Shameful or Shameless?

An elderly woman and her husband who spent Ramadan and Hari Raya on the streets of Kuala Lumpur were threatened and verbally abused by two officers from the Social Welfare Department (JKM). They had responded to a MalaysiaNow report on their misfortune.

Zainab and her husband were forced into a life of homelessness after being kicked out by their own son from his house in Kulim, Kedah. The story of the woman, whose real name is Zaleha Haron, and her husband, who suffers from depression, went viral, with calls and emails from the public asking for more details in order to raise funds for the couple. 

Source: https://www.dagangnews.com

The overwhelming public sympathy was in stark contrast with the attitude of the JKM officers, who came to Zaleha on the third day of Hari Raya after the authorities were alerted of her plight. But instead of helping the couple, the officers threatened them and told them to pack their belongings and leave Kuala Lumpur. They were taken by car to the Integrated Transport Terminal (TBS) in Bandar Tasik Selatan and told to board a bus to Muar, Johor – a place where they had once lived but where they no longer have any family ties. 

Zaleha told the officers that they had no one in Muar, which they had left a long time ago.  Neither are they open to returning to their son, who threw them out of his home in November 2023.  Zaleha also told the officers that she had a job as a dishwasher at a nearby restaurant in the capital city, but her explanation fell on deaf ears. 

Zaleha had in fact applied for JKM’s assistance in renting a room. However, she was told to submit water and electricity bills – documents which, living on the streets, she did not have.  

Despite Zaleha's pleas, she and her husband were taken to TBS along with their meagre belongings. During the journey, her mobile phone was confiscated by the officers who monitored all incoming and outgoing calls. However, Zaleha had made contact with an acquaintance during the officers' initial confrontation. Her friend, together with her husband, rushed to TBS where they were able to intercept the group. 

There, an argument ensued with the officers who refused to let Zaleha go. Eventually, she and her husband were taken to a beat base at the bus terminal where they were detained.  It was not until her friend questioned the officers for confiscating Zaleha's phone that it was returned.  Zaleha said the officers warned her not to tell anyone about the incident, and threatened to revoke her husband's permanent resident status. For now, Zaleha's friend has arranged for her and her husband to stay at a flat. 

This is not a new phenomenon in Malaysia. It also happens in the Chinese or Indian communities. I know of a case of an elderly couple abandoned in a hotel. They were taken to the hotel by the son. Then they were moved to a welfare home after the hotel stay was over and son was not to be found. The husband was too traumatised to speak. Then there was an Indian couple abandoned at a bus stop. Something akin to getting rid of your unwanted cat or dog!

How society has changed? If you are over 60, please retain whatever cash and a home in your old age. Children may change. You need to remain independent. The problem starts when all your savings has been used to educate the children. In turn, you expect them to pay or take care of you. If they give you RM100 per month, how do you survive? Beg, borrow or steal? A modest sum computed by EPF is about RM2,000 per month per person for 10 years. That works out to RM240,000. Many don’t have it! And what more if you live to be 70!

I don’t have solutions but love of family and God will see you through (hopefully!) In the case of Zaleha and her husband, it is shameful on our part that they are treated in this manner and shameless on the government officers who just want to get rid of a problem!

Reference:

Welfare officers threaten elderly couple forced to spend Raya on KL streets, MalaysiaNow, 16 April 2024

Interest Rate, Exchange Rate and GDP Growth

 BNM’s point of view on its Monetary Policy measures for 2024 are shown in info-graphics below:

Comparative Policy Rate Change and Impact on MYR Exchange Rate

The above two charts relate to interest rate change by Malaysia vis-a-vis with other nations and its impact on MYR. Only against Japan and China have we had positive development on exchange rate. Otherwise we have failed to move in tandem with others, especially the U.S.

The above charts do not incorporate inflation. The real differentials are important and on that score we are negative to the U.S. real rate [approx. 2.05 (U.S.) to 0.5% (for Malaysia)], which explains fund outflow!

Gradual recovery of the ringgit in 2024?

The above is really predicated on monetary policy easing in the U.S. For so long as the Fed believes inflation is still persistent and sticky, aggressive rate cuts will not happen. That is not good for MYR.

Is the currency undervalued?

BNM believes currency is undervalued. And what does that mean? Should it be RM4.40 to 1 USD? We are left to make our conclusions. The fundamentals are positive but it is the perception of speculators, traders, investors that really matters.

Reference:

BNM Annual Report 2023

Is 30% Realisation of Approved Investments Reasonable?

Malaysia’s progress in realising RM46.1 billion or nearly one-third of the total RM152 billion approved investments for the manufacturing sector in 2023 was deemed reasonable by some economists.

The Ministry of Investment, Trade and Industry (Miti) has also been improving its information tracking system over the years to ensure that agencies like the Malaysian Investment Development Authority (Mida) is capable of providing timely assistance to businesses in implementing their capital expenditure in the manufacturing sector. 

