2009 budget a distress signal

Written by arimi sidek

It is an attempt to correct government's silly mistake.

Malaysiakini.com quoted Anwar as saying that the budget had no incentive for FDI. Pak Lah insisted that 2009 budget is not for the sake of popularity.



I agree with Pak Lah 100%. There is no way BN government, under strugling Pak Lah's administration, is getting more popular simply because of the generous budget that was tabled yesterday.

This is NOT populist budget at all. This is a CORRECTIVE BUDGET.

Now Government realises that it was horribly wrong to increase fuel price hastily.

It was terribly wrong to abandon several billions of fuel subsidies for the sake of "saving". The trade off is unbelievably high; the fuel hike triggered the record breaking inflation that we currently have. The policy on fuel had broken up General Price Index (GPI) natural momentum. As the result, the economy stucks in one-way traffic ever since, GPI soars up. It left us, Malaysians, with the same amount of Ringgit poorer than before.

As I said before, BN government and Malaysian economists, they hate subsidies. They expose Malaysia's economy to viotility of fuel price market because according to them, Malaysia will be far better off without subsidies. They rather willing to have a record breaking inflation than to retain subsidies.

Therefore, Pak Lah and those moron economists introduce many unnecessary corrective actions due to the mistake they had committed; right in this budget.

* Households which incur monthly electricity bills of RM20 or less, will not have to pay for electricity, for the period from 1 October 2008 to end of 2009.
* The current tax rebate of RM350 per person be increased to RM400 for those with taxable income of RM35,000 and below.

* All interest income from savings for individuals be tax exempt.

* Reduce import duties on various consumer durables from between 10% and 60% to between 5% and 30%. These include blender, rice cooker, microwave oven and electric kettle.

Full import duty exemption on several food items, which currently attract import duties of between 2% and 20%. These include vermicelli, biscuits, fruit juices and canned sweet corn.

* Reduce the road tax on private passenger vehicles with diesel engines to be the same as those with petrol engines, effective 1 September 2008 (Beritadarigunung.blogspot.com)


Please read the highlighted items very carefully. Those are corrective actions with a single aim, "to reduce burden of the people", so they said. But actually NO, they aren't. Those items are going to reduce government income. So they will be on deficit budget. Pak Lah realized and announced in the same session that federal government is going to tighten the belt next year. Government had increased fuel price and Malaysian are generally pissed off over the issue. So, government have play a charitable Santa Clause for now.

Lets hope that he was just kidding us. Because if he was telling the truth, Malaysia's economy will shrink further next year. I am telling this because, in the period of economic distress, the most (and almost the only) reliable resources to simulate growth is in the form of government spendings (G). If government reduce spendings, then the growth of the economy will be getting slower, less productive, and GPI will goes even higher.

I also urge Pak Lah's economists to calculate and translate those highlighted items into real amount of Ringit in the year, 2009. After that, ask them to compare THAT real Ringgit to fuel subsidies that they had forgone with; and again, to provide the good answer to which is a simple method to safeguard economy growth and inflation between the two. I bet the amount of those items aim "to reduce burden of the people" will be higher than the subdidies.

So wonder they wanna meddle with fuel subsidies again in future, and to keep on talking on complicated methods uh...

The "not trying to be popular" budget turned out to be a corrective of a silly mistake. It made myself skeptical once, and I now tend to be skeptical to other elements in the budget as well.

2009 budget seems to put an extra pamper to Sabah and Sarawak.

Not trying to be popular, really?

Sure that this has nothing to do with Anwar's plan to topple BN on mid-September?


Comments


penyo |2008-08-30
this stupid P.M.don't how to manage this country economic, so expel them....
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Malaysians, time to abandon Microsoft Windows and go for LINUX!

Written by arimi sidek

Greedy monster dream: to racks RM1 billion by forcing Malaysians to buy obsolete product!



A greedy monster, Microsoft, had announced that there will be no mercy for 3 million estimated pirate users of Windows XP Pro operating system in Malaysia from now on. Should illegal users use it for internet purpose, their PC possibly goes blackout anytime.

