It is the first day at school.
The usual crowd and commotion can only be expected as parents gather at schools to accompany the first time schoolers and settle any payment due. Over the past few days, shopping complexes have been packed with parents getting new school uniforms, shoes, stationaries and various schooling paraphenalia for their children.
Grumbling can be heard of the rising cost. Parents with many children can be heard moaning of the accumulated bill this year. "Some item still not bought but RM2,000 already spent," lamented a parent is with 5 schooling kids yesterday. And, last year's uniform can still be worn.
Rising cost is a real concern and pressure on public daily life. So when Deputy Minister of Trade and Industry, Dato Ahmad Maslan tried to encourage online business but humour it as second job to meet rising prises, no one was laughing.
The public is already in a foul mood with his promises on GST that turned out wrong. Nothing is really wrong with getting another job.
Extra job
Lets not be naive about second job. Lots of teachers do tuition classes on the side and at times, to the detriment of their occupational responsibility. Many professionals use the access from their job to moonlight. It is an Asian ethos to work hard.
If mak and arwah bapak had not got various income from the sides, they could have given away our younger siblings. Even then when cost was still low, no GST, and government could afford to subsidise goods to maintain low labour economy, raising eight children with proper education was no easy task. Not for two government servants on meagre income to survive then.
At one time, father used to run a private school in Singapore and mother taught at a primary school in Jalan Abdul Rahman Andak, Johor Baru. By noon, father would fetch her in his bike to cross back to Singapore for her to do a second job to teach.
On several occasions, they did petty businesses like selling cloth, kain pelikat, batik, munchies and popsicles, cakes and cookies, Pontian coconuts to Singapore, etc. When father was government Imam, he part-timed as magazine distributor, and teaching kelas dewasa to weekend ugama classes for kids.
During bad times, we had done embarassing to mention pursuits in order to survive. Basically, we've been there, done that.
Unless one has access to other source of income, there is no other choice than to be frugal in one spending. One Facebooker was complaining of his tight budget but when it was disclosed he spend almost half his money on private transportation, astro and handphone bill, he came under pressure for poorly managing his financial affair.
Some Malaysians are unrealistic in their spending. Despite being VSS-ed, they are still maintaining the same lifestyle and not keeping a tight leash on the use of their compensation.
In fact, it is a puzzle as why the complain on rising prices when airport system got jamned by the huge number of passengers during the school holidays. ON every weekend, shopping complexes in the urban areas are packed.
Poverty
Off course, our heartfelt sympathy to the poor in facing the reopening of school and struggling daily to meet ends meet.
Rationally, one wonder how some Malaysians, primarily Malays had to struggle to live in their own homeland. The Indon that came as labourers some 25 years ago could now become sub-contractors and own home repair and renovation business. They have their own home and assimilating into the Malay community.
Poverty can arise for many reasons and usually unexpected. To accuse the poor of lazy, it would be inappropriate. Job opportunities in the rural areas, more so such as the inland areas of Sabah and Sarawak, are limited. However, hard work could still get them through.
The latest Department of Statistics figure as at December 23rd place the workforce figure at 14.4 million of which foreign workers stand at 2.2 million. There are gainfully employed Malaysians and unemployment is at 3.1%.
Job is not scare that foreigners are required to fulfill the vacancies. A recent media report put the number of foreign workers at 4.2 million. The national population is 30 million. They are filling up in sectors where locals are not interested any more. Some 70% of plantation workers are foreign workers
The argument that there is no reason for local to still live in poverty is quite valid. Only insensitive to say it openly.
Policy
For quite sometime, government have been talking about moving up the economic ladder into more knowledge economy, skill-based employment over labour intensive production economy, and moving up the competitive edge in technology.
Come Dato Najib as Prime Minister, he acknowledged the national predicament of the middle income trap. The country cannot sustain an economy still based on cheap labour and cost of living heavily subsidised.
Salary and wages have gone up and Malaysia cannot compete with our neighbours the likes of Vietnam, Thailand, Cambodia etc. It was Dato Idris Jala that alarmed the nation with his statement that Malaysia is doom to go bankrupt should it remain with current high level of subsidy.
Energy is subsidised. The power generators are subsidies and takes up the bulk of energy subsidy. Food, fuel, transport and a long list of items to the point subsidy take up 20% of government budget.
This blog used to argue that subsidy was one way the rakyat could benefit from the wealth of the nation. However, it has its limits. The limit is financial. The argument then was public finance should be spent more efficiently. The new thinking was social welfare program has to be focus.
During the days of nation building building - both public and industrial infrastructure, salary and wages was kept low to cover for the shortfall in technology in order to attract multinational companies to set-up factories in Malaysia.
There was even a lid on salary and wages of certain industries. For instance, Bank Negara Malaysia approval is required to determine salary scheme and bonuses of Banks.
