Malaysia could go bankrupt by 2019?

Why Malaysia won’t go bankrupt

TRANSFORMATION BLUES By IDRIS JALA idrisjala@pemandu.gov.my
 
The Government is not in dire financial straits right now. By all measures its finances are good, but as in any situation involving finances, this is not to say it cannot be better.

I AM frequently asked why I said Malaysia could go bankrupt by 2019. I have had many queries asking for clarification and this has become one of my transformation blues.

In charting out our transformation journey in 2009, one of the first things the Prime Minister and the cabinet did was to list our current status, say where we want to be and set up a programme for transformation to get us there.

Amongst the many things on the list was a need to rationalise subsidy and so we ran a lab to do this.

During our open day, we engaged the public on the lab recommendation on the subsidy rationalisation. I wanted to be as frank as possible and to make it clear what the consequences of inaction would be.

Perhaps I was too frank but what I said has been misrepresented on a number of occasions, and I have since been saddled and hobbled with an unnecessary problem.

Habitual critics latched on to a small part of one of my first presentations where I said we have to change our spending patterns for sustained fiscal health.

Against a backdrop of several caveats and conditions, I said that we would be bankrupt by 2019 IF we continued to increase our subsidies and borrowings the same way we did before and IF our economy grows at less than 3% annually.

I've worked in Shell for more than 20 years, a company that is famous for its scenario planning techniques.

In layman terms, scenario planning means describing a future that could either be “good, bad or ugly” and doing our best to achieve the “good scenario” and avoid the “bad and ugly”.

My statement was heavily qualified but little or no mention was made of the clear caveats that I had put forward.

I still stand by what I said and it is important that my statement is taken together with the conditions.

This statement has been taken out of context so many times that it really gave me the blues - I have been talking till I turned blue in my face explaining what I meant!

Let me say in the clearest terms that my intention then was to illustrate the consequences of inaction when faced with tough decisions. We cannot continue to subsidise the way we have.

Let me also state that the Government is not in dire financial straits right now. By all measures its finances are good, but as in any situation involving finances, this is not to say it cannot be better. Here's why.

Our debt as at end 2011 is 53.8% of gross domestic product (GDP the sum of goods and services produced in the country) and the budget deficit is better than the 5.4% target of GDP.

Compare this with Greece's debt which stands at 110% of GDP and a budget deficit of 13% and it is obvious that we are not anywhere close to a crisis.

Subsidy rationalisation

Globally, many economists are cautioning the Governments against rising national debts. In 2009 the year for which the figures I used when I talked about subsidy rationalisation we had to increase government spending via our “economic stimulus package” in the face of the world financial crisis caused by the sub-prime mortgage problem in the United States.

This had spill-over effects into 2010 as well. But the debt as a percentage of GDP has begun to level off while the budget deficit, again as a percentage of GDP, has begun to significantly decline and as our economy continues to grow. We are reversing the situation.

In a simplified system to assess whether countries are in a sovereign debt crisis, the Boston Consulting Group (BCG) uses a graphical representation to identify countries with a potential problem.

Public debt as a percentage of GDP is plotted on the vertical axis while surplus or deficit in the national budget as a % of GDP is plotted on the horizontal axis.

BCG identifies a potential problem looming if public debt is 100% or over of GDP while simultaneously the budget deficit is 10% or more of GDP (see chart).

The more a country is to the left of the chart and the higher on the vertical axis, the greater the risk of a potential debt crisis but note that a country has to be simultaneously in problem in both areas to be regarded as a big risk.

If you look at Singapore, public debt as a percentage of GDP is 100% in the problem area but only for one of the two criteria but there is hardly any budget deficit to speak of in the republic.

Nobody considers Singapore a financially troubled country.

For Malaysia, it is important to notice that it has moved to the right in 2011 compared with its position in 2009 and 2010 while there is hardly any upward movement. That indicates a move in the right direction.

Based on this analysis, we are better than the United Kingdom, the United States, Spain, Italy, Portugal and Japan, to name a few. We will get into the safe zone soon enough.

The problem I highlighted using 2009 figures, making the caveat that IF debt continued to increase at previous levels we can have a serious problem in 2019 and IF we grow less than 3% annually, does not exist anymore.

Making improvements

Why? Because we are making improvements on both counts.

Firstly, as a responsible Government, in 2010, we began the process of gradually reducing subsidies for fuel, sugar, electricity and so on, knowing fully well that this was unpopular.

