Malaysia’s economy: stronger but eroding purchasing power


The story is the same everywhere – the rising cost of living has not been accompanied by an increase in wages.

HERE we go again – another set of impressive growth figures. Bank Negara has announced Malaysia’s latest economic growth at a commendable 6.2% in the third quarter of 2017.

The pace of economic growth for the three months up to September was faster than the 5.8% registered in the second quarter of the year.

This growth rate was the fastest since June 2014.

On a quarter-on-quarter seasonally adjusted basis, the Malaysian economy posted a growth of 1.8% against 1.3% in the preceding quarter, according to the Statistics Department.

Malaysia’s robust economic growth has been attributed to private-sector spending and a continued strong performance in exports.

To quote Bank Negara governor Tan Sri Muhammad Ibrahim last Friday: “Expansion was seen across all economic sectors.”

But try explaining this impressive economic growth rate to the average salaried worker struggling to pay his monthly household bills.

Stretching the ringgit is especially great for those living in urban areas, and Malaysia is increasingly becoming urbanised.

The story is the same everywhere – the rising cost of living has not been accompanied by an increase in wages.

Compounding matters is the depreciation of the ringgit, reducing the purchasing power of the ordinary folk. They can’t buy the same amount of food as they used to previously.

Employers are being forced to cut operating costs to match declining profits.

Job security is becoming paramount. Many are fearful of losing their jobs, as companies cut cost to cope with the challenging business landscape.

And the reality is that many companies are not hiring, as evident from the unemployment rate of 3.4%.

The Malaysian Employers Federation (MEF) has cautioned that more people would be out of a job this year due to the current economic challenges.

Apart from the challenging landscape, technology has disrupted several brick-and-mortar businesses, forcing them to change their way of doing business.

According to MEF executive director Datuk Shamsuddin Bardan, economic challenges will compel bosses to review their workers’ requirements.

While official statistics show that the economy is charting a strong growth path, the trickle-down effect is not being felt.

Why is the sentiment on the ground different from what the politicians and officials are telling us? Why is there a disconnect in the economy?

Are the figures released by the government officials more accurate and authoritative compared with the loud grumblings on the ground that are anecdotical in nature devoid of proper findings?

We hear reports of supermarkets and hypermarkets closing down, but could that be because their business model no longer works as more Malaysians turn to online shopping, with e-commerce companies announcing huge jumps in traffic?

It is the same with the malls – retail outlets are reporting lower sales and this is compounded by the fact that there is an oversupply of malls.

International restaurant chains such as Hong Kong’s dim sum outlet Tim Ho Wan and South Korean bakery Tous Les Jours and South Korean barbeque restaurant Bulgogi Brothers have ceased operations.

But then again, it could be that their offerings and prices had failed to compete effectively against the local choices.

According to the central bank, demand is anchored in private-sector spending.

“On the supply side, the services and manufacturing sectors remain the key drivers of growth,” Muhammad said.

Looking ahead, the governor said that the economy this year is poised to register strong growth and likely to hit the upper end of the official target of 5.2%-5.7%.

The trickle-down effect is not being felt simply because there is uneven growth in the various sectors of the economy.

The property sector, which provides the biggest multiplier effect, continues to be in the doldrums.

The weak ringgit has had a big impact on the price of food, especially processed food and beverages that make up 74.3% of Malaysian household spending.

It was reported that Malaysia had imported a whopping RM38bil worth of food between January and October last year.

In recent weeks, the ringgit has strengthened to about RM4.16 against the US dollar. But it is still far from RM3.80 to the dollar and the outlook of the currency remains uncertain.

We can’t even hold our heads up against the Thai baht and Indonesian rupiah – two currencies that have appreciated against the ringgit.

The headline economic numbers are showing good growth, but Malaysians’ purchasing power has dropped and our living standards have eroded. That is the bottom line. We are living in denial if we do not admit this.

This column first appeared in StarBiz Premium.
Source: On the beat by Wong Chun Hai, TheStaronline

 

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Wanted: Leaders who listen !


Turning a blind eye: The grumblings over exposed hills are growing louder but little is being done to rectify the situation

//players.brightcove.net/4405352761001/default_default/index.html?videoId=5636613745001

 Grievances from residents warning of environmental damages must not fall on deaf ears

 “Leaders who don’t listen will eventually be surrounded by people who have nothing to say.

