Lets participate in the political economy issues in Malaysia and progress together for a Better Malaysia.
Wednesday, December 17, 2008
Red Alert on Guidelines of foreign participation in the distributive trades services in Malaysia
PENYERTAAN ASING DALAM SEKTOR PERDAGANGAN PENGEDARAN
Once again, the MDTCA is going to implement the guideline which requires all local and foreign companies to comply the 15-30% bumi equity allocation. This issue was previously solved by Ka Ting with a verbal promise by Shafie Apdal and Najib to suspend the guideline in 2006. The latest development of the guidelines is very DANGEROUS and Malaysia's businesses will be badly hurt by the over-emphasizing of affirmative actions.
The MDTCA's guidelines requires you to comply with:
(1) Bumi equity allocation
(2) Employment structure to reflects the ethnicity distribution(even your are private sector).
Business license and expatriate entrance will only be approved if u satisfied the above two criteria in the guideline.
The details are as below:
http://www.kpdnhep.gov.my/index.php?option=com_content&task=view&id=224&Itemid=254
Proses/Prosedur Permohonan
Mulai 1 November 1995, semua syarikat yang mempunyai kepentingan asing yang ingin bergiat dalam sektor perdagangan pengedaran di Malaysia dikehendaki mendapat kelulusan daripada Jawatankuasa Perdagangan Pengedaran, Kementerian Perdagangan Dalam Negeri dan Hal Ehwal Pengguna untuk menjalankan perniagaan baru dalam sektor perdagangan pengedaran. Kelulusan ini perlu diperolehi sebelum perniagaan dijalankan.
Borang permohonan yang telah lengkap diisi dan bertaip berserta dokumen-dokumen yang telah disahkan benar hendaklah dikemukakan kepada Kementerian. Setiap permohonan yang diterima akan disemak Borang Permohonan sama ada lengkap atau tidak. Hanya Borang Permohonan yang lengkap akan diproses sementara Borang Permohonan yang tidak lengkap akan ditolak. Permohonan hendaklah dibuat sendiri oleh syarikat-syarikat yang ingin memohon kelulusan.
Kementerian akan hanya mengeluarkan Surat Akuan Terima kepada pemohon sekiranya Borang Permohonan yang diterima lengkap.
Permohonan akan diproses sewajarnya dan surat keputusan Jawatankuasa Perdagangan Pengedaran akan dikeluarkan selepas keputusan diperolehi. Keputusan Jawatankuasa adalah muktamad dan rayuan mengenai keputusannya tidak akan dilayan.
Borang Permohonan
Borang WRT1 bagi permohonan untuk menjalankan Perniagaan Perdagangan Pengedaran di Malaysia boleh diperolehi bersama-sama dalam Buku Garis Panduan mengenai Penyertaan Asing dalam Perdagangan Perdagangan Pengedaran.(MUST fill in details of equity structure and employment structure)
We hope that the MCA's minister will brought this issue to the Cabinet and either further suspend the implementation or abolish the guideline.
Wednesday, December 10, 2008
Monday, December 01, 2008
Economic and Financial Development in Malaysia in the Third Quarter of 2008
Adapted from Bank Negara Malaysia (Nov 08)
1.Growth moderated in the third quarter (Q3).
a.The Malaysia economy registered a growth of 4.7% in Q3 (2Q 08 : 6.7%).
b.Net real exports of goods and services declined by 14.8%, compared with a growth of 20% in the 2Q 08.
c.Growth was supported by domestic demand, which increased by 6.5% (2Q 08: 8.3%) following continued expansion in private and public consumption.
d.The private consumption growth at 8.1% (2Q 08: 9%) was supported by the effects of the bonus payment to civil servants, festive season spending and cash rebates payment for fuel subsidy.
e.The public consumption increased by 6.9% (2Q 08: 10.9%) on continued high expenditure for emoluments and supplies and services.
f.Investment was supported by higher public development expenditure in particular for the transportation, agriculture and rural development, and education sectors.
2.Sectors Analysis.
a.Services Sectors sustained its strong expansion, increasing by 7.1% (2Q 08: 8.2%)
i.Higher finance and insurance sub-sector growth and strong consumption activities.
b.Manufacturing sector growth was weaker at 1.8% (2Q 08: 5.6%)
i.Weakness in the export-oriented industries. Domestic oriented industries register strong growth mainly by supporting transport equipment, construction related products and food industries.
c.Agriculture sector grew at a more moderate pace at 3% (2Q 08: 6%)
i.Deceleration in production of palm oil.
d.Construction sector moderated further at 1.2% growth (2Q 08: 3.9%)
i.Weaker activity in the residential and civil engineering segments and higher prices of building materials.
e.Mining Sector growth was sluggish at -0.3% growth (2Q 08: -0.5%)
i.Lower natural gas output.
3.Consumer Price Index (CPI).
a.CPI increased to 8.4% in the 3Q (2Q 08: 4.8%).
b.Higher inflation due to higher retail prices for petrol and diesel, higher electricity tariff and higher food prices.
4.Trade Balance
a.Trade balance in 3Q registered another record surplus at RM41.6bil (2Q 08: RM40.6bil).
b.Exports growth moderated, but remained firm at 16.9% (2Q 08: 20.8%) supported by commodities and resource-based manufactured products.
c.Gross Imports increased by 10.3% (2Q 08: 9.9%) due to higher intermediate and consumption imports.
5.Foreign Direct Investment (FDIs)
a.Net FDIs amounted to RM2.7bil in 3Q (2Q 08: RM8.6bil).
i.Mainly channeled to the services, oil and gas and manufacturing sectors.
b.Net FDIs outflow at RM16.1bil (2Q 08: -RM3.6bil)
i.Mainly channeled to the services and manufacturing sectors.
6.International Reserves
a.International reserves amounted to US$99.7bil as at Nov 14 (US$109.7bil as at Sept 30).
b.The reserves position sufficient to finance 8.1 months of retained imports and 3.7 times the short term external debt.
7.Overnight Policy Rate (OPR)
a.OPR was left unchanged at 3.5% throughout the 3Q.
b.Average lending rate softened to 5.96% as at Sept.
c.Loan applications and approvals moderated due to lower demand for new loans from business and household sectors.
8.Exchange rate
a.The US dollar strengthened following the de-leveraging by US financial institutions in the international financial markets and the inflows of funds into US treasuries.
b.Ringgit depreciated by 5.5% against US dollar and 7.3% against the Japanese Yen during the 3Q.
c.Ringgit appreciated against the pound sterling (4.6%) and the EURO (3.9%) indicates that rapid deteriorating economic conditions in the EU.
9.Banking system remained resilient
a.Banking sector remained resilient, supported by strong capitalization, sustained profitability and continued improvement in the non-performing loans.
b. Net NPL ratio remained unchanged at 2.4% at end-October 2008.
10.Economic impact of global financial crisis
a.Despite aggressive injection of liquidity worldwide, financial markets have not normalized and continued to remain highly volatile.
b.Inflationary concerns have receded due to sharp deceleration in growth and decline in commodity prices.
c.Export sector will be affected while the continued volatility across financial markets may dampen business outlook.
Saturday, November 29, 2008
Auto floating mechanism for Petrol Pricing
The government recently proposed to either set a minimum floor price or fix a managed float system for the petrol pump pricing. We recognizes the interest of the public and has always taken the position that the economic sectors should be liberalized and auto floating mechanism should be implemented in the petrol pump pricing.
Acknowledging the fact that world crude oil prices has been significantly drop from US$120 in July to US$50 in November, we urge the government to re-examine the economic policies to adapt to the huge changes that affects the citizens daily life.
An auto floating mechanism in petrol pump pricing will provide an optimum price for motorists and the government will be able to monitor the mechanism in an open and transparent manner.
We also urge the government to continue in giving out the 30 cents petrol subsidies per litre as promised. The chain reaction from the previous petrol hike is still there and the inflation is still stands high at 7% when compared to 2% in 2006. The interest of the lower and medium income group should be taken care of.
We are objecting the floor price fixing for petrol pump as it does not promote transparency and consistency in government policies. The economy prosperity should be enjoyed by all citizens.
Wednesday, November 26, 2008
SEMINAR on Impact of the Global Financial Crisis: What Lies Ahead for Asia
Speakers:
Dr Michael Lim Mah-Hui
Senior Fellow,
Asian Public Intellectuals Program
Nippon Foundation
Mr Manu Bhaskaran
Director and CEO,
Centennial Asia Advisors, Singapore
Date:
Friday, 5 December 2008
Time:
3.00 pm – 5.00 pm
Venue:
ISEAS Seminar Room II
About the Speakers
Dr Michael Lim Mah-Hui is a Senior Fellow in the Asian Public Intellectuals Program of the Nippon Foundation. He taught political economy and sociology in various U.S. and Malaysian universities before he joined international banking. He has over twenty years experience as an investment, commercial, and development banker at Chemical Bank (now JP Morgan Chase), Credit Suisse First Boston, Deutsche Bank, Standard Chartered Bank, as well as Asian Development Bank. He has written extensively, and delivered public lectures in various regional institutions and universities on the present global financial crisis and its impact on Asia. Dr Lim writes extensively for newspapers and journals in Malaysia, Singapore, Indonesia, Philippines, Thailand, Australia, India and the United States. He is also active in community and civil society groups. Dr Lim received his B.A. (Honors) in Economics from the University of Malaya, a Masters in International Affairs, a Masters in Sociology, and a PhD in Development Studies from the University of Pittsburgh.
Mr Manu Bhaskaran is currently Director and CEO of Centennial Asia Advisors, Singapore. Mr Bhaskaran has over twenty years of experience in analyzing political and economic trends in Asia. He has worked for the Singapore government on issues of regional security, and has also subsequently worked with the SG Investment Bank (an international investment banking division of Societe General), as Chief Economist and Chief Strategist. Mr Bhaskaran writes extensively for the Far Eastern Economic review, the Nikkei, and other business weeklies. He is also a frequent speaker at the World Economic Forum. He also continues to be involved in several government initiatives; he is a Council Member of the Singapore Institute of International Affairs, and serves on the board of a listed Singapore government-owned company. He has also served as a Visiting Fellow at the Institute of Policy Studies. Mr Bhaskaran has a Masters degree in Public Administration from the John F Kennedy School of Government at Harvard University and a Bachelors degree in economics from Cambridge University. In addition to these, he is a qualified Chartered Financial Analyst.
