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Monday, December 21, 2009
Thursday, December 17, 2009
Rising prices, stagnant incomes put squeeze on middle class
PETALING JAYA, Dec 17 — As a working professional who enjoys eating out James Yip noticed the charges on his bills have crept up significantly within the last year.
He says that a dinner for two at his favourite outlets used to cost him about RM30 for two but that has risen to RM50 or RM60 now.
Yip, a senior consultant attached to a top US multinational, also noticed his grocery bills creeping up from RM30 to RM50 per week for him and his wife and this has led to him opting for cheaper brands than what he would normally buy.
Malaysians like Yip are feeling pressured by seemingly runaway inflation that has outpaced the rise in income levels, resulting in a cut in living standards.
For people like him, reports that inflation is on the downtrend and will only be between 1 and 2 per cent for the year are met with disbelief.
"I don't think it is accurate," he told The Malaysian Insider.
While the financial stress has been bearable so far, some say that if the trend continues, it could become a major problem.
"People are just coping with it at the moment," said Yip.
Income levels in Malaysia, which is struggling to move up the economic value chain, have remained little changed in the last 30 years. An engineer starting work today would earn perhaps only slightly more than his or her counterpart in the 1980s.
The same is not true for the cost of goods and services, however.
The ringgit, once almost on par with the Singapore dollar, has been devalued drastically since the 1980s and has impacted purchasing power and made imported items essential for modern-day living such as computers and handphones less affordable.
Meanwhile, the cost of real estate, especially in urban areas, has spiralled upwards, making home ownership more difficult.
Years of underinvestment in agriculture and public transport have caused the import of agricultural products to become a factor in food prices and also left many Malaysians with little choice but to purchase cars by taking out hefty loans with tenures up to nine years long.
The middle class is in the situation of being neither rich enough to brush off the rapid increase in prices nor poor enough to benefit from financial allocations such as RM100 million in free shares as recently announced by the government for the urban poor.
Upper-income Malaysians continue to do well as attested by several sold out high-end property launches and openings of fancy restaurants serving menu items such as RM249 per pax champagne brunches and the number of new luxury cars appearing on the roads.
Some middle-class Malaysians have been able to maintain a decent lifestyle in urban areas despite high prices as they rely on bank loans and credit cards.
"A lot of people are living on credit," says Andy Hong, a marketing manager with a leading local tech firm. "Many will be in debt their whole life. We end up working for the bank."
David Lam, a senior manager with a foreign bank, says that he noticed that the prices of goods have increased this year but without a corresponding increase in income.
"If the issue is not resolved now, it will be a concern," he says.
There is some relief in the form of lower interest rates which lessens the burden for those who have taken housing loans and the government's proposed RM1,000 increase in personal income tax relief next year.
The lower interest rates, however, could hit those who rely on fixed deposits.
Some economists have predicted economic growth for Malaysia next year but many still feel vulnerable with news of Dubai's debt woes, high jobless rates in the US and Japan's worse than expected third quarter economic growth adding to their worries.
"There is still uncertainty about the economic climate," says Yip.
One issue affecting taxpayers, especially those that fall into the middle- and lower-income groups, is the quality of public services.
Some developed countries do impose a high income tax rate but offer in return quality and comprehensive public services such as top-notch infrastructure, public healthcare and education institutions.
Zamri Ramlan, a financial services executive, says he feels he is not getting his money's worth in taxes that is being deducted from his paycheque each month.
"The taxes I have paid this year are substantial. I want to see quality public services provided in return," he said.
Yip, meanwhile, has decided to simply eat out at restaurants less.
"Instead, I go to the mamak shops more," he said.
He says that a dinner for two at his favourite outlets used to cost him about RM30 for two but that has risen to RM50 or RM60 now.
Yip, a senior consultant attached to a top US multinational, also noticed his grocery bills creeping up from RM30 to RM50 per week for him and his wife and this has led to him opting for cheaper brands than what he would normally buy.
Malaysians like Yip are feeling pressured by seemingly runaway inflation that has outpaced the rise in income levels, resulting in a cut in living standards.
For people like him, reports that inflation is on the downtrend and will only be between 1 and 2 per cent for the year are met with disbelief.
"I don't think it is accurate," he told The Malaysian Insider.
While the financial stress has been bearable so far, some say that if the trend continues, it could become a major problem.
"People are just coping with it at the moment," said Yip.
Income levels in Malaysia, which is struggling to move up the economic value chain, have remained little changed in the last 30 years. An engineer starting work today would earn perhaps only slightly more than his or her counterpart in the 1980s.
