Dark clouds over the horizon

 

Coming home after a prolonged stay of many months in the States and Australia, where my children are working, I was shocked by how much Ringgit’s buying power has shrunk.. Prices of almost everything, including food, have skyrocketed. Even street food like prawn mee or fried Kwai teow have gone up so much, it’s scary. Items in groceries and supermarkets are selling much more expensive than before, on top of the 6% GST.

Petrol pump price however remains at RM 1.95 per liter. This despite global oil prices falling to US30 per barrel yesterday.  I remember that in July last year, when I was driving across US with my wife, oil price was around US60, and US pump prices was around US3.00 per gallon. At that time, our pump prices was about the present level too.
Now US pump prices have come down to US 1.97,  giving American consumers a big savings on energy cost and putting more money in their pockets to use. Although US oil companies are suffering, the ordinary people have more disposable income due to cheaper petrol and energy bills.

Malaysians, on the other hand, have to contend with rising food and consumption prices, while cheap oil in the world doesn’t seem to translate to any real savings in their energy usage. If we follow US trend, our pump prices should be much lower than it is now, thus at least save us some money on petrol and energy usage to counter the skyrocketing cost of living, and give us some reprieve to fight inflation. Maybe our authority should take another look on this, and pass the benefits of cheaper oil to ordinary people by lowering pump prices. That will in a way be deflationary, and helps to counter the high inflation that we are experiencing now.

Oil prices are going to be low for a long time. While demand for oil has slowed, supply has been increasing, largely due to the shale oil production in US. US is now producing enough oil for its own consumption,, and does not need to import from its traditional suppliers in Middle East. Middle East countries have to look to Asian markets to sell its oil, but unfortunately, China is slowing down and need less oil energy than before, and thus there is a glut in global oil supply.

More and more electric cars and hybrid cars are being produced, and even for petrol-powered cars, new technological advances are making them more energy efficient. Wind and solar energy are being tapped increasingly, even in US, the country that consumes the most oil. As we were driving along the Columbia Scenic Drive, we saw so many wind turbines on the hills we passed. Then in cities like Portland, electric stations can be seen in the cities for electric cars to recharge.

image

Electric Cars charging stations in Portland that we passed

 

 

As a oil producing country, we have not foreseen nor anticipated  this scenario. We didn’t plan for the rainy days during the sunny period. Oil has given us prosperity for many years, but it has also given us a false sense of security. In hindsight, we should have used oil money more efficiently to diversify and lessen our dependence on oil income. Instead, oil money has made us complacent, and the many handouts from the government has made us much less competitive. GST may have helped the government with alternate source of revenue, but the drop in oil prices has resulted in massive depreciation of our currency, and as a result, cost of living has skyrocketed, and even working 2 jobs, as advised by a ‘wise’ leader, may not be enough to make ends meet.

Is 2016 going to be better? I don’t think so. It may get worse before we can get better. But we must start learning to be competitive by slowly replacing the ‘crutches’ that we have given out all these years. We must influence our people’s mindset to be more proactive, more enterprising, more hardworking and prepare ourselves for the next phase in the world’s industrial revolution. With the advent of 3 d printing, we are entering a new era of digital manufacturing as opposed to the old ‘mechanical’ manufacturing.
If we are not well prepared, we may never get back to the stage where we were before!

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GST and consumer power

Updated.

Almost one month has passed since the implementation of GST, has the cost of living gone up?

GST was successfully implemented in many countries and is perceived to be a useful tax to raise revenue for the government.  Protagonists will label it as a fair tax; you pay when you spend; the more you consume, the more you pay.  But if you are one of those living and working in the cities in Malaysia and earning a salary slightly higher than the minimal wage, you probably will be the one worst hit by this so called consumption tax and you will not welcome this.

Even though essential items are exempted from this tax, working persons will have no choice but to eat at least one meal outside. And if you eat a meal outside, you will definitely feel the effects of this tax on your pocket.

So far, I have come across three categories of businesses on how they deal with GST.

1. Many merchants have put out notices that they absorb GST. One prominent example is multinational company IKEA. There are notices in Ikea stating that prices remain as before. They must have a very comfortable profit margin to be able to absorb six percent of taxation. Anyway, as consumers, most of us would be happy to patronize these.

