UN Study: PPR Folks Need Cash Aid!

Cash trans­fers from the government shored up the average income of some of the country’s poorest urban households. But 71% say they still need fi­nancial aid in the coming months. And 60% still could not buy enough food for their families. This is based on a study commissioned by two United Na­tions (UN) agencies.

While the average household income av­eraged RM2,895 (RM2,582 without cash transfer) in March 2021, up 4% compared with RM2,777 (RM2,546 without cash transfer) in 2019, many representatives of households living in Kuala Lumpur City Hall Projek Perumahan Rakyat (PPR) low-cost flats surveyed by the UN agencies in February and March this year “expressed a strong need for con­tinued, regular and reliable financial assis­tance”. This was reported in the “Families on the edge” report (Part 4) by the United Nations Children’s Fund (UNICEF) and United Nations Popula­tion Fund (UNFPA). This exercise was conducted in partnership with Malaysia-based public policy research outfit DM Analytics. 

Other indicators of hardship that the study say reflect the pre-existing low-in­come situation faced by these households even before the pandemic include the fact that one in two could not pay utility bills or mortgage and pay rent on time, one in four of participants continue to reduce food intake while one in three have at least some difficulty or severe difficulties providing enough money for their children to buy meals in school.

According to the report, some 71% of respondents believe they will require con­tinued financial support over the next six months, and they expressed “a clear pref­erence for monthly allowance” — some­thing that researchers say provide a level of comfort and certainty for the low-income PPR folks depending on cash transfers to make ends meet.

Direct social assistance from the gov­ernment now makes up 11% of overall household income, rising to as high as 19% among female-headed households and 36% among households headed by persons with disabilities.

Almost 40% of respondents still need to use their savings to mitigate a reduction in income, despite one in three heads of households and four in 10 female heads of households depend on government assistance.

As such, researchers continue to high­light the need to help urban low-income families, especially those with children, persons of different abilities and the aged, despite it being more than a year since the first Movement Control Order (MCO 1.0) was implemented in March last year.

Even though it is encouraging to see a number of socio-economic indicators im­proving from the survey in December 2020, researchers say many PPR folks are not out of the woods while already exhausting their savings. Unemployment, for instance, remains 12% or 2.5 times higher than the pre-crisis baseline while that among female heads of households remains at 16% or three times the national average, research­ers note.

Overall, pre-transfer median household income of RM2,117 per month remains 5% below pre-crisis levels (RM2,219 in 2019) but improved from RM1,400 in May 2020 and RM2,000 in September and December last year, researchers note. Pre-transfer me­dian household incomes for female-headed and disabled-headed households in March 2021 of RM1,300 and RM1,200 respec­tively, are the same as in 2019. The average household size is 5.5 persons.

At least nine in 10 households and al­most all children live in relative poverty, the survey found.

Indeed, 25% think their finan­cial situation will worsen in the coming six months compared with between 37% and 41% in the previous three surveys (in May, September and December 2020), but only 11% of the respondents think their fi­nancial situation will improve in the com­ing six months, up from 10% in May and December 2020 but down from 14% last September. About 56% of respondents think their financial situation will remain the same in the coming six months, com­pared with 41% a year ago.

According to the survey, having a job is still a major concern among the respond­ents, many of whom are in the informal sector or self-employed and want opportu­nities to generate better income for them­selves and their families.

Some 37% think they are unlikely to get a job in the next few months and 56% say the lack of jobs being the reason they’re not able to obtain employment. The unemployment rate was 37% among adult children of the survey respondents.

A total of 500 heads of households from 16 PPR flats in Kuala Lumpur were inter­viewed between Feb 26 and March 12 this year, with 4.34% margin of error at 95% confidence level. The survey was designed to capture a sample of 25,096 households in low-cost flats under DBKL with heads of households aged 30 and above.

So, will the Government devise plans for these people or provide cash transfers on a permanent basis? We have no real focus on the urban poor except for cash transfers. Federal Government, local authorities and GLCs could improve health, education, employment and general welfare of these people. But politics is in the way!

 

Reference:

One year after MCO 1.0, 71% PPR folks still need consistent cash aid –UN study, Cindy Yeap, TheEdge CEO Morning Brief, May 12, 2021

Vaccination Rates and Recovery Globally

 

Many countries are stepping-up vaccination rates so that recovery will be sooner rather than later. Malaysia may take another 22 months to reach herd immunity, that is by early 2023. It is in the Government’s interest to step this up and reduce the time frame to 12 months or less for recovery to blossom. The PM and the Vaccine Minister now wants this done but are we geared?

 Race to Achieve Herd Immunity

Note: Data is correct as at 10pm 28 May 2021. Herd immunity is defined as when 75% of the population of a country is inoculated.