Secondly, our GDP grew by 7.2% in 2010 and 5.1% in 2011 and that's an average of 6.2%; we are meeting our Economic Transformation Programme (ETP) target. Of course, we can and should do much more.

As I have pointed out in previous presentations very little of our subsidies amounting to billions of ringgit every year go to the poor, the rich get most of it. We must rationalise the subsidy system not do away with it and cut other extraneous expenditures.

However, we continue to help the poor via our GTP initiatives e.g. Azam programmes and BR1M for the low income households and rural infrastructure programmes.

On the other side of the equation, we must increase government revenue sources by introducing such measures as a goods and services tax (GST) and get more economic activity going. We can exclude necessities from the tax.

We are already succeeding. We have the ETP and we are growing our revenue we had additional tax revenue of RM26bil in 2011. This has allowed us to finance rakyat-centric programmes such as BR1M.

Why, if we continue to make progress by these measures, we may even be able to balance the budget come 2020 even though that will welcomingly surpass our own target.

I know there will be critics who will say that I have changed my mind on the bankruptcy issue. I haven't changed my position vis-a-vis scenario planning.

I always believe in describing the “good, the bad and ugly” scenarios (that hasn't changed) i.e. the “good” scenario is if we successfully implement our ETP, we will achieve high income status by 2020.
The “bad or ugly” scenario is if we don't do anything to avoid it, then we can go bankrupt.

The fact is we are doing a lot of things to transform our country. So, we will not go bankrupt.

With the implementation of the ETP, we must acknowledge that Malaysia is on the right track in transforming its economy. The average annual GDP growth in two years (2010 and 2011) is more than 6%. In 2011, we met our GNI and investment targets, trade reached a record high of RM1.27 trillion in 2011.

We cut our deficit in 2011. In April, our PM will be releasing our ETP and GTP annual reports which provide all the details of our country's achievement.

Let me conclude by quoting Dale Carnegie: “It is tragic when we put off living. We dream of a magical rose garden over the horizon and miss the roses blooming outside our windows”.

Datuk Seri Idris Jala is CEO of Pemandu and Minister in the Prime Minister's Department. Fair and reasonable comments are most welcome at idrisjala@pemandu.gov.my

Related post:
Malaysians, work hard to succeed !
Moody's declares Greece in default of debt 

Arrests at New York 'Occupy' protests

Clashes and arrests in Zuccotti Park as 'Occupy' activists mark six months since birth of anti-corporate greed movement.
Critics say the movement lacks demands and direction [GALLO/GETTY]  Police and activists have clashed at a park in New York where hundreds of people had gathered to mark six months since the beginning of the city's Occupy Wall Street protests. The clashes, late on Saturday, came as some activists attempted to re-occupy Zuccotti Park, which police had earlier declared closed for the evening. The Manhattan park, close to Wall Street, was where the anti-corporate greed protest movement began in September last year. Activists spent months camping at the site, prompting similar demonstrations in other US cities and abroad. Police began making arrests after several hundred protesters had remained there, with some erecting a makeshift tent of cardboard and tarpaulin in contravention of rules banning shelters in the park. More than 100 police officers pushed through the park, clashing with protesters who attempted to stand their ground, The Associated Press news agency reported. The Reuters news agency reported that dozens of protesters had been led away in handcuffs, although there has been no official word on the number of arrests. Earlier in the day, hundreds of protesters had marched on nearby Wall Street, resulting in another unspecified number of arrests, police said. Organisers vowed that Saturday's rally was the first of several events planned to protest against perceived economic injustice. 'We are going to take it back' One of the activists taking part in the gathering said he hoped the park would again become a home for protesters, in defiance of a police ban on sleeping there which led to the eviction of the protest camp's occupants after two months. In-depth coverage of the global movement "They're hoping we'll all go away because it's cold," said Rob, 28, declining to give his last name. "The park's become the symbol both for us and for them. We are going to take it back." Protester Paul Sylvester, 24, of Massachusetts said he was "thrilled" to be back at the park but said he hoped the movement would begin to crystallise around specific goals. "We need to be more concrete and specific," he said. Critics say the Occupy movement lacks demands and direction and has lost momentum. But warmer spring weather in the US has brought expectations that Occupy leaders will try to regain their momentum. Protesters seemed invigorated by their relatively large numbers compared to the small turnouts during street demonstrations over the winter. At the park on Saturday, street theatre troupes performed and guitar players led sing-alongs. Some protesters marched through the streets of the financial district, chanting "bankers are gangsters" and cursing at police. Liesbeth Rapp, 27, who was performing street theatre about economic injustice, said protesters were ready to make some changes. "I think we've learned a lot about being strategically and tactically smarter," she said. "We're learning to decentralise, and to work in smaller groups." Source: Agencies  Newscribe : get free news in real time

You can do it, dad !

