income.the oil money.. .the money generated from timber …from palm oil money…planted on State lands..all income..belongs to….rich and poor..no distinctions and the poor should understand why do they stay poor..not natural like other countries..without natural resources income..by the billions…each year…all squandered away by thieves and robbers.
    And that is seen by Doc too…..correct Doc…or is monsterball talking cock and bull?

    Like

  6. aiz
    Sep 30, 2011 @ 17:36:57

    Thinking about solving their economic problem is certainly not the stock-in-trade of the monster (the Greek civil services – borrow from Dr Hsu) from top down. So, let Greece be destroyed then. We can be like Greece if we do not restraint the exertions of the liberty of a few individuals, which might endanger the security and prosperity of our whole society, via the coming GE13.

    The world moves from one crisis to another! The Roman Empire was destroyed because of debt. Similarly, from 1929 to 1934 the world was shattered by a debt crisis. The big question now is when will it break America? The country has become an inextricable labyrinth of gigantic accumulation of debt which needed nothing less than a spark from the lenders for it to explode.

    Like

  7. Ellese
    Sep 30, 2011 @ 20:35:50

    Dr hsu. For once I think your write is very lame. Can it be a bit more factual rather than aspersation and conjecture. Let’s take it through. How much increase do you think it will affect our budget? How much deficit do you think it will create? What is the Debt GDP ratio do you think that a country will become bankrupt? Is Malaysia there yet? Far from it kan.

    I have a contrarion view. We have a structural economic problem where our wages are low than other countries. In order to attract people back we need to increase our salary. So I think it’s the right move. With this invariably comes deflation but our job is to ensure that wages increase higher than inflation.

    So I think this thinking against salary increase is purely partisan without basis. Comparing with Greece is actually shallow.

    Like

  8. CYC
    Sep 30, 2011 @ 21:32:18

    How could it possible to increase wage without commensurate increase in productivity. Salary is not the only factor that deter talent from coming back to serve. Equal opportunity, competitive and dynamic working condition are visibly missing.

    No need to argue on detail figures. As long as you spent more than u earned, u will face bankruptcy eventually.

    Like

  9. Dr Hsu
    Sep 30, 2011 @ 21:46:30

    Ellese

    Thanks for your input.
    I agree that Malaysia has not reached the stage like Greece. This post is meant to warn that if we are not careful and do not spend within our means, we may one day reach that stage, a stage of no return.

    In macro-economic terms, increasing wages without increasing productivity will lead to increase in cost of production. Raising salary without a corresponding rise in productivity may lead to more expensive government machinery like licensing and enforcement etc , more taxes, and higher costs for businesses and industries. To raise 40% of pay in one shot and expecting productivity to rise at same level is not really conceivable.

    The govenrment has run a deficit budget since 1998 , a span of 13 years now, and expect this to continue if we do not check our spending. Our public debts is now about 50% of our GDP, according to CIA year book for the 2009 figures.

    A sudden rise in salary of so many people will result in too much money chasing the same amount of goods, and inflation rte will go up. This rise in inflation, coupled with the rise in cost of government service as mentioned above (because productivity has not kept up), will make services and goods much more expensive, and this tends to cancel off some of the benefits of wage increase. And this rise in prices of goods will hit those in the lower wage category of the private sectors very hard, since i do not expect private sector to be able to keep up with the govt in providing 40% increase, without their business going broke, because again we cannot expect productivity to increase at the same level (and such a high level) of the wage increase .

    I am not against salary increase for our civil servants. In fact, over the years, in most of my writing , i have advocated wage increase for the police force and the lower category of govt staff.. But the wage increase should be more gradual so that increase in productivity can keep up with the wage increase, and the impact of the increase would not result in sudden rise in inflation, so that people in sectors which did not receive any wage increase would not be unduly burdened by rise in prices of goods.

    Also as i see it, if the half month Hari raya Bonus (half month means 50%) cost govt 2 billions, the increase of upto 40% of salary would cost the govt at least more than 1 billion a month, and more than 12 billions a year. How the govt is going to find this money, when we are already having huge budget deficit is a big question mark.

    In the short term,we can borrow by issuing bonds. But this would add on to our public debts, and in the long run, once the debts have grown so big (say it reaches 150% of our GDP) that we cannot even service the interest rate payment, we would reach a stage like Greece today..Even at the present stage, we spend billions just to service our debts interest every year, since our public debt is already around 50% of our GDP.

    So it is prudent to be more thrifty in our spending, and do not spend outside our means..

    I have blogged before,- it is somewhere in this blog– that if by increasing salary of workers, we can become a first world country, then even Zimbawee, Sudan etc would have no problems to become one– they just have to pay everyone a higher salary. But economics is not so simple.. If the increase is not in keeping with the productivity, whatever increase would only make the nation’s currency smaller and smaller in value, like in some of the third world countries, where thousands of units of currency can only buy what we can buy with RM10..

    I am not an economist, so i may be wrong,, and i hope anyone with better economic knowledge can elaborate on this. Maybe we can learn something from this economic website:
    http://tutor2u.net/economics/revision-notes/as-macro-aggregate-supply.html

    This comment is strictly based on economic viewpoints, and not from a political angle..

    Thanks again and i do agree this is not a well written post, done in a hurry perhaps, but the underlying message is to ask our govt to be careful.. for the sake of our children..

    Like

  10. Kenny
    Sep 30, 2011 @ 23:08:57

    There are many similarities between Malaysia and Greece.

    1. High corruption
    2. Bloated civil service
    3. Lot’s of bureaucracy
    4. Many citizens evade paying tax
    5. Lot’s of spending on wasteful projects and defence
    6. Govt keep issuing bonds
    7. High budget deficit
    8. Politicians keep assuring the public that the economy is healthy and rosy
    9. Laid back attitude by those in power

    Can we go the way of Greece? Most definitely! Remember that Greece has the euro. The European Central Bank has no choice but to prop up Greece to protect the euro.

    Malaysia will not be so lucky if we crash. The ringgit will depreciate drastically pushing a large section of Malaysians to poverty.

    Like

  11. monsterball
    Sep 30, 2011 @ 23:21:39

    It does not need an economist to know what’s going on and Doc….your message is fine.
    “As long as you spend more than u earned..u will face bankruptcy eventually”…so said CYC and I love to read Ellese …take on this.
    She will ignore corruptions and mismanagement..and hit hard to defend salary increase for Govt servants.
    The Govt. servants will suffer in the end…being paid doing nothing..when they retire..knowing nothing..how to survive…always depend on UMNO b hand outs….like children.
    The Government mismanaged the country for decades…spend money like water.. …steal as much as they can..’legally” and make sure all Government servants are happy in all ways…that they will keep voting for such a nice boss.
    When come another?….NEVER!!
    They will always buy votes…buy hearts…buy trust…buy loyalty…buy police…but judges…with high salaries and fringe benefits.. with People’s money…and all developments and projects are grossly overpriced….to encourage corruptions with no fear.
    So what is one more billion per year to spend…making Govt. servants happy? Who is going to object?
    The end results can be felt everyday.
    I will not be bothered to talk to Ellese if I was Doc….for she is not thinking about the country and people.
    She is defending a very corrupted government openly.

    Like

  12. Steven Tan
    Oct 01, 2011 @ 01:29:02

    Ellese, Dr. Hsu,

    In this analysis, after Greece defaults, the following countries have high probabilities of pursuing the same default path:

    A simple method is to choose the 45% of countries with large sovereign debts (over $50 billion) that currently have the highest cumulative probability of default. They are assumed to default in the same order as implied by their cumulative probability of default at 6/30/10 from CMA: Greece, Argentina (again), Portugal, Ireland, Spain, Italy, Turkey, Indonesia, Belgium, South Africa, Thailand, South Korea, Poland, Brazil, Mexico and Malaysia.

    http://www.calculatedriskblog.com/2010/07/part-5a-what-happens-if-things-go.html

    We are no 13.

    By 2014, Petronas has said that we will be a net importer of oil. By 2019, Idris Jala said we’ll go bankrupt. And it’s because we’ll run out of oil (unless we find new oil fields and not just marginal ones).

    Now can you imagine what would happen to our budget without the oil revenue? Suharto squandered Indonesia’s oil money. Same goes to Marcos. Look at both of these countries. Luckily, Indonesia has A-Z resources, and with the current high commodity prices, Pres. Susilo Bambang is able to turn around the economy. Alas, Phillipines is not that privilege and thus it’s still a very poor third world country. That’s where we are heading and that’s what bankruptcy means.

    Politicians and economics like to talk about removal of subsidies and free market. Mind you, subsidies is a form of stimulus to boost consumption. It’s the subsidies that allow our SMEs to survive in this global economy. And our SMEs are responsible for almost 40% of employment in this country. Countries such as Phillipines are forced to remove subsidies and look what happen to it? Are the people better off with subsidies or without? Removal of subsidies are signs of an economic decay.

    China provides 15% export rebate and that’s how they SMEs survive. The US provides all forms of grants and tax credit to their industries. So much that some US firms paid more money to their CEOs than taxes (http://www.reuters.com/article/2011/08/31/us-usa-tax-ceopay-idUSTRE77U0KW20110831)
    And you are telling me that we should remove our subsidies? We hurt both our businesses and consumers. If our people are unable to spend, then how are we to boost our domestic consumption? How are we to expand our economy?

    Keep in mind that about 12% of our budget goes to paying our bonds and it’ll get only higher. How strong is our economy? Just compare our exchange rate to Singapore and Thailand. Are you feeling richer now than 10 years back?

    So tell me, are we there yet? How different is Greece? I hope that the people understand the seriousness of the situation. Nations go bankrupt all the time. It’s nothing except for those living in it.

    What does bankruptcy means? It’s high inflation, where the rich become lords and the poor become serfs. The middle class – No More!

    Like

  13. Ellese
    Oct 01, 2011 @ 01:34:38

    Thanks doc.

    A good write. To me the debt GDP ratio of all develop countries save for very few are above 60%. This too include Singapore Japan us most western European countries etc etc. A number are above 80%. The issue raised by political parties on our debt ratio is just not justifiable. In fact it is arguable that the balance to strike between debt GDP ratio should be more than 60% for us to move forward to a developed nation.

    Of course we can develop based on our surpluses but I think it’s not acceptable in this modern times. The growth is just too slow. Like our personal financing a good mix of debt would allow us to afford houses cars etc etc. But too much debt is never good. In economic terms our GDP debt ratio is respectable by any standard. To this I’ve read IMF report saying it’s acceptable.