Source: https://en.wikipedia.org

Data from Mida in 2023 showed that for the period 2016-June 2023, a total of 6,103 manufacturing projects had been approved, of which 5,202 projects or 85.2% had been implemented.

Miti told Dewan Negara recently that the RM46.1 billion of realised investment involved 445 projects and created 29,693 jobs. The ministry said this is encouraging, considering that the projects had been implemented in less than the usual 18-to-24-month period. Miti also said approved investment refers to investment planning for the capital expenditure of a project in the long term, including the cost of purchasing land, factories, machines, machinery and others.

The PM’s administration has been touting that approved investment rose 23% to a record high of RM329.5 billion in 2023, of which 57.2% was from foreign capital while 42.8% was from domestic sources. The services sector constituted the largest portion of total approved investment in 2023, amounting to RM168.4 billion or 51.1%, followed by the manufacturing sector’s RM152 billion or 46.1% and the primary sector's RM9.1 billion or 2.8%.

As the first quarter of 2024 came to a close, economic trackers are keen to watch if the country could beat its record in 2023, amid a mixed of external geopolitical uncertainties, weakening ringgit, expectations towards government’s austerity measures and the several boycott initiatives against certain businesses over the past few months.

Reference:

Economists deem 30% realisation of approved investments in manufacturing sector in 2023 reasonable? Chester Tay, theedgemalaysia.com, 2 April 2024

Do European “Virgins” Want to Dictate Rules?

The European Union’s upcoming ban on imports linked to deforestation has been hailed as a “gold standard” in climate policy. It is viewed as a meaningful step to protect the world’s forests. And it my help remove planet-killing greenhouse gases from the atmosphere.

The law requires traders to trace the origins of a head-spinning variety of products – beef to books, chocolate and charcoal, lipstick and leather. To the European Union, the mandate, set to take effect in 2025, is a testament to the bloc’s role as a global leader on climate change.

Developing countries have expressed outrage – with Malaysia and Indonesia among the most vocal. Together, the two nations supply 85 per cent of the world’s palm oil, one of seven critical commodities covered by the European Union’s ban. And they maintain that the law puts their economies at risk.

Source: https://en.wikipedia.org

In their eyes, rich, technologically advanced countries – and former colonial powers – are yet again dictating terms and changing the rules of trade when it suits them. The view fits with complaints from developing countries that the reigning international order neglects their concerns.

The palm oil dispute also encapsulates a central tension in the economics of climate change. Lower- and middle-income nations are being compelled to bear the cost of ruinous environmental shifts caused mostly by the world’s wealthiest nations.

“We’re not questioning the need to fight deforestation,” said Mr Nik Nazmi Nik Ahmad, Malaysia’s Minister of Natural Resources and Environmental Sustainability of Malaysia. Countries that have deforested their own land for centuries, or are responsible for much of our deforestation, are unilaterally imposing conditions on the lower and middle income nations.

In addition, many government officials, industry representatives and farmers contend that the European Union’s rules are really a form of economic protectionism.  This is a way to shield European farmers who grow competing oilseed crops like rapeseed or soybeans.

The European Union’s law, which was passed in 2023, bars products that use palm oil and other commodities like rubber and wood that come from forestland that was converted to agriculture after 2020.

Smallholders – defined in Malaysia as farmers who own fewer than 40 hectares – grow 27 per cent of the country’s oil palms. The palm oil gold rush has helped to reduce rural poverty, build wealth from exports and create jobs. Roughly 4.5 million people in Malaysia and Indonesia work in the industry, according to the World Economic Forum. For a while the oil was even promoted as environmentally friendly, a “supercrop.” One hectare can produce four to 10 times as much oil as the same area of soybeans, rapeseed or sunflowers.

In Malaysia, government officials complain the European Union’s law ignores the licensing and deforestation rules that the country already has. Since Jan 1, 2020, all growers and businesses have been required to be certified by the Malaysian Sustainable Palm Oil board. The standards match many set by the European Union, although there is no requirement for geolocation mapping. The effort has had some success. In its annual 2022 survey, the World Resources Institute found that Malaysia was one of the few places where deforestation did not get worse. 

A new task force that includes the European Commission and government ministers from Malaysia and Indonesia is meeting to work on putting the deforestation rules into practice. Malaysian officials have asked the commission to accept the country’s own certification system, and to exempt smallholders from the law. Still, the perception that European powers are dictating to their governments stings.

That’s what imperialists do – destroy their country and resources including forests while others pay for their profligation. For over 200 years, the Industrial Revolution in the West didn’t have rules on carbon emissions. If they had they would not become developed countries. Today, they want to play the righteous “virgin” demanding others not be involved in any promiscuous activity.

Reference:

Can Europe save forests without killing jobs in Malaysia? The Straits Times, 14 March 2024

Is Luxury Goods Tax a Good Way to Raise Revenue?

