Sunday, June 20, 2010

Reality Bites

My Heart Beats Very Fast Upon Reading This In The Stars. 

Published: Saturday June 19, 2010 MYT 2:59:00 PM
Updated: Saturday June 19, 2010 MYT 3:04:08 PM 

Idris Jala sticks to his guns By MUGUNTAN VANAR

KOTA KINABALU: Datuk Seri Idris Jala insists that Malaysia needs to start reducing subsidies or face the risk of bankruptcy.
The Minister in the Prime Minister's Department said that since 1998, Malaysia has been operating on a deficit budget, which has seen its debts increase.
He said the country's debt was growing around 12% annually and it would not be able sustain this based on the last decade's annual gross development growth of 4%.
"We have been borrowing to spend, it is increasing our deficit and debt, we cannot go on like this," Idris said at a talk with Parti Bersatu Sabah members on the 10th Malaysia Plan and other the government transformation programmes, here, Saturday.
"If you earn RM1,000 and spend RM1,200 a month, then you have borrow and if you go on (without an increase in salary), you are heading for bankruptcy as you won't be able to pay the debts," he explained.
Idris, however, said Malaysia's debt was still manageable but what was necessary was to reduce expenditure.
He said mechanisms had been worked out to assist the poorer groups if the subsidies were taken away.
Idris also said that Malaysia's 10% gross domestic product (GDP) growth in the first half this year was a good sign for its planned economic transformation to a high-income country.


Too Good If Indeed It Is True. 

Tuesday June 1, 2010 

Too dramatic to say we’ll go broke, says economist

KUALA LUMPUR: To say that Malaysia will go bankrupt by 2019 if subsidies are not withdrawn is a “terribly dramatic and inappropriate way” to justify the end of subsidies, said an economist and Umno supreme council member.
Although phasing out subsidies is a pragmatic move, Datuk Dr Norraesah Mohamad said the country was on a solid footing owing to a good economic outlook, prudent financial management and tight monetary policies.
Prime Minister’s Department Datuk Idris Jala had recently said Malaysia would go bankrupt in 2019 if subsidies were not reduced across the board over five years.
Idris, also the chief executive officer of the Performance Management and Delivery Unit (Pemandu), said the cuts were aimed at saving up to RM103bil to partially repay the nation’s huge debt and address fiscal deficit.
In assessing Malaysia’s economic position, Dr Norraesah said it was “ridiculous to subscribe to a formula” that Malaysia would be condemned to bankruptcy because:
> Malaysia’s economic outlook is positive, as two-digit growth was registered for the first quarter of this year;
> Malaysia’s budget situation will substantially improve over the next few years because the economy is growing;
> Malaysia’s very prudent financial management and tight monetary policies do not allow for dubious cross country swaps like what happened in Greece, further aggravating its debt situation;
> Malaysia is not caught in the euro capsule like Greece. “We have our own money and therefore can deal and manage our costs and prices”;
> Malaysia enjoys a high saving rate. The Employees’ Provident Fund has accumulated savings of RM360bil as at Dec 31, 2009;
> Malaysia’s abundant resources and diversified economy are reinforcing factors that guarantees the country will not plunge into bankruptcy.
Dr Norraesah agreed that phasing out subsidies was a “pragmatic move and a sound economic decision” that must be made because it ate into the national fiscal position, mis-allocate resources and distort more effective use of available development funds.
“Besides, the one-size-fits-all subsidy policy is not sustainable and socially unacceptable,” said the PhD (Economic Science) holder from University of Paris I, Phantheon-Sorbonne, France.
Greece, Dr Norraesah pointed out, had all sorts of problems that were not affecting Malaysia.
For example, while Greece’s budget deficit was an unacceptable 13.6% in 2009, the budget deficit for Malaysia had been brought down from 7% to 5.6 % in last year’s budget.


A Bomb-Shell Dropped.

Friday May 28, 2010 

Idris: RM103b can be saved, Government debt growing by 12% yearly 


KUALA LUMPUR: Malaysia will save RM103bil over the next five years if it slashes its subsidy bill now.
On the other hand, the country would become bankrupt by 2019 if the Government debt continued to grow by 12% per year, warned Minister in the Prime Minister’s Department Datuk Seri Idris Jala.
“If we do not do anything, by 2019, our debt will equal our GDP. We do not want to end up as another Greece,” he said at the Subsidy Rationalisation Open Day.
To the point:i Idris explaining the hard facts concerning subsidy cuts during the Subsidy Rationalistion Lab open day in Kuala Lumpur yesterday.
Idris labelled the move to cut subsidies as “the most unpopular decision the Government has made since Independence”.
“You may be angry today. You and I do not like this. Nobody will be dancing on the streets to celebrate this, but we must do it for our future generation.
“If we vote not to do this (cut subsidies), our children in later years will condemn us for not taking the right decision,” he said.
Idris, who is also Performance Management and Delivery Unit (Pemandu) chief executive officer, said he was encouraged that 61% out of 191,592 respondents who took part in an SMS poll supported the subsidy reduction.
To another poll question, 66% said the reduction should be done over between three and five years, he said.
Recommendations from Pemandu’s subsidy rationalisation lab, where key players from the public sector, private sector and non-governmental organisations brainstormed over six weeks, were displayed at the open day.
Later, Idris told reporters that Pemandu would process the public feedback on the proposals before presenting its report to the Cabinet.


RoseBelle said...

My city is very broke. We're in a big deficit although I'm not sure how much. The mayor has proposed to cut more on programs to get the budget balanced but so far, not much of a difference. I think the economic turmoil that hits the world 2 years ago is trickling down everywhere.

Ummie said...

Broke in a sense that it was spent & shared by all, and broke that the money not appropriately spent makes a world of difference.

Uncle Lee said...

Hello Ummie, does the government publish its economic figures in the press?
Maybe then can see whether whatever everyone saying is a nudge or a shove....

I have stopped reading the papers here, hardly watch or listen to the news since retiring. And hardly wear my watch too, unless when go shopping with my wife...
see how long she spends in the shoe or dress stores, ha ha.

I no longer get upset, uptight or fed up anymore not reading the papers....feel good actually.
As well I have never believed in gain mileage, they either scare the heck out of you or kiss babies, ha ha.
Have a nice day, Lee.

Ummie said...

Mr Lee,
To believe or not to believe politicians, they steer the country. Whatever it is, they have the say in economy and we, the simple folks are the first to feel the nudge.