Pre Budget 2010

The day before yesterday, Malaysiakini's journalist called me if I got any information on the 2010 Budget, the PM is about to announced tomorrow, but sorry, I'm not as privileged as some people who got close connection to the Finance Ministry.

Anyway, in my view, since this is DSN's first Budget as PM, he is facing a tough challenge:
1. Current Deficit is already 7.6% of the GDP, anymore spending will increase our Deficit to at least 8%
2. Government's coffer is receding fast with more spending. More to spend next year with 10th Malaysian Plan.
3. Dilemma to raise or reduce tax. Raise - out of favor among, reduce please a lot of people; Corporate Tax, raise - lower profit for corporate, reduce - reduce govt's source of fund.
4. Sin Tax; tax on tobacco already increased recently.

What the govt can do is to prop up the GLC's either to make a higher profit or divest the companies and keep a "Golden Share".

Just wait for tomorrow at 4p.m.

Harga Petrol Naik

Pelik, sungguh pelik, harga petrol naik lagi 5sen. Nampaknya menteri ni nak memperbodohkan rakyat Malaysia ke? Apa kami tak tahu ke harga semasa minyak mentah dunia? Kita bukan lagi di zaman penjajah, Jepun ke British ke, yang mengharapkan berita dari akhbar atau radio aje. Sekarang ni zaman internet, semua maklumat sekelip mata.

Minyak mentah dunia naik sekejap aje bulan lalu tapi tu pun tak lebih dari US$75 setong. Naik pun sekejap saja, dia akan turun balik. Spekulasi dah tak sehebat dulu. Sekarang ni sekitar US$71 setong sahaja. Harga ni dah lama kat sini, rasanya masa umumkan harga pengenalan ron95 dulu harga minyak mentah lebihkurang US$65 sahaja, kenaikan tak sampai pun 10%. Bila pulak naik hingga 102%?

Dalam Bulan Ramadhan ni pun masih nak menipu? Tak ingat dosa ke? Astaghfirullah... Memang patut lah Be eNd ni sentiasa kalah, masih tak nak taubat lagi...

Worrying Economic Condition

Malaysian GDP for the 4th Quarter 2008 grew only +0.1%, compared to +4.7% in the 3rd Quarter 2008. That is a major setback to the economic figure, where earlier the government was confidently and optimistically forecast a +5.0% growth for the whole year 2008, instead when they announced it last week it was only +4.6%.

But the issue was downplayed and hardly noticed by the general public because the politicians and the mainstream medias were more focused on the political squabbles to control Perak state government. After all, an increase of 0.1% is still a positive growth!

What is more worrying is that the GDP growth against quarter to quarter grew -3.6%, I repeat contracted 3.6%, or decreased 3.6% but it was never highlighted in any mainstream articles. The figure is supposed to be very worrying for the business and corporate players, but everybody is just saying that the mini budget on March 10, will address the issue.

My main worry now is the impact of recession and probability of a deflation.

Anyway, as usual, the government is always in denial until the problems burst...

Pathetic Malaysian Politic

It is very pathetic! I don't know how to describe the Malaysian Politician...

Hey guys, we are in economic crisis, and we may fall deeper than 1997, but you guys are still fighting over for power, seats and political standings.

Why don't you guys get your head together in the parliament, in each state assembly how to face the economic crisis looming over our nation, region and the world.

We should act now, all the giant international corporates with capital equivalent to Malaysia's international reserve are tumbling and requires larges doses of fund, we Malaysian are fighting to control a state. Very pathetic! Please put your pea sized brain together and solve national issues.

I am very disappointed, fed-up, frustrated and dejected by the current political situation.

We should focus more on the economic situation, the welfare of the people, the future of our nation but these power hungry politicians are still blinded. Blinded by their greed for power and swells their ego. Power bring money, ego bring respect?

I remembered when i first highlighted two years ago the possible impact of the sub-prime crisis, my CEO just shot down my concern as just a US internal crisis and will not affect the global. But it was just the tip of an iceberg, later it escalate as we found out, all the financial geniuses had manipulated the investment into a chaotic string of investment that bring credit crunch and the fall of several international corporate giants.

Come on Malaysian, especially Politician, wake-up to the real world and please make Malaysia a peaceful country. Drop your guns and work hand in hand.