Source: Bloomberg/Straits Times Graphics

So, at best we may have 4-4.5% growth in 2021 and 2022. Inflation remains muted while unemployment improves to 3.2% in 2022 from 4.5% in 2020. Retail sales may rise significantly in 2021 as a result of pent-up demand or revenge buying. That assumes vaccine in arms is at a significant level.

 

 

China seems to be leading comfortably with steady industrial production and exports besides reporting improving retail sales, according to Moody’s Analytics in a recent report and reported by Starbiz on 29 May 2021.

The United States has also jumped on the recovery bandwagon, while Europe is trying to accelerate growth. But the road ahead for the Asia-Pacific (APAC) region seems long and winding, according to the report. This is due to the vaccination rollouts being slow in some countries as well as the emergence of new coronavirus variants.

These threats are forcing governments to impose more measures to contain the pandemic, which may in turn harm economic recovery. However, the continued global demand for goods and trade is the strongest source of optimism. The exports by most APAC countries are already above pre-Covid-19 levels and should expand further.

Countries with high trade exposures to the United States and China will gain. The beneficiaries are Vietnam, Hong Kong, Singapore, Malaysia, South Korea and Thailand. Therefore, the speedy rollouts of vaccines are key to containing the virus and facilitating economic recovery.

The Vaccine Minister now says he wants to get clinics, private medical centres, drive-thru, mobile-units to aggressively implement vaccine injections. What took you so long to decide? And there are other channels for distribution, like pharmacies!  In a neighbouring country, senior citizens just turn up at vaccination centres, no registration, no appointments, no MySejahtera to get vaccinated. Can’t we be more creative in implementation or is it about money? 

Source:

Speedy rollout key to recovery, Starbizweek, 29 May 2021

Is Malaysia’s Healthcare System Failing?

World healthcare expenditure was at about 9.8% of GDP in 2018. Japan spends about 9 percent of its GDP on healthcare, where 80 percent of the expenses is funded by the government. Malaysia, on the other hand spends only about 4 percent of GDP on healthcare, and where government funds only 50 percent of it. (Data source: countryeconomy.com).

Anas Alam Faizli pointed out in 2016 that the GDP percentage spent on healthcare ranks Malaysia at number 156 in the world. Majority of Malaysians go to public healthcare facilities. 75 percent of Malaysians seek in-patient treatment and 90 percent of Malaysians seek out-patient treatment at public facilities. Despite that, the government spends only slightly higher than 50 percent for total healthcare expenses.

The Malaysian government in 1983 under then-prime minister Dr Mahathir Mohamad introduced privatisation policies which allow the private sector to play a greater role in taking away the government’s responsibilities in both healthcare and education. Healthcare has exhibited ever increasing costs since then.

As a result of privatisation, highly qualified and experienced doctors flocked to the private sector. Within twenty years, according to Anas (2016), the private sector held two-thirds of the total number of medical, surgical consultants, and specialists. Brain-drain by default? Eventually the waiting time and quality of service in government hospitals deteriorated significantly. Some have experienced tragedies where relatives met their death due to late diagnosis or late treatment.

We need to find the real cost of healthcare. Why are there Approved Permits for medicines?  And large health conglomerates, government-linked companies (GLC) like Sime Darby, Pantai, Khazanah, KPJ and others account for more than 40 percent of private hospital beds. These are not cheap. And if there is an insurance cover then procedures not really required are put through—why? For profit of course!

The government is wearing three hats, as the public healthcare provider, regulator, and as an investor in profit- oriented healthcare facilities. Isn’t there a conflict of interest? Perhaps during this Covid pandemic we should re-examine our healthcare sector and determine how low- and middle- income folks could avail of the facilities.

Reference:

1.     Aas Alam Faizli, A barometer on Malaysia’s healthcare system - are we doomed to fail? 23 Sep 2016, Malaysia Kini

2.     JD Lovrenciear, Private healthcare in Malaysia: Millstone or milestone? 19 May 2021, Aliran

 

MCO 3.0: Can I have Another Relief Package Please?

Under MCO 1.0, there were many possibilities of securing some relief for my business. But, lo and behold, my application was too late for the fund – “kuota sudah habis”. As a SME (bordering on a Micro), it is a struggle to survive for more than a year under Covid-19. The only good point was that there was a loan moratorium for a while.

We are now in MCO 3.0 with a full lockdown to be implemented tomorrow. What relief is possible?

On official count, the Government has rolled out seven economic stabilisation, stimulus and recovery packages. Some say it totalled RM340 billion or 24% of GDP. But fiscal injection was only RM72.6 billion (to March 2021).