2. Many are charging more than six percent even though  on their receipt, it is programmed to read 6 percent. One example is those curry puff chain stores.  One of them  was selling curry puff for RM 2 per piece just before CNY.  After CNY, it was raised to RM 2.20, reasons being that the impending implementation of GST has raised cost and thus a 10 percent adjustment in price.  But then, come April first, the curry puff price went up to 2.40 , an increase of another 20 cents. Six percent GST on 2.20 would be 13 cents, so why increase it by another 20 cents? Why can’t they just sell it at 2.35 or even 2.30 , since they have already increase their puff by ten percent just a couple of months earlier? On the receipt, of course, GST reads exactly six percent of a puff which are now priced higher at 2.26.

A fried YaoCharKway (fried chinese doughnut or flour sticks) in uptown used to charge 40 sen per stick (the small variety type, not the normal long one available elsewhere). Now he is charging 50 sen per stick, an hefty increase of 25%. The reason is that as a small business, he can’t charge GST but have to buy raw materials which may be subjected to GST. So he has to pass on the increase. An increase of 25% no less, even though GST is only 6%.  It doesn’t matter that not all his raw materials are subjected to GST; flour and sugar are certainly GST exempted.

One of my favorite cafe at uptown Damansara raised its white coffee from RM 3 to RM 3.30 a cup, an increase of 10  percent, starting this month.  On top of that, GST is charged on the 3.30. Which means an increase of more than 16 %  on that cup of coffee. The reason given is again increase of cost of living due to the new tax. By their logic, the six percent GST  is causing the cost of living to go up 10 percent? These merchants must be either out of their minds or they are such good predictors of future that they could predict that there is a rise of cost of living of 10% due to the six percent of GST.  More likely, they are shrewd businessmen trying to make more profits using GST as a pretext.

3. This category did not use GST as an excuse to raise their prices, yet! They charge GST as GST should be charged– prices of goods purchased plus 6 %.  They did not have to absorb any cost, but they also did not go all out to profit from the pretext of an increase in cost of living due to GST implementation. Examples are plenty: many restaurants, most hypermarkets and supermarkets.

There are many other examples of category 2 merchants. Precisely because of these unscrupulous merchants , cost of living may go up higher than what it should be purely on GST taxation per se. Precisely because of there are so many category 2 businesses,  that we should have perhaps postponed the implementation of GST until people’s mentality changes to that of first world countries, or until such time when enforcement improves and profiteering can be cut down to a minimum.

In the meantime, what can we consumers do? individual Consumers are powerless, but together we can teach these cat2 merchants a lesson. If they raise their prices in addition to charging GST, like the examples I quoted above,  we should  all stop patronizing them. If we can do that, we will be sending a strong signal to these people that profiteering will not be tolerated.

Afterall, what are they without the consumers?

…………………. ………………………….. ………………………..

 

P.S. There are of course the  rare ones that have lowered their prices. These outlets are so rare that I won’t even categorise them. One of them is this :

image

 

Please note that although this outlet has reduced its prices, they are still not cheap and would still be out of reach for the ordinary wage earners. Anyway, this act of reducing price is commendable and hopefully more outlets should take after this.

Still at the doorway

Below is the list of  top 27 rankings of Global Competitiveness Index(2012-2013)  compiled by the World Economic Forum. For the full report, click here.

Malaysia is not doing too bad, being ranked 25 out of 144 countries. Malaysia’s GCI score remains at 5.1,  same as last year.  So in a way we did neither  regress,  nor progress,  which may seem on the surface to be not a  too bad thing . However, while our score has remained at 5.1, 4 countries has moved ahead of us, forcing us to drop  from our position of No. 21 last year.

South Korea, Luxembourg, New Zealand, United Arabs EMirates has overtaken us, to be exact. This is despite our government channelling considerable resources into transforming our economy since the present PM has taken over. We have not only not moved forward, but has remained stagnant , despite setting up various think-tank labs in Pemandu, employing many of the so-called top brains in trying to develop policies to lift us out of the middle income trap.

Perhaps it is time that we look at how other people view us, especially our weak areas, instead of just debating among ourselves how to transform our policies.

What are the problem areas in our global competitiveness, especially when compared to others?

The report by WEF in fact highlighted out problems. Look at the WEF graph below on our problematic areas:

In case the readers cannot read clearly the graph above, the top 2 problematic areas are these:

1. inefficient government bureaucracy

2. corruption

It is clear that our main problem and main impediment to our competitiveness is none other than our government. It is not only inefficient, but corrupt as well.

Then the next 2 problem areas are:

3. inadequately educated workforce

4. poor work ethic in national labour force

3 and 4 are the results of our education system. Again these 2 problems point to our government who is responsible for formulating our education policy, which has ostensibly produced  many A’s students, but many of these are not competitive once they start competing globally.