MY family home in Kampung Melayu, Air Itam in Penang, is more than 56 years old. That’s about my age, and it has never been hit by floods. Not once!

But last week, my parents – dad is 92 years old and mum, 86, – had their sleep rudely interrupted sometime after 1am by water gushing into their home.

They have been sleeping on the ground floor for years now because they are too old to climb the stairs to their bedroom.

The water that flowed into their room almost touched the top of their bed but fortunately, one of my nephews and his wife from Kuala Lumpur were staying over that night.

It was so fortunate that they were there to calm my anxious parents down and assure them all would be fine. They managed to comfort my stunned folks, who had never experienced such an unpleasant situation before. My father had to be carried to the room upstairs as the house remained flooded throughout the early morning.

Our home was filled with layers of mud the next day and the cars parked outside were all damaged. They sadly look like write-offs.

My father’s pride and joy, his first-generation Proton Saga car – which he bought in 1985 – is now unusable.

A week on, my brothers and nieces are still cleaning up the mess from the massive flood. They haven’t had the time or mood to even assess the financial losses.

And bound by a common sentiment as Penangites, they are tired of the blame game, a trade the state’s politicians have plied to near-perfection.

How many times can the finger be pointed at the previous government, with the incumbent almost 10 years in power? And how many more times can we blame it on torrential rain, which came from Vietnam – or wherever? Worst of all is, when discussions are mooted on flood issues, the voices of the people are swiftly silenced.

It appears that even to talk about hillslope development, one would have to contest in the elections, or be perceived to be challenging the state government, or more extremely, be some kind of lackey in cahoots with the Federal Government.

Blaming everyone else except oneself is simply a way of covering up one’s weaknesses. But the discerning public, in a maturing democracy with heightened transparency and a huge middle class like Penang, will not tolerate such short-term manoeuvring for long.

Suddenly, civil society – a buzzword among politicians – has vanished, with NGOs now regarded as irritants and an affront to the state establishment. Politics is apparently the monopoly of politicians now.

As the National Human Rights Society aptly puts it, “With the benefit of hindsight, we are sure that the Penang government now realises that they should not so readily malign civil society, howsoever obliquely – for the legitimate and well-founded articulation of matters of great concern to civil society.

“This is because it undermines the fundamental values of a functioning democracy and the fundamental human rights of the populace at large.”

Perhaps, the state political elites, many of whom aren’t pure blood Penangites, don’t realise the state is the home of a vibrant civil society, with many active NGOs and activists who are respected influencers of society.

Having walked through the corridors of power and appreciated power’s pleasures, perks and the adulation it brings, maybe it is becoming much harder for people to take criticism. This is, in fact, a reflection of the arrogance of power.

Many have developed thin skin now, with little tolerance for the slightest form of criticism. If anyone even dares raise their voice, an army of cybertroopers, hiding behind anonymity, are unleashed to attack them.

Freedom of speech, it seems, is only the domain of the opposition, with some media (regarded as unfriendly) unceremoniously ridiculed and questioned for their attendance at press conferences.

There are politicians from the Federal Government, too, who are shamelessly cashing in on the flood situation in Penang.

Their relief work must be splashed across news pages, and they have to be seen wading through the flood waters for dramatic purpose. Phua Chu Kang’s iconic yellow boots could likely be the hottest item in the state, as politicians bask in the media’s glare.

Ridiculous remarks have also been passed, one even blaming the state government, saying it has earned the wrath of God.

The rain and floods will go away, eventually. Penangites are stakeholders in the state, and they don’t only make up politicians. The state doesn’t belong to the state government or the opposition.

Caught up in the thick of the action, we seem to have forgotten that the hills are crumbling even without rain. As a stern reminder, just last month, a landslide buried some people in Tanjung Bungah. Investigations on that tragedy are still ongoing.

Basically, the trees – which act as sponge on the hills – are gone. We don’t need to be soil experts to know that.

The grumblings are growing louder because the hills have been progressively going bald in recent years. But the voice of discontent has fallen on deaf ears.

Penangites are alarmed at what they are seeing, and they don’t like it one bit, as much as they understand that land is scarce on the island and property developers need to source some to build homes on.

While it’s easy to hang the Penang state government out to dry for its follies, it’s difficult to ignore how the floods in the east coast states have become annual affairs, too. So, what effective flood mitigation plans have been put in place there?