Abstract
As the global economy still reels under the effects of one of the most serious financial crisis and economic downturns in decades, Asia ponders the particular effects the crisis is likely to have on the region’s economies. The US and EU have already made massive financial interventions in their domestic financial systems; and heads of the G20 discuss major reforms and solutions to the global financial system in their meeting in November. Simultaneously, there have been calls for urgent and coordinated action among Asian economies to protect their economic growth in the face of the economic downturn in the US and EU. While Asia appears to be cushioned against immediate effects of the financial turmoil, there are several concerns about the potential long-term effects of the crisis on the region’s growth. Have the Asian economies learned valuable lessons from the severe financial crisis that hit the region a decade ago? Will Asia play a prominent role in rejuvenating the global financial system post-crisis? These are some of the questions on everybody’s minds as they try to understand the implications of the global financial crisis from a regional perspective.
Dr Michael Lim Mah-Hui and Mr Manu Bhaskaran will discuss some of these important issues in depth as they present their views on the global financial crisis from the regional perspective of Asia.
ISEAS cordially invites you to the Seminar.
Thursday, November 20, 2008
Bank Negara is printing more $$$ now...
Governor of Bank Negara said that the decline in foreign reserves for Oct and Dec 08 is mainly due to a reversal of short-term capital flows. The forex exchange between US$ and RM decline to US$1.00=RM3.60 now.
Accodring to source from Ganesh (http://sahathevan.blogspot.com/),
1. Between 15 May 2008 and 31 October 2008, Bank Negara’s total assets in Malaysian Ringgit terms fell 26% from RM 506,986,188,441 to RM 374,372,661,598.
2. Reserves of foreign exchange and gold alone fell 13.6% , from RM 399 919 106 509 to RM 345 549 644 622. This equated in US dollar terms to a fall of 20%, from USD 125.1 billion to USD 100.2 billion.
3. Bank Negara appears to have financed this fall by simply printing more Ringgit.
Over the same period from 15 May 2008 to 31 October 2008 currency in circulation has increased 9.3%, from RM 42 614 989 793 to RM 46 595 122 319.
4.However this might not be the whole story.Federal Govt deposits have increased 130%, from RM 9,434,186,821 to RM 21,622,286,904. This increase raises the question of where the deposits came from. It is possible that these may well be “new” Federal Government funds, recently minted and issued by Bank Negara.
Conclusion:
All this would mean a further decline in the value of the Ringgit,and higher inflation as more money circulates in the economy.
Saturday, November 15, 2008
Rules on manufacturing licence relaxed to encourage investments in Malaysia
Yes, Malaysia is liberalizing the manufacturing sectors to attract FDIs to overcome the recession, which is similar to the 1997 financial crisis.
We will continue our work to lobby for a more liberal economic policy in Malaysia.
The automatic issuance of manufacturing licences within two days will be made possible as they will now be issued by the Malaysian Industrial Development Authority (Mida), said International Trade and Industry Minister Tan Sri Muhyiddin Yassin.
This was one of several measures he said the Government would undertake to help domestic trade and industry players counter the impact of the global economic slowdown.
An International Trade and Industry Ministry (Miti) source said the ministry had also asked Mida to come up with a simpler form to apply for the licence, which will require only basic information for automatic approval.
Except for certain categories of activities, licence applications will no longer require approval by the Miti secretary-general.
However, activities related to security, health, environment and religion will still need to go through the normal vetting and approval process by the licensing officer.
Firms have said that under the old system, licence application could take up to a month.
Under the Industrial Coordination Act, a manufacturing licence is required for projects by companies with a minimum shareholders’ fund of RM2.5mil or employing 75 full-time employees. This requirement still remains.
Earlier measures to liberalise the licensing process includes doing away with renewal. The RM50 licence fee was also abolished on June 1. Muhyiddin also said he would announce more measures after meeting industry players in other specific sectors, as well as based on the future economic scenario.
Meanwhile, MP for Alor Gajah Datuk Seri Dr Fong Chan Onn, who is a former dean of Universiti Malaya’s economic faculty, said: “If the automatic issuance of licence also deals with approval and usage of land, staff employment, Immigration approval and various other past requirements, it will encourage more investors to do business in Malaysia.”
Thursday, November 13, 2008
Current Economic Development Analysis (Malaysia)
List of Incentives
1st Wave (BNM)
*All currency deposits with financial institutions will be fully guaranteed by the Government until December 2010.
2nd Wave
*RM 5bil fund injection to ValueCap Sdn Bhd.
*Mismanagement of GLCs (Silterra ,ValueCap, EPF) and government procurement.
3rd Wave
*Economic Stimulus Plan tabled in Parliament (Nov 4). The key measures include:
(i) a RM7b new Government spending package,
(ii) Lower EPF contributions of 8% for two years, and
(iii) liberalising building material industries, as well as foreign investment in commercial properties and the services sector.
Attacks by Pakatan Rakyat
1st Wave (BNM)
*Bank Negara Malaysia is estimated to have spent US$12 billion during September to defend the ringgit, said Moody’s Economy.com.
*How to justify the forex defence (RM42.4 billion) and the Ringgit depreciation from RM 3.25 to RM3.57 now?
2nd Wave (GLCs -ValueCap)
*Owned jointly by Khazanah, PNB and KWAP and at the same time provided a bond (est value RM10bil) to ValueCap.
*RM5bil injection into ValueCap Sdn Bhd is in fact a “rescue package” to repay its RM5.1bil debt (Bond) due in February 2009.
*MOF owe an explanation to the public on mismanagement of GLCs (BII Indonesia take-over, Silterra est. lost of RM 1bil and Eurocopter procurement).
*How to justify the RM5bil loan from KWSP and is there transparency?
3rd Wave (ESP)
*MPs blurred by the Budget 2009 winding up speech and Economic Stimulus Plan. (Is the ESP in the budget? The revised figures in the speech?)
*The economic figures was revised and different from Budget 2008, therefore, Najib need to represent the budget again (not following procedure and no details on how the figures derive from).
*Revised economic figures shows high budget deficit at -4.8% from previously -3.6%, highest among ASEAN. (BN deficit is RM28.45bil, PR deficit is RM22.10bil)
*Revised figures shows that the projected revenue decrease by RM 8bil only as it does not tally with the current commodity price from expected. (Crude Oil expected at US$120/bbl but now drop to US$65/bbl)
*The proposed RM7bil is a “fantasy”. (Government expect the RM7bil will come from fuel subsidy savings next year).
*PR is ensuring “quality deficit” be achieved, not injecting funds into speculative activities.
*Status of economic corridors is unknown.
BN Counter Attacks
1st Wave (BNM)
*No response from Government.
*BNM says there is ample liquidity and there has been normal functioning of the financial markets.
2nd Wave (GLCs)
*No response on GLCs mismanagement (ValueCap, Silterra).
Finance Minister 2 (Tan Sri Noor Mohd. Yakcop)
*EPF will not take up equity stake in ValueCap.
*The RM5bil is not for debt repayment.
*ValueCap shareholders may extend the bond obligation repayment period.
*No reasons as to why EPF extending the loan to ValueCap but he assured that the loan was guaranteed by the government.
3rd Wave (ESP)
Finance Minister (Dato’ Sri Najib Razak)
*The ESP is not a part of the budget. ESP is aimed at sustaining the economy growth.
More liberal policies will be adopted. Open tender system will be implemented.
*Structural change in the government to encourage competitiveness and encourage private sector investment.
*More measures will be taken soon to stimulate the economy growth (Economic Council).
Finance Minister 2 (Tan Sri Noor Mohd. Yakcop)
*In the StarBiz Interview, he explained that the government will spend wisely and efficiently with Project Management Unit (PMU).
*Implementing open tender system and PMU to reduce bureaucracy.
*No intention to cut back on the economic corridors (Pak Lah misquoted).
*GLCs will come up with skills training programmes to tackle unemployment.
*EPF contribution reduction will go on. (refusal to reduction will need to fill in a notification form).
PM’s Dept Minister (Tan Sri Amirsham)
*Government will liberalize the economy and financial market.
*RM6bil. under RMK9 will be channeled to the economic corridors.
*Government will increase the economic pie for Malaysian.
*BII take over is a strategic long term investment.
*EPU is monitoring the global economic situation.
*Budget deficit is unavoidable as government increasing spending.
MCA’s Mei Fun
*Open tender system will increase the nation’s competitiveness level.
Wednesday, November 12, 2008
Petronas Position in Government Financial System
Facts about Petronas:
1. Biggest contributor to the government's income.
2. Petronas contributed RM62.8bil or 44% of the government's overall income in 2008.
3. Petronas shares will not be listed in Bursa Malaysia to protect the country's interest.
4. There are 4 listed companies under the Petronas, as below:
(a) Petronas dagangan Berhad.
(b) Petronas Gas Berhad.
(c) MISC Berhad.
(d) KLCC Property Holdings bhd.
Speculated unknown facts about Petronas:
1. Has been used by the government to bailout projects since Tun M era.
2. Petronas projects and license in Malaysia must be dominant with Malay, which means u must have 51% Bumi equity to qualify for projects and license.
3. Force the existing oil and gas related companies to restructure their equity and employment to reflects the racial distribution.
4. Petronas vendor programme for petrol station is only applicable for Bumiputera.
5. Petronas's employment are dominated by Bumiputera.
6. Petronas's account is only given to the Prime Minister (nobody can get details from it).
Relaxation of NEP (Series 2)
Government Procurement System.
a.Margin of Preference (MOP).
Background:
•The government procurement policy was seen as being too conservative.
Arguments:
•The above procurement process is selective and non-transparent.
•The procurement system is not implemented in a transparent manner.
•Greater relaxation in our procurement policies is needed in order to enhance the quality and price competitiveness of government procurement.
Suggestions:
•A committee must be setup to preserve the transparency and integrity in awarding the government tenders for projects and services.
•Preferential treatment to Bumiputra companies must be done in a transparent manner.
b.Direct negotiation (Direct NEGO) in Government Procurement.
Background:
•The direct negotiation approach should only be conducted when the number of people who are able to implement a particular project is limited.
•Procurement by direct negotiation requires special approval from the Treasury of Malaysia.
Arguments:
•Financial irregularities will arise from the poor monitoring of projects as it does not goes through open tender system.
•There is no transparent system in the direct negotiation approach.
•The officers are conducting the direct negotiations approach even there are a lot of people able to implement the project.
Suggestions:
•Abolish the direct negotiation approach and replace it with open tender system with MOP.
c.Class F contractor.