The Gap By CELINE CHUA

It’s time to wake up and break the barriers, a hopeful daughter says. 

THERE is a man who stays under the same roof as me. He is not tall nor handsome, and not that strong. He is in his mid-50s and jobless. That is what I worry about the most. I don’t frown or show signs of worry on my face, but inside, worries fill my heart.



He thinks that he is old, but to me, he is a young man. His leg aches and he cannot walk far.

In his mind, old age and the pain in his leg are reasons why he cannot get a job. But he is wrong. I used to agree what he says, but now I don’t and never will.

You can see old men with wrinkles on their forehead and white hair filling their entire head cleaning tables in coffee shops. There are old men who sit on those big chairs with their legs crossed in their own companies or shops.

Some middle-aged men still read books in public. People who have lost their limbs are learning skills to earn money on their own.

They never give up. They never think that they are unlucky to be born into this world.

When I watch him lying on a wooden chair, I feel a sudden pain in my heart. Why is he not doing anything? Can’t he find something to do? Search for a job, perhaps?

I know it is not easy to get a job. But if he makes an effort to look, he will surely get one someday.

Does he do that? Nope. He just sits on a chair, clicks the mouse and keeps an eye on the share market. Sometimes, he goes to the cinema for a movie.

Wake up, man! You can earn some money through the share market but NOT permanently.

You think the profit you get from there is your salary? No, it’s not! It might be enough for you to survive on. What about us, your family? You’re the man of the house. We count on you.

Now I’m afraid to count on anyone. He has no earnings. Mum does all the work and I don’t want to give her pressure. She has to work hard in the office. When she comes home, she does all the chores.

Whenever I take my tuition fees from her, I feel a sense of guilt. I feel as if I’m “eating up” her years of effort within seconds. Whenever she hands me my pocket money, I’ll thrust it into my wallet and never take it out.

Nowadays, I’m “afraid” to use money. I want to save as much money as possible. After my SPM, I want to get a part-time job and earn money for my parents. The weight on mum’s shoulders is getting heavier because my sister and I need money for our studies. I will study hard and get a scholarship. In fact, it is a must that I do. There is no way mum can afford all the expenses.

What about him? Worse. I’m not insulting him. It’s a fact. How can we afford to pay for thing when there is no income? Forget about those things I love – shoes, dessert, handbags, novels and clothes. Just focus on studies ...

Why does he give up? I don’t get it. People are fighting for their life. No matter how difficult things are, they still break the wall and move on. Why does he let the barriers stop him?

Nothing is impossible – just aim for it.

I know he can do it. Just don’t give up. Think positively and good things will come. There will be an opportunity. Don’t let it go; don’t run away when it approaches. Chances will always be there.

Dad, it’s time to wake up and look around you. There’s a family to support. We support you, always. We will never let you fall. W’ll grab your hand before you hit the ground and pray for you.

You’re a great dad. Don’t disappoint us, just be a hero in our heart. Make us proud, make us happy. I give you my hand, let us all be together.

PS: Be wise and be a good listener.

> Parents and their children at any age can have different points of view over just about everything. Or do they? We invite parents and children to write in to show us where the generation gap closes and widens. E-mail us at star2.gap@thestar.com.my.

Indonesia's ‘one maid,one task’ is raw deal in the new deal!

M’sian side never given chance to object to ‘one maid, one task’ 

By P. ARUNA aruna@thestar.com.my

PETALING JAYA: Indonesian officials appeared to have decided on their own on the “one maid, one task” ruling at the meeting of the joint task force in Jakarta on Thursday.

“They just announced the ruling and did not ask the Malaysian side whether or not they agreed,” an Indonesian participant told The Star in a telephone interview.

“Dr Reyna Usman (the Indonesian Labour Placement Development director-general) made the announcement and the meeting then moved on to other matters,” said the participant who asked not to be identified.

The ruling had caused an uproar in Malaysia, with the associations for both agents and employers now wanting to know whether the Malaysian officials had agreed to it, and if so why.