World economy continue weakened

The Crude Oil continue to remain above USD46 per barrel as Israel continue to attack on Gaza and kills women and children and helpless people.

The Israeli murderers @ foot soldiers entered Gaza and start their assault against the world asking them to stop. The Israeli murderer become bolder as US did not reacted against them instead blaming the Hamas and the Palestinian public of inciting the attack. This is their opportunity before the Presidential transition on January 20, 2008, hiding behind outgoing George Bush and at the same time testing the new policy of the soon to be President Mr Obama.

Price will remain high and also a likely strategy by George Bush to pressure the new President during the transition period to make a stand on the issue and to hide his (Bush's) failure in containing the US Credit Crunch and Economic Crisis during his tenure.

After all US top officials, government advisers, supporters and major contributors are Jews.

Economy is weakening

US dollar is strengthening, pushing the crude oil price higher to above USD45 per barrel. On the other hand other currency including Malaysian Ringgit are weakening against US dollar.

Economically the Crude oil cost should be around between USD30 to USD50 per barrel depending on the efficiency and age of the oil platform.

We don't expect the price of retail fuel price should be increased in the near term as we have been paying premium for some time now. The retail fuel price for petrol and diesel is not expected to change in the near term due to the current increasing trend.

What puzzling and burdening the consumers are the increasing fare price of buses and extra surcharge of 30% imposed and the school bus association to add surcharge of 30% on school bus fares. this is burdening to families with school going children.

And at the same time prices of raw food at the wet market still high and as a matter of fact is still on the rise. Where is Shahrir Samad? He managed to convince the hypermarket to lower the price but what about the wet market?

Shahrir Samad should do his own fact finding and get into his wellington boots and head for the wet market, the place where all middle and lower income earner spend most of their monies.

Crude Oil < USD40/barrel

Crude Oil Prices still tumble despite OPEC plan to cut 2.2 million barrel per day!

In fact, the crude oil is now trading below USD40 per barrel today against the OPEC President's expectation of a higher rebound on the commodity price.

Traders and demand are more concern on the current economic situation.

Our local retail petrol price should see further cut and the fair price should be at RM1.50 per litre a 30 sen cut from the current price, we once enjoyed years ago. Malaysian public fuel (petrol and diesel) are no longer being subsidized by the government (except for fishermen and bus operators) and as a matter of fact we have been paying premiums for our fuel for quite a while.

By cutting further the price, we Malaysian will have more money to spend elsewhere, and created better domestic consumption and therefore will help the Malaysian government to sustain our economic statistics.

Next year economic outlook

The Crude oil price dipped further, so where the price are really heading?

It seems that the price of oil is becoming a benchmark on the health of the economy. The demand for Oil has drastically shrink as the focus is now on the state of the economy.

Several giant multinational corporations and investment banks had collapse due to the credit crunch, but will there be another round of collapse among commodity trading firm involved in crude oil trade?

The US President in waiting Mr Barack Hussein Obama will having a hard time to improve the economy.

For Malaysia, next year will be much more tougher as the commodity prices of oil, palm oil, rubber had dropped so much. And at the same time the Ringgit had weaken against the USDollar at 3 years low of RM3.60.

The demand for E&E/semiconductors is in the declining trend and there were reports that several manufacturing contracts had been called off. Unemployment rate is on a steady rise above the sound figure of 5%.

Will there be another retrenchment or VSS? Most likely, if the situation in US persist.

The government of Malaysia depends largely on domestic consumption to sustain the economy but with the current economic uncertainty will Malaysian spend?

Whatever it is we must brace ourselves for the hard times...

Oil Price >USD55/barrel

Will the OPEC reduce the supply of crude oil? OPEC ministers will meet this weekend to discuss the possibility of cutting their oil supply, due to the current economic turmoil and slower demand. Owing to that the price of crude oil remain at USD55/barrel.

Why would OPEC need to cut the supply? The real cost of crude oil is in the region of USD30/barrel, but due to several national and technical issues, several countries incurred higher cost that may reached as high as USD50 to USD55/barrel. This are putting a burden to these oil producing countries especially those from the Latin and from African continent.

The last few years several oil producing countries are expanding their drilling and services to keep with growing demand at the time and therefore had to spend large amount of money on new infrastructure.