Background:
•There are approximately 35,253 Class F registered contractors (Bumiputera only). They are the smallest fry of the contractor’s world, dependent on government contracts that range from RM5,000 to RM200,000 project.
Arguments:
•These Class F contractors had been "too government-centric”. They have become too reliant on the Government for contracts.
•The Class F concessions handed out are usually a political patronage of UMNO.
Suggestions:
•Abolish the class F contractor system and replace it with an open tender with MOP system for all SMEs.
Monday, November 10, 2008
Proposed relaxation of NEP (Series 1)
1.Foreign Investment Committee (FIC) Guidelines.:
Background
•This has been the overriding policy guiding all Bumiputera equity arguments and justification since 1970’s.
•FIC guidelines regulate and approve the foreign investments in Malaysia.
•The guidelines ruled that all foreign investment in Malaysia is subjected to the Bumiputra equity requirement (30%).
Arguments:
•Has not addressed the problem of poverty and income inequality.
•We need more liberal investment policies as FDIs outflows exceed inflows. (In 2007, Malaysia’s FDIs outflows at RM38bil and inflows at RM29bil.)
•Economic liberalization will help to reduce bureaucracies and cost of doing business.
Suggestions:
•Abolish the FIC guidelines and replace it with a more liberal investment policy to attract FDIs.
•Enhance the competitiveness of local businesses with training and new technology adoption to compete with foreign companies.
2.Industrial Coordination Act 1975 (ICA).
Background:
•To regulate the licensing in the manufacturing sectors in the 1970’s and 80’s during the Industrialization Plan by Tun Dr. Mahathir.
•The ICA requires manufacturing companies with shareholders' funds of RM2.5 million and above or engaging 75 or more full-time paid employees to apply for a manufacturing licence for approval by the Ministry of International Trade and Industry (MITI).
Arguments:
•The approval of manufacturing license is not transparent (case by case basis).
•Foreign investors will not invest in the country if their licenses are subjected to changes from time to time.
Suggestions:
•Abolish outdated and irrelevant restriction in the act.
•Abolish the Industrial Coordination Act.
Friday, November 07, 2008
Employees Provident Fund (EPF) Sucking your blood less now
Employees Provident Fund (EPF) members will be able to benefit from the three percentage point reduction of their monthly contribution rate from January 2009.
In a statement yesterday, EPF said the reduction of the employees’ contribution from 11% to 8% would be made automatically for the ease of members and to facilitate implementation measures.
“This arrangement will be implemented until the December 2010 wage.” However, members who wish to maintain their 11% contribution rate can still do so by filling up Form KWSP 17A (AHL) and handing it to their employers for submission to EPF.
Finance Minister and Deputy Prime Minister Datuk Seri Najib Tun Razak announced recently that members could reduce their monthly contributions from 11% to 8% to give them more disposable income. The announcement was part of a stimulus package to help boost economic growth.
“The decision to reduce members’ statutory contribution rate was taken twice before in 2001 and in 2003 as part of economic stimulus packages,” said Nik Affendi.
EPF would be issuing a new monthly contributions schedule accordingly, he said. “Members and employers may obtain the new schedule and Form KWSP 17A (AHL) from all EPF branches or download them from our website at www.kwsp.gov.my from Dec 1 onwards,” he added.
View Points of Chinese
1. A waste of time to fill up form.
2. 3% is a small money.. don't bother with it.
3. Stupid policy as it does not help to boost economy.
View Points of Malay and Low Income Group
1. It will help to increase the disposable income, means more $$ in your pocket (although its little, but means a lot).
2. The employer contribution still the same, means u don't lose anything.
3. It was expected a big sum of $$ will go to local market consumption (boost local business operation).
Thursday, November 06, 2008
04-11-2008: BNM spent US$12b to defend ringgit in Sept, says Moody’s
Beware, your $$$ is going into the drain now.....
Bank Negara Malaysia (BNM) is estimated to have spent US$12 billion (RM42.4 billion) during September to defend the ringgit, said Moody’s Economy.com.
Moody’s said the ringgit was among Asia-Pacific currencies that had depreciated despite current account surpluses, the others being the Singapore dollar and Philippine peso.
“Sound current accounts may have created a bottom for these currencies and they have ‘only’ depreciated by 5% to 10% since June,” Moody’s Economy.com economist Tine Olsen said in her report yesterday.
She said other currencies in the middle group had fallen because of deleveraging, while those experiencing the biggest depreciation, including South Korea, Indonesia and India, also struggled with current account deficits.
Olsen said Asia-Pacific currency markets had been driven recently by the liquidity squeeze and by current accounts as risk-averse investors moved funds from high-risk markets to safe havens to avoid losses, and also to preserve liquidity.
These include the unwinding of carry trades — the repatriation of funds from high-interest countries to repay loans taken out in low-interest countries.
“As the liquidity crisis eases, investors turn their attention to economic fundamentals to determine the value of national currencies,” Olsen said.
She said the global economic slowdown had encouraged investors to avoid countries with deteriorating current accounts, as they feared export weakness would put downward pressure on currencies.
Olsen said running against the trend of currency markets was the Japanese yen, which is a global reserve currency. The yen has appreciated against the US dollar, but all other major regional currencies have fallen against the US dollar since June.
She said the Australian and New Zealand dollars had been battered in the markets since June, seeing depreciation of 35% and 27%, respectively.
“Monetary policy rates have come down and investors have deleveraged, making the two currencies less attractive than they were earlier.
“At the other end of the scale is the Japanese yen, with an appreciation of 10% due to its status as a safe haven and its role in the carry trade,” she said, adding that as uncertainty increased, investors commonly moved funds out of high-interest countries and paid off their low-interest yen-dominated loans.
Olsen said the forces behind exchange rate movements varied greatly, as were the responses by governments.
“An economic slowdown and looser monetary policy in New Zealand and Australia have reduced the carry trade: borrowing in a low-interest country such as Japan and investing in Australia and New Zealand is no longer as profitable.
“This was amplified by the liquidity squeeze. Interest rates have come down from 7.25% to 6% in Australia and from 8.25% to 6.5% in New Zealand. Investors may have also been discouraged by the current account deficits in these two countries,” she said.
Olsen said if investors began to worry about Australia’s current account deficit, the Australian dollar would be severely challenged in the near term.
She said the Reserve Bank of Australia (RBA) intervened three times in the Aussie market, purchasing the domestic currency two Fridays ago and again last Monday and Tuesday. It has been more than a year since the RBA intervened in currency markets.
Olsen said in Indonesia, by contrast, the central bank was intervening often as it was trying to keep the rupiah steady after the currency reached the psychologically important level of 10,000 rupiah per US dollar.
“With an inflation target of 4% to 5% and annual inflation at 13.6% in July on a year-ago basis, it appears Indonesia has abandoned its inflation target and now focuses on exchange rate stabilisation,” she said.
Olsen said the region’s most troubled currency was the Korean won as doubts about the state of the Korean current account and South Korean importers’ high exposure to the US dollar had prompted traders to stage what at times looked like a run on the currency.
“The government’s repeated assurance that its foreign reserves are healthy has not stopped the exit, and the won has depreciated more than 40% since the end of June.
“The drop appeared to have been halted this week (last week) by a smaller-than-expected current account deficit for September and a currency swap line with the US Federal Reserve. On Thursday, the Korean won jumped 14% as a result,” she said.
Olsen said on a crude scale, the yen’s 10% appreciation matched the depreciation of smaller currencies with no underlying current account problems.
“An exchange rate movement of 10% may therefore be assigned to increased uncertainty and the liquidity squeeze in global markets, and has happened regardless of the sign of the current account.
“How much of the remaining part of exchange rate movements can be assigned to the unwinding of carry trade and worries about the current account is harder to quantify,” she said.
Olsen said the depreciation of Australian and New Zealand currencies was mainly driven by carry-trade reversal, whereas the Korean and Indian currencies had been brought down by speculation about their current accounts.
“As credit markets thaw, currencies may be expected to reverse the 10% move, which was based on the liquidity squeeze.
“Currencies with underlying current account deficits face turbulence in the near future, as a global slowdown puts pressure on the trade balance. Finally, high-interest currencies may be further challenged by looser monetary policy,” she said.
Wednesday, November 05, 2008
Economic Stimulus Package for Malaysia (2008)
Better “something” than “nothing”…
Following the footsteps of several major and regional economies, the Government unveiled an economic stimulus package (ESP)on Nov 4, 2008. The key measures include:
(i) a RM7b new Government spending package,
(ii) allowing workers to opt for lower EPF contributions of 8% for two years, and
(iii) liberalising building material industries, as well as foreign investment in commercial properties and the services sector.
These measures add to the long list of measures that the Government had put in place, first to help the economy – especially consumers – cope with inflationary pressures, and now to deal with recessionary pressures. Over the past three months, steps already announced included a string of reductions in fuel (petrol and diesel) prices to reflect falling crude oil prices, 100% guarantees on deposits, and an additional RM5b to Value Cap.
The Government also revised its 2009 key macroeconomic forecasts, for lower real GDP growth and higher budget deficits. Our 2009 growth forecast is “stable” but under “negative watch” in view of the need to continuously assess the:
(i) effectiveness and execution of the ESP,
(ii) performance of the global economy, and
(iii) developments on commodity prices.
Perak Sultan warns against extreme political actions
All extreme and excessive political actions must cease immediately for the sake of the country's well-being, Sultan of Perak Sultan Azlan Shah said.
The country’s peace must not be sacrificed because of certain leaders’ political ambitions.
"The interest of the people who voted for the government needs to be given priority," he said.
He said this after receiving a memorandum from Gagasan Melayu Perak president Datuk Seri Dr Mohd Helmi Ismail, who pledged their loyalty to the Sultan at the Istana Iskandariah on Wednesday.
Sultan Azlan said although Malaysia was a multi-racial country, the country was still based on the history, political evolution and spirit of nationalism of the Malays.
He stressed that the Malays needed an assurance to ensure their status as natives as enshrined in the Federal Constitution was not threatened.
He also said that the rights of other races are protected and acknowledged under the Constitution.
"It is the understanding and agreement under the social contract that enables the country to be successful, harmonious and stable," he said.
President Barack Obama for USA
Remarks of President-Elect Barack Obama-as prepared for delivery
Election Night
Tuesday, November 4th, 2008
Chicago, Illinois
If there is anyone out there who still doubts that America is a place where all things are possible; who still wonders if the dream of our founders is alive in our time; who still questions the power of our democracy, tonight is your answer.