The same is not true for the cost of goods and services, however.
The ringgit, once almost on par with the Singapore dollar, has been devalued drastically since the 1980s and has impacted purchasing power and made imported items essential for modern-day living such as computers and handphones less affordable.
Meanwhile, the cost of real estate, especially in urban areas, has spiralled upwards, making home ownership more difficult.
Years of underinvestment in agriculture and public transport have caused the import of agricultural products to become a factor in food prices and also left many Malaysians with little choice but to purchase cars by taking out hefty loans with tenures up to nine years long.
The middle class is in the situation of being neither rich enough to brush off the rapid increase in prices nor poor enough to benefit from financial allocations such as RM100 million in free shares as recently announced by the government for the urban poor.
Upper-income Malaysians continue to do well as attested by several sold out high-end property launches and openings of fancy restaurants serving menu items such as RM249 per pax champagne brunches and the number of new luxury cars appearing on the roads.
Some middle-class Malaysians have been able to maintain a decent lifestyle in urban areas despite high prices as they rely on bank loans and credit cards.
"A lot of people are living on credit," says Andy Hong, a marketing manager with a leading local tech firm. "Many will be in debt their whole life. We end up working for the bank."
David Lam, a senior manager with a foreign bank, says that he noticed that the prices of goods have increased this year but without a corresponding increase in income.
"If the issue is not resolved now, it will be a concern," he says.
There is some relief in the form of lower interest rates which lessens the burden for those who have taken housing loans and the government's proposed RM1,000 increase in personal income tax relief next year.
The lower interest rates, however, could hit those who rely on fixed deposits.
Some economists have predicted economic growth for Malaysia next year but many still feel vulnerable with news of Dubai's debt woes, high jobless rates in the US and Japan's worse than expected third quarter economic growth adding to their worries.
"There is still uncertainty about the economic climate," says Yip.
One issue affecting taxpayers, especially those that fall into the middle- and lower-income groups, is the quality of public services.
Some developed countries do impose a high income tax rate but offer in return quality and comprehensive public services such as top-notch infrastructure, public healthcare and education institutions.
Zamri Ramlan, a financial services executive, says he feels he is not getting his money's worth in taxes that is being deducted from his paycheque each month.
"The taxes I have paid this year are substantial. I want to see quality public services provided in return," he said.
Yip, meanwhile, has decided to simply eat out at restaurants less.
"Instead, I go to the mamak shops more," he said.
Friday, December 11, 2009
Gold Not a Bubble, Silver a Better Buy: Rogers
Commodities are still a great place to invest, while some currencies also offer value and investors should stay away from US stocks and bonds, Jim Rogers, chairman of Jim Rogers Holding, told CNBC Thursday.
Rogers has long been bullish on commodities, especially since central banks started to print money to combat the financial crisis.
He is holding gold right now and despite the recent spike in the metal's price, said he things the market is not experiencing a bubble.
"I wouldn't think of selling," Rogers said. "If gold goes to $1,000 (per ounce) -- or pick a number -- I hope that I'm smart enough to buy more."
With central banks now buying gold and many people worried about paper money, gold will be a great investment over the next decade and relatively few people are invested in it, he said.
At a speech in Prague Rogers surveyed about 300 people, including big money managers, and 76 percent had never owned gold, he said.
"So when you say it's a bubble … nobody owns gold yet," Rogers said.
Still, silver is preferable, with silver 70 percent off its all-time high and gold near it's all-time high, he said.
Agriculture indexes are also good to own, he added.
Investors should also learn about foreign currencies, which will be great opportunities, Rogers advised.
If a short-term rally in the dollar happens, the yen, Swiss Franc and Canadian dollars could all benefit, he said.
Rogers does not have any money in US stocks because the market is up about 70 percent in eight-to-ten months.
"I don't like to buy anything like that," he said. "I'm sceptical of the economy going forward."
He also reiterated his view that the US bond market is the next bubble.
Rogers has long been bullish on commodities, especially since central banks started to print money to combat the financial crisis.
He is holding gold right now and despite the recent spike in the metal's price, said he things the market is not experiencing a bubble.
"I wouldn't think of selling," Rogers said. "If gold goes to $1,000 (per ounce) -- or pick a number -- I hope that I'm smart enough to buy more."
With central banks now buying gold and many people worried about paper money, gold will be a great investment over the next decade and relatively few people are invested in it, he said.
At a speech in Prague Rogers surveyed about 300 people, including big money managers, and 76 percent had never owned gold, he said.
"So when you say it's a bubble … nobody owns gold yet," Rogers said.
