Monday, June 30, 2008

Anwar in Hiding; Conspiracy Theories Abound

The story that Anwar Ibrahim is accused of sodomy again is hot in Malaysia. It warrant the front page in BBC website. Well not as top story as Mugabe being sworn in as President again for 6th term.

Now Anwar has been in hiding at Turkish Embassy since yesterday morning, as reported in Malaysiakini. At this juncture, its interesting to read the many conspiracy theories that surface. One claimed that this Saiful Bukhari Azlan is a mole planted by none other than Najib Tun Razak, the Deputy Premier. Believable?
Well, in one press conference Najib did say that he doesnt discount contesting the No. 1 position in Umno end of this year. Then there is that Najib-Rosmah-Altantunya link as expounded by Raja Petra. So the theory says that this accusation is to take away the glaring attention from Altantunya case and its link to Rosmah. Make sense?

READ more Here.

Zulkifli Noordin has this list on his blogpage about assaasination attempt on Anwar Ibrahim.

Sunday, June 29, 2008

Anwar is accused of Sodomy again!

News across online media is hot with this new accusation. Read it in Malaysiakini HERE, HERE and HERE. I notice it less than an hour ago through Fudzail's blogpage.

Think about it. It doesnt matter now whether Anwar did IT or not. This accusation is enough to do some damage to the strength of Pakatan Rakyat, and Anwar's name. Truth doesnt matter, but it will buy time for Barisan Nasional and UMNO to regroup and buy favours as well as whip the errant MPs into line.

Few days ago Yong Teck Lee led the blind charge to unseat AB, and it didnt materialise. AB still in power. Now is the time to strike back. They have strike back at Yong Teck Lee by making public the Sabah Land fiasco and implicating Yong Teck Lee. Yong Teck Lee is finished if Anwar could manage to get enough quorum to unseat the govt soon. Now its time to strike at Anwar.

What I can see is that Anwars team in PKR comprise of mostly the young turks. Well this could be an advantage, their clean image and enthusiasm and ideals. But the disadvantage is their inexperience. The young normally wouldnt be able to stand pressure and temptation. I am not levelling anything at these young idealists, but they should be tempered with experienced older generations.

Now lets examine the background of this same accusation of sodomy against Anwar. Malays are religious people. Anything that is forbidden is not tolerated in Malay society. Sex outside marriage is forbidden. Homosexuality is worse than forbidden, so sodomy and homosexuality is some degree above sex outside marriage (zina). In Islam the punishment for sodomy is heavier than zina. So its make sense to accuse someone of committing sodomy to kill his political career. Its doesnt matter its true or not. Its enough to kill Anwar political career. Now look at the Malay politicians who has been accused of zina, sex with underaged girls, running off with palace princess and sex with prostitutes. They may be put in cold storage for a short while, but they could always come back.

Looks like someone learnt a lot from Robert Mugabe, and apply it the Malaysian way.

An Ulama told me that in the Day of Judgement, there is a group of people that Rasullullah call the bankrupt. 'Why Rasullullah?' A companion asked. 'Because in this world he did good deeds and prayers etc. But these people did a lot of dosa to other people, like aniaya orang, mengumpat etc. So in the Day of Judgement, he has to pay back his dosa to other people in the form of his good deeds and amal ibadah, until nothing left. Worse, when there is nothing left to pay for his dosa, he has to take on other people's dosa. And he end up in the Hellfire. Thats why Rasullullah call the the bankrupt.

Kata Uztadz, "sampai apek Cina boleh kata, " Aiyah Haji, lu dulu manya alim masa di dunia, gua bukam Islam lagi lo. Apa pasal Haji duduk neraka lagi bawah dari saya?"

Elangesvaran Issue: In Islam, He Belongs to Jahannam (Hell)

Just read this piece on the BBC earlier. So I checked on Malaysiakini, apparently it was a few days ago. It was reported HERE in Malaysiakini.
The story was also highlighted by another blogger, Poobalan.

When I was a kid, about 6-7 years old, there was one hot gossip in the village about a man who hanged himself from a jackfruit tree near his house. He was successful in his suicide attempt. He died. So the story goes that a few days before he committed suicide, he met everybody he knew and of some importance to him, and said goodbyes of some sort. The story also goes that his face was blackened when he was dead. And the villagers just bury him like a dead animal, ie without performing jenazah prayer for him. There was also a story the jackfruit tree turn smelly "langu". He was yelling help at the last minute, when he was hanging and couldnt extricate himself out.

Later on his family chopped down that jackfruit tree.

It is without doubt that suicide is forbidden in Islam. Those who commit suicide belong to Jahannam (Hell).

During the time of Rasullullah SAW, there was also cases of suicide. One time Rasullullah was with one companion, before the war of Hunain (if I am not mistaken, pls correct me), Rasullullah was pointing to a warrior who was brave and a good fighter, saying this man is ahl Jahannam, or something like that. The companion asked, "why Rasulllullah, he is a brave warrior and fight bravely." "Because he will receive injury and he couldnt bear it and killed himself."

My apologies, my wording is not right. But its something like that, that I remember.

So I do not know why there is a fight over the body of Hindu man who committed suicide, on the slim possibility and slim evidence of a piece of paper saying he is a Muslim, allegedly that he written himself.

Even if he professed to be Muslim, by committing suicide, he is not anymore.

Read the story HERE.

Saturday, June 28, 2008

Current Issues: Subsidy is it GOOD or BAD?

Before we start, lets define what is subsidy. I got this from wikipedia.

subsidy - In economics, a subsidy (also known as a subvention) is a form of financial assistance paid to a business or economic sector. A subsidy can be used to support businesses that might otherwise fail, or to encourage activities that would otherwise not take place.

Subsidies can be regarded as a form of protectionism or trade barrier by making domestic goods and services artificially competitive against imports. Subsidies may distort markets, and can impose large economic costs.[1]

Financial assistance in the form of a subsidy may come from one's government, but the term subsidy may also refer to assistance granted by others, such as individuals or non-governmental institutions, although these would be more commonly described as charity.

