Wednesday, November 26, 2014

Why rich Malaysians are very rich and the poor, very poor


Last updated on 24/11/2014 - 09:07
23/11/2014 - 09:30     

OUTSPOKEN: The Umno-led BN government continues to paint Malaysia as a thriving socio-economic nation despite the statistical reality that points to a "not all-is-dandy" outlook.
How can the economic and financial outlook be all dandy when the global economy is faltering and struggling?
Furthermore, Malaysia's economic and fiscal policies have only widened the gap of the rich and poor since Merdeka in 1957.
Officially, the country’s federal debt is at RM568.9 billion or 52.8 per cent of gross domestic product (GDP) as of June. 
However, economists believe the figures and statistics had not included other hidden debts.
Former International Trade and Industry Deputy Minister Datuk Mukhriz Mahathir had “accidentally” revealed in 2012 that the federal debt stood at RM800 billion or more than 70 per cent of GDP, way above the 55 per cent federal debt ceiling.
Anas Alam Faizli, who blogs at Blindspot, has recently taken pains to compile damning statistics that should awaken those blinded by BN's propaganda that all is well for Malaysians.
Anas' two questions, backed by statistics:
•    How does it feel to be in a high income nation that Minister in the Prime Minister's Department Datuk Seri Idris Jala is talking about? In 2008, two states in Malaysia surpassed the World Bank Threshold to become “High Income” states – Kuala Lumpur and Sarawak. High Income nation through GNI/capita? In numbers and papers only or a holistic high income nation that prospers?
•    Malaysia’s Gini Index did not move at all in 20 years.
Malaysia is the third most unequal nation in Asia! We have the third biggest gap between the rich and poor. We are worse off than the Philippines, Thailand and even Indonesia. Our rich are very rich and our poor, very poor! Income inequality is bad and has to be addressed. Are we talking and thinking about this enough? Do you understand this as an issue or not? Please discuss. For 40 years, the gap between rich and poor did not change much! What happened?
In short, this has exposed how Malaysians have fallen prey to a skewered economic policies that will only result in misery when a global financial and economic crisis makes a comeback.
The question is, when will the bubble economies start bursting globally?
To quote Anas: “That's high income nation but low income population. To paraphrase, Rich Malaysia, poor Malaysians and why is that so?”
Malaysians already know the answer because they can clearly see who the rich and super rich are and who the poor and very poor are.
The rich and super rich are those with the right political connections and the poor and very poor are those who have to work day and night to put food on the table for their family and loved ones.
The recent case of the six major banks fined a record total US$4.3 billion (RM14 billion) for foreign exchange rate-rigging tells all.
When banks, such as HSBC, Royal Bank of Scotland, Swiss bank UBS and US banks JP Morgan Chase, Citibank and Bank of America had to resort to cheating, common sense tells that all is not well in the global economy.
It's certainly difficult for banks to continue to meet profit targets without resorting to exploitation when the majority of the people are getting poorer.
Even commercial banks in Malaysia have tightened their regulations in approving loans, especially for housing.
The recent depressing news on the economic and financial uncertainties in the US, Germany and China must be taken seriously. The economies of the big three are sneezing and the rest of the world are expected to also catch the cold from them.
Reuters reported from Washington on Nov 13 that policymakers scrambling to keep the world economy from settling into the "new mediocre" of sluggish growth can no longer rely on global trade to do the heavy lifting.
International trade helped the global economy tide over rough spots over two decades before the financial crisis, when it grew nearly twice as fast as economic output, but this engine is running out of fuel.
That is bad news for officials taking part in discussions at the International Monetary Fund and World Bank meetings this week, focused on preventing what International Monetary Fund chief Christine Lagarde warns could be a long spell of sub-par performance for the global economy.
The impetus from China and Russia opening their doors and the emergence of global supply chains, linking factories in emerging markets with rich consumers in the developed world, has largely run its course, economists say.
"It's that particular engine which seems to have exhausted its propulsive energy for now," World Bank trade specialist Aaditya Mattoo said.
The McKinsey Global Institute calculates trade and cross-border financial flows contribute up to a quarter of global growth, leaving policymakers with a gaping hole to fill if trade shifts into a lower gear.
As the IMF cut its global growth outlook, it also forecast annual trade growth to average just 4.2 per cent in the 10 years starting in 2016, compared to 6.7 per cent in the decade leading up to the 2008-2009 financial crisis.
One reason for that downgrade is obvious enough; it is hard to replicate the effect of an economy of China's size tearing down trade barriers.
Malaysians must be reminded again to be prepared for the hard times and misery of a national and world financial and economic crisis.
Ng Kee Seng believes that God helps those who help themselves. In a healthy democracy, every Malaysian has a role in politics and nation-building.

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