Still, silver is preferable, with silver 70 percent off its all-time high and gold near it's all-time high, he said.
Agriculture indexes are also good to own, he added.
Investors should also learn about foreign currencies, which will be great opportunities, Rogers advised.
If a short-term rally in the dollar happens, the yen, Swiss Franc and Canadian dollars could all benefit, he said.
Rogers does not have any money in US stocks because the market is up about 70 percent in eight-to-ten months.
"I don't like to buy anything like that," he said. "I'm sceptical of the economy going forward."
He also reiterated his view that the US bond market is the next bubble.
44,580 contractors registered, 90% bumiputeras
(The Edge) - A total of 44,580 contractors are registered with the Contractors Service Centre, out of which 90% or 40,305 are bumiputeras, Deputy Finance Minister Datuk Awang Adek Hussin told the Dewan Rakyat today.
The number of Class A bumiputera contractors rose by 3% while classes B, C, D and E registered an increase of 16%. The classification of the contractors is in accordance with the paid-up capital and also their experience.
Replying to a question by Datuk Bung Moktar Radin (Kinabatangan-BN) on the achievement of bumiputeras in the economy especially the small, medium and Class A contractors, he said the government would continue to ensure its procurement would be made through tenders.
Awang Adek added that the bumiputera contractors had yet to achieve satisfactory levels in company management, project execution, financial strength and had yet to fully utilise technology and human resources.
To a supplementary question by Bung Mokhtar on how the government would ensure that all the contractors would be treated equally as some may not have the experience, Awang Adek said the contractors were promoted from class to class, hence deriving experience.
He said there were a few requirements in tenders such as price and technical ability. "These are taken into account. We can look into this along with Public Works Department (JKR) so that the technical criteria do not prohibit any contractors that have the ability to execute a purchase or projects," he added.
To another question, Awang Adek said open tenders could overcome wastages
The number of Class A bumiputera contractors rose by 3% while classes B, C, D and E registered an increase of 16%. The classification of the contractors is in accordance with the paid-up capital and also their experience.
Replying to a question by Datuk Bung Moktar Radin (Kinabatangan-BN) on the achievement of bumiputeras in the economy especially the small, medium and Class A contractors, he said the government would continue to ensure its procurement would be made through tenders.
Awang Adek added that the bumiputera contractors had yet to achieve satisfactory levels in company management, project execution, financial strength and had yet to fully utilise technology and human resources.
To a supplementary question by Bung Mokhtar on how the government would ensure that all the contractors would be treated equally as some may not have the experience, Awang Adek said the contractors were promoted from class to class, hence deriving experience.
He said there were a few requirements in tenders such as price and technical ability. "These are taken into account. We can look into this along with Public Works Department (JKR) so that the technical criteria do not prohibit any contractors that have the ability to execute a purchase or projects," he added.
To another question, Awang Adek said open tenders could overcome wastages
Malaysia is close to bankruptcy
The government has no more money. 2009 must have been a horrible year with little corporate taxes collected (and expected to be collected) due to the economic slowdown. Foreign investments have also slowed to a halt.
And yet Najib's government is trying to spend their way out of the economy. Honestly, if carried out well, government spending is a key component in driving the economy up. But not in Malaysia. The leakages are too large. As a result, the expected multiplier effects do not maximise. The money disbursed end up in the pockets of those who least deserve it instead.
2009 must go on record as the year with the largest amount of government bonds issued. Amanah Saham this and Amanah Saham that. I don't have the statistics but I doubt 2009 will be too far off the numero uno spot even if it does not take the top spot. All sorts of bond were raised and for the first time, take-up quotas drawn along the usual racial lines have been removed.
What does that mean? The government is simply desperate for money. The amount that they could raise from the protected and preferred Malay race have simply maxed up. That left Najib with no choice but to loan from the desperate Chinese and Indians on the pretext of equality and sharing of wealth with all in the country. And at lower rates of returns too.
Malaysians are not well read people. And I bet you that most people do not understand what a bond is apart from it being an investment opportunity that generates interest income higher than that offered by FDs. Bonds are actually IOUs. It is a loan. When you buy a bond, you are actually lending money to the bond issuer and you get paid back upon maturity.
Upon maturity, paying back of bond money is an issue should the bond issuer (in this case the government of Malaysia) has no money to pay. But as the government, this can be solved via a few simple strategies at the expense of the rakyat.