Is subsidy good or bad? That is a subjective question.
BUT if we view good in economic terms as increasing productive benefit for the nation, increasing wealth and availability of goods and services now and in the future, then there are some form of subsidies that fall under this GOOD category.
I have cut and pasted this article below. Then we would notice that the forms of subsidies before 1980's are the ones that falls under GOOD category. But thing started going downhill from there.
Coming back to the petrol price hike issue, I am of the view that subsidizing petrol and diesel is BAD for the nation. A fast way of depleting our nation's resources.

this article from www.malaysia-today

A Critical Review of Price Control & Subsidies in Malaysia

Written by Dr. R.Thillainathan

(A Note prepared for delivery at LSE Alumni’s Forum on Rise & Fall of Subsidies on 26.5.08)

The Forum is on the subject of the Rise & Fall of Subsidies. Under DrM the extent and size of subsidies widened and expanded. The framework he created for the control of prices of petroleum products was a time bomb. I am sorry it did not explode in his face. Instead it exploded in the face of his chosen successor PM DB. In the process it led to subsidizing consumption on a colossal scale and on an indiscriminate and inequitable basis. More areas of investment were also subsidized. Such investment subsidies is being further expanded under DB.

Production & consumption subsidies – nature, extent & implications

Historically, the economic and financial management of Malaysia has been generally prudent. Reliance on subsidies and price control was limited and very selective. But DrM was more radical with his price control experiment. An experiment that has turned out to be a nightmare for Malaysia and his successor. It distorts resource allocation, makes for inequity and threatens to undermine the country’s sacred legacy of fiscal prudence.

Before DrM subsidies were aimed at production and investment and not at consumption. A more serious problem with subsidies then – it was implicit and opaque and not explicit or transparent. Therefore it was less amenable to public scrutiny. And it made it more difficult to question the government on its subsidy program.

Investment activities that were subsidized heavily but implicitly were as follows:

- double cropping of padi (with irrigation provided free of charge);

- land development and resettlement (with the administration cost of the scheme not recovered from the settlers);

- provision of education (where fees charged were small relative to cost and more so for higher education) and

- key areas of manufacturing and tourism (where profits earned were exempted from tax).

As the padi farmers and settlers were amongst the poorest in the country, the subsidies extended to them were not wholly inequitable. University graduates and businessmen (in non-traditional areas) singled out for subsidies were less deserving no doubt. But in the first few decades of independence it may have been justifiable to subsidize graduates and businessmen given the high rate of unemployment and the critical importance of knowledge workers for development.

DrM greatly widened fiscal incentives (to cover agriculture and IT services) and expanded the size of implicit subsidies (by exempting profits earned over a longer period).

Dato Seri DB has also aggravated inequities. Firstly by widening the class of exempt investors. It now covers even those engaged in real estate development. And secondly by withdrawing the tax-exempt status of equity investments of workers with the EPF and of retail investors with PNB and the likes (by replacing the imputed system of taxation of dividends with a single tier system of taxation).

Let us now look at explicit subsidies. Its coverage and size was always limited until DrM’s time bomb exploded in DB’s face. The handouts under the school food & nutrition program are the only items of consumption that were subsidized and strictly in a limited way. Production inputs subsidized were fertilizers as well as (to an extent) credit in padi farming and textbooks for schooling. The payment of a guaranteed price to local padi farmers has been, until recently, more in the nature of a production and not a consumption subsidy. (See footnote 1 in the attached Annex Schedule). Now with a run-up in the world price of rice and a near unchanged guaranteed price, the padi farmers are likely to be the real losers and the licensed traders/importers the big winners.

DrM’s consumption subsidy time bomb took the form of the approved price mechanism (APM). He erected this back in 1982 for petroleum products. The mechanism maintained the price payable by the consumer to the government’s fixed (or controlled) price. To ensure that the producer received the market price, it adjusted the tax payable by the oil companies or the subsidy payable to them.

DrM was the lucky PM. During his long over-stay as PM, to maintain the fuel price (paid by consumers), only the tax rate had to be adjusted and little or no subsidy was payable.

DB was not so lucky. Since he became PM oil price has escalated, (partly thanks to the easy money policy of the US).

In 2008, assuming an oil price of USD100-120 pb, the fuel subsidy is estimated at RM18 billion and the tax forgone at RM7b. Therefore the total consumption subsidy to motor vehicle owners, the well-off in Malaysia, is a colossal RM25b.

In 2006, when oil price averaged USD70 pb, the total subsidy paid was RM10 billion. Of this RM7.6b was captured by motor vehicle owners and operators. This excludes the tax revenue forgone of RM7.3b.

In 2002, during DrM’s last full year in office, when oil price averaged USD25.50 pb, the total subsidy paid was only RM3.7b (of which fuel subsidy was probably RM2b).

DrM’s rotten legacy (with respect to price control and the resulting consumption subsidy) was not confined only to controlling the price payable by the consumers (to an arbitrary price it had fixed).

It also extended to a second type of price control – one aimed at regulating profit of utilities with monopoly power. A utility was permitted to increase its price provided the return on its capital was below the prescribed threshold return. However, under the Mahathir Administration, the maintenance of price of a utility (at an unchanged level), was accepted as an end in itself.

This applied not only to the utilities such as water, electricity and telecommunications but also to gas.

Petronas, which is the producer and distributor of gas in Malaysia, is required to sell it at a controlled price to the electricity generators at a price well below its international price. The Mahathir Administration had decided to control the price of gas because it was also controlling the price of electricity. This has led to cross-subsidization of not only electricity generators but also electricity users. It interferes with the smooth operation of the market mechanism and distorts resource allocation. To the extent that the subsidy is an off-budget financing arrangement it is more opaque and makes meaningful analysis of such arrangements more difficult

For an oil price of USD100-120 pb, the implicit subsidy from the control of gas price is estimated at RM20b.

It is staggering to note that now the consumption subsidy, and just for fuel, will far outstrip the development expenditure of the public sector. The fuel subsidy in 2008 is estimated at RM45b versus the projected total development expenditure of RM40b. Interestingly the RM200b 9MP development expenditure target was itself a record. The size had worried many economists on its likely inflationary or crowding out effects.