    My main concern about our economy is the price misallocation. I think we suppress too much of our costs that it affects the incomes. Our salaries if converted is much much lower to other countries salary including our Neighbour. Thus say a lawyer’s charge in Indonesia is higher than what is charged in Malaysia for similar work. What more to compare with Singapore. This is the main reason why we can’t attract people in. My anecdotal experience of people working overseas point to a cut of income being the biggest deference to come back. CYC example of other factors are typical partisan reason. People will go with the money. Even in a more repressive regime like china people will still go if there’s money. Other reasons are secondary.

    Our priority should be increasing our salary/income. To do this We need to break this misallignment and distortion in pricing. We need to break free from suppressing our costs. Our essential goods like oil food etc are not only subsidized but cause massive distortion. And this also contribute to the lower potential earnings by malaysians.

    To this mahathir made one excellent simple statement. He had always challenged economic wisdom and the 98 crisis proved him to be absolutely correct. He proposed that We move forward by increasing our salary. It’s simple. Of course it will attract inflation. But were at this globalized stage where distortion of pricing is making us more uncompetitive. And it’s always at rakyats cost. Much to write but will elaborate more if want to.

    Like

  14. monsterball
    Oct 01, 2011 @ 02:53:44

    HI Ellese….others are typical partisan reasons…and
    yours are most intelligent… realistic and great ideas…including hero worshiping Mahathir .
    Did you read….Barry Wain….International hard cover book..”Malaysian Maverick”..accusing Mahathir stole RM100 billion and encouraged corruptions in his 22 years as PM?
    Why don’t you tell us why Mahathir dare not sue Barry Wain?
    You hero worship Mahathir shows you are just a text book reader ….knowing next to nothing about truths and facts.

    Like

  15. aiz
    Oct 01, 2011 @ 08:51:30

    Ellese… Reading your comment it crosses my mind that you might have previously worked in the IMF/World Bank. Perhaps you are can tell us more their New World Order agenda where I think it states that if member countries do not agree with the steps of IMF they are cut off on all international borrowing. Today, if you can’t borrow money in the international market place, they can’t survive. I would find it hard to believe that their policies would really go out of their way to bring the country down. First you open up the capital markets. Then you go to what’s called market-based pricing. Then you open up your borders to trade. But it isn’t free trade, it is coercion trade. For an example, I think China has a 40% tariff on the USA, but the USA has a 2% on them. That’s not free and fair trade. It’s to force all industry into a country that the globalists fully control, and we all know that they control China. It’s like the opium war. They are taking apart economies through this. As another example, Argentina had six presidents in five weeks because their economy was completely destroyed. This happened because they started out in the end of the 80s with orders from the IMF /World Bank to sell-off all their assets, public assets, like their water system. Then they taxed the people. You can tell all you like until your face turns blue. The World Bank/IMF is owned and controlled by some of the elites and wealthiest people in the world. I would see that every country the IMF/World Bank got involved in ended up with a crashed economy, a destroyed government, and sometimes in flames with riots. It is just really pathetic. We might as well do what we can and pass this information on to the cattle. They might sleep on it.

    Like

  16. monsterball
    Oct 01, 2011 @ 10:31:44

    hhhhhhhhmmmmm….from Greek tragedy….the main topic…due to spending more than they earn….attention completely diverted when corruptions as reasons of our Malaysia’s failures…plain and simple….to talking about …IMF….New World Order…China…USA…Argentina…diverting attentions by 2 economic students….to prove how smart they are….and totally ignoring facts and figures…published where Malaysia is heading to…towards bankruptcy if we do not change the government.
    These two are AGAINST change of government…who has governed for 55 years..
    Any sensible and practical Malaysian will agree to vote and change the government….try something new…..nothing to loose and get rid of corruptions…race ad religion politics.
    No these smart buggers want a party to govern forever….and how smart are these academics?
    They are political minded supporting BN…trying to be too smart.

    Like

  17. Mike
    Oct 01, 2011 @ 11:57:54

    Going the Greek way ?
    We are going the Zimbabwe way !

    Like

  18. Rhan
    Oct 01, 2011 @ 12:10:18

    “I am not an economist, so i may be wrong”

    Even economist can’t assure he is right, so no big deal. We need more data and information to draw an opinion and that is for sure, but still, it is remains as opinion / conjecture / guesstimate.

    Ellese is right when he says most develop countries have high debts ratio, however, that is also the precarious debt levels why most people from the develop countries are getting less optimistic toward both their government and economics performance, and worse yet the trend is with no end in sight. That said, I think we can’t gauge the economic health by looking at debts alone, government deficit, balance of payment, net investment, asset, currency policy, component of debt and etc does have it role. For instance, Singapore high debt is solely an accounting phenomenon, in fact most of its national debt is to CPF. I think Greece problem escalated because government distort statistic that cause a vanishing of trust, and the inherent weakness in the structure of euro, you can’t do like what Mahathir did in 1997, just peg the ringgit.

    On salary, I think we need to ask first why Malaysia salary is at low level, I don’t think to solely increase salary is the solution, however, I agree that higher salary is one main attraction for talent, don’t we see everyone include the Westerner flock into Middle East though there is war, and hudud?

    Like

  19. CYC
    Oct 01, 2011 @ 14:34:20

    Take a good read and comprehend fully what was written by Sakmongkol on the subject of “Munifik-ation of Malay” before prejudge other as being partisan.

    Debt GDP ratio alone will not be suffice to make a country bankrupt. But please look at the reserves they had in their coffer for those countries with high debt GDP ratio but still doing well including Singapore. the balance sheet never lie unless it was manipulated.

    Like

  20. CYC
    Oct 01, 2011 @ 14:37:48

    Sorry, it should Munafik-ation instead.

    Like

  21. aiz
    Oct 01, 2011 @ 14:58:17

    Monsterball,

    I think we both hailed from the same country with which we are culturally familiar that the amount of multiculturalism in any society is directly proportional to the corruption at the top of a political system and inversely proportional to national unity.

    And we know almost nothing about each other but yet not once but many in this blog you branded me as “UMNO b” and a product of “Mahatirism”. It really sucks! If it was merely ignorance that separated us then that would be a bridgeable gap, but your prejudice, your preconception and even your hostility have created a huge gulf between us.

    In regard to this post, I see that the context of the problem is global and thus our understanding of freedom of expression must also be wide and cosmopolitan as the perspective in which this post has emerged.

    We are living in an increasingly interdependent world. As assassination in one nation can lead to a stock market crash in another, and to famine in yet another. An accident in one country can produce riots in another and raise the price of a basic commodity beyond the reach of the mass of poor people in quite another. We should view the world and all that we do in it, from a holistic and socially responsible perspective. Even science, which is considered to be most neutral, is increasing being brought before the court of public opinion which demands that it be pursued with social responsibility, a polite secularist euphemism for moral responsibility.

    We may put forward any argument: We should do so in a way that is circumspect and inoffensive, taking full account of the fact that our beliefs are not just our views, but convictions which go to the core or essence of our being. Still our toleration should leave ample room for meaningful discourse, debate and discussion, but to avoid mockery, offense, and insult. We must leave one another free to address the deep questions of religion, political ideology and philosophy the best way we can.

    Like

  22. monsterball
    Oct 01, 2011 @ 16:23:19

    aiz…I see the problem as a “every action has an equal reaction”…..plain and simple…..and I specialized on Malaysia’s problem..comparing it to no other country…except a comparing the similarity may happen…like what Dr.Shu did.. as an advise or warning…take it as you like it.
    And CYC put all in a nutshell…one of the reason….and many more.
    If you guys keep talking all sorts of history and world stuffs….leading all young readers towards a sort of natural world economic reactions….this and that nonsense…I will label all of you pro UMNO b servants..and it it sucks…good for you…then prove me wrong.
    Every word uttered concerning our people and country…be it FOR or AGAINST…make sure they are uttered with two minds..yes…FOR or AGAINST and not treat Malaysia’s problems like a school text books discussions in Internet.
    Get to the ROOT CAUSE of our problem.
    You guys don’t know the ROOT CAUSE?…or is it that you are leading all readers to say…what problems we are having in Malaysia are natural and happen all over the world.
    Say it clearly…both of you..Ellese and you…..then we can debate.
    Our country is being screwed by Mahathir for 22 years encouraging corruptions and dirty race and religion politics.for 22 years….don’t you know that as the ROOT CAUSE???
    Even Tunku Razaleigh said we all know the ROOT CAUSE. Are you all smarter than Tunku Razaleigh?
    Why talk so much mumbo jumbo…nonsense?
    Now you go ahead and do as you have always done…and you can always depend on me to make sure young readers do not treat Malaysia’s problem as an economic…social or political problem only.
    It is worst than that.
    It’s evil minded people…brain washing..his own race to steal and rob.
    Go read all the sickening nonsense still created by UMNO b and Najib…and if you want to stop Malaysia going bankrupt….apply your intelligence to get vote FOR CHANGE.
    Ignore this and continue your so call…highly intelligent…making young voters forgive and forget the most sinful robbers and thieves….keep fooling their own race….I will conclude what I see fit …who you all are…who knows next to nothing but talk talk talk…not one clear and concrete idea how to stop Malaysia’s problems at all.
    I repeat…are all of you smarter than Tunku Razaleigh and Tunku Ritthauddin?
    Wise highly intelligent men from UMNO b have admitted the ROOT CAUSE.
    Dr. Hsu is trying his ways to open eyes to the ROOT CAUSE…all twisted to prove how smart you and Ellese are.

    Like

  23. monsterball
    Oct 01, 2011 @ 16:48:29

    You… text books graduates..and newspaper readers….go read Malaysiakini and all opposition blogger news too…if you want to be fair… have a balanced great mind..read both and THINK……not depending on others to tell you what is right or wrong for country’s affairs.!!
    Above everything else….watch all events unfolded…like the BERSH2 walkers being treated like animals…..yet you feel nothing?
    So many deaths at MACC building …all declared voluntary suicides.
    Do you honestly believe that?
    And what is our PM doing everyday…making deals…flip flopping .twisting and turning.
    All are one sided…partisan like Ellese said.???…and all news from Star…New Straits Times…..Utusan..are honest and sincere news…not one sided or partisan at all?

    Like

  24. Ellese
    Oct 01, 2011 @ 19:40:38

    Dear monsterball,

    I don’t know why you like to ramble and shoot everywhere. There seems to be not much depth but merely regurgitation of opposition spin. Your sense of right and wrong is also skewered. It depends on whether you are for or against bn. If for bn it’s definitely wrong even though the action is adopted elsewhere in the whole wide world. For example mahathir keynesian deficit spending during 98 recession. By me saying that suddenly you categorize me in so many ways. I think you need to grow up. Counter the points. Don’t let me ask three four times of the same thing. Everytime you answer it’s always hentam bn. There’s so much hatred and it’s so predictable. This does not solve anything except to satisfy your ego. Can you contribute more?