Therefore OPEC need to safeguard their own investment and to maintain the price of Oil certain level to ensure their survival.

And traders will be happy to see the fluctuation as an opportunity to trade on the current situation; buying at USD50 and sells above USD55.

Crude Oil; short-lived spike

The Crude oil price ease back to around USD51-52/barrel after spiking to USD55 yesterday. the spike was mainly due to the new move on bailout. But still the fear for Economic downturn still dogged the sentiment.

Demand for crude oil had declined a lot and the outlook for the market is gloomy and may remain at current level for quite some time.

NO to fuel price floor!

What the .... is Shahrir trying to do, putting a floor on fuel price!

Come on lah he made the biggest blunder in Malaysian economy now he wants to put a floor on the price of fuel. Let say the price goes down to USD40/barrel, who is going to get the profit? Petronas? Cronies? Malaysian consumer will be paying premium on our fuel. An indirect tax on our fuel consumption! We agreed to forego our subsidy but not on putting a floor.

If the government really want to put a floor there should also be a ceiling on the prices, let say not more than RM3 if the global crude oil goes higher than USD180/barrel.

By reducing the fuel price, the consumers will have more disposable cash to spend, in turn, the spending will help spur the economic growth, especially during economic strife where we need domestic consumption to boost the GDP.

Is that very hard for Shahrir to understand? I think our Malaysian Ministers (including PM & DPM) need to attend Economic 101 again.

Economic Disarray

Just in a couple of months Malaysian economic outlook fluctuate erratically. In the middle of the year the Malaysian government panicked due to higher crude oil price, suddenly hike the fuel prices, petrol up more than 40%, while diesel only a few cents cheaper than petrol.

Pity that our current Prime Minister has no economic background nor his initiative to consult the professional economists. The DPM had not practised his knowledge in economy for a long-long time, since his last short stint when he was a deputy minister in MOF, he has been too long in Education and Defense Ministry. As a whole the cabinet made the worst decision in the history of Malaysia by endorsing the fuel hike on June 5, 2008.

It is the worst decision which compel the Consumer Price Index (CPI) or Inflation to shoot to the ceiling to 7.7% in June, 8.5% in July and August and 8.2% in September.

All transport costs shoots to the ceiling with 30% extra surcharges for buses and all food items increase higher and higher.

It was also a bad timing, as the region were facing food produce shortages, rice producing Indo-china were hit by flood, eartquake in China etc.

To appease the angry public, the government had to introduce cash rebates on road taxes and several other incentives were introduce for several category of users. In the first place the move can be avoided if the government had been very prudent and sensible in their decision process.

Now the price of petrol in Malaysia is almost back to where they once were before June because the crude oil price climbed down significantly since then and much lower than it was a year or so ago. The fifth reduction since August.

The main issue all other prices will never come down again. Shahrir had to convince or more probably made a pact with the giant Hypermarkets to reduce their prices. Good for consumers but on the other hand this move will kill the smaller retailers or "kedai runcit".

The recent price reduction for rice were mainly due to the restoration of supply not due to the government effort.

A couple of weeks ago they announced to cut employees contribution to EPF, the effort is not really to help employees during economic strain but mainly to ensure domestic consumption level remain high and by end of the year, the government will report a good GDP/economic statistic. This is another short term measure. The loser - by the time the employee reached their retirement age the savings will not be sufficient.

Another stupid move was to introduce 10% toll discount between 12midnight till 7 am for passenger cars, it seems the government is encouraging the public to drive during the wee hours. Ironically these are the most dangerous time for passenger cars; heavy vehcles and time to sleep.

Just like any other countries our government had to introduce RM7bil stimulus package to spur the economy. Where will the money come from and how the government is to channel them?

Why don't the government be more cool, prudent and sensible like Bank Negara with their monetary policy especially overnight policy rate?

Toll discount - stupidity

What a joke to offer toll discount between midnight and 7 in the morning. This is another case of stupidity over rational mind, disregarding the implication of such a move.

All this while, midnight driving is a privilege for Heavy vehicles; lorries/trucks, tankers, container haulers, express buses and also for "midnight racers", mat rempits and drunks. By offering discounts during these hours, the government is now encouraging the public to make their long distant journey in the wee hours and the possibility of endangering users life. Even in broad daylight a lot of accidents involving heavy vehicles with passenger cars, what more in a sleepy mood and darkness of the night.

