Feel the Pinch? Ouch!

These policy makers earning stratospheric pay packets do not know what is happening at the lower income group brackets. They yakked and yakked about policy imperatives. What do they know about pocket pains?

My friends, it has already gone to shove from push and the government is still needling the people with its VAT proposal implementation.

Let us read what is happening in Petaling Jaya.

Read how some of the families are affected by rising prices brought about by unimpeded inflation.

"Petaling Jaya;13 June 2010:

Administrative clerk Zainab Suboh wants the Government to take into consideration the reality on the ground when formulating policies as the rising cost of living is putting a heavy constraint on her household budget.

“Every time I go to the supermarket I find that I can only buy less and less items with my RM200 monthly budget for groceries,” she said.

Zainab, 32, said the Government must put the rakyat first when implementing policies.

“The interest of the people should come first. Right now we are not feeling it because we are overwhelmed by financial constraints because of the rising cost of living,” she said.

Zainab and her husband Md Fadzli Adnan, 33, earn a total of RM4,000 a month.

“We live in a low-cost flat with three children aged two, nine and 10. I also have to spend RM300 a month on diapers and baby formula,” she added.

She said that the baby formula was quite expensive, adding that the Government should look into providing subsidy for baby formula because infants need good nutrition for healthy growth.

Lawyer Ron Tan, 44, said he and his wife Tan Su Yin, 40, who is a bank officer, find that their monthly savings keep decreasing by the year.

“This is because of the higher inflation rate. We have to pay for essential goods and that substantially cut into our savings.

“We are spending RM200 a week on groceries. Comparatively, we paid less than RM100 about 18 months ago for the same number of items,” he said.

Su Yin said people could not cope with a minimal increase in salary, high inflation rate and low interest rate.

“We are opting to invest rather than putting the bulk of our savings in fixed deposits,” she said, adding that their combined income totalled RM25,000.

“We are investing for our retirement. Most of the working class people will have no money for their retirement,” she added.

A single mother, who only wants to be known as Mellycka, 43, is feeling the pinch even with earning RM5,000 a month.

Mellycka, a writer with two children aged three and eight, said the bulk of her salary went to housing loan and car instalments, and children and household expenditure including utility bills.

She said she hardly had money left and found herself resorting to using credit cards after settling her bills.

Mellycka finds it an arduous task to cut down expenses because prices of goods had gone up by 15% to 20%.

“I just can’t afford to go out. Once I step out of the house, I have to pay for everything from petrol to parking fees to meals.”

Vivek, a human resource manager, said despite having a household income of RM7,000, he and his wife were feeling the pinch.

“We have to service loans for two cars and a house, which account for 45% of our total monthly income. We spend about RM1,200 on groceries,” said the 43-year-old father of one child."

We are crying..................

10MP: Blast from the Brain Trust

This is a good article from By Lee Wei Lian in the Malaysian Insider.

KUALA LUMPUR, June 12 – The former head of one of Asia’s premier economic think tanks blasted the continued influence of the New Economic Policy (NEP), saying that it is distorting the market and blocking serious reforms.

In a strongly worded presentation at a forum on the 10th Malaysia Plan (10MP) yesterday, Professor Datuk Dr Mohamed Ariff, the former executive director of the Malaysian Institute of Economic Research (MIER) said that the NEP which ended in 1990 appears to have mutated into new policy incarnations including Najib Administration’s New Economic Model (NEM) and is distorting the Malaysian economy.“Malaysia’s markets are highly distorted,” said Ariff at a forum organised by the Malaysian Economic Association. “The distortions are related to the NEP and the NEP remains the backbone of the 10MP document. The NEP looks like it is mutating to the NDP and NEM and stands in the way of bringing about serious reforms.”

Ariff, who is now an MIER distinguished fellow, said that 75 per cent of households earning less than RM2,000 a month were Bumiputera ones.

“I don’t understand — after 40 years of NEP why are 75 per cent of households earning less than 2,000 a month from Bumiputeras. That shows that the NEP is just not working,” he said.

Prime Minister Datuk Seri Najib Razak who is trying to make Malaysia a developed high income nation has found himself under pressure from vocal segments of the Malay population to preserve race based preferential economic policies.

Due to political considerations, Najib has not had a free hand in designing truly competitive economic policies. As a result, the public has been getting mixed messages over economic reforms and remain ambiguous over how much of a role ethnicity will have in the economy especially in areas such as government procurement, education and scholarships.

The 10MP document credits the NEP for reducing income disparity, specifically between the Bumiputeras and the Chinese from 1:2.29 in 1970 to 1:1.38 in 2009 as well as the creation of a Bumiputera professional middle class.

It also includes several NEM recommendations on making race based affirmative action more “market friendly” including stressing genuine economic participation instead of mandatory corporate equity quotas and introducing elements of meritocracy when helping the Bumiputera community.