    Why don’t we try. Why do you disagree with mahathir 98 deficit spending method to counter recession?

    Like

  25. Ellese
    Oct 01, 2011 @ 19:50:33

    Dear all,

    Why is all argument leading to us like Greece and Zimbabwe. Can you tell me why increase in civil service salary say to support your argument amounting to an additional 1 or 2% deficit makes us like Greek and Zimbabwe. It doesn’t make sense. Every project government does will always be countered were going to be like Greece or zimbabwe. Cant we develop further? Isn’t this too shallow?

    Why must all argument leads to blaming bn and promote PR or vice versa?. Cant we argue on the subject matter itself. It doesn’t matter bn or pr. We need to resolve issues for our betterment.

    Like

  26. Ellese
    Oct 01, 2011 @ 19:54:05

    Dar Steven,

    Don’t follow your hypothesis. Why is US debt of trillions of dollars not considered? Similarly with Japan? Kindly clarify your parameters?

    Like

  27. Ellese
    Oct 01, 2011 @ 20:16:37

    Dear Rhan,

    I wish the debate here can focus on salary. as we move up the value chain we need to be competitive. Our GDP per capita are higher than say Indonesia Thailand or Philippines yet our fee for professional services are lower than our Neighbour. The distortion previously on essentials like water electricity etc benefit the manufacturing sector. But as we move further we need to focus on value added growth engine rather than the manufacturing sector. For example Islamic finance where we are world leader. We have a comparative advantage. But to get the people our salary and fee scheme cannot attract the best. It’s a matter of time we will lose our people to dubai Singapore as is currently happening.

    Now these very cheap essential items have led to major waste. From water electricity etc. We need to get out of this cycle. Wish we can debate more of this rather than on we becoming Greece or Zimbabwe.

    Like

  28. monsterball
    Oct 01, 2011 @ 20:51:18

    Who is disagreeing in salary increases for Govt. servants?
    Only idiots will disagree…but you can bet …they increases salaries to fish for votes more than anything else.
    Yes…Ellese…we are saying BN is a crooked sly fox government that are daylight robbers and thieves….and the good news on salary increases have pointed out…..they spent more than earning….and ..the ulterior motive is to make sure Govt servants keep voting for UMNO B….period.
    We are saying UMNO b keep spending and feeding without producing..and when they produce…all are lined up with massive corruptions.
    This Ellese love to DEBATE on MONEY MATTERS and so are plenty …love to debate on HUDUD LAWS….as 13th GE is getting nearer.

    Like

  29. monsterball
    Oct 01, 2011 @ 21:03:09

    Ellese really thinks he/she is smarter than world famous Tunku Razaliegh.
    Everyone must listen to his/her.
    His/Hers are most sensible.
    Don’t warn……about other countries downfalls to ours…don’t tell us Gaddafi is finished….and when will Malaysia dictators be thrown out.
    Just talk government salaries..
    OK OK OK…great management by Najib on salaries…satisfied???
    When are we going to throw him out?

    Like

  30. monsterball
    Oct 01, 2011 @ 21:16:16

    If you read carefully…Ellese wants to learn from all..including water now…and get free ideas for her exams.
    Read and observe…before now and definitely future…always wanting to learn from others
    That’s OK…after 13th GE…not now.

    Like

  31. Dr Hsu
    Oct 01, 2011 @ 22:08:40

    monsterball

    I have to ask you not to belittle ellese, even iif you dont agree with her view.

    This is a democratic country, and everyone is entitled to his or her view, and just because she does not agree with your view does not mean that she may not be right..

    Let us discuss rationally and use reason and not ramblings and babbling to disagee with others.

    please, do be civil to others in this blog…

    Like

  32. Ellese
    Oct 01, 2011 @ 23:00:29

    Dear Rhan,

    I was reading an article by Michael spence, a renown economist, on globalization. He was looking into employment sectors in US. There’s a major structural issue there. Job growth has been generated in non tradable sector. There’s not much in tradable sector. They’ve lost jobs to other countries. But what is striking in that is those involved in value added services there’s been increase in income.

    It’s going to affect us or has already. We definitely need to move up as our neighbours like Indon or Thailand play catchup. This is where were stuck. There’s not much incentive. The salary/fee scheme we have in fact put I’d in a disadvantage. People move out simply because of higher earning income.

    I think this is where we have a systemic problem. My thinking is we can still have the same GDP per capital income but with increasing costs and income. A bit stretched but it makes more sense as there’s too much distortion making us uncompetitive and inefficient. We may fall into the trap like the US.

    Like

  33. monsterball
    Oct 01, 2011 @ 23:31:10

    So Doc…she can belittle me saying I am predictable .asking me to grow up..and I cannot respond?…Is that it?

    Like

  34. monsterball
    Oct 01, 2011 @ 23:59:58

    Me..rambling and babbling?
    Why…there must be hundreds of them!!!
    Why complaint now?
    You can ALWAYS delete all those comments and guide everyone to freedom of speeches…be civilized…just like you.
    You are you..I am I…….no way for me to be like you…no way at all.
    You just delete my comments…as you see fit ..and be done with it.
    Then I get frustrated and talk less…or nothing at all.
    Good suggestions?

    Like

  35. Steven Tan
    Oct 02, 2011 @ 01:29:36

    Ellese,,
    The US can double it’s debt and it’s still a nonissue. The reason is because the US Dollar is the world’s reserve currency. Unfortunately, the Ringgit is not. Same goes to Zimbabwe Dollar.

    The US can afford to pursue inflationary policies, and in fact is recommend too as the world is in a very bad recession. When the world economy turnaround, then the US can tighten their credit to combat inflation. In fact, the US can just print it’s way out of debt because the value of it’s debt will go down the more dollars it print due to inflation. That’s the privilege of a superpower.

    As for our beloved nation, we must live within our means. Look at Singapore – living within it’s means means progress and development. Corruption is the main cause of our leakages and that’s what driving away our talent while producing a high level of inflation. With massive corruption comes a big underground economy. That’s why our median wages is not up to par with prices of homes and cars.

    The fact is that our civil service is bloated. You have too many government departments doing the same work multiple times i.e. the Transport Department doing the feasibility of the MRT, then you have the Works Department doing the same thing, the Finance Department doing the same thing, the PM’s Department doing the same thing and PEMANDU doing the same job too.

    Because we are manufacturing unemployable graduates and therefore these graduates got to be absolved into the civil service. Our government has to suppressed wages because of too many civil servants. In fact, corruption has been calculated into the wages of our civil service.

    We have more civil servants than taxpayers. Greece has that problem too. Greece does not have an unemployable workforce. Just that they do not have adequate jobs for their educated workforce. So we are actually in a worst situation socially.

    Greece does not have a central bank as they cease that responsibility, owing to the Euro to the ECB. Luckily we have our Bank Negara and Tan Sri Zeti is doing heck of a good job. We can keep issuing bonds to fund for the excess wastage. Greece can’t do that. In fact, we have already issued too many bonds that our bonds have become undesirable. The world has already doubted our ability to pay. You can just check for yourself the sales of our bonds. We let the numbers speak for itself. To top it off, our PM allowed JLow to sell our bonds and a 50 basis point higher than average. That’s tens of millions in unnecessary payment our taxpayers dollars.

    As for Japan, they still have not recover from their 1980s crisis and is still in a deflationary spiral. Japan has many global corporations and they have been financing the Japan government through bond purchase for the past 20 years. For this reason, Japan is not progressing because these corporations demand kickbacks/monopoly from the Gov and the Gov is obliged to give in. So the people are lacking opportunity and most importantly ‘hope’. It’s a sad situation and a painful way to be in decline. That’s because of the choice they made during their crisis when they decided to at all cost rescue the banks – their oligarchs..

    You can witness how weak their government is by the number of Prime Ministers they have. Still, they are at a better shape than us for a few reasons – developed nation (we are still a developing nation), established tech giants/industries, an important ally to the US as well as to serve US interest in Asia and a strong domestic economy. Japan has a 127 million people. They have a very strict education system. Most importantly, they do not care if you fail. Quality should never be compromised like what Lee Kuan Yew likes to say.

    Go to Japan, go to Korea, and tell me the difference. One lacked hope and opportunity, the other is getting more robust. These are clear cut evidences of the advantages of liberal economic policies. The state must not create monopoly. Let the market decide the winners and losers. We have created too many GLCs and giving them unnecessary monopoly that distort the market. The effect is a depress economy with low wages as our skilled workers can’t find good opportunity. We require too many government licenses with too long waiting time. To get approval in Singapore to set up a firm, less than 2 weeks. In Malaysia, it can take longer than 5 years. That’s what happens when a government priced corruption into the wages of civil servants.

    Like

  36. Rhan
    Oct 02, 2011 @ 01:44:09

    Ellese,

    Thanks. Actually I find it entertaining whenever I read those articles that trying to pigeonhole base on some past event and worldview, I had been reading the prediction of collapse, hard landing, soft landing, no landing, bubble burst, riot, revolt of China in the last 20 years from the various established newspaper, magazine and reputable economist, but, China is still moving on strongly while the West is now in deep shit caused by high unemployment and high debts. When Greece debt crisis erupted, some economists would simulate a model and pigeonhole it to any country with similar economic indicator without take into consideration of the socio-political and socio-economic of that particular country and tell us, nah, this 15 countries is heading toward the same direction.

    Hisham wrote a piece on the middle income trap, he took a contrarian view saying that Malaysia is still convincingly moving forward, I disagree with his opinion. I think reasons for Malaysia low salary level have 2 folds: 1) competition of the emerging economies like Indonesia, China and India 2) not much added value in our manufacturer product chain, in short, no branding.

    I personally think Razak is the one that industrialise Malaysia and in a way, he is successful, Mahathir is merely follow his footstep, unless Mahathir help to establish various Malaysia brand that bring in value to our product which I think he failed, his contribution is even much less compare to Razak.

    We can carry on the debate on salary but my feeling is that my stance is quite resemble yours, perhaps you let me know your view on the middle income trap, we see where we could expand further.

    Like

  37. Ellese
    Oct 02, 2011 @ 04:51:57

    Dear Steven,

    I think you miss my point. I’m questioning your parameters. You took top countries with high sovereign debt. (Malaysia is ranked 40 ). USA Japan etc etc are much higher but not on the list. Than you go on cumulative default probability. Why suddenly Malaysia becomes 13?

    I disagree with your contention on US and Japan. In fact the writer you quote is arguing for Japanese default.

    Key is I’ve looked at CMA sovereign default risk and we are in a respectable position mainly I believe due to Bnm respectable macro policies. Our bps is below 100. The top 10 countries are between 20 to 75. Even then it’s based on 2010. Since then we’ve seen downgrade of US sovereign risk.

    I think you’re extrapolating something minor.