Kelantan has suffered senselessly, and after more than a year of having been subjected to Mother Nature’s havoc, many victims have yet to recover from their losses. Flooding is obviously nothing exclusive and doesn’t discriminate. Every state has, unfortunately, experienced it in some shape or form.

So, irrespective of location, when life returns to normal, you can expect the politicians to resume their old denying ways.

If there’s a thread that binds our politicians – regardless of which side of the political divide they come from – it is their inability to apologise for their mistakes, despite waxing lyrical about accountability.

Don’t expect them to say sorry, because an apology would be admission of guilt, or worse, a sign of weakness in their realm of inflated egos.

And to put things into perspective, perhaps we could learn a lesson from a quote by prominent American pastor Andy Stanley – “Leaders who don’t listen will eventually be surrounded by people who have nothing to say.”
On the beat Wong Chun Wai

Wong Chun Wai began his career as a journalist in Penang, and has served The Star for over 27 years in various capacities and roles. He is now the group’s managing director/chief executive officer and formerly the group chief editor.

On The Beat made its debut on Feb 23 1997 and Chun Wai has penned the column weekly without a break, except for the occasional press holiday when the paper was not published. In May 2011, a compilation of selected articles of On The Beat was published as a book and launched in conjunction with his 50th birthday. Chun Wai also comments on current issues in The Star.

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Another government department, seriously? Beef up the existing enforcement agencies !


YET another government department is going to be set up. Isn’t it common knowledge that the Government has serious budget constraints and is not recruiting to add to an already bloated civil service? And now, another tale of bureaucracy is being spun.

No wonder Malaysian Anti-Corruption Commission chief commissioner Tan Sri Dzulkifli Ahmad is upset over the planned formation of the National Integrity and Good Governance Department (JITN)

Minister in the Prime Minister’s Department Datuk Paul Low has said the proposed department is expected to improve good governance in the civil service.

How would the JITN as a new and probably tiny department be able to do the job? It would probably involve plenty of miracles since there is a reported 1.6 million civil servants to deal with, although Cuepacs says the figure is only at 500,000. It will be a Herculean task to move this mountain of manpower for what’s needed.

Low must surely have good intentions in wanting to set up the JITN, but its objectives and plans remain, at best, vague, at this point.

Its name and role seem almost identical to that of the Integrity Institute of Malaysia (IIM) and Enforcement Agency Integrity Commission.

The IIM, the brainchild of then Prime Minister Tun Abdullah Ahmad Badawi, was set up in 2004 and continues to function.

Its website reads: “IIM’s role is to facilitate the aims and objectives of the National Integrity Plan (NIP). The main objective of IIM is to act as a machinery in the implementation of the NIP towards developing a nation that is of high integrity, resilient and that embraces universal good values.”

The key roles of the institute are: to conduct research related to the integrity of institutions and that of the community; to organise conferences, seminars and forums; to elicit opinions from various sectors on the progress made or on the obstacles faced in implementing integrity; to publish and circulate printed materials as well as formulating and implementing training and educational programmes; to recommend new policies for the enhancement of integrity and ethics; and to advise the Government on strategies and programmes in enhancing integrity.

The voice of cynicism is growing loud and people are questioning the functions of this department, more so if it has no bite. MACC has strongly objected to it, with Dzulkifli labelling it a waste of public funds.

Who can blame the graft buster for being disgruntled? His investigators are overworked and the department understaffed, under budget and now, suddenly, the MACC learns that a new department is to be set up.

If it has no powers and does not concern the MACC, then it is on its way to being another government department which publishes more reports that nobody reads and which will most likely end up gathering dust.

Dzulkifli, who is hard-pressed to secure a heftier budget for his department, has publicly objected to the setting up of JITN, saying the funds could be better used to enhance current enforcement agencies and the wellbeing of its staff.

“What needs to be done is improve and strengthen the laws, human resources and welfare of existing agencies.

“The Government should oversee the welfare of law enforcers. Go and see the conditions of police barracks. They are poorly maintained,” he said.

Dzulkifli urged the Government to re-examine the salaries and housing schemes of law enforcers.

“If we want to decrease corruption and abuse of power in enforcement agencies, the problem will not be solved if law enforcers do not have their welfare taken care of.

“I will defend them (law enforcers) when needed, and take action against them (if they do wrong).

“But we also need to see the state of their welfare,” he told reporters at a corruption-free pledge signing ceremony in Sungai Petani recently.

