Posts Tagged ‘Economy’

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30 percent Bumiputra ruling relaxed

November 13th, 2008
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A bit of good news in that the ruling of needing to have 30 percent equity for those planning to list in Bursa Malaysia has been relaxed. The company must show proof that the allocation was not fully subscribed after two levels of offering exclusive to bumiputras. After that, it can be opened to general public (which of course include the bumiputras as well).

Companies seeking listing on Bursa Malaysia can now open their shares to the public if all efforts to get the 30% bumiputra equity participation fails.

Finance Minister Datuk Seri Najib Tun Razak said while the 30% bumiputra equity participation policy was being maintained, the shares could be offered to the public through the initial public offering (IPO) balloting process, should they not be fully subscribed.

“There is a change in the way it (the policy) is being implemented,” he told reporters after a briefing by the Securities Commission (SC) here yesterday.

“This is part of our efforts to make our capital markets more competitive.”

He said there would now be two tiers for bumiputras to acquire their 30% equity.

The first tier was through International Trade and Industry Ministry-approved bumiputra institutions and the second would be the bumiputra public.

If the 30% equity was still not taken up, it would be opened to others.

“In the event the allocation is not fully subscribed by the bumi public as well, then the company concerned would be deemed to have fulfilled the 30% bumiputra NDP (National Development Policy) requirement,” he said.

“So this takes out the element of uncertainty.”

When asked if this would jeopardise the bumiputra equity in the long run, Najib replied:

“I don’t think so. Actually, this will allow bumi individuals to participate as well.”

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Government agrees in principle for PNB mechanism

November 9th, 2008
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Another glimmer of success is in sight after the PM and his deputy agreed “in principle” to MIC’s proposal (actually many other people suggested this idea as well especially via media and forums, but never mind, we give the honor to MIC) to set up a mechanism under Permodalan Nasional Bhd (PNB) to increase the equity ownership among Indians in the country by three per cent in 2020, from the current 1.2 per cent.

According to Samy Vellu:

…the matter was agreed to by both Prime Minister Datuk Seri Abdullah Ahmad Badawi and his deputy, Dauk Seri Najib Tun Razak, who is also finance minister, when he met the two leaders recently.

“The special mechanism to be set up under PNB will use a similar model as the one used to assist the bumiputera community.

“I have asked the government to set aside an allocation as a form of partial grant and loan to be given to the Indians under the said mechanism,

Another success due to Makkal Sakthi I guess – MIC becoming a bit more relevant and improving a bit on their achievements. Perhaps they will even surpass their past 20 years achievement in the next one year itself.

But I still believe that it should be set at 10%, not 3%. Together with the grants and loans, the recipients should also be provided with some education and awareness on what are they getting into. No point the recipient getting RM1000 worth of units, but selling it off the next day to cover his/her daily expenses.

If can, the units may be linked to some sort of insurance scheme as well.

If done properly, this can be one of the channels to improve the financial status of the poor and underprivileged. However, it must be stressed that providing equity sharing is not enough. It will be falsity to think that the problems faced by the community will go away by giving RM500 million per year (yup, I’m expecting nothing less than that!) in loans and grants. There must be some fail-safe mechanism the amount is not misused by middlemen like MIC, or the recipients themselves. For example, we can put a 3 year “no sell back” clause.

Secondly, how to ensure the correct people get the help? As it is, even the poor and underprivileged are not properly tracked by Welfare Department, so what database are the authorities going to use? How about a list from KWSP? Take the employees of estates, public utilities providers, factories. The government’s employees list can also be obtained. From there, filter those who are earning XXX or less per month. This will be a start, but it would not include self-employed or the unemployed (like housewives).

While waiting the “agreement in principle” to be realised, better some think tanks start their research.

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3 percent EPF reduction to be made automatic!

November 7th, 2008
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I was surprised to read in both Star and NST today that the 3% reduction in EPF contribution will be done automatically “for the ease of members and to facilitate implementation measures”. That means it is not an opt-in choice as implied by Deputy PM Najib, but its an OPT-OUT choice. Your contribution is reduced (means you get back more money) UNLESS you inform EPF. How to inform? Fill in the form KWSP 17A (AHL) and give it back to your EMPLOYERS. The form can be obtained from all EPF branches or download them from their website at www.kwsp.gov.my from Dec 1 onwards.

