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Lim Guan Eng on Budget 2012

Posted: 11 Oct 2011 05:38 PM PDT

By Lim Guan Eng

Unlike PR State Governments That Funds Aid To The Poor From A Surplus Budget, BN's 2012 Election Budget Relies On Deficit Spending And Borrowed Loans To Give Money To The People That Has Still To Be Repaid By The People.

Whilst giving out cash aid to the poor and Malaysians are welcome, questions are raised as to where the Federal government is going to find the money, when even Petronas is expected to contribute only RM28 billion next year or RM2 billion in dividends less as compared to 2011. The numbers just do not add up when the Federal government still expects revenues to increase from RM183 billion this year to RM186 billion next year despite the lower dividend payments from Petronas.

Unlike PR state government that funds cash aid to the poor from a surplus budget, BN's 2012 Election budget relies on deficit spending to buy votes. Many economists have warned that the 2012 Budget risks committing the country to the path of unsustainable spending at a time when the global economic outlook appears to be a recession.

Dr Marie-Aimee Tourres, a senior research fellow at the faculty of economics and administration at the University of Malaya, said that the budget's "goodie strategy" was not linked to any productivity commitment. Clearly this Election Budget is designed to please voters. At the same time, DAP does not find any measures to combat corruption or plug leakages so that resources can be released for public benefit.

For this reason, the Federal government's target of reducing the budget deficit from RM45.5 billion this year to RM43 billion in 2012 or 5.4% to 4.7% of GDP is unlikely to be reached. Revenue collection is overly optimistic and may result in higher federal government debt to fund the deficit spending.

The Federal government debt to GDP(Gross Domestic Product) ratio has increased yearly from 53.1% in 2010, 53.8% in 2011 and 54.8% in 2012. Federal government debt rose by 12% in 2011 to RM456 billion from RM407 billion in 2010. To ensure debt sustainability, the Federal government has imposed a 55% ratio to GDP rule. This 54.8% ratio to GDP by 2012 hovers dangerously close to the 55% Federal government debt to GDP rule.

More worryingly, Bank Negara's Annual Report 2010 revealed that Malaysia's household debt at end of 2010 was RM 581 billion or 76 per cent of GDP. Malaysia has the second-highest level of household debt in Asia, after South Korea.

The Malaysian household debt service ratio was 47.8 per cent in 2010 or almost half of a household's income goes to repaying debts. A debt service ratio of more than 33% would be considered unhealthy. As a rule banks would not lend money to those whose total servicing of interest exceed one third of their income. Clearly Malaysians are becoming an indebted nation with the Malaysian government leading the way by giving the people money from borrowed loans.

This is one essential difference between BN and PR state governments. PR does not give money to the people from borrowed money, which ultimately has still to be paid by the people. PR state governments give money from budget surpluses where the people or their children are not required to repay back in future.

Proposal of A Different (Fair and Caring) Economical Framework

Posted: 11 Oct 2011 05:32 PM PDT

By Charlie Lee

The Current Economical Framework

Based on the some study that 20% of people controlling 90% of wealth and 80% of people owning the remaining 10% wealth in this world, it is obvious and dreadful to have such a wide gap between the wealthy and the poor.

The wealthy have the tool (money) to invest and become market mover to make sure that they are on top and those not in their class unable to catch up with them. Therefore, the open and free market as promoted by the countries in the so-called developed countries will be heading to disaster in 10 or 20 years due to innovative/creative of financial tools giving benefits only to the wealthy or the elite circle, non-sustainability of welfare system, scarcity of basic commodities, likes minerals, foods, oil, etc, coupled with larger world population and climatic changes. Greediness of people is another factor aggravating the situation with now the wealthy and able seizing every opportunity, be it in bad or good times, to maximize income. Speculating on the future market is just one of the methods manipulating the prices of basic commodities and pushing the prices high rocketing later. Some say what go up must come down. Sure, it will but in drastic manners, like war, famine, riot, disease, other unrest etc, with world population substantially reduced as a result (nature self-adjusting).