It's the answer told by lines that stretched around schools and churches in numbers this nation has never seen; by people who waited three hours and four hours, many for the very first time in their lives, because they believed that this time must be different; that their voice could be that difference.
It's the answer spoken by young and old, rich and poor, Democrat and Republican, black, white, Latino, Asian, Native American, gay, straight, disabled and not disabled - Americans who sent a message to the world that we have never been a collection of Red States and Blue States: we are, and always will be, the United States of America.
It's the answer that led those who have been told for so long by so many to be cynical, and fearful, and doubtful of what we can achieve to put their hands on the arc of history and bend it once more toward the hope of a better day.
It's been a long time coming, but tonight, because of what we did on this day, in this election, at this defining moment, change has come to America.
I just received a very gracious call from Senator McCain. He fought long and hard in this campaign, and he's fought even longer and harder for the country he loves. He has endured sacrifices for America that most of us cannot begin to imagine, and we are better off for the service rendered by this brave and selfless leader. I congratulate him and Governor Palin for all they have achieved, and I look forward to working with them to renew this nation's promise in the months ahead.
I want to thank my partner in this journey, a man who campaigned from his heart and spoke for the men and women he grew up with on the streets of Scranton and rode with on that train home to Delaware, the Vice President-elect of the United States, Joe Biden.
I would not be standing here tonight without the unyielding support of my best friend for the last sixteen years, the rock of our family and the love of my life, our nation's next First Lady, Michelle Obama. Sasha and Malia, I love you both so much, and you have earned the new puppy that's coming with us to the White House. And while she's no longer with us, I know my grandmother is watching, along with the family that made me who I am. I miss them tonight, and know that my debt to them is beyond measure.
To my campaign manager David Plouffe, my chief strategist David Axelrod, and the best campaign team ever assembled in the history of politics - you made this happen, and I am forever grateful for what you've sacrificed to get it done.
But above all, I will never forget who this victory truly belongs to - it belongs to you.
I was never the likeliest candidate for this office. We didn't start with much money or many endorsements. Our campaign was not hatched in the halls of Washington - it began in the backyards of Des Moines and the living rooms of Concord and the front porches of Charleston.
It was built by working men and women who dug into what little savings they had to give five dollars and ten dollars and twenty dollars to this cause. It grew strength from the young people who rejected the myth of their generation's apathy; who left their homes and their families for jobs that offered little pay and less sleep; from the not-so-young people who braved the bitter cold and scorching heat to knock on the doors of perfect strangers; from the millions of Americans who volunteered, and organized, and proved that more than two centuries later, a government of the people, by the people and for the people has not perished from this Earth. This is your victory.
I know you didn't do this just to win an election and I know you didn't do it for me. You did it because you understand the enormity of the task that lies ahead. For even as we celebrate tonight, we know the challenges that tomorrow will bring are the greatest of our lifetime - two wars, a planet in peril, the worst financial crisis in a century. Even as we stand here tonight, we know there are brave Americans waking up in the deserts of Iraq and the mountains of Afghanistan to risk their lives for us. There are mothers and fathers who will lie awake after their children fall asleep and wonder how they'll make the mortgage, or pay their doctor's bills, or save enough for college. There is new energy to harness and new jobs to be created; new schools to build and threats to meet and alliances to repair.
The road ahead will be long. Our climb will be steep. We may not get there in one year or even one term, but America - I have never been more hopeful than I am tonight that we will get there. I promise you - we as a people will get there.
There will be setbacks and false starts. There are many who won't agree with every decision or policy I make as President, and we know that government can't solve every problem. But I will always be honest with you about the challenges we face. I will listen to you, especially when we disagree. And above all, I will ask you join in the work of remaking this nation the only way it's been done in America for two-hundred and twenty-one years - block by block, brick by brick, calloused hand by calloused hand.
What began twenty-one months ago in the depths of winter must not end on this autumn night. This victory alone is not the change we seek - it is only the chance for us to make that change. And that cannot happen if we go back to the way things were. It cannot happen without you.
So let us summon a new spirit of patriotism; of service and responsibility where each of us resolves to pitch in and work harder and look after not only ourselves, but each other. Let us remember that if this financial crisis taught us anything, it's that we cannot have a thriving Wall Street while Main Street suffers - in this country, we rise or fall as one nation; as one people.
Let us resist the temptation to fall back on the same partisanship and pettiness and immaturity that has poisoned our politics for so long. Let us remember that it was a man from this state who first carried the banner of the Republican Party to the White House - a party founded on the values of self-reliance, individual liberty, and national unity. Those are values we all share, and while the Democratic Party has won a great victory tonight, we do so with a measure of humility and determination to heal the divides that have held back our progress. As Lincoln said to a nation far more divided than ours, "We are not enemies, but friends...though passion may have strained it must not break our bonds of affection." And to those Americans whose support I have yet to earn - I may not have won your vote, but I hear your voices, I need your help, and I will be your President too.
And to all those watching tonight from beyond our shores, from parliaments and palaces to those who are huddled around radios in the forgotten corners of our world - our stories are singular, but our destiny is shared, and a new dawn of American leadership is at hand. To those who would tear this world down - we will defeat you. To those who seek peace and security - we support you. And to all those who have wondered if America's beacon still burns as bright - tonight we proved once more that the true strength of our nation comes not from our the might of our arms or the scale of our wealth, but from the enduring power of our ideals: democracy, liberty, opportunity, and unyielding hope.
For that is the true genius of America - that America can change. Our union can be perfected. And what we have already achieved gives us hope for what we can and must achieve tomorrow.
This election had many firsts and many stories that will be told for generations. But one that's on my mind tonight is about a woman who cast her ballot in Atlanta. She's a lot like the millions of others who stood in line to make their voice heard in this election except for one thing - Ann Nixon Cooper is 106 years old.
She was born just a generation past slavery; a time when there were no cars on the road or planes in the sky; when someone like her couldn't vote for two reasons - because she was a woman and because of the color of her skin.
And tonight, I think about all that she's seen throughout her century in America - the heartache and the hope; the struggle and the progress; the times we were told that we can't, and the people who pressed on with that American creed: Yes we can.
At a time when women's voices were silenced and their hopes dismissed, she lived to see them stand up and speak out and reach for the ballot. Yes we can.
When there was despair in the dust bowl and depression across the land, she saw a nation conquer fear itself with a New Deal, new jobs and a new sense of common purpose. Yes we can.
When the bombs fell on our harbor and tyranny threatened the world, she was there to witness a generation rise to greatness and a democracy was saved. Yes we can.
She was there for the buses in Montgomery, the hoses in Birmingham, a bridge in Selma, and a preacher from Atlanta who told a people that "We Shall Overcome." Yes we can.
A man touched down on the moon, a wall came down in Berlin, a world was connected by our own science and imagination. And this year, in this election, she touched her finger to a screen, and cast her vote, because after 106 years in America, through the best of times and the darkest of hours, she knows how America can change. Yes we can.
America, we have come so far. We have seen so much. But there is so much more to do. So tonight, let us ask ourselves - if our children should live to see the next century; if my daughters should be so lucky to live as long as Ann Nixon Cooper, what change will they see? What progress will we have made?
This is our chance to answer that call. This is our moment. This is our time - to put our people back to work and open doors of opportunity for our kids; to restore prosperity and promote the cause of peace; to reclaim the American Dream and reaffirm that fundamental truth - that out of many, we are one; that while we breathe, we hope, and where we are met with cynicism, and doubt, and those who tell us that we can't, we will respond with that timeless creed that sums up the spirit of a people:
Yes We Can. Thank you, God bless you, and may God Bless the United States of America.
Thursday, October 23, 2008
Ten ways to boost competitiveness (The Star)
# P. Gunasegaram is managing editor at The Star. This article is an abridged version of a talk he gave recently at Khazanah Nasional’s Megatrends Forum.
Education, trade issues among important factors
MALAYSIA needs to focus on the basics to increase overall competitiveness. Here are 10 ways in which the country can improve its overall competitiveness. Where possible the factors are linked to the global credit crisis.
1. Education. No country has managed to climb up the competitiveness ladder without producing a core group of highly educated and competent people in all areas of the economy. The main problem is the poor and deteriorating public school system caused by a lack of good, motivated teaching staff, not facilities. It calls for a total overhaul of how teachers are recruited, trained and motivated.
Throughout all my school years and after, I have noticed that when the headmaster was good, so was the school — no matter the lack of resources or the poor calibre of teaching staff. An immediate measure will be to retrain headmasters and formulate key performance indicators for them, and empowering them.
2. Opening up the Economy. We should encourage foreign direct investments, not only in manufacturing but also in services too, for example in tourism and education. But I am not a fan of attracting excessive foreign portfolio funds into the stock and money markets. Such short-term inflows can flow out just as easily and cause major instability when they do. Witness the steeper fall in Asian stock markets recently despite the main problem being in the US. We should put a lower cap on foreign portfolio investments.
3. Removing trade barriers. Trade barriers make us rather inefficient. For instance, we are without a doubt the most inefficient car producer in the world because of the low scale of manufacture. The motor industry survives simply because of high tariffs levied on imports and therefore there is no push to get the industry to either become more competitive or to merge with other large-scale manufacturers to get access to technology and scale.
Being able to source anything from anywhere in the world will make the country more competitive and will force industries and services to come up to international standards in terms of quality and price. Those days, we had Penang as a free port, now we have Pulau Langkawi, and I think Pulau Tioman. Why not make the whole of Malaysia free? It would help bring down prices.
4. Judicious removal of subsidies. Subsidies, especially of petroleum and related products, are not only a huge cost to the Government but represent a serious misallocation of resources which could have been used for other purposes. Evidence is that subsidising oil prices helps much more the higher income group which uses a lot more of the dwindling resource than the lower income group. Painful as it may initially, subsidies must be unwound.
The problem of a poor and deteriorating public school system requires an overhaul of how teachers are recruited, trained and motivated
5. Revising the tax structure and collection. Our personal income tax and corporate tax rates are still too high relative to many other countries. At the same time, we give away far too many tax incentives to foreign investors. In some cases, these tax benefits are not even effectual because the foreign companies pay taxes in their home countries — we end up letting other countries collect the taxes instead.
We can lower tax rates but at the same time remove excessive incentives to capture tax income. Inland Revenue has to pay more attention to getting more people into the tax net by looking at the assets they own and asking them to account for how they got it if they don’t pay taxes.