Fuel price control & subsidy – an inspired insight or a monumental folly

I am surprised that some had viewed DrM’s design of the APM as an inspired insight. It was in fact a monumental folly. Stabilizing the fuel price through an adjustment in duty (which offered in any case only a limited cushion) or through a subsidy payable, leads to the squandering of a scarce resource. And as this is a depleting resource the government failed to take into account the real risk of a continued rise or a sudden jump in price (as has certainly been the case from 2004). And once the public gets used to a fixed price, the government will find it very costly (except in a crisis) to raise the price, and hence remove the subsidy especially in a democracy, (again as is amply evident in Malaysia).

The massive subsidy for fuel (almost the only consumer good subsidized in the country) is enjoyed by motor vehicle owners and operators, the better off segment of society. There is no case for the granting of this subsidy. No such subsidy is being granted to non-vehicle owners and operators, the worse off segment of society. Only some users of public transport may deserve the subsidy but there are less indiscriminate and inequitable ways of addressing their needs.

The removal of the fuel subsidy will no doubt greatly increase the cost of owning and operating motor vehicles and force the less well off amongst them to use public transport. As the coverage and frequency of public transport services is not satisfactory this will greatly inconvenience this group. Therefore the removal of the subsidy has to be accompanied by a corresponding improvement in public transport, (both bus as well as mass transit rail transport including an effective system of feeder buses to support mass rail transport). And given the very bad state of traffic congestion encountered by road users in getting to their work place and back, priority should also be given to the introduction of urban congestion charge on road users. There is a strong case for the revenue collected from this charge to be spent on cross-subsidizing public transport. Of course the imposition of the congestion charge will immediately reduce the number of motor vehicles getting into the city. Public bus transport can be stepped up concurrently (which is not very difficult) to cope with the increased demand (with mini buses re-introduced to service commuters in the suburbs)

The removal of the subsidy will also impose a painful readjustment on energy-intensive industries or force them to become more fuel efficient. But this is something to be welcomed in the interest of building a more competitive and resilient economy.

An aside on DrM’s zero inflation target & price control

In passing it is also instructive to refer to a third type of price control - reliance on which was greatly increased by DrM as a means to achieve his so-called zero inflation target[1]. This form of price control was aimed at price maintenance as an end in itself, and applied to industries dealing in so-called essential goods such as sugar, cement, steel, motor vehicles and even chicken. To make price control more palatable to the businessmen, the authorities protected their profits by strictly regulating competitive imports or entry into these industries, and by allowing the businessmen to seek a price review based on changes in their cost of operations. This type of price control activity with import or entry restriction can expose the regulator to capture by the regulated.[2] It can enable the businessmen to charge a higher price or short-change on quality thereby undermining the welfare of consumers or the competitive position of other businessmen who are end users of the controlled products.[3] Where the authorities have been slow in allowing price adjustments in the face of major shifts in supply or demand conditions, such price control activities have led to shortages and black marketeering. This has been found to be the case from time to time in the cement and steel industries.

Where the Government control activity has taken the form of a severe restriction on imports regulated through the issue of import permits with a nominal regulation of prices, as is the case with the import of motor vehicles, this has led to abnormal profits in such distributive trades and intense competition amongst rent-seekers to capture such profits.[4] Rent-seekers are always on the lookout for opportunities to create contrived scarcities to earn monopoly rents. To eliminate such incentives and opportunities, the Government has to make a firm commitment to competition in all its economic pursuits.

Badawi Administration’s limited attempt at curbing growth in consumption subsidies

The Badawi Administration, after the general elections of March 2004, started raising the prices of petroleum products. But it halted this process from 2007, partly on account of some public disquiet and more in order not to prejudice its prospects in the subsequent general elections which it called in March 2008. Now that the elections are over it has no choice but to raise the fuel price and eliminate the unprecedented and massive subsidisation of consumption if the country’s legacy of fiscal prudence is to be restored.

In 2004, the total Government revenue was around RM100b. But only RM8.8b was generated from taxes on motor vehicles. However, petroleum products were enjoying a subsidy that year of RM4.2b. Less the subsidy net taxes on motor vehicles was only RM4.2b. In 2008 motor vehicle owners are likely to end up enjoying a subsidy on a net basis of around RM10b.

There is no case for motor vehicle owners, certainly a very well-off group, to enjoy such subsidies. There is also a strong case for the Government to subject the consumption of petroleum products to sales tax. The level of the sales tax on petroleum products in Malaysia is a lot lower than most countries, including those in the Region. At the current level of oil prices, the duty has to be waived. In fact the Government has to provide a substantial subsidy, in addition, to keep prices at the current level. Even if Malaysian consumers pay prices which reflect market prices and which includes the full Malaysian duty, the prices paid by Malaysian consumers will still be lower than overseas prices. Therefore, in the interest of fiscal prudence as well as equity the Government should let prices rise to the desired level, at least on a phased basis.

Collecting taxes on motor vehicles through a duty on petroleum products is also more efficient as the duty payable will be related to usage. Therefore, it will create the right incentive for users to be less wasteful and to economise on their use when prices are higher.

Road tax as well as import and excise duties on motor vehicles are a less efficient form of tax.[5] They cannot be justified as a wealth or luxury tax as other forms of wealth or luxury consumption are not subject to such taxes. If the purpose is to regulate the car population, it is best to require a certificate of entitlement (COE) to own a car (as in Singapore) or to operate the car (as can be done for use of a car in Kuala Lumpur’s Central Business District or CBD.) The certificates can then be auctioned off amongst the higher bidders. The Government is now better placed to make this policy shift with the sizeable investment it has made on mass transit rail transport. The additional investment required to improve this form of public transport will be a lot less than that required on flyovers and elevated highways. The massive investments for an improved road network in any case can alleviate traffic congestion only on a temporary basis.

The Government continues to build more flyovers and elevated highways in the Klang Valley instead of improving the inter-face between the different mass rail systems, extending their coverage, reintroducing a mini bus feeder system within each suburb and by ensuring a more effective enforcement of traffic rules. One wonders if the DB administration’s continued reliance on the system of negotiated tenders – another rotten legacy of the DrM administration – (and in spite of the DB Administration’s declared intention to rely on it only on an exceptional basis when it came to power in October 2003), has distorted incentives of the decision makers.

Where improvements in public transport (including better bus services) are combined with a Road Pricing System for entry into KL’s CBD, the use of revenue generated from COEs and the Road Pricing System to cross-subsidise public transport can be easily justified as users of public transport do not impose any external costs on other road users.