There is something  grossly wrong with our policy which has produced not only inadequately trained workforce, but work force with ‘tidak apa’ attitude, as we Malaysians know all along. Who can blame employers opting to employ foreign workers? Not only they are cheap, they are hardworking, with better work ethics, to say the least.

In a nutshell, and looking deeper, I think that if we want to become more competitive,  to make our workforce more productive with better ethics, and our civil service more efficient, we have no other choice but to introduce more liberal and broader based education system. We need to do away with affirmative-action-based policies, and curb corruption.

In September 2009, I wrote an article about this Global Competitiveness Index too, and one of my frequent commentators, klm, has made a comment  which I think  is still relevant. I would like to post his comment here:

Dr. Hsu. If you take a look at the list above  Malaysia (Editor: the list refers to the 2009 list not 2012), other than Qatar and UAE, these countries are the so called developed countries of the world, the tier 1 countries. Malaysia had done well in reaching the doorway. But crossing this door way is a very different thing from what Malaysia had done in the past. Malaysia is having great difficulties in make the crossover. The characteristics of these countries are:

1. Liberal and open economy
2. Other than a few, a vigorous and democratic government system
3. Strong governance, transparency and accountability
4. Little or no public corruption
5. Quality education system
6. Knowledge industries
Strong nurturing of talent
7. open immigration

These are many things Malaysia do not have. Without the political will to make the changes needed, Malaysia will still be at the doorway 10 years from now.

Three years from that last article on our competitiveness, we are still at the doorway, unable to move out and up into the top ranked nations.

Even though I wish my country well, I think klm may be right that Malaysia will still at the doorway 7 years from now.

Prudence and wisdom

Imagine 2 persons  who are middle income earners. Let us assume that both earn about the same pay. Both are staying in their own houses passed down from their parents.

One of them, let me called him A,  is prudent. He maintains a simple lifestyle, employs only a maid, does not spend on luxurious goods, and saves up most of his income. With his savings, he bought another house with a bank loan, and rents out that house, using the rent to pay the instalments for the bank loan. Whatever he saves goes to help paying the mortgage too.  In a few years time, he sold the property and use the proceeds earned to buy 2 separate properties, again with bank loans, again renting them out, again using the rentals to pay for the instalments.

In time, he will be a proud  owner of many properties, and with most properties paid off, he is now considered a very rich man.

The other person, let’s call him B,  started off with the same income. He is even more  fortunate, for one day, when he as digging in the garden of his ancestral home, he found a big box of gold bunions.

Instead of using his fortune to invest like A above, he employs a driver, 3 maids, 3 gardeners, a cook, 2 cleaners, a nanny, 2 guards. Most of these staff are redunctant, and most spend the days chatting instead of doing work.

Using his bunions as collateral, he borrows from various banks and has many credit cards. Because his lifestyle is so luxurious, his income cannot sustain him, and what sustains his lifestyle is the borrowings. One day, when he finds his income unable to pay the interest of the loans, he has no choice but to  mortgage his own house for more funds just to service the previous loans. That is actually the point of no return. Once his income cannot service his loan, and he has to use fresh loan to cover the interest of his existing loans, he has already cross the line to bankruptcy.

The above is actually happening everyday. Even among the younger generations, many have become bankrupt because of borrowings that they are unable to service.

Borrowings can be good if it helps to increase income. Borrowings are bad if it is merely use for operational costs, like keeping a huge staff that is many times above what is needed for the same productivity. The examples of A and B are clear illustrations.

Extrapolate the above to nations, and we will understand why some nations which have big borrowings but still manage to get richer and richer, and others which are collapsing under the huge borrowings that they have accumulated over the years.

Our country too has debts which is now about 53% of our GDP. If these debts are used to generate income that can be more than the   interest, then we should be able to reduce the borrowings in future, and at the same time, progress  faster than if we just use our own funds..

However, if the borrowings are used to service operational costs, a big part of which goes to pay  remuneration of our civil service and servicing interest payments, then we must start thinking of more prudent ways of managing our spending.

We have not reached the point of no return yet. But at 53% of our GDP and with sluggish economy growth of around 3-4% next year (this is my estimate, but it can go lower in view of the uncertainty in the West), we must start planning to reduce our debts. We can easily start  that by reining in our wastage and leakage; we can actually see how our funds are wasted looking at Auditor General’s report. A few years ago, an international renown financial house estimated our leakage and wastage to be around 100 billions. It must be more now.