The Finance Ministry is finalising several policies related to the high-value goods tax, including the type of items that would be levied.  An economist described the tax on luxury goods, which was expected to be implemented on May 1, an effective way to expand the government’s tax base. It will not burden the B40 lower-income group.

The luxury tax was expected to apply on items such as jewellery and watches that exceed a certain price threshold. It was expected to earn the government RM700 million annually.

The proposed rate of between 5% and 10% was viewed as reasonable, when compared to other countries like China and Indonesia. China’s luxury tax is reported to be between 30% and 40% on imported high-end goods, with the Chinese government considering lowering it by 10%. In Indonesia, the tax ranges from 10% to 95%.

Source: https://www.linkedin.com

Tax revenue-to-GDP ratio for Malaysia has been declining steadily over the decades. In 2021, the Organization for Economic Cooperation and Development (OECD) reported that Malaysia’s tax revenue-to-GDP ratio stood at just 11.8%, lower than Thailand (16.4%), the Philippines (18.1%) and Vietnam (18.2%).

Expanding the tax base is important. Hence, the view by some, to re-introduce the GST. That’s silly! Net receipts from GST will only make sense if it is 6% or above. That will drive inflation up. Then again, we are not a developed nation nor our Gini-coefficient below 0.35 (it is currently hovering around 0.4). So, if not for GST what else? We could do a Tobin tax, broaden the excess profit tax or consider an inheritance or wealth tax!

Reference:

Luxury goods tax a good way to raise govt revenue, says economist, Ameer Fakhri, FMT, 

23 March 2024

Why Are Many Older Adults in Malaysia Unhappy?

 The annual celebration of the International Day of Happiness fell on 20 March. This day was defined by a resolution in the UN General Assembly in 2012. A day decreed to be observed annually on 20 March because happiness and wellbeing are universal goals and aspirations around the world.  

This year’s theme “Reconnecting for Happiness: Building Resilient Communities” aims at happiness for the young, the old and everyone in between. As of 2024, Malaysia was ranked 58th out of 143 countries in life evaluation 2021-2023. The rankings for other Asean member countries were Singapore (30th), the Philippines (53rd), Vietnam (54th), Thailand (57th), Indonesia (80th), Laos (104th), Myanmar (118th) and Cambodia (119th).

Source: https://www.un.org

Among the criteria used include GDP per capita, social support, healthy life expectancy, freedom, generosity and corruption.

 Malaysia stood at 64th among those aged below 30 (Thailand was 45th) and 71st among those aged above 60 (Thailand 41st, Philippines 43rd and Singapore 26th).

So Malaysian citizens aged 60 and above were the least happy in the country, while those below 30 were the happiest. The “World Happiness Report 2024” quotes from the “Seven Ages of Man” in Shakespeare’s As You Like It: “the later stages of life are portrayed as deeply depressing.” This quote may well describe the state of mind of many older Malaysian adults.

Some factors that may contribute to older adults being the least happy group in the country include:

• Financial insecurity, which can result from ineffective financial management after retirement, insufficient savings, low retirement benefits and lack of awareness, thus limiting access to various pension schemes which are only available in more recent years.

• Limited access to healthcare facilities, long waiting times, and high out-of-pocket expenses.

• Social isolation and loneliness are common among older adults in Malaysia, especially those who live alone or have limited social support networks. 

• Age discrimination in employment and societal attitudes can limit opportunities for older adults to remain active and engaged in the workforce and community life. 

• The lack of affordable and suitable housing options that are age-friendly and accessible is a challenge for many older adults in Malaysia. 

• Older adults in Malaysia are at risk of various forms of mistreatment, including financial exploitation, neglect, and physical or emotional abuse.

• Transport and mobility are a problem for many older adults due to limited access to reliable and affordable transport options. 

• The digital divide limits many older individuals’ access to digital technologies and the internet. This restricts their ability to stay connected, access information and take advantage of online services, such as telemedicine and e-commerce

By identifying these factors, we may improve the happiness of older adults in Malaysia. This will assist local authorities, planners and welfare organisations in formulating targeted strategies to create a more inclusive society by studying the inequality of happiness.

Reference:

Why are so many older adults in Malaysia unhappy? Goh Hong Ching, ALIRAN, 30 March 2024

The Malaysian Economy to Grow 4.0% - 5.0% in 2024

The info-graphics below are from BNM’s Annual Report dated 20 March 2024, a snapshot of possible growth prospects in 2024.

It seems 2024 is a better year! But I wonder, if they (BNM) have simulated a worse-case scenario – unwarranted political instability, slow pick-up on exports, subdued domestic consumption due to lower disposable income, deferment by FDIs and DDIs due to less than attractive investment climate and lower government spending owing to fiscal constraints? I am not a “prophet of doom” but a good presentation will carry a worse-case scenario and an optimistic case, and you may still believe a base case that lies somewhere in between. All I am going to say is “hope for the best”!

Reference:

BNM Annual Report 2023