The improvements will greatly reduce the multi-billion RM losses the economy is presently suffering from the time lost in commuting within the Klang valley and from the enormous stress traffic congestion imposes on commuters.


Price control and price subsidy has been on the rise in Malaysia from DrM’s early years as PM. There is no sign of its fall under the DB administration.

Price control is inefficient for attaining economic or welfare goals for several reasons. Firstly, it distorts resource allocation. Secondly, it dispenses with the services of the price mechanism which provides a costless way of coordinating economic activities which are by their very nature extremely complex and involved. Thirdly, beneficiaries cannot be targeted and thus ends up benefiting those who do not deserve any assistance. Often those who deserve the assistance are only a small minority and there are other more efficient and less inequitable ways (such as income transfers) of reaching out to them. Fourthly, price control encourages illegal and immoral activities including bribery, corruption, smuggling as well as illicit manufacture.

The size of consumption subsidy, (and almost entirely due to the control of fuel price), has gone almost completely out of control. Ineptitude, opportunism or lack of grit is now threatening the integrity of the government’s finances as well as the very fabric of the economy.

The production subsidies accorded to businessmen through a system of fiscal incentives (or tax breaks) have been increasing from the early years of the Mahathir administration. Many corporations including MNCs have thus not paid taxes for many, many years running. More importantly, under the current full employment environment, investments generated by fiscal incentives create no additional jobs and in fact reduces tax revenue. Why is this so? With full employment, the new investment displaces an existing investment which is currently paying taxes. And hence the country ends up collecting less tax revenue.

The alternative to a system of fiscal incentives is to rely on a lower tax regime to promote investment. A lower tax regime can make for more investment, higher profits and hence more taxes. This happened in Malaysia in spite of the big reduction in tax rates during the mid and late 80s. If there are no tax breaks, there will be more corporate taxpayers. The resulting gains on tax revenue from the removal of fiscal incentives will far outweigh any likely losses in tax revenue from the reduction in the tax rate. These reforms will also make for less distortion in resource allocation.

R. Thillainathan


Appendix: Relationship between total subsidies1 paid and oil price, 1999-2007



(RM billion) Oil price (USD pb)

1999 1.14 18.56

2000 4.82 29.89

2001 4.55 24.92

2002 3.68 25.48

2003 2.68 30.35

2004 5.80 41.20

2005 13.39 58.47

2006 10.11 69.60

2007 12.15 74.00

Source: MOF Treasury Economic Reports for relevant years.


1.As per 2002/03 TER goods accorded subsidies were as follows: diesel & LPG, rice, fertilisers, textbooks as well as items given under the food & nutrition program for school children. With respect to rice, the government controlled the price payable to padi farmers. Those licensed to buy the poorer quality rice from the local farmers are also licensed to import the higher quality rice from abroad such as Thailand. The higher the guaranteed price for local rice, the more likely is the buyer/importer to make a loss from engaging in the rice trade business. So where the government fixes a high guaranteed price it has to subsidise the rice trader to cover his losses and make a normal return for engaging in the business.

2.As is clear form the data DrM’s administration did raise the fixed price in response to the increase in oil price from 2001. Fortunately for him the extent of the rise in price was small relative to the rise in oil price in the mid-2000s. There is no doubt that he would also not have raised the fixed price from 2007 on account of electoral considerations. This is readily evident in his decision not to introduce the VAT/GST in spite of its widespread adoption the world over. In designing the APM he should have realized that once set up it becomes an excellent tool in the hands of any populist politician to maintain himself in power and he is probably no exception.

3.In 2006 as per the TER fuel subsidy accounted for 76% of the total subsidy paid.

4.These are best estimates and not actual.

[1] DrM’s infamous experiment with price control (through the restructuring in 1994 of the Department of Domestic Trade into the Ministry of Consumer Affairs) was aimed at achieving his target of zero inflation. In this context he had opined that the pursuit of inflation targeting by economists via the control of money supply and interest rate was simplistic and easy.

[2] This type of price control was dealt with at length in R. Thillainathan, Malaysia’s Experiment with Zero Inflation and Price Control – An Assessment, Malaysian Institute of Economic Research, 1995 (See MIER Monograph Series No. 4).

[3] In the steel industry, end users who wish to import steel products on account of their more stringent quality requirements, have to convince a panel made up of domestic steel manufacturers and regulators as to why they should be given a permit to import the products. The domestic car makers have also faced this requirement but as they are in a promoted industry, one promoted by the previous Administration, their challenge was a less onerous one.

[4] From January 2004 until 2007, the Ministry of Domestic Trade & Consumer Affairs started the practice of licensing jobbers to supply diesel and Mogas to independent distributors in the rural areas who are not a franchisee of an oil company. As the price of diesel was controlled well below its market price for many classes of consumers, this opened up possibilities for smuggling diesel to foreign countries or reselling it to consumers who are not eligible for such a subsidy. This licensing requirement therefore opened up a new rent-seeking opportunity in classic text book terms.

[5] High road tax has led to evasion. And bribery of enforcement officers by the evaders is not uncommon.

Dr. R. Thillainathan is past president of the Malaysian Economic Association. He obtained his 1st degree from the University of Malaya and Masters and PhD at the London School of Economics.

Thursday, June 19, 2008

Pulau Batu Puteh belongs to Johor, period!

It gets your blood boiling to read this piece in Malaysiakini that Sultan Johor said that Pulau Batu Puteh belongs to Johor.

No doubt, every Malaysians would agree that Pulau Batu Puteh belongs to Malaysia. Singapore has NO BASIS to claim sovereignty in the first place.
Its about time that Sultan Johor also claim sovereignty over that island Singapura.

International Court of Justice has made a blunder, a big blunder. Their judgement is just like saying that 'if you occupy your parents land, even if your parent have the title deeds' to the land, that land is yours.
What kind of judgement is that?

By the same token, if you occupy that piece of land called Singapura, that land is yours, you have sovereignty over it. Did Stamford Raffles buy that land outright from Sultan Johor back in 1819? (did I get the year wrong?)

Its high time that we walk over and take possession. That land called Singapura and that small rock called Pulau Batu Puteh.