The government may raise new bonds to pay-off the earlier bonds. And this can be done over and over again. The bet by the government is that the government's income will improve in the future and one day, these loans from the public can be paid off. Theoretically, this sounds ideal. But do you genuinely accept that from the government of a nation whose corruption index ranking have been consistently falling to an embarrassing 57 now? Regardless of how much of the nations resources are depleted (our oil is running out by the way; palm oil isn't that popular in the world market unless you are a sucker who believes in Utusan Malaysia; we do not have much rubber; we ran out of tin decades ago), the profit do not go back to the rakyat but the Swiss private bank accounts of our politicians.
So, the bonds will never get to be paid from the ideal profits. New bonds will be issued to pay off earlier bonds. And this will go on and on and on. Over time, with larger amount of bonds raised every time to cover for additional 'nation building and development', government debts will only continue to rise. This is what we call a Ponzi scheme. Read Bernie Madoff. Read cheat. Read con.
The present government is passing it's current problem to the future generation. An irresponsible government indeed. In developed nations, the people are able to appreciate this problem. Parliaments debate after debate on bond issuances. In Malaysia, the Prime Minister approves new bonds while he gobbles down his nasi lemak with ayam rendang and sotong sambal. The future is not his problem anyways. He has his hot seat to protect; lose it or he will get nagged to his death by the thing who sleeps next to him.
Has anyone actually thought that Najib knows that his days are numbered and he is maximising his personal dough collection? Think about it. Whatever he takes from the bonds will have to be paid back by the next government. If he is not going to be the next government, paying back will not be his problem.
But whatever he does now will still be a problem for the rakyat in the future. If BN continues, it will be BN's repayment problem. If PR takes over, it will be PR who is faced with the same repayment headache. The only permanent fixture is that the rakyat is at the losing end.
Some may argue that all the government has to do is to print more money. Yes, that is true. A learned friend of mine once said that the government will never run out of money because it can just print more. That is a brilliant statement. But of course it has it consequences. The amount of paper money in circulation must correspond to the amount of gold held in reserves. If paper money exceeds the value of gold - which is what the US is facing right now - then the said currency's value falls. Purchasing power declines. Inflation rises. And a whole lot of other negative economic terminologies.
So you see, printing money to repay government loans solves the loan issue but it brings the country to a whole new level of economic problems.
And yes, you got the message, the rakyat loses.
If you are lucky to live short enough, the problem will not be yours. But your kids? You better leave them enough money to buy bananas at RM1 million per comb.
And yet Najib's government is trying to spend their way out of the economy. Honestly, if carried out well, government spending is a key component in driving the economy up. But not in Malaysia. The leakages are too large. As a result, the expected multiplier effects do not maximise. The money disbursed end up in the pockets of those who least deserve it instead.
2009 must go on record as the year with the largest amount of government bonds issued. Amanah Saham this and Amanah Saham that. I don't have the statistics but I doubt 2009 will be too far off the numero uno spot even if it does not take the top spot. All sorts of bond were raised and for the first time, take-up quotas drawn along the usual racial lines have been removed.
What does that mean? The government is simply desperate for money. The amount that they could raise from the protected and preferred Malay race have simply maxed up. That left Najib with no choice but to loan from the desperate Chinese and Indians on the pretext of equality and sharing of wealth with all in the country. And at lower rates of returns too.
Malaysians are not well read people. And I bet you that most people do not understand what a bond is apart from it being an investment opportunity that generates interest income higher than that offered by FDs. Bonds are actually IOUs. It is a loan. When you buy a bond, you are actually lending money to the bond issuer and you get paid back upon maturity.
Upon maturity, paying back of bond money is an issue should the bond issuer (in this case the government of Malaysia) has no money to pay. But as the government, this can be solved via a few simple strategies at the expense of the rakyat.
The government may raise new bonds to pay-off the earlier bonds. And this can be done over and over again. The bet by the government is that the government's income will improve in the future and one day, these loans from the public can be paid off. Theoretically, this sounds ideal. But do you genuinely accept that from the government of a nation whose corruption index ranking have been consistently falling to an embarrassing 57 now? Regardless of how much of the nations resources are depleted (our oil is running out by the way; palm oil isn't that popular in the world market unless you are a sucker who believes in Utusan Malaysia; we do not have much rubber; we ran out of tin decades ago), the profit do not go back to the rakyat but the Swiss private bank accounts of our politicians.
So, the bonds will never get to be paid from the ideal profits. New bonds will be issued to pay off earlier bonds. And this will go on and on and on. Over time, with larger amount of bonds raised every time to cover for additional 'nation building and development', government debts will only continue to rise. This is what we call a Ponzi scheme. Read Bernie Madoff. Read cheat. Read con.