It is like a patient who is having a bacterial infection of his toes. Bacterial infection of such kind can be cured easily if treatment is given early. Once the infection goes up from the toe and involves the whole foot, it can still be managed but it will take a longer time to recover. But if the infection is left alone at the stage of foot involvement, it can easily infect the blood stream and septicemia may set in. If there is septicemia, and if the bacteria is of a virulent type, then I can only pray for the patient , for at that stage, a point of no return may have been reached, and treatment may not be effective.

The Chinese has a proverb advising that “we must be prepared for the rainy days”. I think that is the wisdom which will do any nation good.

Penang leads again!

In the next GE, will Penang be taken back by BN?

The big brother thinks that with it winning a few extra seats, and the little brothers winning one or 2 seats each, they can scrape through and win the next GE.  But sentiments on the grounds say otherwise.

Ask any Penangite and the answer is likely to be they would give LGE and PR another term.

Penang has done well since 308, despite the handicap it faces with an uncooperative Federal Government. This is generally the assessment by most analysts.

The latest article in the Economist says plenty about the revival of Penang.  It is now a show case state of Malaysia.

AFter 308, I have said that the most important thing facing the opposition pact is for PR to show its  ability to govern  the states that it has won, and if it can manages the states well, even non-supporters will cross over to support them.

Penang is doing exactly that.

The article in the  Economist is an acknowledgement by foreign observers on how well Penang has been doing.

Here  is the article by the Economist:

Malaysia’s Penang state

Getting back its mojo

IF YOU are going to have a heart attack, have it in Penang. So one might think, to the see the hospitals in George Town, the capital of this north-western Malaysian state. Patients are flocking in. Ted Mohr, the head of the venerable Penang Adventist Hospital says that he will admit 70,000 medical tourists this year. The hospital specialises in heart procedures and it will perform roughly 23,000 of them this year, including 550 open-heart operations. Such is the demand that the hospital is doubling its number of beds.

Mr Mohr gives two main reasons for Penang’s success with the coronary crowd. First, it is relatively cheap. Open-heart surgery that would set you back $100,000 in America costs only about $10,000 in Penang. Second, Penang’s hospitals are as well-equipped as many in the West.

The combination of low cost and high technology is the main reason why industries across the state of Penang, made up of the original island and a larger bit of the mainland, are prospering again after more than a decade of decline. Their revival is important to Malaysia’s economy—Penang and the surrounding region account for 21% of the country’s GDP. But the renaissance could also have important political consequences for the country. Since 2008 Penang has been one of only four states (out of 13) run by an opposition party. If its politicians can claim the credit for the recent success, that should greatly help the opposition in the next general election, expected within the year.

Penang was founded as a free port by the British in 1786. Occupying a position between India and East Asia, the island drew merchants and middlemen keen to make their fortunes. Chinese, Indians, Armenians, Arabs and more all traded alongside each other. With its racial and religious mix, and dedication to the pursuit of free trade, Penang was in many ways the first custom-made city of globalisation.

The island’s fortunes sank as it lost business to its arch-rival, Singapore. In the post-colonial period Penang fell victim to the rise of nationalism. The region’s freshly minted republics chose to develop their own ports. Penang enjoyed a revival during the 1970s with the setting-up of Malaysia’s first free-trade zone (a “free port” by another name); this attracted big names in electronics, like Intel and Bosch, which built some of the first offshore assembly lines. But this boom was founded on cheap labour, and as Malaysia became richer other emerging economies, such as China and Vietnam, drew the assembly work away.

To recover its prosperity, Penang has sought to reinvent itself. With the rise of India and China, Penang’s location again looks very handy to foreign companies as a place to invest, as in the 18th century. It is relatively close to both big markets—yet offers advantages that trump Asia’s giants’.

Penang’s own “Silicon Valley” companies know that the rule of law in Malaysia gives them the sort of protection for patents and intellectual property they would not enjoy in China, and an ease of doing business that they could not find in India. Wages are higher than they were, but no more so nowadays than on the Chinese seaboard. The federal government has also spent liberally on bridges and the airport, making Penang better connected to the rest of Asia. And old George Town has been smartened up, which helps to bring in foreigners to live, work—and have surgery.

The result is another boom. Last year more investment poured into the state than any other in Malaysia. Scores of new electronics firms have swooped in to join the pioneers, along with an expanding cluster of 20 or so medical-device manufacturers. Crucially, most of the new jobs are in research and development rather than assembly. An American chip-designer, Altera, has a new facility with 1,100 workers in Penang, 800 of them engineers. Its head says that almost all the engineers are locals—which is good for Malaysia.