Sultan Johor mahu ikhtiar dapat semula Pulau Batu Puteh
Jun 19, 08 2:37pm
Sultan Johor Sultan Iskandar bertitah baginda akan berikhtiar mencari jalan bagi mendapatkan semula hak kedaulatan Pulau Batu Puteh yang kini dimiliki Singapura.

Ketika merasmikan pembukaan persidangan Dewan Undangan Negeri Johor di Johor Bahru hari ini, baginda bertitah bahawa pulau berkenaan bukan milik republik itu sebaliknya hak milik kerajaan Johor.

pulau batu putih pulau batu puteh 230508"Suka beta ingatkan bahawa beta tidak lupa pada Pulau Batu Puteh. Pulau Batu Puteh bukan hak Singapura tetapi hak milik Johor. Sampai bila pun beta akan cari ikhtiar untuk mendapatkan semula pulau milik Johor itu," titah baginda.

Hadir sama berangkat ke istiadat pembukaan itu, Tunku Mahkota Johor Tunku Ibrahim Ismail dan Raja Muda Johor Tunku Ismail Ibrahim, demikian menurut laporan Bernama.

Sultan Iskandar juga mengingatkan rakyat supaya hidup secara muafakat bagi menjamin keberkatan dalam hidup.

Baginda turut melahirkan keyakinan bahawa kerajaan negeri di bawah kepimpinan Menteri Besar Datuk Abdul Ghani Othman akan terus maju.

MB enggan ulas

"Beta bersyukur kerana kita dapat terus berada dalam keadaan selamat, aman dan damai. Tahniah kepada kerajaan di bawah pimpinan Datuk Abdul Ghani Othman yang terus mendapat amanah rakyat.

"Oleh itu, kita mesti mengelakkan unsur perkauman dan agama, berpegang teguh kepada Rukun Negara serta Raja Berpelembagaan. Ahli Dewan Undangan Negeri pula hendaklah menjalankan tugas dengan ikhlas, jujur dan memahami hasrat rakyat," titah baginda.

Abdul Ghani, yang ditemui pemberita selepas istiadat itu, enggan mengulas lanjut mengenai titah Sultan Johor berhubung Pulau Batu Puteh itu.

"Tuanku bertitah bahawa Pulau Batu Puteh kedaulatannya telah diputuskan oleh Mahkamah Keadilan Antarabangsa. Saya tidak mahu komen lanjut. Kita dengar apa yang telah dititahkan," katanya.

Pada 23 Mei lalu, Mahkamah Keadilan Antarabangsa di The Hague, Belanda, dalam penghakimannya yang menamatkan pertikaian antara Malaysia dan Singapura, memberikan kedaulatan Batu Puteh kepada Singapura dan Terumbu Karang Tengah kepada Malaysia.

Kedaulatan Terumbu Karang Selatin pula menjadi milik negara di perairan di mana ia terletak.

Sultan Murka!

Terkejut juga bila baca berita yang kata Pemuda PAS Selangor nak buat tunjuk perasaan dekat Stadium Selangor kerana Ella dan Mas Idayu buat Konsert sempena perlawanan bolasepak antara Selangor dan Singapura.

Saya tak pernah pergi Konsert Ella. Tak tahu pula kalau Ella tu melalaikan atau menyesatkan, bagi saya Ella tu macam orang biasa saja. Pernah jumpa di supermarket 15 tahun dulu, masa tengah top, macam orang biasa saja. Tak lah perangai macam Paris Hilton.
Sila baca DI SINI.

Jadi saya tak berapa faham kenapa Pemuda PAS membantah sangat. Saya juga agak Ella, Mas Idayu dan Alleycats akan perform lagu lagu Melayu. Memang kita tak expect mereka nak bernasyid..

Bagi saya, kalau tak nak dengar, jangan pergi lah. Pergi masjid ke, banyak lagi bende boleh buat.

Kan lebih baik kalau kita menegur dengan cara elok. Konsert belum lagi di adakan, kita dah bantah, dah nak buat tunjuk perasaan. Mana tahu Ella dan Mas Idayu nanti nyanyikan lagu lagu nasyid, lagu lagu yang mengajak kepada kebaikan. Bukankah buruk sangka kepada Ella dan Mas Idayu tu. Tak elok, Buruk sangka tu berdosa.

Kan lebih baik kalau kita sama sama pergi, kendian buat permintaan kepada Ella dan Mas Idayu nyanyikan lagu lagu yang kita suka, nasyid ke, Talal Badru Alaina yang macam Yusof Islam nyanyikan tu. Itu kalau nak pergi dan pantau.

Dah tu buat surat hantar kepada Menteri Besar.. dah tu kena panggil jumpa Sultan..


Memang betul Sultan kata, jangan besar besarkan perkara trivial ni, belum sampai masanya nak larang itu ini. Ini tak boleh itu tak boleh.
Nampak sangat kita ni jumud.

Memang betul amal makruf, nahi munkar.

Buat amal makruf tu dulu, nanti nahi munkar, bila sampai masanya semua orang faham dan tak buat.

Kat kampung dulu ada orang tua nama Pak Mokhyi. Tapi itu kat Tanjong Karang 30 tahun dulu. Si Uztadz Sallehen Mokhyi, Ketua Pemuda PAS Selangor ni asalnya orang kampung saya ke?

Inflation Rate Highest in 22 month

Its official, Malaysian Inflation rate at the highest rate in almost 2 years. This report in The Guardian UK and also in Malaysiakini.
This means that the policy of price control on essential items is not working.

For years it has always been the official policy in Malaysia to control price of essential items, rice, flour, sugar, cooking oil etc. Enforcement officers making rounds to markets to check on prices of fish, vegetables and meat. This has been going on for as far back as I can remember.

What is the effect does this have on producers, people whose enterprise is producing vegetables and supplying fish and meat to the nation?
Well, to start with, the profit margin is low or negligible, and sometime not profitable. So producers shift away from these agricultural enterprises. In the long run, less people producing these foods locally. So supply would be tight.
WHen that happen, prices hit the roof. This is reflected in higher inflation.

Who is to blame? Government policy, or policymakers who think they are smart.