Also, to curb speculation on the stock market, capital gains on the stock market and on derivative products should be taxed, with the rate going down the longer the investments are held. In the light of the current crisis, this also provides an audit trail of transactions and may prevent abuse through financial engineering.
6. Tightening up contracting and procurement procedures. During times of crisis, we have this habit of rushing out to cut projects, some of which may actually be badly needed. It is much better to take this time of crisis to tighten up contract and procurement procedures. Instead of the fat margins some of the suppliers have been given in the past, squeeze the margins because there is real hunger for business and there is a lot of idle capacity. I dare say if we do that we will still have the money to undertake the projects without having to scrap any. The crisis is the perfect opportunity to tighten up contract and procurement procedures.
7. Cutting red tape. This is a perennial problem and more should be done to facilitate approvals for businesses and streamline licensing requirements. Local councils should be made to function more efficiently while easier approvals for knowledge workers should be given. It is ironic that foreign labourers find it much easier to get entry as workers when compared to highly qualified white-collar professionals.
8. Improving infrastructure. I really don’t think we have first world infrastructure all over the place. Case in point is the very poor Kuala Lumpur public transport system which had sporadic and spotty improvements that still could not keep pace with the requirements of commuters. What is needed is a good demographic study to ascertain future needs and a plan which fits in with that.
The overall effort should include a comprehensive programme in all key cities for working space, living and recreational areas and for a good transport system to link all of them. The current crisis is an opportunity to engage in some counter-cyclical spending to keep economic activity up. The right kind of investment in infrastructure spending will improve our competitiveness considerably in future years.
9. Refining New Economic Policy requirements and reviewing others. I recall after the 1985 recession the Government relaxed equity and other requirements under the NEP for a range of investments. That will make us more competitive in terms of attracting new investments. Extending those incentives to local companies will also help promote economic activity and make them more competitive as well.
Meantime, we must hold all contractors and service providers — whether bumiputra or not, whether politically linked or not — to high standards of work and completion. Too much money is squandered by improper monitoring.
10. Becoming less obsessed with racial quotas, both implicit and explicit. There are many quotas, some stated and others not. If you look at government service, one can’t help but note that there is a preponderance of bumiputras at all levels. Ditto for government universities, and many government companies. We really need to make better use of all the manpower available in the country. We must move towards a performance-driven culture using all resources available to us.
A look at financial developments and activity in some stock markets around the world Wednesday
MUNICH, Germany -- The German state of Bavaria's finance minister resigned, accepting his share of responsibility after BayernLB, a regional public-sector bank, said it would seek 5.4 billion euros ($7.2 billion) in federal government aid. Bavaria's state government owns half of BayernLB; the other half is held by municipally backed local banks. Germany's DAX closed down 213.34 points, or 4.5 percent, at 4,571.07.
PARIS -- France's prime minister says a newly created and state-backed refinancing company will start doling out urgent loans to French banks by the end of the week. The French refinancing firm known as SFRE was set up to support French banks short of liquidity amid the global financial crisis. The French government has pledged 40 billion euros ($54 billion) to provide banks with extra capital as part of an urgent plan to cope with the financial sector meltdown. The CAC-40 in France finished 177.22 points, or 5.1 percent, lower at 3,298.18.
MOSCOW -- Russian stocks shed the previous day's gains as shares in energy companies followed sliding oil prices down again. The U.S.-dollar denominated RTS index closed 7.2 percent lower at 665.8 points while the MICEX index dropped 3.7 percent to 628.1. Russian energy stocks fell sharply on the MICEX stock exchange with oil firms Tatneft and Transneft 7.5 and 5.1 percent lower, respectively. Gas giant Gazprom lost 6.3 percent.
SEOUL, South Korea -- South Korean stocks dropped sharply amid further heavy selling by foreign investors that has helped push share prices down 40 percent this year after years of strong gains. The Korea Composite Stock Price Index fell 61.51 points, or 5.1 percent, to 1,134.59. At one point, the Kospi fell as much as 8.4 percent before recovering some losses.
ISLAMABAD, Pakistan -- Pakistan sought help from the International Monetary Fund to avoid defaulting on billions of dollars in loans and skirt a financial crisis brought on by high fuel prices, dwindling foreign investment and soaring militant violence. Pakistani officials had previously said turning to the IMF would be a last resort.
TOKYO -- Japanese stocks tumbled as spreading pessimism over corporate earnings and a strengthening yen sent the benchmark index tumbling almost 7 percent. Stocks opened lower following an overnight retreat on Wall Street, but they widened losses in the afternoon on a flurry of bad news that aggravated fears about the global slowdown. Japan's Nikkei 225 stock average fell for the first time in three days, dropping 631.56 points, or 6.79 percent, to 8,674.69
BUENOS AIRES, Argentina -- Argentina's benchmark stock index plunged Wednesday as investors worried the president's plan to nationalize private pension funds would drain companies' access to private capital. The Merval index fell 10 percent, adding to 11 percent losses on Tuesday, when President Cristina Fernandez unveiled plans to take over $30.1 billion in private pension fund assets.
SHANGHAI, China -- Chinese shares sank on heavy selling of power producers and others reporting weaker-than-expected earnings. The benchmark Shanghai Composite Index fell 3.2 percent, or 62.71 points, to 1,895.82. The smaller Shenzhen Composite Index slipped 1.6 percent to 510.66. Declines were seen across the board, with energy and commodity-related shares falling sharply on expectations of weak demand. Chinese President Hu Jintao expressed concerns over the ailing U.S. financial system in a phone conversation with U.S. President George W. Bush, state media reported. China, which holds hundreds of billions of dollars in U.S. government bonds, has enacted a growing number of measures to stimulate economic growth as its crucial export sector suffers from downturns in the U.S. and Europe.
SAO PAULO, Brazil -- The Brazilian government announced it will allow two state-controlled banks to buy stakes in private financial institutions, hoping to limit damage from the global crisis. The Banco do Brasil and Caixa Economica Federal will be able to buy stakes in other banks, insurance companies and other private institutions needing aid, Finance Minister Guido Mantega said Wednesday. The institutions previously were not allowed to seek help from the state-controlled banks. Trading was automatically suspended for 30 minutes after the benchmark Ibovespa index dove 10 percent and fears mounted that a global recession could stall growth in Latin America's largest economy.
WASHINGTON -- World leaders will meet Nov. 15 in Washington to address the global financial crisis -- the first in a series of summits to mitigate what economists predict could be a long and deep downturn. In making the announcement, White House spokeswoman Dana Perino said the first meeting will focus on the underlying causes of the financial crisis, the global response and the principles that should guide any reforms. The summit will bring together leaders of the Japan, the United Kingdom, France, Germany, Italy, Canada and the United States, the European Union China, Brazil, India, Russia, South Korea and other major economies. She said the White House would seek input from the winner of the U.S. presidential election who will take office on Jan. 20.
MEXICO CITY -- Mexico's peso tumbled to 13.6 to the dollar and the stock market dropped 7 percent, despite the central bank's actions to stabilize the economy. The bank has been auctioning off reserves since the peso hit a record low of 14 to the dollar this month, after trading in early August at under 10 to the dollar. Mexico's central bank has vowed to auction $400 million every day at the previous day's closing price plus 2 percent, and has converted $12 billion to pesos since Oct. 8 in attempts to prop up the currency. The IPC index fell 7 percent to 1,415.93.
LONDON -- British Prime Minister Gordon Brown acknowledged for the first time Wednesday that the world economic downturn is likely to cause a recession in the United Kingdom, the U.S and other countries. Brown's comments during his weekly question-and-answer session at the House of Commons followed a warning Tuesday from Bank of England Governor Mervyn King that Britain is probably entering a recession as a result of a squeeze on pay, a lack of available credit and a likely prolonged slowdown in domestic demand. Later, Britain's FTSE 100 index of leading shares closed down 189.84 points, or 4.5 percent, at 4,040.89.
Sunday, October 19, 2008
MCA PARTY ELECTION RESULT
President: Ong Tee Keat
Deputy president: Dr Chua Soi Lek
Vice-presidents are Kong Cho Ha, Liow Tiong Lai, Dr Ng Yen Yen and Tan Kok Hong
The 25 newly-elected central committee members are:
Lee Wei Kiat, Wong Foon Meng, Tan Chai Ho, Tan Cheng Liang, Dr Hou Kok Chung, Lee Chee Leong, Gan Ping Sieu, Yu Chok Tow, Wong Nai Chee, Lee Sing Chooi, Wee Jeck Seng, Gan Tian Loo, Dr Yeow Chai Thiam, Chong Itt Chew, Hoh Khai Mun, Ti Lian Ker, Liew Yuen Keong, Wong Mook Leong, Paul Kong Sing Chu, Edward Khoo Keong Hai, Teh Siew Kiong, Loh Seng Kok, Wong Siong Hwee, Dr Por Choo Chor and Loke Yuen Yow.
Deputy president: Dr Chua Soi Lek
Vice-presidents are Kong Cho Ha, Liow Tiong Lai, Dr Ng Yen Yen and Tan Kok Hong
The 25 newly-elected central committee members are:
Lee Wei Kiat, Wong Foon Meng, Tan Chai Ho, Tan Cheng Liang, Dr Hou Kok Chung, Lee Chee Leong, Gan Ping Sieu, Yu Chok Tow, Wong Nai Chee, Lee Sing Chooi, Wee Jeck Seng, Gan Tian Loo, Dr Yeow Chai Thiam, Chong Itt Chew, Hoh Khai Mun, Ti Lian Ker, Liew Yuen Keong, Wong Mook Leong, Paul Kong Sing Chu, Edward Khoo Keong Hai, Teh Siew Kiong, Loh Seng Kok, Wong Siong Hwee, Dr Por Choo Chor and Loke Yuen Yow.
Monday, October 13, 2008
US Gov't eyes plan to take ownership stakes in banks
WASHINGTON (AP) -- Treasury Secretary Henry Paulson told international leaders on Sunday that isolationism and protectionism could worsen the spreading financial crisis. With a new trading week dawning, U.S. lawmakers urged quick action by the Bush administration on measures to make direct purchases of bank stock to help unlock lending.
Sen. Chuck Schumer, chairman of the Joint Economic Committee, said an administration proposal to inject federal money directly into certain banks, in effect partially nationalizing the banking system, "is gaining steam."
"I am hopeful that tomorrow, the Treasury will announce that they're doing it. And they have to do it quickly ... markets are waiting," Schumer, D-N.Y., said.
The administration has not indicated when it would announce its next steps.