“Forming a new department will be costly and require hiring new staff. Their scope of duties will be similar to (that of) other law enforcers,” he added.

And even in less-than-ideal circumstances, the MACC has continued with its crime-busting duty, its stats backing up its hard work. Up to last month this year alone, the commission has arrested 728 individuals, including 349 civil servants, 215 members of the public and 151 from the private sector.

So far, 316 people have been accused of corrupt practices this year. Nearly half of them – 155 individuals – are from the civil service. Last year, only 113 civil servants had the long arm of the law catch up with them.

MACC statistics reveal that 1,629 cases (up to last month this year) involved civil servants, compared to 2,008 the whole of last year, with 654 cases concerning members of the public and 174 involving those from the private sector.

Until September this year, 432 investigation papers were opened against civil servants, compared to 526 last year. Half of that figure – 215 – implicated members of the public, 102 members of the private sector, and seven from other categories, including politics.

Up until last month, 756 investigation papers were opened.

Low said the Cabinet has given the green light for the setting-up of JITN to serve as a coordinating body to lead transformational changes in the public and private sectors.

He said the department would focus on good governance, integrity and human rights. How it will co-exist with Suhakam (Human Rights Commission of Malaysia) is something which needs explaining.

JITN received the Cabinet’s nod on July 28, and is currently under review by the Public Service Department pending final approval. The department was previously a division under Low in the Prime Minister’s Department.

There isn’t much the MACC can do now since the Cabinet has already approved the move.

But what the Government should consider doing is to beef up the MACC where manpower and resources are concerned, given the flurry of cases flying its way.

By Wong Chun Wai The Star

Wong Chun Wai began his career as a journalist in Penang, and has served The Star for over 27 years in various capacities and roles. He is now the group’s managing director/chief executive officer and formerly the group chief editor.

On The Beat made its debut on Feb 23 1997 and Chun Wai has penned the column weekly without a break, except for the occasional press holiday when the paper was not published. In May 2011, a compilation of selected articles of On The Beat was published as a book and launched in conjunction with his 50th birthday. Chun Wai also comments on current issues in The Star.
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All in a day’s words in politics


 

Some phrases have become jargon for lawmakers. Many have been overused, and in most cases misused, by this category of people.

 

Ten most incredible remarks by our (or any other) politicians:

 

1. Playing politics – One politician accusing another politician of “playing politics”. If politicians are not playing politics, then what are they supposed to be doing? We expect politicians to, well, play politics and to engage in politicking. That’s their job and that’s the skill they’ve honed. Can we imagine, say, a footballer accusing another of the same act – “he is only playing football.” It’s bizarre when politicians point fingers at their counterparts for playing politics, often with negative connotations, as it amounts to accusing their reflection in the mirror.

2. Serving the people and country – Every politician in any given country says the same thing. They are supposedly only interested in serving the people, the country, religion, race, pets, families and everything they can think of – except themselves! And we are expected to believe that that’s their noble cause and that they don’t have any ulterior ambitions. Yet, they will spend their entire time and resources kicking, back-stabbing, bad-mouthing and clawing their way to the top! Of course, we will duly be told that they can serve the people “better and effectively” the higher they reach, all in the name of the people’s benefit, of course.

3. I will “take note” of the proposal – Which means the politician will do nothing. In fact, if your staff or colleague spouts
the same phrase, it only amounts to the person not deserving a pay rise. Lazy bones syndrome? Highly likely! It’s almost an expression of inertness. Amazingly, it has now become the standard “tactical response” used by politicians to answer fellow Members of Parliament on the opposite bench during Question Time.

4. I “will study” the proposal – This gives the above a run for its money.

The same disinterested, non-committal reply, aka, “I am doing nothing about it”. This merely amounts to, “We will form a sub-committee/a committee/a task force/action committee to study the matter and a report will be submitted to another committee, which will then deliberate the findings.” In short – nothing happens for a while, or probably in the end, nothing happens at all.

5. “I have been misquoted by the press” – This means the politician has screwed up by putting his foot in his mouth (foot-in-mouth disease?), and the only way to get out of the mess, is well, to deny having said it all together.

And if he did say it, then blame the media for taking it “out of context”. And in their minds, this equals: the media has an ulterior motive; the media is biased; the media has an agenda; the media creates fake news.