Malaysia's May inflation at 22-mth high, to rise more
Reuters, Wednesday June 18 2008 (Adds details)
By Liau Y-Sing
PUTRAJAYA, Malaysia, June 18 (Reuters) - Malaysia's inflation rose to a 22-month high of 3.8 percent in May and is set to rise further following a rise in domestic fuel prices this month, putting pressure on the central bank to raise interest rates.
However, Domestic Trade Minister Shahrir Samad told a news conference on Wednesday that the government does not expect June inflation to spike to double digit levels.
The government raised domestic fuel prices earlier this month, joining a growing rank of Asian countries unable to maintain hefty subsidies as global oil prices soar.
The consumer price index in May rose 3.8 percent from a year earlier, above expectations in a Reuters poll for an increase of 3.2 percent and above April's 3.0 percent.
"The higher inflation print is not too surprising though it should be noted that the steep fuel hikes in June have not come into the picture yet," Joanna Tan, Singapore-based Economist at Forecast Pte Ltd, said.
"Underlying price pressures cannot be overlooked. Coupled with the June fuel price hikes, the next headline print is expected to be one of escalated inflation," she added.
The government raised petrol prices by 41 percent early this month and lifted diesel prices by 63 percent as part of a broad reform of energy policy to prevent subsidies from eating up a third of its budget.
The central bank had said energy price increases would push inflation to an average of 4.2 percent in 2008, well above its previous forecast of 2.5-3.0 percent.
However, the latest Reuters forecast showed average inflation for this year could reach 4.8 percent, which would be the highest since 1998 at the height of the Asian financial crisis.
Malaysia's inflation has crept up since last year but is still among the lowest in Southeast Asia, thanks largely to price controls on essential goods such as flour and cooking oil.
Annual inflation in Indonesia and Thailand stood at 10.38 percent and 7.6 percent, respectively, in May.
Some economists fear higher borrowing cost could undermine consumer spending. (Additional reporting by Harry Suhartono, Niluksi Koswanage and Soo Ai Peng) (Writing by Harry Suhartono, editing by Jalil Hamid and Neil Fullick)

Wednesday, June 18, 2008

The Root of Inflation

Economists generally categorize inflation into 2; cost-push inflation whereby cost of main driver of good and services increases and demand-pull
inflation, whereby there is just too much demand for the goods and services, so producers increase prices to rake in better profits.

Most of us would readily identify the first cause in our current situation, ie the the price of oil in the world market increased substantially, which lead to chain effect down the production sector of the economy. If this was just before the WW2, it would not matter so much. Oil was not the main driver of production cost back then.
Lets just accept the fact that there is nothing much we can do about the price of oil in the world market. We all know that the current high prices of oil is achieved through increasing demand from newly rich economies of China and India as well as rampant speculative betting by investors in the market.
Just because our country produce oil, doesnt mean that we can demand to get subsidized petrol for years to come. What if we dont have oil, like what it was in the sixties?

Now, lets remove oil as a factor in Malaysian economy, and consider inflation.

Some of us would admit that there are elements of demand pull inflation. Next time we go to the 'pasar malam' check how traders sell their vegetables, ready-to-eat food and fresh food. How brisk is their business?
We would notice that people are more affluent these days compared to say, 10 years ago. Driving cars to work is normal, not motorbike or bicycle. Malaysia economy shift from agriculture based 20 years ago to manufacturing and services. When people get richer, they consume more, and a substantially higher portion of this consumption is on food. Notice too that obesity and 'wealthy diseases' like high blood pressure, diabetes is becoming more prevalent even in villages. So the demand for basic food has increased substantially. This is the demand pull inflation.

this article from
Consumer inflation 'could top 4%'

How one family is having to cut back in response to rising food and petrol prices
Rising food and energy prices could push UK consumer inflation above 4% this year, the governor of the Bank of England has warned.

He was speaking after the Office for National Statistics (ONS) said the Consumer Prices Index (CPI) rose by 3.3% in May, up from 3% in April.

This is the fastest rate since the CPI measure began in 1997, the ONS said.

The wider Retail Prices Index measure of inflation rose to 4.3% from 4.2% the previous month.

The biggest contributor to consumer inflation was the rising price of food and non-alcoholic drinks, the ONS said.

This was mainly due to the increasing cost of meat products, particularly bacon, and vegetables.

Increasing household energy bills were also a significant factor, along with the rising cost of books, stationery and foreign holidays. However, this rise in the cost of leisure and recreation was offset by a fall in the price of DVDs, according to the ONS.

'Considerable uncertainties'

If inflation rises more than one percentage point above the government's 2% target, the Bank of England governor must write a letter to the government to explain what action it is taking to control consumer prices.

In his letter to the chancellor, Bank of England governor Mervyn King blamed sharp rises in the prices of food and energy for the increase in the rate of inflation.

He also suggested that prices will rise at a faster rate in the coming months. DEAR MERVYN...

To return now to inflationary pay settlements would undermine rather than raise people's living standards

Chancellor Alistair Darling

"As things stand, inflation is likely to rise sharply in the second half of the year, to above 4%," Mr King told the chancellor.

"I must stress however, that there are considerable uncertainties, in both directions, around this, and any such projection is particularly sensitive to changes in domestic gas and electricity prices," he said.

Mr King has had to write such a letter to the chancellor only once before, when inflation hit 3.1% in April 2007.

The governor said that the rate of inflation should peak towards the end of this year, as long as there were no "unexpected increases in oil and commodity prices".

Should the UK avoid severe external shocks, then the rate of inflation will begin to fall back towards the 2% target next year, Mr King said.

In reply, Chancellor Alistair Darling called for "restraint" in pay rises awarded in both the public and private sector.

"To return now to inflationary pay settlements would undermine rather than raise people's living standards, with a damaging circle of wage increases eroded by steadily increasing prices," the chancellor said.

Economic slowdown

The higher-than-expected rise in consumer price inflation has transformed expectations for interest rates, according to the BBC's Economics Editor, Hugh Pym.

The global nature of these price changes is evident in inflation rates not only in the UK, but also overseas

Confident talk of two or more cuts in borrowing costs from the present level of 5% has been replaced by forecasts of unchanged or even higher rates in the months ahead, our editor says.

Mr King and his colleagues are unlikely to cut interest rates further until they are convinced that the inflationary threat has passed - despite pleas from those struggling in the housing market.