Democrats also are lining up behind House Speaker Nancy Pelosi's plan to bring lawmakers back to Capitol Hill after the Nov. 4 election to work on a second economic relief plan. The idea is "give the middle class and the average citizen the same kind of relief that we try to give the financial sector," said Democratic Rep. Barney Frank of Massachusetts, chairman of the House Financial Services Committee.
Top Democrats are suggesting a $150 billion measure that would extend jobless benefits, provide more money for food stamps and finance some construction projects, such as rebuilding bridges and roads. It would also include either a tax rebate or tax cut.
Rep. Roy Blunt of Missouri, the second-ranking House Republican, said he would help on a plan "that makes sense" but is not laden with huge public works projects or bailouts for states that overspent on social programs.
In another step aimed at easing the financial crisis, the Federal Reserve on Sunday approved the $12.2 billion acquisition of troubled Wachovia Corp. by Wells Fargo & Co. Wachovia is the latest in a string of major banks and financial institutions that have been felled by the financial crisis. The Fed action was expected.
As the International Monetary Fund and World Bank held their annual meetings over the weekend, Paulson warned the bank's policy-setting committee of the dangers of "inward-looking policies."
"Although we in the United States are taking many extraordinary measures to ease the crisis, we are not pursuing policies that would limit the flow of goods, services or capital, as such measures would only intensify the risks of a prolonged crisis,"
Sen. Chuck Schumer, chairman of the Joint Economic Committee, said an administration proposal to inject federal money directly into certain banks, in effect partially nationalizing the banking system, "is gaining steam."
"I am hopeful that tomorrow, the Treasury will announce that they're doing it. And they have to do it quickly ... markets are waiting," Schumer, D-N.Y., said.
The administration has not indicated when it would announce its next steps.
Democrats also are lining up behind House Speaker Nancy Pelosi's plan to bring lawmakers back to Capitol Hill after the Nov. 4 election to work on a second economic relief plan. The idea is "give the middle class and the average citizen the same kind of relief that we try to give the financial sector," said Democratic Rep. Barney Frank of Massachusetts, chairman of the House Financial Services Committee.
Top Democrats are suggesting a $150 billion measure that would extend jobless benefits, provide more money for food stamps and finance some construction projects, such as rebuilding bridges and roads. It would also include either a tax rebate or tax cut.
Rep. Roy Blunt of Missouri, the second-ranking House Republican, said he would help on a plan "that makes sense" but is not laden with huge public works projects or bailouts for states that overspent on social programs.
In another step aimed at easing the financial crisis, the Federal Reserve on Sunday approved the $12.2 billion acquisition of troubled Wachovia Corp. by Wells Fargo & Co. Wachovia is the latest in a string of major banks and financial institutions that have been felled by the financial crisis. The Fed action was expected.
As the International Monetary Fund and World Bank held their annual meetings over the weekend, Paulson warned the bank's policy-setting committee of the dangers of "inward-looking policies."
"Although we in the United States are taking many extraordinary measures to ease the crisis, we are not pursuing policies that would limit the flow of goods, services or capital, as such measures would only intensify the risks of a prolonged crisis,"
Budget 2009 Highlights
Budget 2009 was presented on 29 Aug 08 by the Prime Minister and (then) Finance Minister YAB Dato’ Seri Abdullah Ahmad Badawi in Parliament. Themed “A Caring Government,” Budget 2009’s three specific strategies focus on enhancing the wellbeing of all Malaysians, developing quality human capital and further strengthening our nation’s economic resilience to mitigate the adverse impact of an increasing challenging external environment. A broad range of measures will be implemented in this Budget to reduce the impact of higher cost of living, particularly for the lower income group and the vulnerable.
Budget Allocation
The overall federal government revenue for year 2008 is RM 161.6bn and expenditure is RM196.9bn. The deficit for 2008 is estimated to increase to 4.8% due to an additional allocation of RM22.1bn this year for food and fuel subsidies. Committed to reducing the fiscal deficit to 3.6% in 2009, the government believes that the high fiscal deficit is a one-off necessity.
For Budget 2009, RM207.9bn will be allocated for government expenditure, which is 5.1% higher than the allocation for 2008. Of the total allocation, RM154.2bn will be used for operating expenditure and RM53.7bn for development expenditure.
The Malaysian economy in 2009 is projected to grow by 5.4%. The key driver for economic growth is the oil and gas industry, tourism, transportation, finance and banking, and ICT related industries. The key measures and steps that were outlined by the government in Budget 2009 are as below:
Social Safety Net
The government has raised the eligibility criteria for welfare assistance under the Welfare Department and allocated RM500mn. It is expected that eligible recipients will rise to 110,000 households and 40,000 senior citizens.
Government pensioners who have served at least 25 years upon retirement will receive no less than RM720 monthly, which will involve RM140mn allocation and benefiting 75,00 retirees.
On top of that, the government also set up an RM25mn special fund to channel financial assistance to victims of calamities, such as floods and fire. The government also encourages the private sector to set up more “Rumah Tunas Harapan” and will increase the allowance of caregivers up to RM1,000 monthly.
Eradicating Poverty
The housing assistance programme is one of the tools to eradicate poverty and will be allocated RM 50mn to build 1,400 new houses and repair 1,000 houses for hardcore poor, senior citizens, disabled and single parents. To reduce the burden of lower income groups, the government will bear the cost of electricity bills for households which incur monthly electricity bills of RM20 or less. 1.1mn households are expected to benefit from this measure. Additionally, Sabah and Sarawak will be allocated RM580mn and RM420mn respectively to improve basic amenities such as electricity, water and rural roads.
Increasing Disposable Income
The purchasing power of lower middle income groups was badly affected by the high inflation rate. Therefore, the government proposed the current tax rebate to be increased to RM400 for those taxable income of RM35,000 and below. It is expected that 100,000 tax payers will be out of the tax net.
Moreover, the government also proposed that the highest marginal tax rate for individuals be reduced to 27% and marginal tax rate of 13% will be reduced to 12% too. Civil servants will receive a one-month bonus, subject to a minimum of RM1,000 for 2008 as an appreciation of increasing productivity.
Improving Public Transportation
The government will continue to encourage greater utilization of public transportation and believes that a more efficient, reliable and integrated public transportation is needed to provide seamless travel and greater service frequencies. To further improve the efficiency of public transportation, RM35bn allocation will be expanded during 2009 to 2014 to enhance the capacity of existing rail services, build new rail services and tracks, increase the number of buses and provide better infrastructure facilities. RM3bn additional soft loans were also provided under the Public Transportation Fund and a Public Land Transportation Commission will be established to oversee overall public transportation services by mid 2009.
Therefore, the government agreed to provide 200 additional buses to RapidPenang to service 14 new routes in Penang. It is expected that usage will be increased to 120,000 passengers daily. Other key measures are toll charges for all buses will be reduced by 50% and road tax for all buses and taxi operators will be reduced to RM20 a year.
The existing LRT system in Klang Valley will be extended by 30km and 35 train carriages for the Kelana Jaya line worth RM1.3bn will be fully operational by 2010. A new LRT line will also be built along a 42km route from Kota Damansara to Cheras. The commuter rail services will be upgraded too. An additional 13 new units of commuters will be operational by 2011, with an expanded rail services network of 7.5km for the Sentul-Batu Caves line by 2010. Sam, pls insert Komuter train here
Food Security
RM5.6bn is provided under the national food security policy to implement several agriculture programmes to ensure adequate food supply. To increase fish landings, RM300 mn is allocated for cost of living allowance to fisherman and fish landing incentives.
To increase poultry output, the expansion of chicken and duck farms will be given a Reinvestment Allowance of 60% for a period of 15 years. RM1bn will be allocated for 220,000 padi farmers to increase padi production and 1,300 hectares of abandoned land have been identified for padi and other food production. The government also proposed that import duty on fertilizers and pesticides be abolished.
Health Services
RM 13.7 bn is allocated in 2009 to enhance health facilities and provide equipments, increase supply of medicines, develop human resources and build more hospitals. Other than that, the government also announced that the excise duty on cigarettes will be increased by 3sen to 18sen per stick.
Improving Public Amenities
RM1.8bn will be provided to increase basic amenities and infrastructure in rural areas. For Sabah and Sarawak, RM3bn and RM3.3bn allocations were given respectively for various infrastructure projects.
Enhancing Training and Skills Programmes
RM2.4bn is allocated to enhance facilities as well as undertake training and skills programmes. In addition, the government will increase the number of nurses in public hospitals by allocating RM70mn to train 7,600 nurses.
Improving Quality of Education
RM31mn will be allocated to the Education Ministry benefiting 5.8mn students. 110 primary schools and 181 secondary schools will be built in near term. In addition, RM14.1bn was allocated for the Higher Education Ministry to improve the quality of learning.
New Economic Sectors
New selected regional services such as Islamic finance, business process outsourcing, resource based industries such as petroleum, higher value added manufacturing such as biotechnology will be giving significant opportunities for growth in the Malaysian economy.
Economic Corridors
RM6bn is provided in the 2009 budget for development expenditure of the corridors. An additional allocation of RM30mn is provided under the Strategic Investment Fund in Iskandar Malaysia.
National Energy Plan
A comprehensive national energy plan will be outlined to support the long term energy needs. Renewable energies equipment will be exemption import duty and sales tax.
Ensuring Public Safety
RM5.4bn is allocated in the Budget 2009 to enhance the capacity of the Royal Malaysia Police (PDRM). The allocation will be used to build more police stations and train/hire more Polices.
As a conclusion, the government was seen as responsible to the concerns of the rakyat and has taken measures to lighten the burden of all Malaysians, particularly the lower income group. Support and assistance approach will improve the quality of life and enables all Malaysians to enhance their productivity.