Why we have to wait the disaster to strike and not to warn all to take precaution to avoid such eventuality? Based on human history, there are sufficient preceding events on the matter and we shall start now to minimize, or even better, overcome the impact of such eventuality. The following will discuss on what as an individual (a person or a family or a community) and the government can do to resolve the not-so-distance bad eventuality.

The Proposed Economical Framework

Minimum Wages, Necessities and Luxuries

First, the price of all goods and earning of people must be kept to fair and reasonable level.

The minimum wage shall be formulated and based on education level, experience, frequency of absence from works, working hours and performance of the company. The wage increase shall also be specifically formulated accordingly so as to be fair to both employee and employer in the case of good profit or loss incurred. Here is example on minimum wage formulation.

Goods can be categorized into foods, necessities and luxuries. In order to price goods fairly and reasonable, the prices for foods and necessities shall have profit fixed within the range of 5% ~ 20% and the prices for luxuries shall have profit no more than 200%.

The so-called necessities and luxuries shall be studied and sorted out in priority list. Such list shall cover all items in everyday life, like hand-phone, computer, living facilities, car, house, vacation etc. This list is intended to advise people not indulge to pursue luxuries but contain with necessities. A proposed list of necessities and luxuries is tabulated below.

In fact, cost prices of all goods can be worked out in details and, once the equations and formula set in place, it is just a click in front of the computer that one can know the cost prices of goods and the effect if there is price variation on some raw materials or components.

With the limit set on profit, a seller has to sell more to earn more and he is not allowed to raise the price drastically if there is great demand or shortage. Looking at a boarder scenario, volatile market can be kept in check and the majority of obedient and hardworking class can be better ensured of a smooth and steady life style.

Maximum Limit or Capping Limit of Earning

Second, the government shall act as mediator or coordinator to distribute wealth of the country to all people fairly. It is hard to define and formulate a "fair" way to distribute the wealth among the people as people have diverse abilities, attitudes, background etc. Failure of communist country is living proof that same wage for all people or least difference in social status are not likely to motivate people to work hard and aim to earn for a good living. It would be unwise to limit creativities and abilities of people to earn for a good living. In contrast, the capable people shall be encouraged to develop and achieve higher and higher goal in life.

The method proposed here is that earning by a person must be capped with a maximum limit and, from thereon, the maximum earning achiever shall assist others to earn until the maximum limit. On assisting the others to earn well, the maximum earning achiever shall be entitled for prestigious social status conferred by the government.

The other consideration to implement the second method is to deter unlimited wealth gaining of a person, which may turn the person into a powerful long living tyrant/dictator/demi-god with assistance of genetic engineering, scientific breakthrough in medical research and advancement of new technology.

They are other plus points for the maximum limit on earning because once a person has reached the maximum limit, he/she has to give up the excess either paying tax or giving out to assist other person, and this will discourage corruption as no one can have more than the maximum limit.

To start with, the proposed maximum limit is as follows.

To hasten the process of wealth distribution, the government can lower the maximum limit.

Once implemented, there should not be any difficulty to change the current economical framework to the proposed economical framework. The big company can be divided into many smaller companies and, instantly, there will be many opportunities for other capable people because the big company will have to ensure the owners of the smaller companies are capable persons in order that all can work towards a common goal as a team. The only problem is that the current owners of the big company are not willing to accept the proposal. But if there is political will or very strong urge or movement from the 80% people, it is very like the few have to agree and accept the need of the majority.

Discussion

A government can implement either the first proposal or the second proposal or both at the same time.

I strongly feel that it is time to reform the current economical framework as ideologies of both socialist and capitalist systems are good but need refining taking into account of bring out the good nature of man to give and assist one another to prosper.

I hope one day to see that the above proposals be implemented to find out the results and suggest the first proposal to be implemented in socialist country and the second proposal in capitalist country.

P/S:

I am not an economist but just a simple guy after surviving donkey years of hardworking under the current economical framework.

If you have any comment on the article, you are welcome to email to charlie.sabah@gmail.com.

Kredit: www.malaysia-today.net

Rabu, 12 Oktober 2011

Malaysia Today - Your Source of Independent News

Malaysia Today - Your Source of Independent News

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