    I’m not saying I’m for debt. But arguing Malaysia is like Greece and Zimbabwe economically is purely fanciful and we need to put a stop to this useless debate and concentrate of real economic issue. Our macro economic policies are still reasonable and respectable. We have our own issues that we need to resolve.

    Like

  38. Ellese
    Oct 02, 2011 @ 05:20:41

    Dear Rhan,

    To me the issue of salary and fee structure is one of our major middle income trap. As illustrated. In Islamic financing we have a lead comparative advantage over other industries. It’s service based with a lot of value added. For us to go out of our middle income trap we need a lot more of similar economic engine growth mainly based on service sector. (I note the German exceptional model on manufacturing).

    Now I’ve met many players in this industry. Many moving overseas due to higher salary. The top find it difficult to come here due to lower salary.

    Now this set me then thinking on our structural issue. And the recent article by noble price winning Economist Michael spence was instructive. As you know I’ve put my view against HISHAM and it was a good learning debate. But that was before Michael spence. The US is also facing a structural problem due to globalization and to me akin to our scenario. In fact applicable worldwide.

    Contrary to Steven almost all job growth in US is on non tradeable sector mainly health. They have a huge issue on their health sector which I don’t know how they can resolve this with partisan views. Don’t think they can sustain. The argument on our civil service is also similar to the non tradeable sector view.

    So back to Islamic finance sector. This is a middle income trap solution we must replicate. Government has been focus and consistent in their push. This is fine with me. But I see the great barrier moving forward is the low salary and fee regime. Singapore or Dubai pay much more and will get a better mix of players.

    This issue unfortunately ties very much with our costs. It’s part of the purchasing power parity. As argued with HISHAM we must release this shackle on the costs which makes us wasteful and inefficient. In turn its my proposition that it’ll drive the income up and inevitably the salary/fee structure. We must give more thoughts on how to keep inflation rising gradually. My contention is that we can still maintain the GDP ppp per capita income with higher costs and salary. By doing that we become attractive in competing high end or value added services. Islamic finance itself can allow a huge multiplier income for us. I see similarities with what financial services sector did to UK to move it up on the value added chain. By addressing this we remove a major barrier to our middle income trap issue.

    Like

  39. Ellese
    Oct 02, 2011 @ 05:28:28

    Dear mOnsterball,

    The earlier you realize that you ramble aimlessly the better it is. In other forums I would have taken a similar direct approach like yours just to show how irrelevant and fruitless an approach like this leads to.

    Save for you all have been civil polite and generally focus. Why don’t you do as such. It’s more rewarding. To do this I suggest you focus on issue. Forget whether an argument is for or against bn. If we debate and learn it’s very rewarding. Try it.

    Like

  40. Ellese
    Oct 02, 2011 @ 05:42:08

    Doc,

    I’m new here. But want to make a request. Can you change the commentary setting to one which has a thread reply. By doing this we can have a focussed thread specific debate rather than reading all over.

    Of course this is subject to your older commentators response. But believe me it makes debate more constructive structured and focus.

    Like

  41. Rhan
    Oct 02, 2011 @ 10:58:36

    aiz “and we all know that they control China. It’s like the opium war.” “I would see that every country the IMF/World Bank got involved in ended up with a crashed economy, a destroyed government, and sometimes in flames with riots.”

    Interesting perspective, since Ellese brought up Spence, i paste here his famous soundbite among the Chinese (China) in 2008 “China’s faced challenges for the last 30 years, when they started reforms, people bet against them every year, and every year we’ve been wrong, [laughter] so this is not a good time to start betting against them.” Different phase of opium war i presume?

    China went through the 1997 Asian financial crisis unscathed because IMF /World Bank have less influence toward China policy thus your point do have basis, however, I think the IMF “one size fit all” seem to be a bigger culprit, in fact South Korea recover well.

    Like

  42. Kenny
    Oct 02, 2011 @ 12:13:23

    Let’s not hide behind the intricacies of financing and sovereign debt. The bare fact is that our wages have been stagnant for the past 16 years.

    How much can a fresh graduate command now? About RM2000. This is exactly the same as 1995. If you compare the wages of office workers, blue collar workers, factory workers and whoever else you care to compare you’ll not get a different scenario.

    Meanwhile inflation and world commodity prices have not been stagnant. Our ringgit has depreciated vis-a-vis first world currencies. Compared to 16 years ago our purchasing power has deteriorated by a few multiples. Yes, subsidies are bad but Malaysians are now unable to pay real world prices for essentials like petrol and electricity because their incomes are locked in a time warp.

    The reason for this stagnancy is what has been eloquently stated by Steven Tan and others. Corruption, distortion caused by racial policies, lack of meritocracy, declining standard of education and productive citizens disadvantaged by race leaving to contribute to foreign economies.

    The BN govt has no idea how to transition to a high income economy. It cannot be done by spending vast amount on infrastructure like what Pemandu is proposing. It has to be done by improving education standard, increasing the pool of skilled workers, attracting high value investments, implementing meritocracy in all fields and reining in corruption. Having more democracy and respect for rule of law help too.

    None of them can be accomplished by the BN govt which lack any political will to dismantle the racial policies or allow more democratic freedom. Even meritocracy has become a dirty word. Higher education opportunities are race based. The abuse of law enforcement institutions, a subservient judiciary and the lack of press freedom will not be given up by BN and they all ultimately impact on income. If you can’t make the connection just think how corruption can be controlled with non-independent bodies.

    Without fixing the structural problems there is no chance for Malaysia to join the ranks of high income countries. We can talk about Islamic financing and budget deficit till the cows come home but structure is structure. Wrapping glowing coals with cardboard doesn’t work, you have to extinguish the coals first.

    Oh, yes, Greece and Zimbabwe. We are headed there. Perhaps it should be Indonesia, Greece and Zimbabwe in that order. Already Indonesian maids find Malaysia not so attractive to work. In another few years there will be no more Indonesian maids. 10 years from now, the flow of maids may reverse.

    Only a change of govt can save Malaysia from becoming a failed state. It is impossible for Umno to abandon or ameliorate racial policies because the bedrock of their political power is the unequal treatment of races. It is impossible for Umno to allow independent law enforcement and an independent judiciary because the lifeblood of the party is patronage (an euphemism for corruption).

    A discussion of the economic future of Malaysia cannot be disassociated from politics. Essentially what is needed is a political change.

    Like

  43. Ellese
    Oct 02, 2011 @ 13:14:55

    All I ask was to be focus and not ramble. Isn’t this 101 of a proper discourse?

    Like

  44. Dr Hsu
    Oct 02, 2011 @ 14:09:31

    i have deleted a few comments by various persons which are not relevant and are just name-calling each other..

    this blog is now in moderation mode.

    A certain person is trying to disrupt this forum , and i have on a number of occasions put this blog on medaration mode because of this same person.

    Like

  45. aiz
    Oct 02, 2011 @ 15:19:06

    Rhan …. “one size fits all”. I would like to see how IMF/World Bank policies fits America. They are having serious liquidity problem. As Steven says they are printing money.. which I would think would only increase and perpetuate inflation. If the Chinese and the Arabs apply their brakes on their funds, the American would find it difficult to repay them. In layman’s term when there is no money, the industries would collapse, retrenchment and unemployment rises and depression would be the order of the day. David M.Kotz says that, “..the basis of economic power is not expertise but ownership and control over abstract capital..”. There is so much truth in his statement. So with wealth goes power. With concentration of wealth goes the concentration of power, both economic and political. To Kenny: The philosophy applies to both internationally between nations and domestically within nation.

    Like

  46. aiz
    Oct 02, 2011 @ 16:01:38

    Dear Kenny… you mentioned Islamic financing in your above comment, so I thought I just want to post this for your thoughts. This what Lord John Maynard Keynes, the great British economist, who is famous for his Keynesian theories wrote: “There remains an allied, but distinct, matter, where for centuries, indeed for several millenniums enlightened opinion held for certain and obvious a doctrine which the Classical School has repudiated as childish, but which deserves rehabilitation and honour. I mean the doctrine that the rate of interest is not self adjusting at a level suited to the social advantage but certainly tends to rise too high, so that a wise Government is concerned to curb it by statute and custom and even by invoking the sanction of the moral law.”

    Like

  47. Ellese
    Oct 02, 2011 @ 19:15:08

    I totally disagree with you. You seemed to have in mind that every answer to your problems be answerred with change to PR. If you want to satisfy your ego I’ll let you be. I can easily argue to the contrary with pr policies. But what’s the point? To prove bn or pr better? So what? It still does not resolve one iota of issue.

    I saw jala townhall meeting and thought many have shortchanged what he did because of blind partisanship. Some ideas are extremely good and don’t understand why you object and make sweeping statements.

    Why not like this? We go through the etp? You tell me then why you’re against it?

    One by one. I’ll start with the contentious mrt. My view it’s long overdue. I think we should have more lines like the circle line etc. We should spend more. I note there’s no successful profitable privatized rail business model in world save for a few countries. I’m for asset light model where operator does O&M and assets owned by govt. This would incur huge public spending but it’s a social need. However im open to land rail model like hong kong and we should try it.

    Two requisites I make. One is that it must be by open tender. Secondly it must for lcoal contractors save for specialized contracts.

    We must think what US is contemplating now. A huge public infrastructure project to increase domestic growth. It makes a lot of sense on the multiplier effect for it to be local contractor.

    Now this pemandu idea I’m for it. Why are you rubbishing it? I’ll go to other areas after this. What say you? We discuss a bit more specific rather than unproductive blame game? Put your objections down.

    Like

  48. Rhan
    Oct 03, 2011 @ 01:27:20

    Ellese,

    Malaysia employment is mainly from 4 sector: 1) Civil servant 2) MNC 3) SMI 4) Professional/services. I know very little on civil servant and many here have commented thus I will articulate my knowledge on (2) and (3).

    Tax break granted to MNC include either pioneer status or investment tax allowance, and reinvestment allowance (60%). Most MNC is without R&D, and machinery is imported. My experience tell me most MNC don’t pay a single cent tax in the first 10 to 15 year, and the transfer pricing eventually keep their profit low, I don’t see much transfer technology as our domestic market is too small, and foreign market would prefer product that guarantee quality ie brand, so how this FDI help us besides employment? If government objective is solely on employment (Maslow hierarchy of safety needs, and vote), where is our negotiation power when facing the MNC during a time when everyone else open up their economy?

    Our SMI basically survive on being the supplier of MNC and government subsidy via energy cost. If government takes away the subsidy and MNC/consumer are not willing to absorb the additional cost, most SMI can close shop, their costing is now mostly distorted in term of energy and labour (foreign worker). The reason is still the same, employment.