The present government is passing it's current problem to the future generation. An irresponsible government indeed. In developed nations, the people are able to appreciate this problem. Parliaments debate after debate on bond issuances. In Malaysia, the Prime Minister approves new bonds while he gobbles down his nasi lemak with ayam rendang and sotong sambal. The future is not his problem anyways. He has his hot seat to protect; lose it or he will get nagged to his death by the thing who sleeps next to him.
Has anyone actually thought that Najib knows that his days are numbered and he is maximising his personal dough collection? Think about it. Whatever he takes from the bonds will have to be paid back by the next government. If he is not going to be the next government, paying back will not be his problem.
But whatever he does now will still be a problem for the rakyat in the future. If BN continues, it will be BN's repayment problem. If PR takes over, it will be PR who is faced with the same repayment headache. The only permanent fixture is that the rakyat is at the losing end.
Some may argue that all the government has to do is to print more money. Yes, that is true. A learned friend of mine once said that the government will never run out of money because it can just print more. That is a brilliant statement. But of course it has it consequences. The amount of paper money in circulation must correspond to the amount of gold held in reserves. If paper money exceeds the value of gold - which is what the US is facing right now - then the said currency's value falls. Purchasing power declines. Inflation rises. And a whole lot of other negative economic terminologies.
So you see, printing money to repay government loans solves the loan issue but it brings the country to a whole new level of economic problems.
And yes, you got the message, the rakyat loses.
If you are lucky to live short enough, the problem will not be yours. But your kids? You better leave them enough money to buy bananas at RM1 million per comb.
Wednesday, December 9, 2009
Woman ‘selling’ herself to pay off debts
A 50-YEAR-OLD woman is “selling” herself for RM150,000 to settle debts she ran up while operating a coffee shop in Singapore.
Nanyang Siang Pau reported that the woman – a Malaysian living in Singapore – said she was willing to go with anyone who could pay off her debts amounting to more than S$60,000 (RM146,000).
“I can be his employee, nurse, live-in friend, maid or wife,” said the divorcee, who has two daughters living in Malaysia.
To advertise herself, the divorcee even handed a two-page letter to the media, hoping to find a “buyer”.
The woman, who declined to be named, said she had lost all her money in the coffee shop venture which she had partnered with some friends four years ago.
She claimed that the economic crisis last year had badly affected her business, forcing her to borrow heavily in an effort to save the shop, which eventually failed.
Now, the woman is more than S$60,000 in debt, mostly owed to her relatives, friends and suppliers.
“At the end of every month, I would receive over 10 telephone calls demanding that I repay my debt.
“I don’t even have money to pay for the room I’m renting now. I have no choice but to offer myself,” she said, adding that she did not want to “trouble” her daughters who were married and had their own families.
> The daily also reported that a 14-year-old girl and her mother had been arrested for prostitution in a raid in Sibu, Sarawak, on Sunday.
The teenager, who charged RM80 for her services, is said to have been following in her 38-year-old mother’s “footsteps” in the flesh trade for the past three years.
The two were among a group of women loitering at some shoplots when they were picked up by the police and had been staying in a RM15 room at budget hotel nearby.
Nanyang Siang Pau reported that the woman – a Malaysian living in Singapore – said she was willing to go with anyone who could pay off her debts amounting to more than S$60,000 (RM146,000).
“I can be his employee, nurse, live-in friend, maid or wife,” said the divorcee, who has two daughters living in Malaysia.
To advertise herself, the divorcee even handed a two-page letter to the media, hoping to find a “buyer”.
The woman, who declined to be named, said she had lost all her money in the coffee shop venture which she had partnered with some friends four years ago.
She claimed that the economic crisis last year had badly affected her business, forcing her to borrow heavily in an effort to save the shop, which eventually failed.
Now, the woman is more than S$60,000 in debt, mostly owed to her relatives, friends and suppliers.
“At the end of every month, I would receive over 10 telephone calls demanding that I repay my debt.
“I don’t even have money to pay for the room I’m renting now. I have no choice but to offer myself,” she said, adding that she did not want to “trouble” her daughters who were married and had their own families.
> The daily also reported that a 14-year-old girl and her mother had been arrested for prostitution in a raid in Sibu, Sarawak, on Sunday.
The teenager, who charged RM80 for her services, is said to have been following in her 38-year-old mother’s “footsteps” in the flesh trade for the past three years.
The two were among a group of women loitering at some shoplots when they were picked up by the police and had been staying in a RM15 room at budget hotel nearby.
Tuesday, December 8, 2009
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