Whom to thank?

When the Democratic Action Party won the state’s legislative assembly three years ago, it became the first opposition party to triumph in Penang in more than 40 years. The victory presented a direct challenge to the Barisan Nasional (BN) coalition that has ruled the country continuously since independence in 1957. Penang’s new leader, Lim Guan Eng, says that the federal government has an “ambivalent” attitude towards him, cutting off some funding but not undermining his authority. “They don’t want us to get any credit, but they can’t afford to see us fail”.

The revival of Penang was already under way in 2008, but Mr Eng’s new policies have helped it along. He has become the first governor in Malaysia to open up all state tenders to competition. This has entailed dismantling the special preferences for ethnic Malays that have underpinned the BN’s rule since the early 1970s. That was when the Malay majority institutionalised affirmative action for themselves, to the disadvantage of ethnic Chinese (a majority in Penang), who were perceived to have got unduly rich. Mr Eng claims that by reforming the system he has ended the cronyism and corruption that wasted money under previous regimes.

Adapted to the national stage, such policies could transform the way that the Malaysian federal government conducts business. Mr Eng says that the savings he has made by ending the “old systems of patronage” allow him to spend money on new social programmes instead, such as modest handouts for the elderly. These policies are popular, and the assault on corruption pleases foreign investors. Little wonder, then, that Penang has become a political weathervane as much as a lesson in economic development.

The hike mentality

According to the Star,  another government linked company is raising its tariff. Airport tax is likely to be raised from RM 51 to RM65. an increase of 27%.

Those behind the hike may be thinking that for international travellers who are able to fork out thousands to travel, an increase of RM 14 is negligible.

BUt coming at a time when cost of livings and inflation rate are going up, this hike must be scrutinised carefully.

Many top leaders have asked the  retailers to try to absorb cost and not to raise prices when they increase  the petrol and electricity tariff. BUt apparently the same rule does not apply to the government linked companies.

Since the past year, we have an increase of postage from  30 cents to 60 cents per letter, an 100% increase. We have seen an  increase in petrol and a 7% increase in electricity charges. We have seen an increase in Astro charges. Medicine costs have gone up many times, partly thanks to government efforts in limiting import of certain raw materials , thus creating an artificial shortage of colds and cough medicine (which contain an ingredient called pseudoephedrine).

Those who are behind the hike may say that it is only an increase of ‘cents and dollars’. But the cumulative effects is that the price of  all other goods have gone up.

Besides, all these increases from government linked agencies, or as a result of more red tapes and bureaucratic hurdles, have resulted in a “hike” mentality.

What is easier than to just  hike the price of goods and services to improve the bottom line? No need to talk about being more efficient. No need to talk about increase in productivity. For the management of government linked companies, what is easier than just to just raise  the tariff and rake in more profits? After all, many of them are monopolies, like TNB and MAHB.

It is the easiest way to increasing profits and as the results of the increase, there would be justifications to have higher director and management fees. But this hike mentality would have hampered innovation and better productivity. Little wonder why we are still in the middle income trap, since we always resort to the easiest way out.

Coming back to the proposed airport tax hike, let us look at MAHB’s financial highlights.

The following is the 2nd quarter 2011 result:

(click to enlarge)

It is acknowledged that while revenue grew 8.4%, PBT(pre tax profit) grew 65.9%. There is a net earning of 81.8million in 2nd quarter (2011) alone.

Look at the first half result of 2011 below:

(click to enlarge)

In the first 6 months of this year, PBT was 267.1 million while the net earning is 170.1 million. So MAHB is not doing that badly, as a monopoly.

While it is true that many of the travellers are filthy rich people, who can afford to spend millions on a single diamond or spend thousands on a single meal,  there are many who are not so rich.

This latter group has to travel either because of business reasons or sometimes family or personal matters. There are also those who are retirees and who have slogged for their whole lives and at the end of their twilight, they wanted to see the world– these groups are pensioners who are definitely not rich. To raise airport tax when MAHB is earning good profits is not reasonable at this time when inflation rate is already high, even though the increase maybe small.

For businessmen who travel a lot, the cumulative increase on their companies would add costs to doing business, and thus they would have to hike the price of their products.

Small increase cumulatively become big, and cumulatively, people would feel the pinch.

I think government agencies must do away with this hike mentality, especially at this moment . It would be wise for them to review other ways to trim operation cost. Some of the directors are earning way too high, some of the managers are earning way too high too. Some of the goods and services contracted out are way too high. If all these can be trimmed first, and productivity be increased, then there should be an improvement in the bottom line.