 

Source:www.kualalumpurpost.net

GDP recovered somewhat from negative 17% in Q2 2020 to a lower decline of 0.5% in Q1 2021. Businesses at 40-50% of capacity at best were looking forward to a higher tempo with the vaccine roll-out. But alas, the roll-out is so slow, it may take at least one year to reach “herd” immunity.

Under MCO 3.0 and dine-in banned, restaurants, retail outlets lost 70-80% of the pre-pandemic revenue. Others are further behind – especially hotel and airline sectors. In all probability, MCO 3.0 or a full lockdown will be extended to mid -July. Then more SMEs will fold-up. SME Association expects 40% of SMEs to close operations. Even if it is a new version of MCO 1.0, we will have more bankruptcies as well.

In the current lockdown phase the economy will lose RM 2.4 billion per day or about RM 72 billion if it is for a month.

So, what do SMEs want?

We need cash relief for wages, rental relief, loan relief or another loan moratorium. Small/micro businesses, the self-employed and those paid on daily or weekly wages should be given relief because they are the most impacted by the restriction on movement.

Is that too much to ask when this is not our doing? And the pandemic is not going away soon, even with the vaccine rollout at full steam. SMEs will need 12-18 months to get back on their feet after it is finally over. Meanwhile, how will one sustain monthly wages, rental or interest on loans – key components of total expenses? This idea of cutting OPR is optical, why bother with interest cost when we are dead!

Remember Makcik Kiah?

Makcik Kiah sells (or used to sell) banana fritters (pisang goreng) as our PM claims. She lives in a Government housing project. Her husband, a Government pensioner, earns extra income as a Grab driver. Their daughter depends on PTPTN for her studies while their unmarried son lives with them.

She is livid! No savings, no money to pay rent, no customers and no funds to settle loans or utilities. She is in deeper debt and no idea where help will come from. Mr. PM can you see her after taking a 50% wage cut?  

 

Wirecard Scandal: The Enron of Germany?

Reuters

German payments provider Wirecard filed for insolvency on June 25, 2020, just days after admitting €1.9 billion (RM9.1 billion) missing from its accounts.

What does Wirecard do?

At its heart, Wirecard is a payments processor, offering companies services allowing them to accept credit cards and digital payments like Apple Pay or Paypal in stores, online or on mobile.

The company collects a commission for ensuring that merchants will receive the money they are owed.

Beyond that, it sells to its customers extra services like analytics based on the data generated from those transactions that it says can help boost sales and track trends.

Wirecard claims around 300,000 firms worldwide as customers and deals with giants in the sector like China’s AliPay and WeChat, Apple and Google.

How did Wirecard make it big?

Wirecard was founded in 1999, starting out offering its services to porn and gambling sites.Such stable revenue streams helped it survive the early-2000s dotcom crisis, and as more savoury forms of online commerce ramped up through the 2000s and 2010s, the Group’s star rose.

In the early days, CEO Markus Braun increased his stake to 7 per cent, becoming the largest shareholder.

Wirecard had clients like KLM, Deutsche Telekom and FedEx on its website.

First listed on the Frankfurt stock exchange in 2005, by 2018 it elbowed traditional lender Commerzbank out of the blue-chip DAX share index.

In early 2019, Wirecard’s market value hit around €17 billion, matching crisis-ridden Deutsche Bank with 15 times fewer workers and revenues.Revelations in June 2020 collapsed its value to around €350 million.

Why weren’t weak spots uncovered?

Beginning in January 2019, a string of Financial Times reports highlighted accounting irregularities, notably in Wirecard’s Asian division. Bosses denied any wrongdoing and the German financial world appeared to close ranks around its favourite.

Markets watchdog BaFin, the German Securities and Exchange Commission, announced a probe into potential links between the FT and short sellers betting against Wirecard stock. The hammer blow came when auditors Ernst & Young said they were unable to find €1.9 billion of cash meant to be sitting in trustee accounts at two Philippine banks. The fact the regulator did not catch the scandal sooner was a “disaster”.

Wirecard’s status as a Payment Service Provider (PSP) subjected it to multiple EU directives since 2008 obliging it to better fight payment fraud, but companies are not subject to as much scrutiny over their accounting practices.

Who controls Wirecard?

Wirecard has been run by Austrian computer scientist Braun since 2002.

He resigned abruptly after the company was forced to acknowledge the missing cash. He was detained after Munich prosecutors accused him of market manipulation and falsifying accounts. Braun turned himself in and was freed on a €5 million bail. American James Freis is serving as Wirecard’s interim CEO.

Chief operating officer and management board member Jan Marsalek meanwhile was dismissed, with media reports placing him in the Philippines.