However, analysts warn that raising interest rates to curb inflation could dampen an economy already dented by slowing growth and the weakening housing market.

"The key factor [deciding the direction of interest rates] will be whether increased inflationary expectations feed through into greater wage demands and second round effects – at the moment average earnings growth is stable, but the MPC will be watching it closely through 2008," said economist Charles Davis from the Centre for Economics and Business Research.

Passed on

Consumers and companies around the world have been feeling the effects of higher energy and food bills.

"The global nature of these price changes is evident in inflation rates not only in the UK, but also overseas," Mervyn King said.

In the past 12 months, world agricultural prices have increased by 60% and retail food prices by 8%, the governor said.

Oil prices have nearly doubled over the past year and on Monday the price hit a fresh high of almost $140 a barrel in New York.

Wholesale gas prices are up by about 160% in the past year and UK household energy bills have risen by about 10%.

Those increases have prompted many people to rein in their spending in other areas.

Tuesday, June 17, 2008

Current Issues: Inflation

Normally Central Banks would use its 'tools' to counter inflation, ie raising interest rate. Why?
Higher interest rate would dampen investment and the demand for money. People and businesses would simply park their money in the bank and earn interest instead of borrowing money from the bank to invest in economic enterprise, like starting a small business or venture. So the theory goes, with less investment, there will be less demand for goods which leads to lower inflation in the near term.
M3, the money in circulation would also contract. People would feel less rich, and hence spend less. This would dampen GDP growth, and sometime may lead to economic contraction (recession).

Is inflation that bad? What does inflation means to ordinary people, and to businesses?
To ordinary people, inflation means rising prices, caused by high demand for goods with limited supply. To businesses, inflation means passing on the cost and higher profit figures.

Inflation dangers 'threaten Asia'

Rising food prices could lead to spiralling inflation in Asia
The threat of high inflation remains a major worry for Asia, and could undo the progress made in the past 20 years, the Asian Development Bank (ADB) says.

ADB managing director Rajat M Nag said inflation in 2008 would exceed the 5.1% annual figure predicted in April.

Rising fuel and food prices were the chief dangers behind inflation that affected Asia "good growth story".

Rising inflation could also hit investment and corporate earnings, and destabilise governments in the region.

In Asia, roughly about a billion people are vulnerable to the food and fuel price increases

Rajat M Nag, Asian Development Bank

On Friday India said its inflation had risen at its fastest rate in seven years. And earlier in June South Korea said its inflation had hit a seven-year high as a result of rising energy and food costs.

In Vietnam inflation is more than 25% and the government has said the issue is the biggest challenge it faces.

Singapore, Thailand, and the Philippines and Indonesia are facing inflation rates of between 7.5% and 11%.

'Regressive' taxation

The ADB has forecast 7.6% growth for the region in 2008, down from 8.7% in 2007, which was the highest in two decades.

Mr Nag said Asian monetary and fiscal authorities should "recognise inflation as a very major concern" and indicated that raising interest rates could be one solution.

Inflation "can endanger growth in Asia," he said, adding that "central banks should take all steps, including looking at rates as what India has done quite appropriately."

On Wednesday India's central bank raised a key short-term borrowing rate by a quarter percentage point to 8.0%.

Rising food prices have been spurred by rising fuel costs that have increased production and transport costs.

Loans offered

Asian nations such as India, Malaysia and Indonesia recently cut fuel subsidies in the face of rising world oil prices, which may send inflation even higher.

"Inflation is the most regressive form of taxation and it hits the poor most. In Asia, roughly about a billion people are vulnerable to the food and fuel price increases," Mr Nag said.

He said governments had to ensure "targeted cash support" for the poor to protect them from the price increases, he said.

Asia is home to two-thirds of the world's poor. It cut its poverty rate to about 19% from 33% in 1990, but Mr Nag said this improvement was under threat because of inflation.

In April the Asian Development Bank offered to support countries dealing with the effects of rising food prices.

It said loans could be made available to countries so that they can subsidise the price of staples to help the poor.

Tuesday, June 10, 2008

Cash Rebate and Spending Cut: Too little too late.

Never too late you say?
All I can say is that it looks like that the Govt is in crisis mode. Announcing rebate to be brought forward doesnt mean anything much, it doesnt even quell public anger. Bring forward the rebate doesnt do much to our income expectation, its still the same at the end of the year. Its a small drop indeed. As for the announcement of RM2billion spending cut, it means nothing. Thats like saying you are not going on holiday next month, because there is no money.

Well, there never was any money anyway!

The report in Malaysiakini come in late, or was it timed with Berita Perdana at 8pm?

Indeed the Govt is in crisis, not much money left, and in danger of losing control. Too much money has been wasted in the past few years subsidizing petrol in an effort to control inflation. Too much money wasted on mega projects.

Since my posting 2 days ago calling for minimum wage legislation and national social welfare system, a few other people also start calling for implementing these.

READ this one here, also in Malaysiakini. Tony Pua of DAP also suggest the same thing. READ HERE.

Big question is, where we would get the money for social welfare system? I am afraid we have to print the money first, have higher inflation this year and that may deplete our foreign reverves considerably.

Oil Price Hike and Fair Income Distribution

Back to the issue of the week, oil price hike.

We shall accept that the oil price hike is largely external factor, that demand simply far exceed supply in the world. We just hope and pray that with this high price, it would spur research and development and change attitude of world citizens towards alternative forms of energy.

Nuclear, solar, hydro, coal and whatever. In fact I like the idea of nuclear energy to supply our energy needs. Look at Iran, they are working on it. Our competitiveness and our success in the future depends on our ability to secure cheap energy. In our case, we should look into solar, hydro and nuclear.

I accept the fact that we need to let the price of petrol and diesel to float to the world price. This is to reduce conspicuous consumption, even though we are a nation blessed with our own oil wells.

But our income from selling the 'Tapis light sweet crude oil' should be fairly distributed amongst our citizens, so that no one shall go hungry. So a portion of the nation income should be redistributed to the poor in our society. This is why I call for social welfare payment for the poor in my previous posting. The workers, those people with jobs, shall also be fairly compensated, hence minimum wage legislation, so that everyone shall be able to live with dignity.