Well, if the media produces audio or visual evidence to prove the politician’s folly with the said contentious remarks, then the standard operating procedure would likely be “well, I did say it, but I did not mean it THAT way,” or “you did not quite understand what I said”.

6. Fake news – It has frighteningly and sneakily crept its way into Malaysian politics from the United States, President Donald Trump its greatest purveyor. The fake news accusation is a good tactical move to defend illogical/embarrassing situations created by politicians, and used to near perfection by Trump.

It is just as handy for scatterbrain politicians.

7. Trust me – When a politician requests this faith, you know you should believe in your own instincts and scurry in the opposite direction. But it has to be the most overused and, consequently, misused phrase by politicians everywhere, perhaps perfected by North Korean leader Kim Jong-un, who doesn’t even have to worry about standing for elections!

8. Dementia – It’s a disease all politicians should contract if they wish to survive long in the merciless business of politics. You are expected to lose your memory of past actions against your opponents, if it means, you are now required to swallow your indignation to forge a new political partnership.

“What? I took action against you? Did I? It can’t be, it’s someone else who did it. Not me. If I did, well, I hope to pardon you soon.” Sound familiar?

9. The opposition is only interested in toppling us – Well, that’s exactly their job scope, isn’t it … to take over from the present administration? If they are not interested in toppling existing governments, then aren’t they wasting their time in the opposite side of the camp?

10. There are no permanent enemies, only common interests – In Malaysia, our politicians have turned this into a near artform, hopping in and out of bed so much so voters end up losing track of the number of strange bedfellows.

Let’s not even get into the pillows and strange dreams, or nightmares that have been created for getting in the same sack. One day, a party is accusing another of being an “infidel”, and the next, it is actually working with “infidels”. Almost predictably, after that, it is seen to be friendly with the same party that it has been crossing swords with for decades.

Meanwhile, divorces are announced for the break up with the infidels, yet, the desire to stay in the same house remains, because, well, the rakyat needs to be served.

That’s not all, and this one is even more incredulous – a leader once threw his opponents into the slammer for all kinds of offences, ranging from threatening internal security to sexual perversion, but in the very next instance, touted his once greatest enemy as the leader-in-waiting and probably gave him a BFF status on his FB. Of course, our voters are expected to subscribe to all of this and believe it’s for their own good.

On The Beat by Wong Chun Wai

Wong Chun Wai began his career as a journalist in Penang, and has served The Star for over 27 years in various capacities and roles. He is now the group’s managing director/chief executive officer and formerly the group chief editor.

On The Beat made its debut on Feb 23 1997 and Chun Wai has penned the column weekly without a break, except for the occasional press holiday when the paper was not published. In May 2011, a compilation of selected articles of On The Beat was published as a book and launched in conjunction with his 50th birthday. Chun Wai also comments on current issues in The Star.

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Earn your money the right way: no quick buck, get paid only for honest, hard work



Get-rich quick schemes drawing the interest of those who want to make a quick buck but really, there is no substitute in getting paid for honest, hard work

AS a Penangite, I am always asked by my colleagues and friends in the Klang Valley why is it that most get-rich-quick schemes are located in the island state and the investors mostly its citizens.

I have asked that same question myself, since I’ve heard enough stories of relatives and friends who have been entangled in this web of financial crookery.

It’s not something new. It used to be called the pyramid scheme and Ponzi but, like most, it is just another scam. The new term is ‘money game’ and it’s probably called this to warn new participants that there will be winners and losers, like in any other game.

However, no one is listening because most people are merely interested in the quick returns from their investments.

There are some reasons why Penang lang (Hokkein for people) have warmed up to these quick-rich con jobs.

Penang is a predominantly Chinese state and rightly or wrongly, the appetite for risk there is higher. Some may dismiss risk as a euphemism for gambling, but the bottom line is, many of its denizens are prepared to roll the dice.

Given that there are so few police reports lodged against operators, despite the huge number of investors, indicates the readiness of these players to try their luck.

They clearly are aware of the element of risk involved when they lay their money down, but the huge returns override any rational thinking. No risk, no gain, they probably tell themselves.

Making police reports against operators also runs the risk of “investors” getting their money stuck if the accounts of the scammers are frozen.

Risk-taking is nothing new to many Penangites. This is a state with a horse-racing course and plenty of gaming outlets. Is it any surprise then that a spat is currently playing out between politicians over allegations that illegal gaming outlets are thriving there?