Toll operators are an unscrupulous lot, they know that the number of passenger cars plying their highways are the lowest during this hour, now they are encouraging drivers to travel at the hour to optimize the usage. It is very dangerous as it midnight is habitually considered a time for rest and sleep for the majority of the public.

If the toll operators are really sincere they should offer discount during peak seasons i.e beginning 3 days before and ending 3 days after any festivities (Hari Raya, CNY, Divali, Xmas etc.)

One thing for sure this is not a way to help during the economic downturn!

No Fuel Subsidy

Yesterday's Shahrir's statement has proven that my earlier suspicion and contention that our retail fuel price were no longer subsidized by the government is true.

Check out today's Star newspapers or StarOnline "Government Not Paying Petrol Subsidies". At last the government finally revealed that our fuel price no longer subsidized since the global crude oil price drop below USD65/barrel. So for all that period, in actual fact we have already been paying a premium and most probably still are. Shahrir did also mentioned that the price may be cut to RM1.92 or much lower soon, therefore indicating that all this while the subsidy is either minimal or non-existent.

Quoted from The Star;
“Even with petrol retailing at RM2 per litre, we are not paying any subsidy. We have actually arrived at a time when the price can return to RM1.92,” he said.

Then what happen to the discount of 30sen, most probably also non-existent. The Government all along had given a wrong picture on the subsidy when Shahrir said;

“Earlier announcements of how much the subsidies cost us, even as recent as 2005 or 2006, always included how much we had foregone in terms of taxes.

“We have stopped doing this, however, and just focused on how much subsidy we are paying,” Shahrir said, adding that the Government was now enjoying some revenue due to the difference in the ex-refinery price and the price oil companies sold petrol to station operators." (the Star 19/11/2008)

See how lack of transparent the BN government were and still are.

As an oil producing country we should be enjoying much lower fuel price, like Brunei and the oil rich middle Eastern countries.

Crude Oil > USD55/barrel

Just yesterday morning i mentioned about the Malaysia Petrol retail price and by the evening NTR announced the reduction of petrol RON 97 by 15sen to RM2.00 per litre. And lucky for me, yesterday morning i decided not to pump in the petrol, so today I managed to get a cheaper petrol.

Pak Lah yesterday lashed out at traders refusing to cut down prices of goods despite the reduction in fuel price. But the real culprit is not the traders, but Pak Lah himself! and together with Shahrir and probably the rest of the cabinet. They had made the decision to hike the fuel price by more than 40%, without proper economic forecasting or projection, misjudged the economic situation, without taking into consideration of the impact from such historically huge hike.

Such a huge hike prompted traders to increase their goods and once prices are fixed it will never look back. Fullstop.

Anyway, still not satisfied with RM2.00/litre still hoping for RM1.90/litre soon.

Crude Oil < USD57/barrel

Last Friday, I anticipated another cut in the Retail fuel price, but it was a major letdown, no announcement came out. The price of global Crude Oil is now below USD57/barrel, lower than the figure two years ago.

Shahrir had promised to lower the price but nothing materialized. The petrol price should by now retail at below RM1.90 per litre.

Several pump station had already pasted "pump rosak" (broken pump) on their regular petrol unit in anticipation of an increase in the retail price. Several station operators decided to defer replenishing their stocks ahead of any government move to cut any losses. Some had to resorted to these tactics until their stocks all dried up.

How low will the crude oil price go? Unsure, but consensus says that the chances for the prices to go higher is generally very minimal.

Malaysian Economic outlook

Can Malaysia withstand the global economic slowdown? The probabilities is yes but with lots of cuts and bruises. Malaysia is fundamentally strong or probably seen to be strong - if the statistics produced by the government is accurate and genuine.

As a country rich with our own natural resources we are less dependent on other countries but i have to stress not totally independent, we still rely heavily on foreign trade, especially with the US and the Asean countries. Based on the current statistics our major export is to USA, Singapore and Japan. All these countries are suffering economic recession. The latest statistics also shows that the our export is declining while import increased.