    Thus if 1), 2) and 3) are drawing low salary, how do you expect 4) to charge a so called reasonable fee?

    I think our government is aware of the problem but can we compete with Taiwan and Korea in component making even if we want to have our own brand and industry now? Are we courage enough to remove the subsidy and let the MNC know now is time to pay more tax, and our labour salary shall be increased to the market level? Are we prepares to let the market to adjust by itself and willing to go through the short term pain? Be it BN or PR, who would and could do it?

    PS/ I have to learn more about Michael Spence before replying you, My take on future is agriculture, petroleum and Islamic product that include financing and halal food.

    Like

  49. Ellese
    Oct 03, 2011 @ 05:40:41

    Kenny, reread your starting comment and find it a bit disingenuous. You opened your comment with:

    “Let’s not hide behind the intricacies of financing and sovereign debt.”

    This to me seemed to be a diversionary argument. You see. This article and commentaries like yours arise first because of najib’s increase in govt salary. Most argue that it will increase debt that we become like Greece or Zimbabwe.

    So I approached from a sovereign debt and debt GDP ratio to explain why it’s taken out of proportion. Suddenly you’re arguing let’s not argue on intricacies of debt. This is a bit disingenuous to me. if not debt, why so much concern on pay rise?

    Like

  50. aiz
    Oct 03, 2011 @ 08:41:18

    Dear Ellese… Re your comment Oct 2 2011 [19:15:08]. You said….”I’ll start with the contentious mrt. My view it’s long overdue”.

    Here’s my feel on MRT..

    The following MRTs are making profit i.e. London, Singapore, Hongkong, Seoul and Manila. I agree that there are many advantages of MRT. I would like to support it. However, I felt that the cost is too way off the world’s average.

    The world average for every 1.0 million population of a city is 19 kilometers of MRT line. Depending on the systems the average cost of construction of the MRT is about USD20.0 million per km. It cost about RM8.0 billion to construct the KL Monorail, STAR LRT and PUTRA LRT, which in total is about 70km long, and population for KL City is about 1.5 million. Now, a new 150km MRT which would cost RM50.0 billion for a population of greater KL of about 8.0 million people? That is too much for me to chew.

    By the way can you check with SPAD what the present phpdt of RapidKL is? It is not economical if it is below 8000. Can you also check with PEMANDU what is the anticipated phpdt of the new 150km – RM50.0 billion MRT?

    As the fares have to kept competitive and affordable to the common man, PFI participation does not hold much hope for the aforesaid MRT project. So, it must come from us – the tax payers. And, the government has just taken this new project away from SPNB and has appointed a Sime Darby man to head the new MRT Co. I could only hope that he would bring the cost down by standardizing the technical parameters and specifications and works towards maximum indigenization.

    Nevertheless, sometimes when I am alone and in pensive mood and looking at he stars and the heavens, I do wonder how many armchair millionaires would be created by via this project!

    Like

  51. aiz
    Oct 03, 2011 @ 08:52:05

    Dr Hsu… as I think you are using the new system as suggested by Ellese, then you must put your “recent comment market place” at the top left for your readers to follow. Your readers are not familiar with your new mode. They just scroll down to the last comment.. and would not be aware of the new comments.

    Regards,

    Like

  52. Dr Hsu
    Oct 03, 2011 @ 09:06:06

    As most of the regulars are not familiar with the new system, I am reverting back to the old system.. Please bear with us for the incovnenience that you may face..

    Thanks for the understanding..

    Like

  53. Rhan
    Oct 03, 2011 @ 10:01:51

    aiz, not really sure what exactly is your point, hypothetically I agree with you, but no way China, Japan and Arab will stop buying USA bond, it is a lose-lose situation for all.

    I talk to one local Japanese MNC MD wrt their manufacturing as compare to US , he told me outsourcing (globalisation?) helps to lower down the cost in short term but at the same time, they lose the skill especially the manufacturing capabilities that is strong among their middle management, Taiwan and Korea learn fast and that is why the competition is fierce among this few Asian countries. It is actually a cycle that happened to US/West (except German) in the past and Japanese realized the only way to preserve their strength is to keep the manufacturing onshore, or less use of outsourcing if there are choices.

    US problem is their talent are now concentrate in services and financial sector, the ‘talent’ is not refer to tangible skill but innovation to create illusion wealth, they actually lose the capabilities to produce a tangible product that can sell for a good profit (generally speaking), and to preserve employment, that is why I am a bit hesitate when Ellese brought up service as part of the solution, we must be very clear what type of service we are talking about.

    There is a shift of wealth from the West to the East for sure, to make our world more balance in term of wealth and power, we are now playing the same capitalism game started by the West, and might beat them. So I hope you are right that one of this day, IMF / World Bank has to step in to rescue US and UK with their “one size fit all” program.

    Like

  54. Rhan
    Oct 03, 2011 @ 10:11:52

    Hsu, i am okay with both system, but i agree with aiz that the recent comment shall be at the top, i think it would help me not to log into a particluar thread with comments i want to skip. Just my opinion.

    Like

  55. Guest
    Oct 03, 2011 @ 12:48:39

    Dear Ellese

    For me, where Monsieur Monsterball is concerned, and with due respect, I skip his comment, period. He has been around in a few other blogs as well. So a bit of an understanding of his web behavior would be good, whatever his person is.

    So hopefully with this in mind, you don’t get worked up by his response.

    Like

  56. Li Li Fa
    Oct 03, 2011 @ 18:08:33

    Oikonomia is a Greek word which means managing the household.

    As nations turn the pages of time, this word appears to be a subjective word whose appropriateness and relevance depend on who, how and when it is now used.

    Greece has a high national debt and it has been issuing bonds which many nations hitherto are unable to assist, because of the credibility of those bonds.

    Many European nations, especially Germany, France, Spain and Italy are cash strapped to help the Greece ailling economy, except maybe to build a hedge of firewall around it, hoping to be protected from its spread and onslaught.

    The next alternative is to call in the IMF debt-busters. But where will it lead and to what extent this world-$-body can help or try to help?

    Do you think, the domino theory will spread across Europe, America and then to the rest of the world?

    Like

  57. CYC
    Oct 03, 2011 @ 21:09:42

    IMF is a political tool for the developed nations to manipulate and twist the axis of the financial gravity to their advantage. Hence, the imbalance voting rights tilted to some of the “powerful” member nations. This game will goes on unless and until a new order is developed that could rectify the imbalances. Perhaps, its just my sheer day dream as a balanced world order may not last too long due to human greed.

    Prolonged capital control introduced by Kutty has had damaging effects on our economy as well as financial well being. But due to the munafik-ation of certain sector of our society, he was over glorified but in reality did more damage than contribute to our progress.

    Like

  58. Ellese
    Oct 03, 2011 @ 21:30:26

    Dear aiz,

    Jubilee line london cost 330 million usd per kilometer and Copenhagen 247 million per km kilometer. There’s a wide range of cost.

    Main thing for me is the tender.

    On profitable railway model the best is still the land rail model of hongkong. But most rail co including London are profitable if compared to operating cost. All Infra and capex have not been factored in. In other words its based on asset light model. Government bears the capex to make it profitable. For example London makes only 25% revenue over it’s Operating cost. Rest of cost borne by govt.

    Like

  59. cilipadi
    Oct 03, 2011 @ 23:30:54

    Greek is a case of complacency
    A case of government pampers its people
    Making them complacent, lazy and greedy
    Wanting for more and more from the goverment
    Expect to be spoon fed in perpetuity

    Ring any bells here?
    I am long enough in Malaysia know their habits
    This not only true on certain previleged sons, but also with Chinaman
    You know them well somehow and whatnot.
    Morality is not important in politics, what to do?

    Privilleged sons makan cili, Chinaman rasa pedas

    Like

  60. cilipadi
    Oct 03, 2011 @ 23:54:08

    Imagine in Greek all people one color
    Not like Malaysia, multicolours
    At least economy can still sustain by those not privileged
    But, for how long?

    They can’t think, they complacent

    Greek makan cili, Malasia rasa pedas

    Like

  61. Ellese
    Oct 04, 2011 @ 07:12:33

    Dear Rhan

    Your write poses many issues and not sure how to develop. I start with fdi in manufacturing sector.

    I believe a tax free investment creates more than employment. Let’s take the much controversial lynas. They would have to employ various advisors from legal financials tax technicals to set up business. Now they have to engage environmental and pr consultants. They would have to acquire lands then pay assessment and quit rent. They have to submit various licences requirements and pay fees for it. They have to acquire vehicles from local distributors for company and directors. They have to employ local contractors consultants quantity surveyors architects etc for construction of the plant. They have to engage local suppliers for their plants. Pay electricity water and sewerages. I believe if we go through there’s much much more benefit than employment.

    To me any fdi in manufacturing will bring multifold multiplier effect. In principle they are good for our economy and brings more than just employments. It generates growth.

    Question: will we lose fdis if we increase our cost?

    Yes. No doubt. but not all. Plants which rely on low costs utilities and labors will sooner or later will move to china Vietnam etc. That we can’t stop. Met many Malaysian owners of factories in Malaysia setting up plants in china. Thus our policy must be strategic. We need to focus on industries which we have comparative advantage, brings added value and less reliant on our cheap costs but more of our skill. To me we should move from the model where we pay for and subsidize their profits in order for them to sell more. Eg we subsidize fuel electricity and water for their plant of which tax is not imposed. This distortion does not benefit us.

    Like

  62. Ellese
    Oct 04, 2011 @ 07:23:13

    Dear guest

    Thanks .Met many people like monsterball. I normally do a head on with this kind of people just to show they can’t monopolize the truth.

    Like

  63. Ellese
    Oct 04, 2011 @ 07:29:15

    CYC,

    For the 98 episode i will defend mahathir because what he did was bold right and correct for the nation. Prior to that I was follower of jomo on productive sector allocation. Anwars view then was totally disastrous and to me betrayed our nation. If want we can debate.

    Like

  64. Kenny
    Oct 04, 2011 @ 08:36:36

    Ellese, I will not respond to over-interpretation, hidden meanings and hair splitting instead of addressing my fundamental points.

    Embracing the IMF prescription in 1998 would be painful but it would force the removal of non-competitive racial polices bogging down the economy. We missed the chance for sweeping reforms. Corralling the economy with capital control allow the continuation of economic distortion, corruption, cronyism and odious practices like Mahathir’s rescue of his son’s shipping company using MISC.

    Other countries which have embraced the IMF like Thailand and Indonesia emerged stronger. Their currencies recovered to pre-crisis level. Our ringgit has never recovered back to RM2.50 to US$1.

    Ellese, do you want to debate economics or politics? When you said Anwar’s view then was totally disastrous you should have just stopped there. Saying he betrayed the nation is going off on a political tangent. If you want to know who really betrayed the nation I can write a book on Mahathir but that’s another story.