One politician believes the state government does not have the authority to issue gambling licences and “to single out Penang also ignores the fact that gambling is under the Federal Government’s jurisdiction. We don’t issue such licences.”

It’s bizarre because no one issues permits to illegal gaming outlets. That’s why they are called illegal.

But there are some fundamental sociological explanations to this fixation on earning extra money in the northern state.

The cost of living has gone up there … and everywhere, too. For the urban middle class, it is a monthly struggle managing the wages – after the deductions – settling the housing and car loans, and accounting for household items such as food, petrol, utility and tuition for the children.

The cost of living in Penang may be lower than that in the Klang Valley, but it is not cheap either. Any local will tell you that the portion of char koay teow has shrunk, although the price remains the same.

But unlike the Klang Valley, where career development and opportunities are greater, the same cannot be said of the island state.

Many of us who were born and brought up in Penang, moved to Kuala Lumpur because we were aware of the shortage of employment opportunities there.

We readily sacrificed so much, moving away from our parents and friends, relinquishing the relaxed way of life and the good food for a “harder” life in the Klang Valley. We paid the price for wanting a better life.

Job advancement means better salaries, but in Penang, where employers have a smaller base, they are unable to match the kind of pay packages offered in KL.

So, an extra few hundred ringgit from such investments does make a lot of difference to the average wage earner.

It is not unusual for many in the federal capital to take a second job to ensure they can balance their finances.

I don’t think many Penangites expect to be millionaires, at least not that quickly, although JJPTR has become a household acronym since hitting the market in the last two years. As most Malaysians by now know, it stands for JJ Poor-to-Rich, the name resonating well with middle class families.

Its founder, Johnson Lee, with his squeaky clean, boyish looks, assured over 400,000 people of his 20% monthly pay-outs and even more incredibly, convinced many that billions of ringgit vanished due to a hacking job.

Then came Richway Global Venture, Change Your Life (CYL) and BTC I-system, among others. And almost like clockwork, Penang has now earned the dubious reputation of being the base for get-rich-quick schemes.

Having written this article while in Penang, I found out this issue continues to be the hottest topic in town, despite the recent crackdowns by the authorities.

My colleague Tan Sin Chow recently reported in the northern edition of The Star that “money games are on the minds of many Penangites.”

On chat groups with friends and former schoolmates, it has certainly remained very much alive.

Tan wrote: “Another friend, Robert, had a jolt when, a doctor he knew, told patients to put their money into such a scheme. A doctor!

“From the cleaners at his office to the hawkers and professionals he met, everyone, it seems, was convinced. None questioned how the high returns could come to fruition in such a short time.”

We can be sure that these get-rich-quick scheme operators will lie low for a while, but the racket will surface again, in a different form and under a different name.

There is no substitute for honest, hard work. Money doesn’t fall from the sky, after all.

BY Wong Chun Wai The Star

Wong Chun Wai began his career as a journalist in Penang, and has served The Star for over 27 years in various capacities and roles. He is now the group’s managing director/chief executive officer and formerly the group chief editor.

On The Beat made its debut on Feb 23 1997 and Chun Wai has penned the column weekly without a break, except for the occasional press holiday when the paper was not published. In May 2011, a compilation of selected articles of On The Beat was published as a book and launched in conjunction with his 50th birthday. Chun Wai also comments on current issues in The Star.

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What concerns Malaysians most ?


Supermarket shopping food

THE biggest concern among Malaysians, as we head towards the general election, is the cost of living. It’s as simple as that.

There have been plenty of political and religious side shows, but for many Malaysians, regardless of race, settling the many bills each month is what worries them the most.

Although Malaysia remains one of the cheapest countries to live in, its citizens have been spoilt for too long.

We are so used to having so many food items subsidised, including sugar, at one time, to the point that some of us have had difficulties adjusting ourselves.

Our neighbours still come to Malaysia to buy petrol, because ours is still cheaper than theirs.

But, as in any elections, politicians will always promise the heavens to get our votes. One of the promises, we have already heard, is the abolishment of the Goods and Services Tax.

No doubt that doing away with GST would appeal to voters, but seriously, even the opposition politicians calling for this are aware that it is a counter-productive move.

In the words of Tan Sri Mohd Sheriff Mohd Kassim, a highly-respected retired government servant, “it is too much of a fairy tale.”

The danger, of course, is that populist electoral pledges are always appealing, even if they are not rational.