Revised text version, 27 Aug 2008.

If you don't want it to happen, you have to purchase the original copy of Windows at the cost of RM580.00 each from local resellers or go to Microsoft website .


Curtains for pirated Windows

PETALING JAYA: From today, those with pirated copies of the Windows XP Professional operating system in their computers that are Internet-capable could find their screens going black and the icons vanishing as Microsoft Corp gets tough.

There are 8.6 million users of Windows XP Pro in Malaysia and about three million are expected to suffer the “blackouts”, according to Microsoft Malaysia.

To continue working, users will need to reset the machine’s desktop background. All will return to normal, but only for 60 minutes before another blackout occurs.

The only “cure” is to get a licensed copy of the operating system from a Microsoft reseller or going online at microsoft. com/malaysia/genuine. Each licence costs RM580.


Okay, we should respect the intellectual property right, thats the way it is. Windows XP is a proprietary of Microsoft, so, it can do whatever it wants. But still, Microsoft is unbelievably greedy. This is the strategy to sell phased out Windows XP before it being laid off the shelf. It is the last bid to make Malaysia as dumping ground for obsolate operating system which was launched sometime in 2001 - 7 years ago.



Yes, Windows XP is considered an obsolete operating system, Microsoft is on Vista now. In fact Microsoft's initial plan was to end official support for Windows XP in April, 2008. But the demand for Vista not the way as Microsoft expect as XP remains as a popular operating system and it obliged to extends the support for XP until next year.

RM580 for XP Pro? That is the normal price without any discount whatsoever. By the way, the normal price for Home Edition was only RM350. Microsoft expected to racks more than RM1 billion should it successful in chickening out Malaysian pirates, illegal users.

The monster is dreaming

And Microsoft wanna talk about intellectual property right to 3 million pirate users in Malaysia. Most of them rather face the blackout than to spend RM580 to buy license copy of Microsoft Windows XP. If they wanna buy the genuine copy, they had done so long ago. Now their PC screen goes blank, I bet, they will wait for somebody to come up with 'pirated' fix downloadable from torrent sites to prevent microsoft cop from blanking their screen again, ever.

Ahoi Pirates!, Go for open source









For these reluctant hardcore Windows XP pirates, I propose that you go for LINUX. Its FREE. And go for the most user friendly linux at present, ubuntu and its variants, kubuntu and xubuntu.

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Palm oil: Time for more refineries

Written by MDYSphere

Demand for agriculture products has an inelastic demand and it implies that a reduction in the demand for palm oil means that revenue will fall drastically (percentage decrease in price is larger that percentage decrease in quantity demanded).



In theory producer of agricultural products tend to limit its production as acquire high price in order to gain larger revenue.

MIRI, July 26 (Bernama) -- Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui will meet his Indonesian Agriculture Minister Dr Anton Apriyantono in Jakarta next week to discuss measures to be taken concerning the current downward trend of palm oil prices. Speaking to reporters here Saturday, Chin said the meeting would be significant for both countries as they commanded over 85 percent of the world's palm oil production . Definition of having monopoly power is to have control 1/3 of the market production. Malaysia and Indonesia have 95% of the world supply of the palm oil and it is surprising to see that consumers are controlling over the price of palm oil.

Sabah became the country's main palm oil producer on 1.24 million hectares of the total 4.3 million hectares, Plantation Industries and Commodities Deputy Minister Datuk Anifah Aman said Saturday (DE 17.02.08).

The government must be diligent enough to be able to control its supply of palm oil so as to control the price of palm oil. I recommend at time of fall prices, producers must put more attention on refineries even its means accruing less revenue until world palm oil price become attractive once again.

This article is being mirrored from MDYSphere.BlogSpot.Com

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Subsidies: Microeconomics point of view

Written by MDYSphere

I agree with you subsidies on the price of petrol is inevitable . You have illustrated at the macro level how subsidies can achieve a desirable level of GDP. Once subsidies are placed into the economy, the multiplier effect will play its part.