The reduction will run until end of December 2010, meaning two years.

Now, what would you do? Opt for the extra 3% cash in hand or choose not to reduce the contribution? Those who think cash in hand is better, can make use of the reduction and perhaps invest the money in other investment vehicles. Or you can use it to reduce yourloans. As long as the extra cash is not wasted on unwanted expenses. OR if you think that better to keep the money in EPF, then fill up the form and cancel your reduction.

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A foreign worker sends back the amount a poor family earns

October 22nd, 2008
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On average, foreign workers send back RM720 per month, the total being Rm9.12 billion up to June 2008. According to Deputy PM Najib, its expected to reach RM18.1 billion by year end. The number of foreign workers up to July 31 is 2.1 million (which in Bolehland means it can easily be double of that!).

Imagine a foreigner sending back RM720 per month (yeah, I know, on AVERAGE). If his/her cost of living is about RM500, that would mean a take-home pay of RM1200. I doubt this includes expatriates as they are in different category.

Do you know that RM720 is the newly revised household income value criteria used by Welfare Department to provide welfare assistance in Peninsular Malaysia?

The Government empathises with the difficulties faced by the lower income group, arising from the higher cost of living. In this regard, the Government has raised the eligibility criteria for welfare assistance under the Welfare Department, from a monthly household income of RM400 to RM720 for Peninsular Malaysia, RM830 for Sarawak and RM960 for Sabah. With this increase, the number of eligible recipients is expected to double from 54,000 households to 110,000. This includes an increase in the number of eligible senior citizens from 14,000 to 40,000. For this purpose, an additional RM500 million is allocated.

– From PM’s Budget 2009 Speech (here).

Obviously for a foreign worker, there are less “side” expenses. Most things are free – provided by the employers.

What do you make out of this – the amount a foreign workers sends home is same as the amount a poor family earns (following Welfare Department criteria)?

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Deepavali Shopping amid Economic downturn

October 14th, 2008
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How much does one spend for Deepavali? Clothes, prayer items, raw material for food/cookies, decorations, firecrackers (legal ones), house cleaning/painting (once every few years?), travelling back to home town, angpow for kids, etc. How much would it cost? RM500? RM1000? RM2000? RM5000? As for me, Deepavali has always been a low-key affair. So, most expenses will originate from Then.

Looking at the article from the NST, one “in-fashion” punjabi suit going for RM200, imagine if you have to buy 2 or 3 for your siblings, girlfriend, wife etc. I guess clothing is the single biggest cost for Deepavali

I was in Klang twice in October (and I think another 2 trips are in order if going by Then’s calculation). The crowd was less. I went on first day of Raya evening and also last Saturday night. Maybe the crowd is waiting for the last few days for better bargains.

The looming financial crisis has not dampened the spirit to shop for sarees and salwar kameez this Deepavali.
While saree shop owners admit that the Deepavali crowd in the Brickfields and Masjid India areas is a bit slow this time, they are still confident the cash registers will start ringing soon enough.

Women were still coming in for the latest Anarkali salwar kameez made popular by actress Aishwariya Rai, said Jothika Collections owner Thilagavathi Supramaniam.

“The Anarkali suit is the in-thing this Deepavali,” she said.

“Even though it is pegged at RM200 and more per suit, there is no shortage of buyers,” she said, adding that they were largely popular among the young crowd.

The Anarkali, designed with an empire line, boasts a traditional Moghul-style that has been revived with a contemporary look made popular via Bollywood and comes in classic colour combos — green with red and pink with grey.

The dinner saree is also a best-seller. Those who can afford to buy such premium products were not really affected by the dampened economy, said Thilagavathi.

“Sales for the lower range of sarees and salwar kameez are slightly down, but we have a steady stream of customers for our exclusive sarees like the dupion silk, brasso, traditional silk and sequined chiffon laser ones which come in vibrant colours.”

The prices for these sarees, range from RM120 to RM900 each.

“When Deepavali comes around, everyone wants to own at least one new outfit.”

So, the community is still spending money while the economy is in turmoil. Yeah, its once a year affair, so I rather not complain much. We hope that there’s enough left to cover for next few months.

So, how to be more prudent this Deepavali? Less clothes? Less food? Less travelling? Smaller open house?

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