Malaysia cannot depend on just about two million tax payers to foot the bill in a country of over 30 million people. It is unfair and unsustainable.

Taxing consumption gives more stability to revenue because income tax is regarded as highly volatile, as it depends very much on the ups and downs of businesses, according to Mohd Sheriff. When the market is soft, revenue collection always sees a dip.

For the government, which has already been criticised for having such a huge civil service, without GST, it could even mean its workers may not get paid when there is a downturn in the economy.

In the case of Malaysia, we have lost a substantial amount of revenue following the drop in oil price.

So, when politicians make promises, claiming plugging leakages is sufficient to end GST, it is really far-fetched and irresponsible.

The Malaysian tax system needs to continue to be more consumption-oriented to make it recession-proof, and, more importantly, the tax net just has to be widened. The bottom line is that, it is grossly unfair for two million people to shoulder the burden.

The government has done the right thing by widening the tax base and narrowing the fiscal deficit. The move to implement GST, introduced in 2014, has been proven right.

GST is needed to provide a strong substitute as a tax consumption capable of off-setting revenue loss from personal and corporate tax.

Beginning next month, India will join nearly 160 countries, including Malaysia, in introducing GST. Like Malaysia, when GST was first introduced, plenty of loud grumblings and doubts have rolled out.

Unlike Malaysia’s flat 6% across the board, India is introducing a more complicated four-tier GST tax structure of 5%, 12%, 18% and 28%, with lower rates for essential items and highest for luxury and demerits goods that would also attract additional cess.

In Singapore, GST was introduced on April 1, 1994, at 3%. The rate was increased to 4% in 2003, then 5% in 2004. It was raised to 7% on July 1, 2007.

Some politicians came under fire recently for purportedly calling for the abolishment of GST, however, some others clarified that they had merely called for a reduction in the tax’s percentage.

Another top opposition politician has come out as the strongest opponent of GST, reportedly saying the claim that Malaysia needs GST is false.

Some other politicians have described GST as regressive, but have not come out with clear ideas on how it should be tackled.

Nonetheless, the ruling party should not make light of these electoral promises.

For many in the urban middle class, they feel the squeeze the most.

They have struggled against the rising cost of living, paying house and car loans, and earning deep levels of debt, as one report aptly put.

The middle class, consisting of over 40% of Malaysians, is also in the income tax bracket, it must be noted.

Last year, an economist was quoted saying that 2016 was a year of a shrinking urban middle class and a happy upper class.

Shankar Chelliah, an associate professor at Universiti Sains Malaysia, said that the Malaysian middle class shrank in metropolitan centres across the country, and that most of its members would end the year almost 40% poorer than they were in 2015.

He said this would be due to the withdrawal of cooking oil and sugar subsidies, depreciation of the ringgit, decrease in foreign inflows and increase in outflows, among other factors.

For many in this middle class range who do not qualify for BR1M handouts, the government clearly has to come up with a range of programmes which can relieve them of these burdens.

It isn’t race or religious issues that will appeal to voters – they want to know how they can lead better lives, and if the opposition thinks contentious issues will translate into votes, they will be in for a surprise.

It is true that the heartland will continue to deliver the crucial votes, and the ruling party will benefit from this, but Malaysia has also become more urban and more connected.

At the end of the day, it is the bread and butter issues that matter most. Let’s hear some solid ideas and programmes which will reduce the burden of Malaysians.

By Wong Chun Wai On the beat, The Star

Wong Chun Wai began his career as a journalist in Penang, and has served The Star for over 27 years in various capacities and roles. He is now the group’s managing director/chief executive officer and formerly the group chief editor.

On The Beat made its debut on Feb 23 1997 and Chun Wai has penned the column weekly without a break, except for the occasional press holiday when the paper was not published. In May 2011, a compilation of selected articles of On The Beat was published as a book and launched in conjunction with his 50th birthday. Chun Wai also comments on current issues in The Star.

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Scheme or scam?: Multi-level marketing companies often conduct presentations to potential members promising financial freedom and a better lifestyle

There is no fast track to getting profits or income. Nothing can replace hard and honest work.

IT’s now called the money game but it has been around for awhile, only that it was referred to as multi-level marketing (MLM) or pyramid scams.

There seems to be a resurgence of such scams recently probably due to the economic slow down. While it may be safer to put one’s money in the bank, the reality is that the interest is not that great. It’s the same with unit trust investments.