Braun and other senior board members were already under investigation by Munich prosecutors over “market manipulation” relating to how they presented updates of KPMG audit findings of their old accounts.

Who is behind the missing cash?

German news weekly Der Spiegel named Mark Tolentino, a lawyer working in the Philippines, as the trustee responsible for the missing cash. Based in Philippine financial centre Makati City, his website vanished, although a Facebook page with public legal Q+A video sessions remained online.

Meanwhile one of Philippines largest banks — BPI — where some of the missing money was supposedly deposited — confirmed to AFP that an employee was on “preventive suspension”. Media have reported that an assistant manager at BPI signed a forged document relating to the supposed deposits at the bank.

 

It is not just BaFin that needs to stand up to scrutiny, analysts say. There are also questions about why EY, Wirecard’s long-time auditor, didn’t pick up on accounting irregularities that date back years.

EY has faced mounting legal pressure over its auditing of Wirecard’s accounts. German shareholders’ association SdK has filed a criminal complaint against Wirecard’s auditors. The complaint targets two current employees and one former staff member at EY.

It comes after law firm Schirp & Partner brought a class action lawsuit against the firm on behalf of Wirecard investors, alleging it failed to flag improperly booked payments on Wirecard’s 2018 accounts.

“There are clear indications that this was an elaborate and sophisticated fraud, involving multiple parties around the world in different institutions, with a deliberate aim of deception,” EY said in a statement. “Collusive frauds designed to deceive investors and the public often involve extensive efforts to create a false documentary trail. Professional standards recognize that even the most robust and extended audit procedures may not uncover a collusive fraud.”

The upshot of the matter is it can happen anywhere—Germany, U.S., India, Malaysia (1MDB), China or the U.K. What matters is how it is dealt with and what mechanisms are introduced to improve governance and prevent a recurrence. That’s the difference between a more developed economy and one that is not.

 

 

Reference:

1.     Five things to know about the Wirecard scandal, 25 Jun 2020, Malay Mail

2.     ‘The Enron of Germany’: Wirecard scandal casts a shadow on corporate governance, 29 Jun 2020, CNBC

3.     The Weird, Extremely German Origins of the Wirecard Scandal, 21 April 2021, The New Republic

LRT Accident: Who is To Blame?

 

Bernama

How could two light rail transit trains coming from opposite directions be travelling on the same track? That was the question posed in MalaysiaKini on 25 May 2021.

This was among several questions which a former Transport Ministry officer said. Many industry players are asking these questions but are too afraid to speak out because of how close-knit nature of the rail industry.

Chung Yi Fan, a former special functions officer to then transport minister Anthony Loke, said many in the industry are suspecting systemic or organisational failure as the root cause.

“Everyone knows each other. They don’t want to be harsh critics, or they might ruffle feathers and lose some potential jobs in the future,” said Chung on his Facebook page.

Among others, Chung asked why a four-car train set was driven in manual mode and undergoing testing at 8pm on 24 May 2021.

He also wanted to know if the Automatic Train Protection (ATP) system had malfunctioned or whether it was manually disabled.

But most importantly, Chung said the public should be told what happened to the signalling and interlocking systems which would have never allowed trains coming from opposite directions to be on the same track.

“There are many more questions. Incidents of such magnitude can only happen because of multiple errors and oversight. A series of wrongdoings, not just one guy pressing a wrong button,” said Chung.

“Investigations must not rule out the possibility of an underlying systemic issue or organisational failure or both.”

Details of the LRT accident are scant although it has been established that it involved two train sets along the busy Kelana Jaya line. According to the former Chairman of Prasarana the trains had just kissed each other in the tunnel. The Government did the right thing to terminate him. Otherwise there would be more kissing going on!

According to Dang Wangi district police chief Mohamad Zainal Abdullah, preliminary investigations suggested that one train set was undergoing testing and was driven manually on the wrong track while the other which carried 232 passengers was driven autonomously.

The accident has resulted in 47 hospitalisations.

The Kelana Jaya LRT line began operations in 1998. The train sets are from Canadian firm Bombardier which are fully automated while the signalling system is from French firm Thales.

Will there a full independent investigation? Or, a Parliamentary Select Committee to investigate? No! Why? Because it may unearth some unsavoury matters (or characters) in Prasarana and MOT. The public should demand an independent review of the accident; systems; competency of personnel; leadership, and the back-up plans. The word, otherwise, will be a “cover-up”. For a public transport operator, public scrutiny is necessary, especially when its liabilities are close to RM40 billion.

 

Reference:

Ex-MOT officer: LRT accident not caused by just one guy pressing a wrong button, 22 May 2021, Malaysia Kini

Happy Wesak Day!