I
have written about this sometime ago. 3 days ago, this issue cropped up again. Lim Guan Eng
asked parliament to explain what actually happened to the RM52 billion worth of
equities out of the RM54 billion given out in line with NEP and other NEP
clones. In an effort to increase Bumi equity in large businesses, by decree the
government insists that a certain proportion of new issues be granted to bumiputeras.
During
the term of the DEB and DEB successor plans- RM54 billion worth of equities
were given out. One and a half year ago, the PM admitted that out of the
RM54bn, only RM2bn was left. The RM52bn was sold off by their vendors to make windfall
profits out of the difference between the acquired price and the IPO prices.
It would be interesting to know the profile of the sellers.
Look
at the 2012 household income survey. It’s a compilation of data supervised by
EPU. Look at the share of income between the top 20%, middle 40% and the bottom
feeders- the bottom 40%.
For
as many years we care to look back, the income share of the 3 groups has consistently
been like this: the top 20 gets 50% of the income, the middle 40% gets 36% and
the bottom 40% gets 14% of the income. let me simplify this further:
In
an economy of 10 people with an income of 100, the top 2 persons get RM50, the middle
4 people get RM36 and the bottom 4 people get RM14. Each of the top 2 gets
RM25, the middle 4 people get RM9 each and the last 4 get RM3.50 each. That’s how
it works.
Question:
is RM3.50 a liveable income?
Why
has it become this way?
Distribution
of income depends on free market forces. If everything works perfectly, then
the top 20 gets 20% of income, the middle 40 and the bottom 40 will get 40%
each. But the market system isn’t perfect because the government
policies make it so. How so? the top 20% will craft policies that ensure the
bigger portion of the pie goes to them. In effect, the system works on the
principle of policies of the 20%, by the 20% for the 20%.
How
does the agenda translate into reality? Translated into policy it means,
polices must be drawn up so that the rich is made richer so that they in turn
can help out the bottom feeders. Students of economics know of the idea behind trickledown
economics. Enrich the already rich, because once they are moved by enlightened
interests, they will help out their less fortunate brethren.
We
in Malaysia know of this principle by another name. It used to be called
1Malaysia. Now it’s called Endless Possibilities.
Dato, trickle down effect that never goes down at all. I was so impressed once upon a time when I attended a lecture given by a professor explaining the concept of trickledown that he said was propagated by the man who can walk over the water Mahathir- rupa nya indah khabar dari rupa. Sampai ketua la Bumiputra kena kelentong kerana mu UMNOputra.
ReplyDeletein your perfect market force,an economy that produce rgt 100,top 2 person gets gt10 each,the rest get 1rgt each?
ReplyDeleteJohan. There r 10 people. The first 2 get rm20', the next 4 get rm40 n the next 4 get rm40. The income is 100. Right?
ReplyDeleteHaving worked in the private sector all my life, I say the same thing is happening.
ReplyDeleteAt my last job, top level mgmt with mthly pay of 15 to 20k ewc'd annual salary increment of about 2-3k and bonus bet 50k to 100k
A mid and low level staff with say mthly pay of 5k rec'd avg increment of RM150 - rm200 and bonus of 2 mths max!!
This happen yearly!!!
That means the top 20 (50%) and the other other two groups of 40 (36% and 14%)will all pay the same GST.
ReplyDeleteHow come some economists say it is "even taxation".
In Malaysia wages are much lower then what their counterparts get in Singapore. Wages have hardly increased over the years. Now what with higher food prices and petrol price hike?
Is an economic bubble in sight?
Dear Sakmongkol
ReplyDelete“Question: is RM3.50 a liveable income?”
The answer depends who you ask. To the Chinese the answer is obvious, but to the many Malays and Bumiputra, yes. At least they tolerate it. How so? UMNO supplements that subsistence income with religion and Ketuanan Melayu ideology. It makes the Malay masses forget their desperate condition. This has been tried countless times before in other countries. We are not the first, and UMNO is not original.
As for “of the 20%, by the 20%, for the 20%”, it is in reality more like “of the 2% by the 2% for the 2%”. Only a very small number of UMNO Malays are in the position to make or influence such policy to benefit themselves. Some of the 98% close enough to the 2% do get some trickle-down effect – after all the big UNO chiefs do need to feed and maintain a power base – but the unfortunate truth is that the vast majority of Malays get nothing. Sorry, they do get the RM3.50. Only Malay patience or rather impatience will change this status quo. In the meantime, the Christians and the non-Malays continue to serve as useful bogeymen. Someday – we can’t predict when – the Malays will wake up and realize who their real enemies really are. But it might be a bit late: the country would have become Burma, and our sons and daughters would be working as waiters and maids in neighbouring countries.