马来西亚2009年财政预算案
首相兼财政部长拿督斯里阿都拉巴达威今年八月在国会提呈的2009年财政预算案内,主轴及重心被定位于确保全民和谐共处、建设人文发展环境以及强化国家抗御能力。2009年财政预算案被各界给予高度评价,更体现首相一贯的务实与亲民政策。今年的财政预算案主要就是围绕着增加低收入群的福利、改善交通网络及提升全民教育的素质。
在高油价及高通膨年代,政府为了照顾全民福利,便推动了提高低收入群的福利及妥善策划未来的交通规划,因此这一次的财政预算案被评为连续12年来的扩张式“爱心”预算案,但是却因此缺少了明确的商界税务削减或津贴。
联邦政府今年的总收入是1616亿令吉,相等于9.1% 的收入增长。首相并预测在2009年的总收入将会增加至1762亿令吉,或相等于9.1% 的增长率。政府也预测收入增长的主要贡献者是石油所得税及公司税。除此之外,政府也预计2009年的经济成长可达到5.4%,而通膨率将会保持在稳定的水平。图表1显示2008-2009的联邦政府收入。
图表1:联邦政府收入2008-2009
令吉(百万) 增长(%) 占有率(%)
2008 2009# 2008 2009# 2008 2009#
税收 107,737 124,379 13.2 15.4 66.7 70.6
*直接税 77,579 92,126 11.8 18.8 48.0 52.3
•公司 33,325 35,780 3.7 7.4 20.6 20.3
•石油所得税 24,511 35,826 19.8 46.2 15.2 20.3
•个人 14,593 15,399 25.1 5.5 9.0 8.7
*间接税 30,158 32,252 17.0 6.9 18.7 18.3
•消费税 10,369 11,038 15.3 6.5 6.4 6.3
•营业税 7,580 8,059 14.1 6.3 4.7 4.6
非税务收入 53,821 51,841 20.4 3.7 33.3 29.4
*执照/准证 11,779 13,059 24.9 10.9 7.3 7.4
*投资收入 38,874 35,442 20.0 -8.8 24.1 20.1
收入总额 161,558 176,220 15.5 9.1 100 100
2008/2009 经济报告书。(# 预算估计,不包括2009年税收)
2009年财政预算案也详细的探讨了联邦政府在近年的财务状况。我国在2008年的赤字扩张至国内生产总值的4.8%,并且超出了政府在一年前所定下缩减至3.1%的目标。由于政府估计到世界原油价格飙升所导致的后遗症,所以适度的调低在2009年的财政赤估计到3.6%,并希望能够让经济平衡增长。
由于国际原油及基本粮食的价格都已经大幅度飚高,钢铁、洋灰及其他的建筑材料也都涨价了,所以这都致使政府的营运开销和发展开销急速的增加了。应此,政府使用了适度的财政赤字及增加发展拨款来确保食物保证措施与燃油津贴。政府的举动是希望能够继续协助人民渡过经济难关。图表2显示了联邦政府财务状况。
图表2:联邦政府财务状况2008-2009
令吉(百万) 增长(%)
2008 2009# 2008 2009#
税收 161,558 176,220 15.5 9.1
营业费用 150,953 154,170 22.6 2.1
目前盈余 10,605 22,050 -36.9 107.9
发展费用总额 46,258 51,729 14.0 11.8
扣:贷款收回 1,191 1,229 -61.6 3.2
发展费用净余 45,067 50,500 20.3 12.1
全面余额 -34,462 -28,450
占国内生产总值巴仙率 -4.8 -3.6
2008/2009 经济报告书。(# 预算估计,不包括2009年税收)
在高油价及高通膨年代,政府为了照顾全民福利,便推动了提高低收入群的福利及妥善策划未来的交通规划,因此这一次的财政预算案被评为连续12年来的扩张式“爱心”预算案,但是却因此缺少了明确的商界税务削减或津贴。
联邦政府今年的总收入是1616亿令吉,相等于9.1% 的收入增长。首相并预测在2009年的总收入将会增加至1762亿令吉,或相等于9.1% 的增长率。政府也预测收入增长的主要贡献者是石油所得税及公司税。除此之外,政府也预计2009年的经济成长可达到5.4%,而通膨率将会保持在稳定的水平。图表1显示2008-2009的联邦政府收入。
图表1:联邦政府收入2008-2009
令吉(百万) 增长(%) 占有率(%)
2008 2009# 2008 2009# 2008 2009#
税收 107,737 124,379 13.2 15.4 66.7 70.6
*直接税 77,579 92,126 11.8 18.8 48.0 52.3
•公司 33,325 35,780 3.7 7.4 20.6 20.3
•石油所得税 24,511 35,826 19.8 46.2 15.2 20.3
•个人 14,593 15,399 25.1 5.5 9.0 8.7
*间接税 30,158 32,252 17.0 6.9 18.7 18.3
•消费税 10,369 11,038 15.3 6.5 6.4 6.3
•营业税 7,580 8,059 14.1 6.3 4.7 4.6
非税务收入 53,821 51,841 20.4 3.7 33.3 29.4
*执照/准证 11,779 13,059 24.9 10.9 7.3 7.4
*投资收入 38,874 35,442 20.0 -8.8 24.1 20.1
收入总额 161,558 176,220 15.5 9.1 100 100
2008/2009 经济报告书。(# 预算估计,不包括2009年税收)
2009年财政预算案也详细的探讨了联邦政府在近年的财务状况。我国在2008年的赤字扩张至国内生产总值的4.8%,并且超出了政府在一年前所定下缩减至3.1%的目标。由于政府估计到世界原油价格飙升所导致的后遗症,所以适度的调低在2009年的财政赤估计到3.6%,并希望能够让经济平衡增长。
由于国际原油及基本粮食的价格都已经大幅度飚高,钢铁、洋灰及其他的建筑材料也都涨价了,所以这都致使政府的营运开销和发展开销急速的增加了。应此,政府使用了适度的财政赤字及增加发展拨款来确保食物保证措施与燃油津贴。政府的举动是希望能够继续协助人民渡过经济难关。图表2显示了联邦政府财务状况。
图表2:联邦政府财务状况2008-2009
令吉(百万) 增长(%)
2008 2009# 2008 2009#
税收 161,558 176,220 15.5 9.1
营业费用 150,953 154,170 22.6 2.1
目前盈余 10,605 22,050 -36.9 107.9
发展费用总额 46,258 51,729 14.0 11.8
扣:贷款收回 1,191 1,229 -61.6 3.2
发展费用净余 45,067 50,500 20.3 12.1
全面余额 -34,462 -28,450
占国内生产总值巴仙率 -4.8 -3.6
2008/2009 经济报告书。(# 预算估计,不包括2009年税收)
Critical Questions on Government Efficiencies
1. Regarding to Temporary Occupancy Licenses (TOL) land issues,
a. Is there any progress on converting the idle land to agricultural land?
b. What is the biggest hurdle in the TOL land issues and what are PEMUDAH strategies?
c. Is PEMUDAH going to unify the state land regulations among states in Malaysia?
2. Efficiency in the government policies :
a. What is the progress on liberalization of FIC Guidelines, Guidelines on Foreign Participation in the Distributive Trade Services and the 30% Bumiputera equity restriction?
3. Business licensing issues:
a. Does the government intend to simplify the business licensing application and approval process to less than 5 licenses and in less than 1 week time? Ex. The grocery shop need to get 11 licenses to operate and hotel need at least 30 licenses to operate are not efficient and may cause corruption practises.
4. Halal Industry Issues:
a. The industry players are finding it tough as there are no clear indications on the Halal enforcement and clear guidelines or regulations on Halal issues. What is the role of PEMUDAH on facilitating the development of the industry?
a. Is there any progress on converting the idle land to agricultural land?
b. What is the biggest hurdle in the TOL land issues and what are PEMUDAH strategies?
c. Is PEMUDAH going to unify the state land regulations among states in Malaysia?
2. Efficiency in the government policies :
a. What is the progress on liberalization of FIC Guidelines, Guidelines on Foreign Participation in the Distributive Trade Services and the 30% Bumiputera equity restriction?
3. Business licensing issues:
a. Does the government intend to simplify the business licensing application and approval process to less than 5 licenses and in less than 1 week time? Ex. The grocery shop need to get 11 licenses to operate and hotel need at least 30 licenses to operate are not efficient and may cause corruption practises.
4. Halal Industry Issues:
a. The industry players are finding it tough as there are no clear indications on the Halal enforcement and clear guidelines or regulations on Halal issues. What is the role of PEMUDAH on facilitating the development of the industry?
Petrol Hike Response
July 5, 2008, Malaysian witnessed the real impact of the rapid increase in world crude oil price. After detailed study and serious consideration, the federal government decided to raise the price of petrol and diesel at the pump. The new price will be a 40% increase for petrol to RM2.70 a litre and 60% increase for diesel to RM2.58 a litre. Although the action was seen as a political suicidal act, but the truth is that since the second half of 2007, the world crude oil price has been rose up to 150%. The realities were the government are unable to allocate more subsidies which were ballooned from RM30bil previously to as high as RM50bil now.
Although the Government action on reducing the petrol subsidy will be giving a direct impact to the daily lives of the Malaysian, but the government did not forget their duties to help the citizens. A number of actions have been taken to ease the burden of Malaysian and these temporary measures were RM625 cash rebate for car owners, RM150 cash rebate for motorcyclist, RM200 road tax reduction for vehicle more than 2000cc. The government also initiated a few rules to cut the government officer’s entertainment allowance in order to reduce the federal government expenditure. After the reform of fuel subsidies, it is expected that the government will save about RM13.7bil. The following chart 1 shows the new allocation for people centric projects from the savings.
Chart 1
Projects New Allocation
National food security policy RM 4.0 bil
cooking oil subsidy RM 1.5 bil
imported rice subsidy for Sabah and Sarawak RM 0.4 bil
flour subsidy RM 0.2 bil
bread subsidy RM 0.1 bil
petrol, diesel and gas subsidy and rebate RM 7.5 bil
Total RM13.7bil
(Source: Prime Minister Office, Malaysia)
Nevertheless, list of action taken above was just a temporary measure before a more comprehensive relief packages which will be released on the Budget 2009 in mid August. Therefore, we suggest the government to kindly provide more efficient relief packages to help Malaysian in riding out of the high crude oil price era. In the mean time, we also must not forget and ignore the poor family and the hardcore poor families which were facing the most difficulties in daily living among Malaysian.
According to Department of Statistics survey in 2007, the country currently have 5.8 million households, and it is expected that 8.6% of household are having total income less than RM1,000. We hope that the Government will give more attention to these 500,000 poor households. We also recommended the Government through the Department of Social welfare, set up an efficient mechanism to select these poor and hardcore poor families and allocate them a sum of cash assistance. In the same time, the government must also provide technical and vocational training to these poor and hardcore poor family members. The opportunities in gaining skills will allow them to increase their family income and to an extent, they will be able to gain an opportunity in conducting small-scale business activities.
We have to admit that there are structural inefficiencies in the federal government administration. The public service delivery system was deeming to be inefficient. Therefore, we urge for a closer working relationship between the Chief Secretary of the government and the Special Task Force to facilitate business (PEMUDAH). With a joint cooperation from government and private sectors, we hope that they will be able to remove the barricades in government services and ultimately removing obstacles that affect the inefficiencies in the public delivery system and services.