    Like

  65. Rhan
    Oct 04, 2011 @ 08:46:28

    Ellese,

    I agree with you pertaining to fdi and the benefit they bring in, my point is (1) how do we improve our level of salary base on this model (2) shall we follow Korea/Taiwan model meaning to say they start with fdi, develop own industry and own brand lead to added value and higher salary and (3) what have we done to acquire the necessary skill?

    Mahathir is right to develop our own car/consumer industry, but the right is referred to the idea but not the implementation. Taiwan/Korea have the capabilities to produce on their own the whole chain of required component before they think of coming out with their own brand, Malaysia until today still do not possess the knowledge to develop component like capacitor, inductor, transformer, power supply, resistor and if they do, the quality and cost still far behind compare to that few countries I mentioned. I would think that if we are able to acquire the skill via fdi and technology transfer, our own industry and branding shall lead to the similar benefit as cited by you, and perhaps with higher salary, therefore my question would be, why are still rely on fdi after many years, and depend on foreign labour to ensure the foreign investor stay and not moving to a lower cost country?

    The crux is on skill and government support, but if I move into depth, then I think both Kenny and Steven do make some valid claim wrt our government policy in the past and moving forward, but you shall know me well, I prefer not to touch on this because I guess we would never agree to each other.

    In short, in order to improve the salary level, we either take a close look to our fundamental or as suggested by you, we look at another model ie services or agriculture.

    Sorry a bit rush, no time to check through what I wrote, and thanks for the reply.

    Like

  66. Rhan
    Oct 04, 2011 @ 11:00:08

    What is globalization? I think it is to produce similar goods at lowest cost regardless of location. Therefore the power/decision is in the hand of the producer/capitalist, they are the one that make the call because they own the knowhow, technology and capital. Who suffer most under globalization? It is actually the working class in Western country that draw high salary, and that is why the job growth in both US and Europe is very low in the last 20 years, they survive on wealth accumulated from the colonist past and of course, debts, and start to embark policy such as recruit local first, and demand the corporation to move their overseas manufacturing base back to respective native country, meritocracy become a delusion and big talk of their government, and this is common in country with election and democracy.

    So in this context, I agree with Ellese that Malaysia is facing similar dilemma, but the difference is we are not yet a fully developed or a fully industrialize country, we don’t even reach the level of the few Asian dragon, to postulate a similar hitch is to me a bit premature. What I would put forward is that we shall scrutinize closely what is lacking in our very basic, and strategise accordingly. Political bickering is actually a waste of time and resources but we do not have much choice unless the present government is courage enough to dismantle some of the existing policy that is actually the primary causation that would drain our resources. (I am not saying it is completely bad, but we can do better). That said, I am a socialism devotee so I have no issue with NEP, as long as it goes back to the original spirit of why we had started it earlier.

    Like

  67. Kenny
    Oct 04, 2011 @ 14:43:58

    Rhan, I respectfully disagree with you that Mahathir was right to create our own car industry. A car manufacturing industry is not required for industrialization. Many developed countries do not manufacture cars.

    In retrospect Proton may be the worse legacy that Mahathir inflicted on Malaysia. It trapped the middle class into paying for artificially priced cars whether or not you buy a Proton. Car loans up to 9 years are now a heavy burden on the middle class.
    Not only that, our public transport system was neglected to encourage people to buy cars.

    What benefits have Proton brought? Jobs? We have lost more than enough jobs in car assembly. Downline support industries? They have been degraded to produce shoddy products at high prices to serve Proton instead of serving a vibrant car assembly industry. Malaysia should have been the natural choice for a regional auto assembly hub due to population affluence but auto investments have mostly gone to Thailand. Mahathir may be called “The Father of Thai Auto Industry”.

    In terms of technical knowledge Proton has learned nothing. Proton still can’t design and manufacture its own engines. However it is good at buying over outdated technology from Mitsubishi and putting its own badge on.

    Proton is still selling cars overseas at prices below what they sell in Malaysia. The Malaysian middle class is perversely subsidizing consumers in rich countries. Take a look at this: http://blog.limkitsiang.com/2010/05/25/proton-cars-price-in-saudi-arabia-raw-deal-for-malaysians/

    There is also a cost in human toll. When ABS and airbags have become standard safety features mandated by law in other countries we still go easy on them or Proton will die.

    Instead of driving a low tech and overpriced Proton or an unsafe Kancil or Viva, you could be driving an advanced Japanese car with the latest safety features at real world prices. You can thank Mahathir for this.

    Like

  68. streetfighter
    Oct 04, 2011 @ 19:10:18

    In a nutshell, check out our social ,economical and political situations, good or bad, man made or natural.

    Like

  69. Ellese
    Oct 04, 2011 @ 22:36:22

    Dear Rhan,

    Good write. I have two proposition on tackling this issue of which one I’ve explored with HISHAM previously.

    On the first proportion, I want to relate what happen to our firm. Somewhere in the first Quarter our firm realized that were losing good staff. At that time our salary scheme for freshly graduate were around 2800 to 3000. We did a survey and the market has moved up for starting pay as much up to 3500. The rest of the senior staff pay moves upwards accordingly. Our previous survey and review were done only just last year. To my surprise I realize not only were competing with the private sector but glcs and government who pays better than previously. And in order for us to retain good competent staff we had no choice but to do another review again for the whole firm. We had to move the starting pay for fresh graduate above 3300 to compete and the rest upwards.

    Now my first contention thus in order to move the salary up, the biggest employer has to move up the pay. It’s as simple as that. Private sectors will react accordingly as we need to be better. Thus my support on the government pay rise.

    My only catch is that it must be affordable. That’s why I ask how much deficit we can absorb but none could commit. Im for the government to bear this extra expenditure. 

    Now where do we get the money to pay this off?

    This goes to my earlier debate with HISHAM. My contention then was that if we allow cost to increase with less subsidies the price will definitely increase and invariably bringing more income into the economy. Businesses would increase price and this money flow gets back to the system. As opposed to benefits being accrued to limited party we spread the distribution of benefits manyfold downwards. Let me explain. Main subsidy for energy is the gas subsidy payable to Petronas. We as a result get cheap electricity which we are simply wasteful. Now by lessening the subsidy the price will definitely goes up but most importantly these subsidized money which is supposed to be paid to Petronas can now be funneled back as increase in govt salaries. It creates the effect of increasing income to a substantial mass of workers and creates s better trickle down economic impact. And for private sector to survive we need  to then increase our salary.

    That’s my thinking at the moment. I’m still extrapolating and expanding it. I’ve not touched on inflationary effect. Open for suggestion.

    Like

  70. Ellese
    Oct 05, 2011 @ 05:41:10

    Dear Kenny,

    Thank you but always find your write somewhat disingenuous. Previously everyone was arguing how govt proposed pay rise increase our debt and when I’ve explained you argue we should not be involved in intricacies of debt.

    Similarly now.You said ” I will not respond to over-interpretation, hidden meanings and hair splitting instead of addressing my fundamental points.” but were you not the one who overinterpreted the issue of salary to many other unjustifiable areas.

    Now,  you write that I shouldn’t touch politics but your commentary is always from a pr angle or hentam bn. I purposely wrote to CYC, who disdainly name call mahathir, to tell him that on 98 crisis I can easily categorize Anwar. In fact on the 98 issue that is how I felt. Nevertheless if CYC withdraw the name calling I too will withdraw my comment.

    As for you if you want to write about mahathir go ahead. Where he’s right I’ll defend and where he’s wrong I won’t. But on the 98 issue Anwar was dead wrong. 

    Cont…

    Like

  71. Ellese
    Oct 05, 2011 @ 05:42:10

    Cont….

    I categorically say your write of 98 event is categorically wrong, selective and myopic. Let me explain.

    When you’re first hit with a recession you never go for a contraction policy. banks are afraid to lend and people are afraid to invest. If you go for contraction by raising interest rate there will be less lending which results in lesser economic activity. It will also lead to higher bank default. With lesser economic activity there’s less on the table for everyone.

    So what do you do? You go for Keynesian surpluss spending by government. Government takes anti cyclical policy to generate growth. They essentially spend to increase economic output and activities. Generate further loans and business opportunity. Increase income economic oportunity and welfare of the rakyat.

    We see this unanimous response from US UK etc during their crisis/recession recently. And its during this you should restructure.

    Why you do this? Coz you take the nations and rakyats  interest first.

    Now in 98, mahathir did just that. But Anwar went for the ‘stupid’ contraction policy. 

    Why did he do so? Apparently He wanted to follow again the now proven wrong IMF prescription and to unseat mahathir. 

    You see your demigod IMF presription has only one interest to protect. They want to protect the interest of foreign lenders. They want to protect the capital of foreign lenders. The interest of the nation and people is disregarded or subsidiary. That’s why they apply the stupid one size fit all scenario. This is totally wrong. See stiglitz. Now why would a Malaysian have foreign lenders interest first than our national interest? You tell me why Anwar was right.

    Now our issue was not essentially rooted from an economic structural issue. It was more a contagion or confidence issue. Even hk and korea were attacked. Traders were attacking our currencies. I had been offered a 30% return for shorting our currency then. I tell you it was totally out of hand. That’s why the currency control was brilliant. Read krugman as well. Jomo the Anwar economic advisor had to admit it as well. To me it was a turning point to the crisis and foretold the world traders that countries can adopt out of the box measure to counter them. This mahathir stand on capital control was duly recognized by IMF. Go to their website. There’s already a consensus of it’s needs to have capital control to stem the volatile flow.

    And if the world has moved to a consensus on combatting recession and capital control and saying IMF was wrong then, why do you Kenny not moving with them? Simply because you’re too partisan to judge. You can’t admit or allow to say that  mahathir can do a right. Get out of this mindset.

    Your idea of abolishing the racial policy by IMF was purely fanciful and speculative. IMF never bothered. It wouldn’t have happened. Our country would be in total chaos. Why? We were all racial. Even those proponent of Malaysian first were racially motivated. From independence they believe in segregating our kids along racial lines and perpetuate racial prejudices and tendencies. Thats what we’ve agreed in the constitution. 

    So Kenny, I strongly suggest you read stiglitz book on this issue. He’s the US president Clinton  economic advisor and Nobel prize winner. Have an open mind. Where mahathir is right admit it. If wrong we admit it as well. It does not make you a lesser man.

    Like

  72. Ellese
    Oct 05, 2011 @ 06:15:04

    Kenny,

    On proton, I think you’ve been selective. There’s miss and hit. I thought as a growth engine it was good. There’s a number of listed companies of suppliers. Some doing badly but some are doing well supplying parts to Thai auto city. Proton has been able to build their own engines and come up with their own design. But for inspira I dont know why they took short cut with Mitsubishi.