When we talk about subsidy we are referring to Fiscal Policy which deals with government spending (Expenditure) and Imposition of Tax. It is an important policy to check and balance the economic activities within an economy.

Government expenditure on subsidies can be looked at as a long-run investment. Obviously, one talk about investment one must consider the concept of Opportunity cost of that investment. Notwithstanding the social obligations of government, perhaps, one way of looking at subsidies as a waste of resources is when the opportunities forgone for such subsidies are not taken seriously. Worst still if subsidies are presumed to stimulate spending during inflationary period. Having that extra money without prior having to produce goods and services for such extra money would only create further inflation as too much money chasing too few goods and services. An example is the subsidies on petrol recently introduced by the government, where cash money is given to motorists.

Another unique example for subsidies is the way Japanese government spent million of yen on subsidising rice. Rice was once so important to Japan’s culture that it was worshipped as a god. Yet the economic problems now facing Japan’s rice farmers make it almost impossible for them to make money. As a result, the Japanese government subsidises the industry and tries to stop imports of foreign rice. Other nations complain these practices breach world trade rules, but it could be very hard for the rice farmers to manage without such subsidies. The US, Australia and China would be popular and cheaper than the home-grown variety. Why then the Japanese government went to the extent in breaking the world trade rules and at the same time, what happen to the law of comparative advantages.

I like to look at the micro economics theory to illustrate why it is important for the government to invest by means of subsidising the price of petrol. We begin by looking at four main reasons that cause the price of crude oil to increase which in turns increase the price of petrol.

Supply and Demand

As incomes rises, economies use more energy for transport, and producing goods and services. Abroad cross section of nearly 180 countries shows that doubling per capita income more than double per capita oil consumption. How much each country contributes to increases in global energy demand depends on its population and rate of income growth.

Micro economics demand and supply theory suggests that there is an inverse relationship between price and quantity. The magnitude change in price and quantity depend on the individual elasticity. Empirical evident suggests that both supply and demand of crude oil tend to be relatively inelastic in short run. What this means is that an increase in demand would shift the demand curve to the right at a given supply curve - a greater percentage increase in price as compare to percentage increase in quantity. However, it unlikely supply will be able to meet demand in the short-run due to the nature of crude oil business. Oil exploration and production require huge investments over long periods. In the long-run supply curve will move to the right and a new equilibrium is reached. At the new equilibrium, the new price will be much higher than the old equilibrium price.

Mismatch between reserves and economic systems

A large part of the world’s oil reserves are outside the easy reach of free market, with their incentives and disciplines. Oil prices are rising not because the world is running out of oil but because the bulk of reserves are in countries where market incentives cannot work fully or in the hands of monopolists who may be exercising their power by restraining investment

Speculation

The price of crude oil is controlled by an elaborate financial market system as well as by four major Anglo-American oil companies. It has been argued that as much as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of peak oil. It has to do with control of oil and its price.

Dollar’s Weakening

Oil has long been traded in U.S dollars. It is believed that having a single-currency system lowers transaction costs for commodity that trades globally. The weakening of dollar has a direct impact on demand, supply and price of petrol. A declining dollar makes oil cheaper for consumers this in turn increase demand for petrol. A weakening U.S. currency also reduces the dollar-denominated supply from foreign producers. Together, these two factors exert additional upward pressure on prices. When comes to adjustment in oil consumption and production, a declining dollar takes time to reshape crude oil prices because expectations do not shift quickly. Factors that push up expectations of future prices, however, also put upward pressure on spot prices because markets will adjust until investors are indifferent between holding and selling the marginal barrel of crude oil on the spot market.