Asked after the forum if he felt that making NEP type policies more market friendly would help, Ariff replied that the NEP would have to be rejected wholesale.

“It has to be cut off, just like how Alexander cut the Gordian knot,” said Ariff referring to the metaphor for solving an intractable problem with one bold stroke.

Earlier in the forum Ariff also said that for the economy to grow by 6 per cent per year as aimed for in the 10MP, investment would have to grow by 12.8 per cent per annum.

He pointed out that during the 9MP, investment growth was just 2 per cent.

“That (12.8 per cent investment growth) is a tall order,” he said. “I am not sure if we can bring this about.”

He said that while foreign direct investment FDI) levels had fallen due to the global financial crisis, it was particularly striking in the case of Malaysia which experienced just 1 per cent growth in FDI as compared with 10 per cent in China and 9 per cent in Singapore.

“Something is seriously wrong,” he said.

He however said that he liked the 10MP’s emphasis on enhancing the nation’s human resources but said that for that to happen, there needed to be a “revolution” in Malaysia’s education.

The director general of the economic planning unit, Datuk Noriyah Ahmad also spoke on the 10MP at the forum and said that unlike previous plans, the 10MP was a “rolling plan” and allocations would be done every two years to take into account the financial resources of the government.

For the first two years of the 10MP, RM44 billion has been allocated for 2011 and RM47 billion in 2012 and the amount beyond that will be determined later.

Another speaker at the forum, DAP MP Tony Pua said that there were too many contradictions between what Najib has said and what was actually carried out. He cited the case of a lack of open tenders for the development of the new convention centre near Jalan Duta, KL which was given to auto conglomerate Naza Group’s property unit.

“When I asked about it in parliament, the minister said that Naza asked for it first,” said Pua to laughter from the audience.

He also said that the government should focus on cutting down the sizeable subsidies to private corporations rather than just removing subsidies to the man on the street.

He citied the case of government interest free loans to the private water utility company Syabas that he claimed had cost the government RM250 million as it had to borrow the money in order to lend it interest free.

“Why are we hitting the man on the street?” said Pua.

He added that his worry was vested interests would derail the 10MP.

“We have a very nicely written document,” he said. “My fear is that people won’t follow it because of vested interests even though the prime minister says he won’t tolerate rent seeking and patronage. I hope the 10MP and the NEM will be carried out to the dot.”

EPF: Quarterly Investment Holdings Display

Beginning today, EPF will be showing its op 30 equity investments in companies listed on Bursa Malaysia on a quarterly basis.

This action is in conformance with its corporate governance stance, where members could see in which companies their savings were invested.

“Besides, by periodically disclosing its investment performance, it will help to reassure members that investment decisions undertaken are in the best interest of growing their retirement savings and in accordance with best practices in investment and governance,” says EPF.

This is a first step towards enhancing EPF’s transparency and it would review periodically if there was any further information on its investment that could be disclosed without jeopardising its investment strategy.

However,  “not everything regarding EPF’s investments could be revealed”.

The investment highlights can be viewed at
 
www.kwsp.gov.my.

The website includes media releases on quarterly financial performance, a compilation of annual reports, advertorials on annual reports and dividend rates.

As of March 31, the EPF’s top three shareholdings were 67.33% stake in Malaysian Building Society Bhd, 56.14% of RHB Capital Bhd and 41.54% of Malaysian Resources Corp Bhd.

The Berjaya Corp Sting

Was it a sting and Vincent Tan made a bundle from his Bursa pronouncement ?

We may never know.

One thing is for sure, many people chased the shares subsequent to the pronouncement of Berjaya Corp buying 70% of Ascot Sports which purportedly was re-issued a sports betting license.

The share price went beyond RM1.80 sen.

Today, with all the finger pointing and mystery surrounding the status of this pronouncement, the share is sliding down below RM1.40. Some analysts are predicting it will fall to the 90 sen mark when Sarawak became the first BN led state to ban the opening of sports betting centres there.

How sad!

Bursa Yusli's Tall Tales

Don’t blame others. Bursa committed seppaku when it introduced the RM40.00 irresponsible standard brokerage share in a market that hardly saw much retailing activity. In its bid to save the remisiers, it put on this condition.

However, the remisiers were undone by IT trading and most went back to square one.

Again by trading using a one sen price interval revision, the market became almost comatose. There was little to look forward too. Big players came in once a while to harvest arbitrage differences.

True, the mutual funds did mop up some of these retail payers but in the end, their investments came to naught in spite of such strongly worded terms like ‘capital protected’. It was misrepresentation through and through!

It’s no point bringing up statistics. Retailers were shut out of the market because of your silly RM40.00 brokerage. That should explain why the percentage of retail players slumped from 52% pre 1997 to only 20% these days. The current play is the work of local institutional players and when they get their funds at the beginning of a month, the get into the market marginally pushing up the index momentarily. The state-controlled Employees Provident Fund accounts for 50 per cent of daily trading. After that it will move from side to side like a disused sampan.