Dr Reyna had said the fresh batch of Indonesian maids would be trained in four household chores cooking, babysitting, taking care of the elderly and housekeeping but each would perform only one of these tasks for her employer and be paid RM700 a month.

She added that the ruling was to prevent a recurrence of the problems affecting maids and employers.

The Association of Foreign Maid Agencies (Papa) acting president Jeffrey Foo said the officials, led by Labour Department director-general Datuk Sheikh Yahya Mohamed, should explain what transpired at the meeting.

“If our officials agreed to it (the ruling), they must explain it to us,” he said.

Malaysian Maid Employers' Association (Mama) president Engku Ahmad Fauzi Engku Muhsein concurred, saying: “There are many doubts that need to be cleared. We want to know what really happened at the meeting.”

None of the Malaysian officials present at the meeting have commented on the decision.

Sheikh Yahya could not be reached for comment.

Raw deal in this new deal
 
On The Beat By Wong Chun Wai

Malaysians are not amused with Indonesia’s latest condition on hiring of maids.

I HAVE only one Indonesian maid and come July, she would have worked with my family for seven years.

Yuli, who comes from Way Halom in Sumatra, is regarded as a family member. She eats the same food we eat. She goes on annual local holidays with us and her birthday is celebrated with a good dinner and cake. Occasionally, she goes to watch concerts with the family.

My wife insists that she gets to return to Indonesia during her break on Malaysia Airlines and arrangements are made at the airport so she would not be hassled by Indonesian Immigration officers and hustlers.

Yuli gets a say in most decisions involving the household and I have my lucky stars to thank, considering that many Malaysians have a horror story to tell about their maids.

She has picked up the English language, learnt how to cook some of my favourite Penang nyonya food, and she can even laugh at the Hokkien sitcoms on Astro.

But my sister-in-law has not been lucky. She has had two maids and both were a disaster.

The first was an Indonesian from Flores who spent most of her time in the living room in front of the TV rather than in the kitchen. Her addiction to instant noodles would have made her worthy of an academic study.

The second, a Cambodian, was worse. She put on weight within weeks of her employment after she discovered the magic of the refrigerator and oven.

But that wasn’t enough. She stole food, secretly storing them in a bag in her room. Apparently, she’s never heard of expiry dates.

Still, that was tolerable until she decided to go on a mutiny, snubbing directives and snapping back at her boss. Then she walked off and refused to come back.

Here’s the best part: the agency had the audacity to ask for her salary to be paid despite her absence without leave and work not rendered.

I won’t be surprised if she has been “recycled” and is now with another desperate Malaysian couple who needs a maid.

There’s another story. Lady boss asked the Cambodian maid why she had not prepared the husband’s breakfast as she was told.

The maid’s reply: “Madam, Sir is already big. Sir knows how to make breakfast. I no need.”

I swear this is not made up, but I am not sure if the maid has gone for counselling or if she has been sent back to Cambodia.

And here’s another one. There is a friend who installed CCTV at his home so he could monitor what’s happening there from his office. Lucky for him – he found out he had a psychopath on his hands when he saw his Indonesian maid regularly talking to her image in the mirror and rolling on the floor laughing hysterically.

She would burn so-called blessed papers, presumably jampi, and insist that his children consume them before they went to school. The final straw came when she asked my friend to post her “love letters” – addressed to President Suharto!

Again, we are not sure if she’s safely back and undergoing mental treatment in her home country or if she’s with another new Malaysian tuan. Hope someone tells her there’s now a new Indonesian president.

There may be stories of maids being abused and certainly Malaysians in their right mind would not tolerate such incidents. It gives our country a bad name and also leads to pressure from their countries to slow down the numbers coming in to Malaysia.

But there are also stories of Malaysian employers who suffer emotional and financial abuse from maids. These are less reported but that does not mean they are isolated cases or it’s simply because non-governmental organisations are not taking up cases of abused employers.

So, Malaysians are not amused when Indonesia tells us that their maids headed here will only perform one task and must be paid RM700 for that.

I believe Malaysian employers would not mind paying more, but not for less work. Pressing frustrated employers with such unreasonable demands is certainly going overboard.

It has been reported that the fresh batch of 106 Indonesian maids headed here would only carry out one task for their bosses. They would be trained to do four household chores – cooking, babysitting, taking care of the elderly, and housekeeping – but will perform only one of these tasks for their employers.