    My main concern is that were still not competitive with Toyota or the Koreans. Even US automakers are having problem. Perhaps a totally separate discussion would be useful here on the way forward of our auto industry. perhaps doc can write on it and we debate therein.

    Like

  73. Rhan
    Oct 05, 2011 @ 10:37:52

    Ellese,

    Well said. On macro perspective, perhaps what Mahathir did is right by looking at China capital control policy along the years, and read through Krugman and Stiglitz opinion wrt IMF and Asian crisis, but I would still persist Mahathir is immoral and selfish to safeguard some of his cronies (or family?). However I have to stress that Mahathir cronies are not race base, actually the crisis implied a crucial message, only the genuine and prudence business would emerge stronger during and after an economy disaster, it is unfeasible, unrealistic and illusionary to create a business through political power, that is tantamount to misallocation of nation resources.

    Back to salary, Singapore salary may not be exceptionally high, the pull factor is their currency strength, don’t you think we shall look at this angle?

    Like

  74. Steven Tan
    Oct 05, 2011 @ 13:39:12

    The US is a large nation with a very diverse economic activities. One one hand you have California, which in 2003 was the 4th largest economy in the world, and currently the 8th. There is also the south, the Northeast (New York), the mid West all with different concentrations. Together they form the economic powerhouse of the US. To say that the US economy is in a terrible shape, worst than our country, etc… is a great exaggeration. Silicon Valley still attracts the best and the brightest in the world. The US has the most attractive reward system and that’s what i believe is the ‘secret’ recipe of their success. I had a college friend who created a medicine storage system and was immediately bought over by 3M. His reward – equivalent to a 1 year savings – USD10 million. Lets not talk about the sum, but would a company here pay you even close to their 1 year savings if you actually helped them function more efficiently?

    This is essentially the problem we faced in this nation. It’s an ongoing problem and it has reach the stage where we are almost without talent (Lee Kuan Yew said that a year ago). Our policies are now skewed towards developing or attracting the best and the brightest. It’s not the SALARY but rather the OPPORTUNITY. I know a friend who graduated with first class from LSE, coming back to do her duties. Unfortunately, our local banks would not take her for the position that she seek. She’s multilingual (able to speak multiple European languages) and no doubt very talented. She does not come from a well connected family, and during the interview, the interviewer had the honestly to tell her that “it’s a pity you are not of ‘my’ race, else i would have taken you right away or even have you at a higher position”. Well guess what, OCBC grabbed her right after that, and now she’s earning a much higher salary in Singapore. What you see here is the loss of opportunity. Money matters but as long as you give justly, it’s the opportunity that counts first.

    A few months ago, i read in the Star Entertainment section about a young Burmese migrant who came here under the UN problem to escape the poverty and hardship in Myanmar. He worked as a restaurant worker here and was frequently harassed by the police, or other government agencies seeking bribes etc. (He talked about how his people was either monetary or sexually harassed.) Life was horrible. However, he had the determination and learnt English. Opportunity came one day when some UN officials were having this problem to relocate Burmese in Malaysia to seek asylum in Europe and the criteria is to be able to speak English. He jumped on it and now at the age of 19, is the lead guitarist in one of the leading bands in Sweden. I’m actually surprised that the Star published this story. But it shows that our nation does not care about talent.

    Tun Mahathir did right in 1998. We recovered at a faster pace than those who took the IMF prescription. Obviously we cannot sell our national assets away for cheap. Even the West is not subscribing to their own prescription on the reason of national interest or security. But look at South Korea and Indonesia, 2 countries which took the bitter pill from IMF. Are they better off today incomparison to Malaysia? The bitter pill destroyed the existing oligarchs or chaebus. This allowed the nations to have a fresh start. Today, we still have the same UMNOputras running the same GLCs despite having 3 Prime Ministers. This is the essence of our problem and that’s why we are not progressing. A nation can never remain static. You either get up or go down. People have the impression that things are the same, but it’s not. If you are not better off, means that you are actually regressing. And our nation is regressing. Our culture has driven away our talents. When PM Badawi came into power, promising “work with me, not for me”, the effect was corruption became even more rampant, with bribes being paid not under the table but over the table. We even lost our Sugar King who has now become the King of Sugar. To top it off, even under PM Najib, we are losing industry after industry. If anyone watch TV3 half a year ago, Felda had started a program to train locals as maids. This is our path in the future with the present leadership. Change has to come. Nothing is constant.

    As for Proton, Dr. M, had a good vision. Alas, it’s only a vision. The cost has become too much for this nation to bare. 20 years of subsidies, 20 years of the deterioration of the middle class (Housing and car loans), and 20 years of infrastructure expenditure gone to waste to subsidize Proton. Tell me Ellese, how many more years should we continue to subsidize Proton? Is Proton better off today than 20 years ago. Let the Proton financial statement speak for itself. Pride comes at a huge price. Lets compare it with the automotive industry in the US. Apart from having >300 m in population, the industry has gone through a multitude of boom and bust. Creative destruction is what i like to call it. It is not the lack of sales or quality that cost GM and Chrysler to file for bankruptcy but pension costs. By reforming their pension programs, which in turn reform the company policies and direction (No more bigger means better), now we have 2 better promising automotive corporations.

    Look at Malaysia, do we have the population to support 2 automotive giants (Proton and Perodua)? What are our problems? It’s quality and mistrust – and all boils down to inefficiency and tidak apa management. This is a top down plague that is affecting the health of our economy. Are we prepare to face the necessary remedy? Time for Proton to stand on its own feat. We live in an era of globalization. Policies produces cause and effect results, even simple ones. We give our population more spending power by reducing unnecessary costs, such as our subsidy to Proton. And corruption!

    Lastly energy policies, the common misconception is that Malaysia has one of the cheapest tariffs in the world. This might be true 20 years ago but not now. We are producing in excess of >50% electricity. That’s our waste. International standard states less than half of that is sufficient. Energy has become a major expenditure for SMEs. Thailand pays a little more than us, with zero subsidies. Tony Pua had already presented the calculations that based on our subsidies, we should be paying 30% lesser. We are currently paying more for less! Don’t get fool. Majority of energy subsidies does not trickle down to the ordinary rakyat. Same with our oil subsidies. With the FiT tax, our energy prices going to get worst. Look at our TNB bill, it’s currently clustered into a single payment for every 2 months. This means that you are not getting the subsidy of the lower rate. If you split it into separate months, you’ll pay less. Accounting tricks no doubt. Once again the rakyat gets the short end of the stick.

    This is my final post in this economic column.

    Like

  75. Rhan
    Oct 05, 2011 @ 14:51:42

    Kenny,

    By looking at the result alone, I don’t disagree with you, that is why I said “but the right is referred to the idea”. There are many ways to industrialization, in fact most Western countries start the process much earlier, I think Mahathir want to do it quick and shortest way, by initiate the end product and develop a whole range of upstream parts, the idea is good provided you have 1) capital / money and 2) domestic market 3) talent / skill labour, 4) mindset that endorse, encourage and cultivate competition.

    Capital is not an issue with robust flowing in of FDI and Petronas, domestic market is actually quite small but there are car producer countries with more or less the same scale, for instance Korea and Sweden, our problem is with (3) and (4). I don’t know why Mahathir can’t foresee this, perhaps he held the belief that if he can do it, why not others?

    Steven,

    Thanks for the informative writing. No doubt US is a great country with great people, no sane person would think that their economy will worst than our country at this point of time, but we can’t deny their foreign policy sucks and their economy is moving downhill. Although I always held the belief that US and their peoples is one with the most dynamic mind to make changes, but with China and India coming up to compete, I am not that sure anymore.

    Like

  76. Dr Hsu
    Oct 05, 2011 @ 14:56:19

    Steven Tan
    A good write, and I think perhaps it is time for this discussion to close, and let us move on to other topics.

    The comments are really insightful, even though some of you have differing views from others, the points brought out could have enlivened any economic forum..

    I thank all of you for that..

    Like

  77. Ellese
    Oct 05, 2011 @ 20:15:25

    Dr,

    I hope you don’t mind letting us continue. We need to explore and extrapolate for our common good. By debates and discourse we can close gaps of perception and hopefully arrive at a point of nash equilibrium. We can still agree to disagree after all else.

    Like

  78. Ellese
    Oct 05, 2011 @ 20:51:30

    Dear Steven,

    If you’re in US I don’t believe opptimism prevail. I think data shows structural economic issue. If you want please refer to Michael spence on the impact of globalization on income and employment. The crux of the issue is the income and employment data. Your example miss the whole issue and in fact further support my argument. By sidestepping and misreading the situation like what you did I’m afraid we will miss the opportunity to learn avoid and tackle the issue.

    If you care to analyse between 98 to 2008 there were 27 million jobs created in the US. You know what? 98% of these jobs came from non tradeable sector ie mainly by government and health care industry. Tradeable sector only created a negligible 900k jobs out of that decade.

    This shows a lot. But what is telling is this. Despite the huge increase in non tradeable sector, the value added per employee (VAPM) increased only by 0.7%. in terms of numbers the value added per employee increases from 72k usd to 80k usd (12%). But in non tradable sector with smaller employment increase, it grew much more. The VAPM grew from from 79k to 120k ie an increase of 52%.

    What it shows and we can learn is that the value added that we must focus is on the tradable sector. But hold on. From the tradable sector data in US, the value added by high end manufacturing and services increased so much that that it outweighs the losses at the low end manufacturing and business sectors. In other words it’s wealth is shared by highly educated or entrepreneurs at the upper end of the tradable sector. That’s why their the rich and poor gap has widen.

    You can brush aside my write to say US is diverse. But this is the coming political and economic thinking led in the US. What’s more worrying is the proposed solution which will involve protectionism.

    Either (I) we learn adapt and tackle the crisis or (ii) make short shriff and brush aside these issue saying that the US is so diverse and better than Malaysia and won’t affect us.

    You decide Steven.

    Like

  79. Ellese
    Oct 05, 2011 @ 21:06:16

    On energy Steven, don’t let Tony phua fool you.

    You see energy tariff widely varies.

    We are usd 7.2 c per kw.(07). Thailand is usd 12 cents p kw. Netherlands 34 Singapore 20 France 19 Germany 30 uk 18.

    Why didn’t Tony phua argue even with subsidies we are more efficient and cheaper than those in the western countries? He won’t coz he makes bn look good.

    So Don’t be fooled by Tony. Argued with him on plus issue at his blog. He makes no economic sense. Please don’t quote politician. They have different agenda to deceive. Quote me those in the industry.