Government must make a clear stand on removing the outdated government procedures, reducing bureaucracy and red tape. We believe that the simplification of administrative process is the best way to reduce corruption practices and eventually will help the citizens and government in savings costs. The best solution here is to let the accountants and auditors to re-assess the federal government operating costs and development costs to reduce or cut unnecessary spending. We believe that by ensuring a lower expenditure and a higher taxation income will lead to a better government’s financial and economy position.
In order for the citizens to adapt to the changes and switch to use public transportation, we urge the government to set up a drastic plan and solution to revamp the public transportation system. Syarikat Prasarana Negara Berhad (SPNB) did a survey after the oil prices hike and the survey shows that public bus user rose by 7.5 %, while PUTRA Light Railway Transit (LRT) users increase 3.9% in a week time. We believe more citizens will choose the public transportation in the long run. Therefore, government must seriously look into setting up a more integrated and user friendly transportation system to ease the burden of citizens on inflation and price hike.
Due to bureaucracy, the public transportation system is currently under jurisdiction of more than 10 government departments. We agreed the government’s move in setting up the Cabinet Committee on public transport to enable a standardize policy management unit and also to establishment a one-stop service centre to focus on all public transport activities. In the long run, the Government should increase the number of public transport and the frequency of the transportation services.
We also urge the government to ensure that all residential areas must be public transportation accessible. The government must make sure that convergence point for all public transportation must be user friendly and easy accessible. Once the public transportation system was improved and upgraded, the LRT and public bus system will be the first choice for citizens. As a result, Malaysian will be able to reduce their daily spending by using less cars and petrol.
Due to the uncertainties in the world economy, we also urge the government to relook into the annual budget and economy plan and find ways to address the impact on rising prices of raw materials and a possible food crisis. Maybank Aseambankers in a report recently estimated the government’s budget deficit will be ballooned to 5.9% of Gross Domestic Product (RM 41bil) from an earlier estimated deficit of 3.1% of GDP (20 billion). Chart 2 below shows that the federal income, expenditure and deficit.
Chart 2
(RM Billion) 2005 2006 2007
Federal government’s income 106.3 123.5 139.9
Oil related 31.0 45.5 51.1
Non oil related 75.3 78.0 88.8
Federal government’s expenditure 128.2 143.5 163.7
Total subsidy 12.5 12.1 15.0
National administrative spending 85.2 95.6 108.1
Development expenditure 30.5 35.8 40.6
Budget Deficit (21.9) (20.0) (23.8)
(Source: Ministry of Finance, Malaysia)
In order to avoid excessive borrowing from overseas to finance the budget deficit, we propose to the government to increase other non-oil related income and be more proactive in taxation enforcement. Therefore, we propose that the government continue to impose oil palm windfall tax, independent power producers windfall tax and also increasing the threshold of gambling tax. On the other hand, we also urge the Government to review the large-scale development projects. We suggest that the large-scale development projects to be scrapped or put under the initiative of Government Linked Companies (GLCs). The government's main target now will be fighting the inflation and setting up the national food security mechanism.
We also suggest that all subsidies must be phased out in a given time line. We found that the petrol, diesel and other subsidized products are often smuggled and sold at neighbouring countries to obtain windfall profits. Recently, there are a few news reports mentioned about 3,500 litres of fuel being smuggled to neighbouring countries and there are a few people arrested in the Malaysia-Thailand border for sugar and flour smuggling.
In order to put an end to these illegal activities, we suggest that the Domestic Trade and Consumer Affairs Ministry and border enforcement units to cooperate in executing their tasks. Marine Police should be enhanced to patrol the border frequently to tackle the smuggling activities too. Therefore, government department’s effort to increase efficiency will help to reduce wastage and losses caused by the smuggling activities.
The current worldwide economic downturn will be a major challenge to the government. The government will not turn a blind eye on helping the citizens to overcome the burden. We believe that the Government will have a strong political will to help the people. With the initiatives of the government, a series of anti-inflation mechanism has been launched and fine tuned in the coming budget 2009. With a strong support from the citizens, the government will work on their very best effort to overcome every difficulty.
Although the Government action on reducing the petrol subsidy will be giving a direct impact to the daily lives of the Malaysian, but the government did not forget their duties to help the citizens. A number of actions have been taken to ease the burden of Malaysian and these temporary measures were RM625 cash rebate for car owners, RM150 cash rebate for motorcyclist, RM200 road tax reduction for vehicle more than 2000cc. The government also initiated a few rules to cut the government officer’s entertainment allowance in order to reduce the federal government expenditure. After the reform of fuel subsidies, it is expected that the government will save about RM13.7bil. The following chart 1 shows the new allocation for people centric projects from the savings.
Chart 1
Projects New Allocation
National food security policy RM 4.0 bil
cooking oil subsidy RM 1.5 bil
imported rice subsidy for Sabah and Sarawak RM 0.4 bil
flour subsidy RM 0.2 bil
bread subsidy RM 0.1 bil
petrol, diesel and gas subsidy and rebate RM 7.5 bil
Total RM13.7bil
(Source: Prime Minister Office, Malaysia)
Nevertheless, list of action taken above was just a temporary measure before a more comprehensive relief packages which will be released on the Budget 2009 in mid August. Therefore, we suggest the government to kindly provide more efficient relief packages to help Malaysian in riding out of the high crude oil price era. In the mean time, we also must not forget and ignore the poor family and the hardcore poor families which were facing the most difficulties in daily living among Malaysian.
According to Department of Statistics survey in 2007, the country currently have 5.8 million households, and it is expected that 8.6% of household are having total income less than RM1,000. We hope that the Government will give more attention to these 500,000 poor households. We also recommended the Government through the Department of Social welfare, set up an efficient mechanism to select these poor and hardcore poor families and allocate them a sum of cash assistance. In the same time, the government must also provide technical and vocational training to these poor and hardcore poor family members. The opportunities in gaining skills will allow them to increase their family income and to an extent, they will be able to gain an opportunity in conducting small-scale business activities.
We have to admit that there are structural inefficiencies in the federal government administration. The public service delivery system was deeming to be inefficient. Therefore, we urge for a closer working relationship between the Chief Secretary of the government and the Special Task Force to facilitate business (PEMUDAH). With a joint cooperation from government and private sectors, we hope that they will be able to remove the barricades in government services and ultimately removing obstacles that affect the inefficiencies in the public delivery system and services.
Government must make a clear stand on removing the outdated government procedures, reducing bureaucracy and red tape. We believe that the simplification of administrative process is the best way to reduce corruption practices and eventually will help the citizens and government in savings costs. The best solution here is to let the accountants and auditors to re-assess the federal government operating costs and development costs to reduce or cut unnecessary spending. We believe that by ensuring a lower expenditure and a higher taxation income will lead to a better government’s financial and economy position.
In order for the citizens to adapt to the changes and switch to use public transportation, we urge the government to set up a drastic plan and solution to revamp the public transportation system. Syarikat Prasarana Negara Berhad (SPNB) did a survey after the oil prices hike and the survey shows that public bus user rose by 7.5 %, while PUTRA Light Railway Transit (LRT) users increase 3.9% in a week time. We believe more citizens will choose the public transportation in the long run. Therefore, government must seriously look into setting up a more integrated and user friendly transportation system to ease the burden of citizens on inflation and price hike.
Due to bureaucracy, the public transportation system is currently under jurisdiction of more than 10 government departments. We agreed the government’s move in setting up the Cabinet Committee on public transport to enable a standardize policy management unit and also to establishment a one-stop service centre to focus on all public transport activities. In the long run, the Government should increase the number of public transport and the frequency of the transportation services.
We also urge the government to ensure that all residential areas must be public transportation accessible. The government must make sure that convergence point for all public transportation must be user friendly and easy accessible. Once the public transportation system was improved and upgraded, the LRT and public bus system will be the first choice for citizens. As a result, Malaysian will be able to reduce their daily spending by using less cars and petrol.
Due to the uncertainties in the world economy, we also urge the government to relook into the annual budget and economy plan and find ways to address the impact on rising prices of raw materials and a possible food crisis. Maybank Aseambankers in a report recently estimated the government’s budget deficit will be ballooned to 5.9% of Gross Domestic Product (RM 41bil) from an earlier estimated deficit of 3.1% of GDP (20 billion). Chart 2 below shows that the federal income, expenditure and deficit.
Chart 2
(RM Billion) 2005 2006 2007
Federal government’s income 106.3 123.5 139.9
Oil related 31.0 45.5 51.1
Non oil related 75.3 78.0 88.8
Federal government’s expenditure 128.2 143.5 163.7
Total subsidy 12.5 12.1 15.0
National administrative spending 85.2 95.6 108.1
Development expenditure 30.5 35.8 40.6
Budget Deficit (21.9) (20.0) (23.8)
(Source: Ministry of Finance, Malaysia)
In order to avoid excessive borrowing from overseas to finance the budget deficit, we propose to the government to increase other non-oil related income and be more proactive in taxation enforcement. Therefore, we propose that the government continue to impose oil palm windfall tax, independent power producers windfall tax and also increasing the threshold of gambling tax. On the other hand, we also urge the Government to review the large-scale development projects. We suggest that the large-scale development projects to be scrapped or put under the initiative of Government Linked Companies (GLCs). The government's main target now will be fighting the inflation and setting up the national food security mechanism.
We also suggest that all subsidies must be phased out in a given time line. We found that the petrol, diesel and other subsidized products are often smuggled and sold at neighbouring countries to obtain windfall profits. Recently, there are a few news reports mentioned about 3,500 litres of fuel being smuggled to neighbouring countries and there are a few people arrested in the Malaysia-Thailand border for sugar and flour smuggling.
In order to put an end to these illegal activities, we suggest that the Domestic Trade and Consumer Affairs Ministry and border enforcement units to cooperate in executing their tasks. Marine Police should be enhanced to patrol the border frequently to tackle the smuggling activities too. Therefore, government department’s effort to increase efficiency will help to reduce wastage and losses caused by the smuggling activities.
The current worldwide economic downturn will be a major challenge to the government. The government will not turn a blind eye on helping the citizens to overcome the burden. We believe that the Government will have a strong political will to help the people. With the initiatives of the government, a series of anti-inflation mechanism has been launched and fine tuned in the coming budget 2009. With a strong support from the citizens, the government will work on their very best effort to overcome every difficulty.
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