The report stated that the workers were undergoing four skills training courses over 21 days and must be paid RM700 a month by their Malaysian employers.

The Malaysian Maid Employers’ Association and Malaysian National Association of Employ­ment Agencies have rightly questioned the announcement. Come on, this one is surely a bad deal.

Related Stories:

PM: Not what was agreed between Susilo and me  

Maid inherits S$6 millilons from employer
 
Hiring for Kids? Think Twice before too Late

Vid.mpg 2898K   Download

Stranded Viet women get help

42 Viet women in a house — and surviving mainly on rice
The Star

GEORGE TOWN: Forty-two Vietna-mese women living together in a house here have allegedly been surviving mainly on rice for the past few months.

The women, aged between 30 and 50, are said to be unable to return to Vietnam as their visas have expired.

They have been staying in a semi-detached double-storey house in Jalan Tull for the past few months.
The house has four rooms and a toilet upstairs.

Help us get home: The Vietnamese women in tears while relating their plight to Koay at their home in Jalan Tull, George Town, Friday.

 There is also a living room, a small room, toilet and kitchen downstairs.

It is said that up to five women would sleep in a room while some had to sleep in the living room.

The women's plight came to light when their neighbours informed the authorities after finding the noise made by the women, especially at night, intolerable.

One of the women, known only as Hai, said most of them were jobless and could not send money back to their families.

“Some of us have been in Malaysia for a year and a half but our visas have expired,” she said.

She claimed that some of the women used to work as cleaners at a hospital and were paid RM50 a day but their wages were later reduced to RM25.

“In the end, we were not paid at all though we continued to work. Only a few of us are still working,” she said, adding that their agent was holding on to their passports.

When reporters visited the house, three women appeared sickly.

There were some fish, vegetables and eggs in the refrigerator.

Hai claimed that their agent would send 20kg of rice to them every three days.

She added that they would add salt to their rice for flavour.

“We have been calling the Vietnamese embassy every day, asking them to help us go home, but we are still waiting for a response,” she said.

She added that all they wanted now was to return home.

She alleged that they knew of 26 other Vietnamese and Nepalese foreign workers who were men, living in another house.

The women cried when relating their misfortune to Pulau Tikus assemblyman Koay Teng Hai who visited them yesterday.

Koay said he would contact the Vietnamese embassy as soon as possible.

“There are similar cases in Penang, such as in Paya Terubong.

“I will also contact the Immigration Department and the police,” he said.

 42 ‘stranded’ Viets get help

GEORGE TOWN: The 42 Vietnamese women “stranded” in a house here will be sent to a women's protection centre in Kuala Lumpur.

OCPD Asst Comm Gan Kong Meng said they had obtained an interim protection order from a magistrate's court here to send the women, aged between 31 and 50, to the centre.

He said the case was being investigated under Section 14 of the Anti-Trafficking in Persons Act 2007.

ACP Gan said an initial investigation showed that the women had not been paid for two months, adding that police had gone to the house and taken a statement from Tran Thi Hai, 31, who used to work as a cleaner in a hospital.

Sad plight: Some of the Vietnamese women sobbing uncontrollably while eating rice and vegetables donated by Malaysians who went to their aid upon learning about their plight in the newspapers. — MUHAMAD SHAHRIL ROSLI / The Star

“We were told they have been on their own for about one month. They have to buy food and daily necessities using their own money.

“We have informed the Immigration Department, the Vietnamese Embassy and Interpol. We will complete investigations soon.”

Meanwhile, several caring Malaysians sent food items such as cooking oil, vegetables, beverages and rice to the house in Jalan Tull off Jalan Residency while some have shown interest in hiring the women as domestic maids.

Pulau Tikus assemblyman Koay Teng Hai said he had contacted the embassy, which was aware of the problem faced by the women.

“The embassy has contacted the Immigration Department and a meeting will be held tomorrow,” he said.
It was reported that the women survived on white rice for the past few months while their agent would send 20kg of rice every three months.

Meanwhile, 34 Nepalese and Vietnamese men, aged between 20 and 40, who are in the same situation as 42 Vietnamese women, would also be sent to a protection centre in Kuala Lumpur, said Koay.

He said they used to work as cleaners at Penang Hospital and claimed they had the same agent as the Vietnamese women.

State Immigration assistant director Mustaffa Kamal Hanaffi said investigations would be carried out to trace the agent responsible for the 76 Vietnamese and Nepalese men and women.