It is akin to rolling a die with the name: UMNO elites etched on five of its faces. Beside the name, an amount is fixed from 100 to 500, leaving on side allocated for the majority with the amount of 10 percent.
ReplyDeleteIn making the game of business monopoly, tender and power seems transparent, at the same time, making it escalatingly unattainable by the ordinary rakyat, the same people play with an octahedral die, a dodecahedral die, or an icosahedral die, or a rhombic triacontahedral die over the same cake or a newer towering cake.
Now their names & co and massive portions are etched on each face. Two or three multifaceted dice can be rolled simultaneously at any one throw. The possibility of making obscene money is endless - sky high ! The odds always favor the ordinary players. They have been assigned to lose out. And if there is a lack of player, they will pay a suave phantom to make the kill! However, the latter will have to pay the winners from his salary or borrowed money when the risk happens. Albeit a charismatic proxy stands a chance to win some and lose some. Part of the fun game.
In the worst scenario, the suave player disappears untraceable and bailouts are excruciated from his family of ordinary people, ordinary Rakyat.
In the highly ambitious game, with many dice and the same players - both amateur and seasoned tricksters can win and make obscene money umpteenth times with minimal or without chips ( in this case the new towering multi – tiered cakes ) minus the committed work, relevant vast work experience, integrity, cash and brains.
Beyond looking over the shoulder longingly, for some “elite jaguh kampong” absence can navigate them immense wealth from far- flung shores while sipping whisked latte.
Losers are always losers even if they win, notwithstanding the people’s representatives in Pakatan will have be more united across and within the alliance to make the Rakyat’s voice and aspirations a reckoning force to actively and directly participate in the economic transformation. And upstage stupid and wasteful issues and projects !
Idris Jala seems to have become clueless, restraint like his distant cousin Obama.
non gambler
Its a bad idea to compare Spore & Malaysia on income. You have to extend Spore by some 70k sq miles!
ReplyDeleteIts just sentiments and not valid.
Actually I am more angry at lives lost.....due to inept and incompetence of UMNO-BN and the cover up associated with it and keep going on and hidden under Royal Commission....
ReplyDeleteToday the families of the Bangladeshi and Indonesian overseas are wondering who is going to feed them.....and the Chinese family wondering the same & how can such death occurs in Cameron DAM SHAM without proper warning...is this the same UMNO Zahid Ideology Shoot first then investigate later???
The people who operate the Dam needs to be charged with Murder, manslaughter or Crime against humanity of Malaysian!!...then we get closer to the day when UMNO will suffer the same anger of the people!
It is no difference to a drunk driver or building collapse builder charged with manslaughter or murder if their ACTS causes death!!...How is this different?? I am going to do a Crazy Incompetence Inept act and AIM for UMNO-BN leaders Death......should be OK with Malaysia Allah Justice systems...can and cannot depending on location/situation!! ...Everything is failing under UMNO Barang Naik + GST!!
Dato, poverty strikes every race. And the goverment of the day is frenzy bankcrupting the nation, while propagating Ketuanan Melayu. Sadly the majority of the 47% minority voters are in lullaby...sweetened by the BRIM and having multiple orgasm due to the recent Ketuanan Melayu callings.
ReplyDeleteHi Dato Sak
ReplyDeleteI havent commented on your blog for a long time, ever since you joined DAP ;)
I have posted here before that the 30% bumi equity target is deeply flawed.
1. It focuses on equity shareholdings of companies. This is just one small part of the wealth of the nation. There are land, property, stock, deposits, bonds etc.
2. Worse, the equity caluclation is based on the nominal value of shares. Anyone with basic accounting or investment knowledge will know that a company's share nominal value has no relation to the actual value of a share. For example, a Maybank share has a nominal value of RM1. Its market value is much more, about RM10. For the government equity computation, ownership of one Maybank share is considered the same as owning one share of a nearly bankrupt Sdn Bhd company.
3. Finally, it excludes government shareholdings in companies. So it doesnt count the like of Petronas, the biggest & richest company in Malaysia. And EPF and Khazanah.
What is needed to uplift Bumiputeras are to set better targets. Maybe a combination of a several trackable measures such as annual income, unemployment etc, managerial professional positions etc.
Politics - Power - Money - Economy.
ReplyDeleteEconomy for the poor but real money for rich and powerful