    Like

  80. Ellese
    Oct 06, 2011 @ 08:09:26

    On Effect of IMF on Korea and Indonesia I can’t find empirical evidence and support to back your view. In fact to the contrary I’m arguing that it was wrong for IMF to have the objective of destroying the chaebul. Chaebul is koreas comparative advantage over the west businesses. It’s wrong for IMF to prescribe methods having foreign interest as primary goal. This is the major failing of it’s subscription. Thank god only 11 Chaebuls collapse. The remaining 20 are still dominant with the like of samsung LG Hyundai etc etc. being stronger than ever.They’re still operated by family chaebul and are dominant now.

    Now compare this to the US. They allowed Lehman to die but suddenly say the like of Goldman Sachs AIG GM etc etc are too big to fail. To big to fail to whom? To the US. why didn’t the proponent of IMF like you argue allowing GM sachs to fail coz Toyota is there? All these hypocritical arguments.

    Main thing we must always do is to protect our interest first. Not other people like Anwar did. If You read international relation and law you will find that it has always been about self interest. First without exception So we can’t be knaive. Mahathir did restructure. He put in place danaharta and danamodal to recapitalize the banks and clear off toxic assets which impede growth. We then increase our balance of payments and reserve. Why in your haste disregard all these efforts. I attended a few neac meeting and it was very good. Ideas came and being implemented. Unlike US where they have political problem to solve the many economic issues. You must recognise this for us to learn. My take is that zeti did at an excellent job in managing our macro policies. Now on what basis are you arguing Indonesia is better as a result of IMF prescription?

    Like

  81. aiz
    Oct 06, 2011 @ 11:09:22

    Dear Ellese…

    Highly indebted nations are on the brink of economic collapse. No one knows for sure which countries could be brought down along with Greece. The IMF is aware that Ireland, Portugal, Spain and Italy all have a gigantic debt burden and their economies are shrinking. Germany’s export needs help while the US is reported to be printing an extra $60 billion every month. World leaders are aware that a default now would lead to market turmoil and engulf other high-debt nations and may pull the rest of the world down with it.
    France’s financial institutions have drawn the markets’ mistrust for having too many bonds from debt-stricken EU nations in their portfolios, not only from Greece, but also from Italy and Spain.

    President Nicholas Sarkozy said.. “We’re leaving a zone of turbulence only to enter a possible crash zone..”. His prime minister, François Fillon, seized in a bewildered rage said.. ” I’ve been trying for two years to shake some sense into the political classes that don’t want to believe we’re staring into the abyss,” he says. “We’re on our last legs here.”

    And… Jean Peyrelevade, former head of Crédit Lyonnais, has diagnosed France as being in “critical condition” and says the country has been in a continuous economic decline for the last 10 years. “With recklessness and arrogance, France continues to live in its economic bubble, convinced it will never burst. The hard truth of statistics is unrelenting in its proof that the opposite is true,” Peyrelevade says.

    Ellese.. as I think you are from LSE and also IMF, knowing that if Europe slips they may pull the rest of the world down with it, what would be your action(s) not to exacerbate the crisis? You also know that Europe hasn’t got the mechanisms in place to handle the impact of a Greek bankruptcy on other nations and on the European banking sector, right!

    In reality, the domino effect could spread to Asia. Before it spreads to Malaysia, our government needs to walk a tightrope between imposing savings and boosting economic growth. Our economy indeed is shrinking. FDIs are moving away from us! It might be more prudent for us to stop the rot now rather than increasing our debt to finance the increase the salary of some rakyats and/or to finance some super mega projects.

    Greek Prime Minister Giorgios Papandreou, said Greece deserves “respect” for its efforts so far. “Greece has the potential, Europe has the potential,” and can achieve it through global cooperation. “We are not a poor country; we’re a country that has been governed badly.” It is going to be a best joke if one day our PM is going to have to utter the same.

    Like

  82. Rhan
    Oct 06, 2011 @ 15:41:39

    I recently finished a book about the tax policy during Qin and Han. Qin operate in centralize approach, tax have to be submitted/delivered to the government within a specific period of time in less than one year. The punishment for delay is death, no exception as Qin Fa (Law) was extremely strict and harsh As we know China is huge, some district in Jiangnan and most Southern part may took at least three months to deliver the tax to central government, and the travelling expenses alone would cost 5 to 10 times of the tax itself. For those that delay, the only way out is to revolt against the government and that is where Liu Bang came from.

    When Liu Bang founded Han, he solved the issue via decentralise the government similar to our Federal and State, and collect tax every 3 to 5 years depend on distance. However another problem occur, the State is becoming too strong and choose to break up, so again, war is inevitable.

    Politics and economics are stuffed with paradox. Both Keynesian and Chicago Schools sound contradict but their application work fine in certain circumstance, my only explanation is that everything is fluid, thus different action and solution is required in different age and situation. I personally prefer the prudence approach.

    Like

  83. Ellese
    Oct 07, 2011 @ 06:34:36

    Dear Aiz,

    Just want to touch on your concern about indebtedness.

    To have a feel the 2010 public debt-to-GDP ratio in the US was 62.3% with a gross debt-to-GDP ratio of about 92.3%. The level of public debt in Japan in 2010 was 225.8% of GDP. The level of public debt in Germany in the same year was 78.8% of GDP.

    For UK, the public debt ratio is 76% and our much developed Singapore is 105%. France at 82%.

    Malaysia is 52%.

    Funny thing is that EU has set at 60% for the debt GDP ratio under the Maastricht criteria for all eu nation members..

    Now in euro the strongest country is Germany which has around 80% ratio. If any country is to pull EU out of the crisisit will be Germany. Next France which has a ratio of 82%.

    What does it say to you?

    My main point is that we don’t be overly concern about debt to the point were not to incur further debt anymore. It’s the quality of debt which is more of a concern. It should be strategic creating growth for us. During better times we go for surpluss budget. Now all are trying to avoid recession.

    It’s like individual. You may not take loan in life and keep renting take busses walk cycle use debit card and don’t go for holiday if you only want to spend money you have. Some took loans to buy car, house shares etc etc. They go for credit card rather than debit card. If you take too much loan you’ll be bankrupt but if too little you have to content with a much lower standard and comfort of living. If you find the right balance then you will have an affordable comfortable life.

    Similarly with the nation. You need to find the balance. At 52% now it’s a very comfortable balance with room for deficit spending when necessary. It’s under the conventional wisdom criteria.

    The debate for us is always to ask what’s good for us. We don’t reject simply because were creating debt. We ask what’s the debt for? Whether justifiable? Will it improve our livelihood and standard of life?

    It’s subjective. But if all take off the partisan hat you can discern better the goals and objectives. Then we can forge ahead based on proper informed decision.

    Like

  84. Ellese
    Oct 07, 2011 @ 06:49:55

    Dear rhan,

    I’ve missed your question on currency. I think it’s an economic tool we can use and have used before. But if has it’s restriction. The currency cannot be a paneach to all. We have a managed floating rate. Everytime we move the currency value it will definitely affect our competitiveness. I think the current thinking of devaluing or increase the value of RM in tandem with change in renminbi is acceptable to me. Coz Everytime china changes the value of renminbi it will certainly affect the competitiveness of other nations. So using currency as an economic tool is not straight forward. At this juncure I can’t say where the balance of currency value should lie.

    Like

  85. aiz
    Oct 07, 2011 @ 12:07:45

    Dear Ellese.. you said that you sit in the NEAC. I have attended MIGHT and also MIER meetings before, but not NEAC. I have also attended PEMANDU workshop. I am sorry to say that the thinking of some members are quite vested and backward. They always want to run rather than to crawl and walk first. The always want to do a quantum leap and are so sure that they will land in the a leafy garden. Go for big projects but who are the advisers and consultants who are supporting the project viability with 1001 crazy assumptions? Then we have conflicting policies… for example you want MRT but yet more highways are now on the drawing board to bring in more cars into the city. What happen to our enforcement policies.. bus lane.. area road pricing.. illegal parking operators.. we can debate this!

    Like

  86. Ellese
    Oct 07, 2011 @ 16:43:52

    Dear Aiz

    I’m not sure where youre coming from. Your mrt has an alignment and cater for specific area. The highway is for different area. Can’t see your objection?

    If you look at macro level I think we can have both. All our highways use domestic funds. It’s the best form of tax using user pay principle. As world economy heading for lesser consumption demand domestic growth like highways make sense provided its a new alternative route. Our savings are still high. What’s the best pfi model we can discuss later.

    Even at US now, the thinking is for infra project to spur growth. Perhaps you could elaborate further your main objection.

    Like

  87. aiz
    Oct 07, 2011 @ 18:08:23

    Dear Ellese… lets go back to basics first. One is for less congestion on the roads and clean air whereas the other is for traffic congestion, carbon dioxide, health hazards, etc… Feel me.. Ellese?

    Like

  88. Rhan
    Oct 07, 2011 @ 18:22:05

    “I’m not sure where youre coming from.”

    I guess he is from Sabah🙂

    Like

  89. kings
    Oct 07, 2011 @ 20:01:24

    🙂🙂

    Like

  90. ellese
    Oct 07, 2011 @ 21:45:58

    Dear Aiz,

    Life is always about balancing the competing interest. I did environmental subjects in UK and ploughed through the findings between national economic development and environmental degradation. In our case, its a typical scenario of competing interest faced for hundreds of years.

    Here we have one mrt line and the whole world makes such a fuss. To me we need more met but its expensive. So if environmental concern is premier then we need to spend huge and huge tons of money. We definitely can’t afford now to have all the lines.

    Where does that leave us? Roads which is self sufficient and is not subsidized by taxpayers. We have less traveling time and more time for social/ family, It improves ones standard of living.

    So you decide. Should we put environmental concern above else or find a middle ground of mrt and highways to pursue an increase standard of leaving.

    Like

  91. ellese
    Oct 07, 2011 @ 21:46:50

    Apol…erratum…. should be “standard of living”

    Like

  92. aiz
    Oct 09, 2011 @ 10:24:22

    Dear Ellese.. there are already too many highways coming into KL City. I know a few more are going to be built. I am not in favor of that.. be it privatized. Secondly, ten years ago it cost about RM8.0 billion to construct about 70 kilometer of MRT lines. Now, RM50.0 billion for 150 kilometer of MRT lines. I am for MRT but I am against the cost. My simple basic reasons are it is too expensive, conflicting policies [MRT and Highway coming into the city], and it is not going to solve out traffic problems.. because the government is not going to stop the cars from coming into the city… because it will affect the toll collections of the privatized government- friendly-companies or GFCs [antonym GLCs]. Now, we are going to have two MRT companies [SPNB and new MRT Co]. I am not against it but I have given up! I can do a thesis on this issue and do a viva session with you. But what the heck… why bother? Lets move to the new post.. The Budget.. Period

    Like

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