I like Mufti Perlis latest posting touching on income distribution.


Yes absolutely true, that before the nation leadership call for the rakyat to 'ubah cara hidup' the Prime Minister, Raja-Raja and Menteri-Menteri must spend their wealth first and not wasting our nation's resources.

We should take example from the time of Khalifah Umar, that the Great Khalifah didnt introduce a law to control price of food, or any other life necessities. Not because the Great Khalifah Umar understand the concept of 'invisible hand' in economics, but because even during the time of Prophet Muhammad SAW there is no such thing as price control and state subsidy, be there petrol subsidy, or rice and sugar price control.

Its simply false economics, by having a law controlling price on certain food item like rice, chicken and meat, we are giving message to entrepreneurs and farmers not to invest in rice or chicken farming and production, its not profitable. So in the long term the price of rice would be high because of limited supply.

We have seen this is happening to the price of rice. Price of rice has always been controlled, that rice farming was not profitable in the past 30 years. Scores of rice farming lands left idle or converted to other uses like housing etc. Until such time that we dont produce enough rice to feed ourselves.

The same could be said with the petrol and diesel. True that we are oil producing nation. By keeping the price of petrol and diesel artificially low, we are 'gorging'ourselves, wasting to the point of nothing much left. It would be better if we sell petrol and diesel at market price, then redistribute the profit to the poor among us, that way we would only use what is necessary, nothing beyond necessity.

I am looking forward to the day when the Govt announce social welfare payment for the poor as a form of safety net and minimum wage legislation for the workers. I am looking forward for fair income distribution in the country.

Sunday, June 08, 2008

Oil Price Hike and Inflation

Oil Price Hike and Inflation

There is so much unhappiness over the petrol price hike. Malaysiakini is full of report on demonstrations and protests. Some letter writer, like Dominic Pillai wrote good suggestion on subsidy for the low income group.

The glaring fact is, the current proposed rebate scheme does not alleviate the misery of low income Malaysian being hit in the pocket by this petrol price hike. True that it is done too hastily. When was it that Datuk Shahrir announce that Govt will increase the price of petrol to its full price in August and the price increase last week? Less than a week? Govt didn’t give a chance at all for wage earners to get their monthly salary and fill up their tank.
Two years ago, after the Govt increased price of petrol, I wrote to PM suggesting that the Govt remove petrol subsidy altogether. Two year is a along time, we have spent billions of ringgit already. Also don’t forget the billions of ringgit spent on mega projects. That money could be better spent on setting up a comprehensive welfare system for poor Malaysians to help them weather the inflation brought about by petrol price hike.

Now the Govt don’t have much in the kitty, unless we want to spend our foreign reserves of RM260billion. True that Petronas is profitable, and returning dividends to the tune RM40bilions last year. Question is, do we still have that money in the kitty?

Nevertheless, better late than never. I support Govt removing petrol subsidy.

Now what do we do to help the poor? Giving rebates to motorists means we are alienating Malaysians who doesn’t have motor vehicles who also feel the pinch of inflation.

As I said 2 years ago, Govt must take care of the welfare of low income Malaysians.

Minimum wage legislation.
This might take up to six month to study, write and put it through the parliament and passed into law.
This will spur the country forward to make more capital investment and increase per capita productivity, since employers would not employ employees to do low value jobs. It will also help employees on low income; higher income will ease their burden.

Social welfare payment (dole).
Social welfare payment for the poor, disabled old folks and pensioners, since their income are normally low and most of them cannot make end meet. Those people who are unemployed and have children to feed should also be included in this category. I would not elaborate further on this, since this should be included in our caring society concept adopted some time ago.

May I also suggest that the social welfare payment for main urban areas be set at RM1200 for two person household, (single person rate could be set at RM600) with increasing amount depending on the number of dependent in the household, e.g. RM100 for every additional child under 15 years old.
As for the minimum wage rate, I would suggest the rate is set at RM1200 for 48 hour week. That gives hourly rate of about RM5.70.

Why has the Govt throw away MTUC’s petition for minimum wage legislation to the rubbish bin? To protect the rich employers so they could continue reap huge profits? Its probably true that rich Malaysians make up the majority of UMNO lobbyists and backers. So it is not in UMNO interest to legislate minimum wage, which will dry up the political contributions.

This Govt also would rather spend billions of ringgit of useless projects so that the power brokers (read; UMNO to echelons) can farm out projects to cronies, who will contribute handsomely to some overseas bank accounts.

Ten plus years ago I heard Mahathir and Rafidah talked about ‘trickle down effect’. What a lot of crap. Still we voted these bunch into office.

Saturday, June 07, 2008

Snow in June, Christchurch

The day started fine. It was about 15 deg C in the morning. no wind. Certainly a bit warmer than the day before.
Then dark cloud came from the south.
And rain.
Then everything went quiet. Not a sound of falling rain.
Then the snow falls.

Tuesday, June 03, 2008

Asyura is celebrated in my village for generations

picture from Faisal Tehrani.

I am writing this after reading Mufti Perlis Dr Asri's charge that Faisal Musa aka Faisal Tehrani 'berfahaman Syiah' as published in Malaysiakini.


Read the 'Bubur Ratapan Asyura' HERE

Also check Faisal Tehrani website HERE

Let us be clear that just because the man put a name of a city in Iran behind his name doesnt mean that he is Syiah.

Celebrating Asyura by eating 'bubur Asyura' doesnt make you a Syiah.

When I was a kid, the masjid in my village in Tanjong Karang celebrated Asyura every year, by, what else, eating Bubur Asyura together at the masjid. Afterwards the would be lecture from an invited ustadz on history or sirah of the Prophet Muhammad SAW.
I was also told that Asyura is also to remember the history of Prophet Nuh Alaihissalam. On the last days of the time when Prophet Nuh in the ship, there wasnt much food left, only a bit of this and a bit of that. So Nabi Nuh told his people to combine all the food that is available and cook them together into a porridge, hence Bubur Asyura.

One year there was a small group of Pakistani traders whom the masjid committee let them stay at the masjid. They asked, what celebration is this? Asyura, said Pak Imam Ahmad, as I remember. The Pakistani traders left the majlis and goes to sleep in their quarters behind the masjid.

You are not going to say that my villagers are Syiah are you?