As for the index, this is not the same one as before. You have changed the goal posts all too often.

The slump in trading by individuals on the Bursa also coincided with an exodus by foreigners from Southeast Asia. Overseas investors have sold a net RM1.36 billion of Malaysia’s equities this year alone, adding to RM8.57 billion withdrawn in 2009 and RM38.6 billion ringgit that flowed out in 2008.

It's all your fault!

Drowning the Selangor Water Players

Now the time-lines are getting shorter. Debts would have to be paid.

Today the Malaysian Rating Corporation (MARC) got into the act as well. It put all the players involved in the Selangor  Water Sector under “ Negative Watch” as there seems to be no “development to the restructuring exercise”.

Hopefully, this dampener will wake up those players which are ‘reaching the end of the rope. With no more rope to hang onto any more, maybe they will give in to the  Splash offer to take over  all the disparate water concessionaires in Selangor  at RM10.75 billion. The State of Selngor’s earlier offer was RM9.2 billion.

Splash’s bid preseumably was backed by the Federal government after a revised offer in April which saw the participation of Pengurusan Aset Air Bhd (PAAB), in compliance with the asset-light condition spelled out under the Water Services Industry Act.

Under the deal offered by Splash, PAAB would pay RM8.1bil for the assets to be topped up with RM2.6bil from Splash.

What will be the negative effects of being put under ‘negative watch’?

For one, it definitely affects debt papers issued by Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Puncak Niaga (M) Sdn Bhd, Puncak Niaga Holdings Bhd, RUN Holding SPV Bhd, Syarikat Pengeluar Air Sungai Selangor Sdn Bhd, Viable Chip (M) Sdn Bhd and Titisan Modal Sdn Bhd.

The concerns are real. The inability to restructure will result in Syabas’ continued inability to meet in full its monthly bulk water payment obligations to water-treatment operators as the result of the former’s unresolved water tariff hike.

Let us watch whether this MARC action will spur some players into action.


Also the Pahang-Selangor Water Transfer Project is on-going and should provoke players to look at the bigger picture of a win-win situation for all.

Meanwhile, you can start collecting shares like KPS,KHSB and JAKS at fairly low prices now!

Idris,You are Wrong. Dead Wrong!

Now, Idris is finding himself in a corner. It it embarrassment big time for him! It is indeed a lonely place. He is also feeling exasperated as the PM and his Cabinet colleagues choose to look the other way!

That is politics, my boy. The possible has become the impossible and the impossible, the possible.

The Ministry of Finance have a bone to pick with Idris on his findings and his arguments for immediate subsidy cuts.

Treasury officers briefing the Barisan Nasional (BN) backbenchers in Parliament today dismissed Idris and said he has overstated his case for the subsidy cuts with flawed statistics

Using Pemandu findings Idris had predicted Malaysia could be bankrupt by 2019 if it did not begin to cut subsidies for petrol, electricity, food and other staples, which he said cost the country RM74 billion last year.

Prime Minister Datuk Seri Najib Razak also moved today to quell fears raised by Idris that Malaysia would one day go the way of Greece and Iceland and become a bankrupt nation by pointing out the government was taking steps to ensure that the country’s debts would be reduced.

Now, we are told that  the country’s total subsidy bill was only RM18.6 billion, and not RM74 billion as stated by Idris, for 2009. 

According to Pemandu figures, the country’s total subsidy was RM74 billion, which is equivalent to RM12,900 per household.

Pemandu said the government subsidises RM23.5 billion for fuel, RM4.6 billion for infrastructure, RM3.1 billion for food and RM41.8 billion for social welfare (health, education and higher education).

But the Finance Ministry said today the country’s total subsidy was RM18.6 billion or equivalent to RM3,246 per household.

It said that RM7.1 billion was spent for fuel, RM0.8 billion for infrastructure, RM2.9 billion for food and RM7.8 billion for social welfare.

Former premier Tun Dr Mahathir Mohamad has also ridiculed Idris saying that Idris was exaggerating.

The Malaysian Insider understands that Idris has come under fire from Cabinet colleagues because his remarks had undermined Najib’s government.

So now Pemandu is also holding a briefing for the BNBBC tonight after many BN leaders had expressed dismay over Idris’s bankruptcy remarks.

The briefing is aimed at explaining its findings and receiving feedback from members of the BNBBC.

Lawmakers from both BN and Pakatan Rakyat (PR) have agreed that an immediate implementation of any subsidy cuts would spell political suicide for the Najib administration with the next general election within the next 34 months.

Najib has also stressed that the public would have the final say on whether expensive subsidies would be cut.

So Idris, the writing is on the wall. Perhaps it is time to say good-bye.