That sort of practices was not sutainable. Malaysia kept losing its graduates and skill workers abroad. This blogger remembered encountering a post Gaddafi Libyan that said this country is wealthy but the people are poor because salary and wages too low.
Then came the policy for high income model. The intention was to move away from the low income past so that the higher income can absorb the higher cost of goods and services. Higher income attracts better skilled worker and generate a more productive and efficient economy.
A finding by one NGO claim that proportion of salary and wages component in this country is too low vis-a-vis private sector revenue. They claim employers are making too high a profit margin at expense of salary and wages.
Instead of moving up the learning curve to bring about more automation, apply better management and all to generate a higher revenue per staff, employers and capitalist are generally still stuck in the old ways and resort to hire foreign workers for cheap.
The complain was locals are not hired because they demand higher pay, do not work as hard as foreigners and rather indisciplined. The availability of permit to get foreign labour makes them more reluctant to hire locals.
All these contribute to the restlessness on rising prices. Every time public complain of rising prices, some politicians would make statement of plan to form a fact finding committee. Thought the government had EPU, PEMANDU and KPDNKK at their disposal.
GST
One reason being heavily blamed on government for the increase in prices was GST.
Good and Services Tax for valued added into the product and services. For a nation of 12.2 million of employed Malaysians, only 1.8 million paid tax. This is another element of the economy that cannot sustain itself.
In the past, there is always Petronas. They contribute to about 65-70% of tax to the government. In any failed project or financial scandal, Petronas is always there to bailout. Now that it is known that the lower oil prices had denied the government some RM30 billion of this revenue, a firm decision had to be made.
RM30 billion is a big dent in public finance that cannot be ignored. The opposition and it's supporter, allies and sympathiser can only politicise the problem.
They blame Najib government for being spendthrift and implicate the Missus to get the desired anger and hate. Expenditure and borrowing have been on the rise under Najib. A favourite political argument is too much corruption.
Malaysians seemed to forget the Opposition's Buku Jingga that had a steep rise in spending but could only offer cutting corruption to fill the budget shortfall. It is ridiculous to do a budget by assuming that spending could be cut by 20% and the saved money used to cover the shortfall in spending.
Why do the roundabout way when they could start with a lower expenditure figure? The reason is politics.
If GST had not been implimented, the public finance would be in disarray. A severely deficit government cannot afford to do any social and welfare program for the people. That is the priority.
GST is the fairest tax regime. There is no issue of having a concumer tax regime.
It should have started at a lower 4% but at 6%, the Malaysian GST is comparatively low. By right personal income tax should brought down lower, so that the rich would pay their taxes in their spending of higher end goods and the poor pay significantly less GST since most basic goods are GST free.
The problem with GST was the reality in the first few months did not meet the public expectation. Retailers and wholesalers up are reluctant to wait for the rebate later but choose to charge the extra 6% on consumers than wait for the "rebate".
One can attribute the problem to Custom Department's inability to educate the retailers. It is heard that they themselves do not understand it enough. On April 1st, when GST commence, it is heard Customs Department switched off their IT system for fear of the unknown.
The Information Ministry too failed to educate and disseminate the right and honest information. Even in developed countries, prices rise for the first few months of GST implementation. It takes three years for system to stabilise and work smoothly.
Apart from the deficit from Petronas, paying taxes is one of the sure things in life including death. Even fakir and poor have to pay their fitrah though they benefit from zakat collection. Recently, oil rich Saudi Arabia have begin to impliment GST as revenue for government.
The need for tax is not only on spending for goods. There is the other part and for years been ignored. That is the services sector. For instance, stamp duties and legal agreement have by-passed our tax system by stamping it abroad and raising money for Singapore government for deals in Malaysia.
There is more area for government to raise revenue. That should be the focus. That way any reduced revenue or deficit in certain item will not lead to the rakyat having to bear a higher GST in the foreseeable future.
Transition
Rising prices can be seen as transitional but government have to show earnestness in making its policy work. The free flow of foreign labour permit should not be allowed to continue.
The one way for government to address rising prices is to make the high income model work. Minister in charge of EPU, Dato Wahid Omar spoke recently on the target to increase monthly income. The government must be firm on employers and formulate laws to enforce on employers to respect the minimum wage.
More effort have to be done on unethical business practise that have culminated into incidents like Low Yatt and Kota Raya. Police and corruption buster, MACC need to be given the authority and supporting law to stop these practices including the involvement of money laundering, gangsterdom, and criminal elements in retailing.
The headline in the paper today is on the leakage and smuggling of LPG. After the leakage and smuggling of fuel that eventually lead to removal of subsidy of fuel, such criminals will eventually lead to removal of subsidy on LPG and an expected rise in LPG is definite.
Something also need be done on monopolistic business practises and the need to break control on supply chain by the few. That runs counter to the free market practises as preached by businessmen and their trade organisation. But, why are they silent?