Given such factors it is clearly be seen such notion of the invisible hand of Adam Smith by letting the market forces to determine the price equilibrium for patrol is no longer applicable when we referring to petrol production nowadays. Demand and supply situation only play small part in determining the market equilibrium for patrol. On the other hands, even if we agreed that Smith theory is applicable, the price equilibrium will never be reached in the long run. This is true if one looks at Cobweb model which illustrates that given the differences in elasticity of both demand and supply for a product tend be unstable. At this situation where the supply curve is more inelastic than the demand curve for petrol as such the price of petrol will never be stable in the long run. What it implies here is that price of petrol will never be at equilibrium because of mismatch between reserve and economic system, speculators, and the weakening of US dollar. Therefore, when talking about the determination of price of petrol we are no longer talk about the Adam smith notion of invisible hand. The price of petrol and the elasticity of supply and demand are solely determined by the visible hand of the factors mentioned earlier.

We expect the global price of petrol to remain relatively high. Therefore, we need to use other measure to predetermine our local price of petrol. One of the tolls is giving subsidies on the price of petrol. The reason is simple. Subsidies on price of petrol must be treated as a form of investment and the return on investment would be in the form of income collected through tax from businesses. Subsidies reduce the price of petrol and will reduce the cost of production. The reduction on cost will lead to profit for profit maximisation firms and further increase earning for the government. Were profit is there to be captured there will be more investment and more profit that leads to further increase in earning capacity for the government. Obviously, the government needs to find sources on how to finance the subsidies and this problem has been touched by certain politicians.

Subsidies will eventually be self-financing and this is because in the long run the extra earnings by the government will eventually pay for the subsidies invested. The policy of reducing income tax, waive the dividend tax and RPGT has little impact on the burden by the increase in the price of petrol. Money given directly to the population, at times, can do more harm than good to the economy. We must remember lots of money in the pocket does not necessarily imply that money can acquire more goods and services. What matters is the purchasing power of money that we have in the wallet. Therefore, subsidy on the price of petrol is money given indirectly to the population and there is no question of too much money chasing too few goods and services in the economy.

Mirrored from MDYsphere.BlogSpot.Com

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Pak Lah plans monthly revision of fuel price

Written by arimi sidek

When Pak Lah's government had given subsidies a no-no recently, they actually destroyed the General Price Index of our economy. The nearly immediate backwash effect was the increase in the price of nearly all goods and services in the economy.



It is because fuel IS the main source of energy.

This is what we called as a "cost-push" inflation.

Not only inflation, but we are now facing the highest inflation ever in 25 years, the rate is about 7 - 8 %. Meaning at present, if we have RM1,000 in hand, the "real value" of our money is being reduce to RM993 - RM992 in compare the previous month before the implementation of the hike took place.

Fuel prices will be lowered soon Prime Minister Datuk Seri Abdullah Ahmad Badawi confirms that the Government will lower fuel prices but remained tight-lipped as to when this will take place (THE STAR, 01.08.08)

Like always, I will nag about petroleum subsidies again and again.

But in order to do that, I have to rely on countless of if, if and if.

If government did not act too hastily and had not increase fuel price at 43% rate, the inflation rate definitely not as high as we are having at present.

If government maintain some respect over subsidies, they should have been anticipating the violatility of the market forces of fuel market. And if they did, they should maintain some amount of subsidies as buffers - to cushion the fluctuation effect; the up and down trend of the fuel global market.

The subsidies buffer is important IF you want stability in general price level.

If there is the increase in fuel market, government add more subsidies, and if the fuel price drop government reduce the amount of subsidies. This way, we stabilize the general price index. And this way, we will be able to avoid 7 -8 % inflation rate.

Now, Pak Lah's economists are going to revise the fuel price, a lower fuel price is expected in near future. But how can they pull back the already more expensive price of nearly all goods and services in our economy?

Will, for instance, a bundle of five packets of Maggi mee be reverted to RM3.60 - the market price of two months ago in Kota Kinabalu - from the current price of RM4.70? I bet not.

Comments

katak man |2008-08-03
aku sokong ko!!!

inilah pemimpin yang harus ditukar oleh kitaorg, bikin susah orang kampung saja.

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