So, there’s little surprise that many people are attracted to MLM scams, with its huge returns, although they know there’s always a risk behind these schemes (or scams).

These people are seemingly prepared to take the plunge.

New recruits are told to just deposit RM5,000 and stand to gain RM1,000 every month. That’s so attractive – and that is also how one gets sucked into the game.

Imagine this – if there are over 20,000 members and each of them places RM5,000 in the scheme, that works out to a whopping RM100mil collected. The numbers get higher with more members recruited.

And we wonder why there are not many reports made by the victims to the police or Bank Negara Malaysia against these con artists.

I have a relative who pours scorn on his father who works very hard to put food on the table but this arrogant young punk thinks he can make a huge pile of money without selling anything or working for anyone.

Another friend, who declared himself to be mentally-challenged to escape the bill collectors, used to laugh at those studying hard for their exams.

He said although he was illiterate, he would soon make millions and hire graduates to work for him. Of course, he didn’t see his millions.

These people were driven by pure greed, really. Social media is filled with stories of young people making tonnes of money, often living in Dubai, or driving around in gold-plated luxury cars.

Sometimes, famous personalities are dragged in to be part of these advertisements – without their consent, naturally.

Of course, Google and Facebook are not responsible for these fake news and fake advertisements.

The scams include binary option trading which is essentially an unregulated, and sometimes, fraudulent, mainly offshore activity.

Binary option trading involves predicting if the price of an underlying instrument – shares or currencies, for instance – will be above or below a specified price at a specified point in time, ranging from a few minutes to a few months in the future.

Those involve in it receive a fixed amount of money if the prediction is correct or lose the investment otherwise. It is essentially a “yes” or “no” betting, hence the name binary, according to one report.

But that’s another story.

The one that is hitting Malaysians – particularly those in Penang where many scams seem to surface – is the straightforward MLM.

To be fair, there are legitimate MLM businesses. These actually sell products. Members have to sell real products to earn their income, and not sell membership.

You know you are getting into a pyramid scam when they tell you to just put your feet up and get more people to join in.

The MLM is simply about finding new members – or rather, new victims. It is as good as paying you some silly fake gold coins. In some cases, even so-called virtual coins.

You are told that the more members you recruit, you will double or triple your income. The pyramid will come crashing down once no new members are recruited anymore.

But some dubious MLM have gotten smarter. They sell products but they are mostly “worthless” goods like accessories, stones, cosmetics, health and beauty products, among other things. Some sell low-quality health gadgets with unproven scientific claims.

Come on, don’t tell me your home is filled with air purifiers and magic water dispensers? Or you have some lucky charm? Or stones?

According to Mark Reijman, who advocates financial literacy, these MLM use cheap products to hide the fact that members are actually investing in a pyramid scheme,

He said the products are there simply to hide the truth. Members are investing in a pyramid scheme!

“If the MLM cannot explain the source of profits or give details about the technology of the products, or do not permit you to show your contract to outsiders, they are hiding the fact that their product is useless and the profits come from new recruits and not from product sales.

“Be wary when you are asked to buy a large inventory of the product. Don’t fall for ‘patented’ or alleged ‘US technology’ or secret recipes. It’s all smoke and mirrors.”

He advised the public to be on the alert if the product is not sold through regular channels that have served societies for millennia, such as stores and (online) market places.

“If it is such a great product, why can it not be sold through other channels? Perhaps because those channels don’t allow you to recruit new members and they want to protect their reputation against fake or low quality products?”

There is a lesson here – nothing can replace the old fashioned values like hard work and having honest earnings. Greed should be kept at bay.

In short – pyramid schemes are unstable because at every new level it will require more recruits in an exponential manner, as Reijman warns.

Soon, the scam will run out of people who fall for the scam, at which time the payments stop and that’s when press conferences are called by the victims.

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By wong Chun Wai On the beat

Wong Chun Wai began his career as a journalist in Penang, and has served The Star for over 27 years in various capacities and roles. He is now the group’s managing director/chief executive officer and formerly the group chief editor.

On The Beat made its debut on Feb 23 1997 and Chun Wai has penned the column weekly without a break, except for the occasional press holiday when the paper was not published. In May 2011, a compilation of selected articles of On The Beat was published as a book and launched in conjunction with his 50th birthday. Chun Wai also comments on current issues in The Star.

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