CEOs of these government linked companies must realise they have  social reponsibilities too  towards the rakyat, not just to their shareholders.

I met a high official from the little red dot down south some time ago. He told me that in their country, if there are 10 vacancies in a department, be assured that the head of department would only fill up 7 to 8 of these vacancies, and let these 7-8 persons work a workload of ten people. That is how their productivity remain high. That is how their country is now first world and we are still in the middle income trap.

I hope the power that be will seriously give a directives to all these companies not to have this “hike mentality”. At least any increases should be postponed  for a few years, unless the company is losing lots of money, in which case a total revamp of the management is in order.

Do not just tell the small retailers not to raise the prices of their goods. We must not have like what the Chinese proverb says:  ” allowing  top government officials  to light big  fires, but restrain the ordinary people from even lighting their candles.” That is a sure way of losing support!

When belts cannot be tightened anymore!

I chatted with an old patient of mine after a consultation yesterday. He was probably suffering from a side effect of stress and not enough rest. I enquired about his job and he told me that he is working 2 jobs now, a daytime office job and part time taxi driving at night. He had to do this to make ends meet.

So i told him what any doctor would tell his patient under these circumstances– to rest more.

Then he started to pour his woes to me that he has already been tightening his belt so much over the past few years, that he dreads to think of ways to tighten it some more, since living cost is creeping up and food prices are going to shoot up. He told me that there would come a point that the belt cannot be tightened anymore, and that point is fast being reached.

With so much news on the need to cut subsidies in the newspaper ( it was even equated to opium), the government is in fact building up a case of cutting subsidies further. It is just a matter of time that subsidies on petrol will be cut further. When that happens, petrol pump prices as well as electricity tariff will go up.

I have mentioned before that subsidies are actually bad to economy in the long run. It will also create a subsidy mentality among the people. But removing subsidies in a stagnant economy will result in a lot of problems for the poor. Subsidy removal must be done very gradually, and that too, should be done when economy is expanding and real income rising.

I can’t help but recall a round table conference which I had attended  in Feb 2010 on subsidy and the economy. In fact, I have blogged on this conference a day after.

I will paraphrase what i wrote then:

I attended a round table talk on subsidy yesterday. Although most speakers spoke about the need to do away with the cost of living subsidy, like the subsidy for sugar, petrol and so on, what a young man said about being cynical impressed me most.

 This young man began by saying that even though all the speakers spoke about the need to do away with subsidy, he was against the idea because being a cynical person, he doubted whether the money saved from abolishing the subsidy (direct and indirect subsidy comes to about 80 billionRM a year), will go to development and helping the poor. He said that being cynical, he thinks that this huge amount of money will go to someone else’s pockets and if so, why should he give up his right to subsidy?

His reason is based on one point only, and that is the whole system is rotten. I thought about it and I think he has a very valid point.

With the rotten system and everyone out to make a fast buck, whatever mechanism of doing away with the subsidy and using the amount saved to channel to development and helping the poor would just not work . Remember that time when the pump price of petrol went up to 2.70 from 1.92? The government promised to use the savings to channel into public transport and make it more efficient. Did we see any money going into the intended sector? A big No of course.

I can’t help but think that if the money saved from abolishing subsidy (the 80 billions) goes into private pockets and results in a few more PKFZ, even though I am all for abolishing subsidy gradually ( with safety nets in place such as cash coupons and cash cards to be given to the poor) , I would want to change my mind and go along with the thinking of this young man.

After all, if you have lived in Malaysia for the past 20 years, you can’t help but become cynical.

This young man raised  a very valid point.

We should start to withdraw subsidies slowly AFTER we ensure that the leakages and wastages are plugged first. After all the amount that has been siphoned out of the system is quite high, if we go by the reports of foreign media and investment reports.

The government must have the will to tackle corruption and cronyism, not just paying lip services, and expect people to tight belts which cannot be tightened anymore.

If subsidy withdrawal results in people unable to make ends meet, then expect social problems and crime rate to go up. If we do not clean up corruption first, expect corruption to go even more  rampant and severe, since civil servants too will be hard hit by subsidy removal and they, being in a position to dictate things, will not doubt be tempted to find other sources of income under the table.

From 2004 till now, we have wasted 7 years to tackle corruption, which is perceived to be even worse now. We do not have another 7 years, given the conditions of world economy and the middle income trap that we find ourselves in.

But do we have the will?

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