The weakening of the economy had pressured the price of commodities lower; crude oil back to the level more than 18 months ago, palm oil is now going lower than RM1,400/ton after enjoying as high as RM4,400/ton, and rubber is back to its previous level. All the above were the major contributor to our export statistic.

The main export item, electronic and electrical goods had been suffering a low demand for quite a while. The main importer of Malaysian E&E, the US are facing economic recession and demand for such goods will not improve although the festive season is just around the corner.

Malaysian monetary policymaker had been very brave by not increasing the interest rates when the inflation rates soared to record high despite other countries adjusting their rates higher. By now those countries had to re-adjust their rates when the economy come tumbling down.

Malaysia will be affected indirectly by the slowdown in global economy; the weakening export, shrinking in commodity prices, slower foreign investment, weakening stock-market sentiment and economic slowdown in neighboring countries.

Right now Malaysia had to depend largely on domestic consumption. To encourage more domestic spending at the expense of reducing rakyat's savings!

Stimulus package for who?

To spur the Nation economic growth on the expense of the peoples' retirement savings in Employee Provident Fund (EPF). The laymen and lower working class group hails the move to reduce the employee's EPF deduction as a generous effort by the government to help during economic slowdown. It seems that in the near term the rakyat will have more money in hand.

But it is actually a very diabolical and irresponsible act, a short-term measure to ensure the economic records growth. By reducing the deduction, more cash will be available in the hands of the people and more spending power. In other word, the government is prompting the peoples to spend more. By spending more, it would stimulate demand in the domestic market and therefore incite consumer spending. GDP figure will improve.

In the long-term the people/EPF member will suffer especially the lower income group, where at the end of their service age, would found out that their retirement savings is barely enough to sustain a couple of years only.

Before implementing the policy, employers should brief in detail of the pro and contra of their options, reduce or maintain the deduction. This is the time for the employee to increase their saving instead of spending. The government should be more prudent and do an indepth study before implementing any policy, this is the second biggest boo-boo the government made, the first was in June this year, hiking the fuel price by more than 40%.

All working Malaysian and EPF contributor/members must alert and be well inform of the implication of such a move. Inflation is forever increasing and goods are getting more expensive, by 5 to 10 years the savings in EPF may not be sufficient and by then we will see a lot more old folks working like we see now as security guards, kitchen helper etc., etc. instead of enjoying their retirement benefit.

The new Finance Minister cum Prime Minister-in-waiting should be more farsighted, sensible and practical in your decision.

Crude oil Price USD60/barrel

It is obvious that the price of Crude oil closely follows the fluctuations of the stock-market, the USDollars and in general the perception of global economy outlook.

The US Presidential election had ended and the joy in celebration for the new President-elect in the stock exchange also ended, as the market come back into reality. Will Obama be able to make changes as promised? Will his view of the economy be distinct from his past predecessors?

Yesterday's plunge in the stock exchange all over the world compelled the crude oil price to USD60/barrel. Are we seeing the price to remain at this level?

The main issue now is that the demand for oil has reduced so much as the major import countries are more concern in rehabilitating their dwindling economic trend.

Could the coming winter create demand for the black gold? Very difficult to gauge. Most probabilities major user countries like US and China may have already piled up their inventories when the market was pushing to record high in reaction to stock-up before the price goes above USD200/barrel.

In Malaysia are we seeing the retail fuel price revert to pre-June 2008 hike? It should be lower than RM1.92/litre, last year the crude oil price was hovering around this level or probably lower.

Malaysian petrol price

Yesterday I read some comments in the newspapers complaining that the government was very slow in cutting the petrol and diesel prices and the cut were only between 10-15sen at a time. The low cut was mainly to avoid petrol stations operators from suffering huge losses due to expensive stock purchase prior to the cut. The BN is very caring government but only to the petrol station operators because the bulk of these operators are politicians, relatives, proxies and cronies of politicians.

When the government hike the petrol by 40%, they never consider the implication on inflation, costs of other consumer goods, cost of transportation, basically nobody is thinking about the general public welfare. But, the petrol operators made huge sum of profit when the fuel prices were increased drastically. By increasing the petrol from RM1.92/litre to RM2.70 per litre, the petrol station operator made a profit of at least 78sen.

Let say, as at 12 midnight on the eve of the price hike, a petrol station had a stock of 10,000 litres bought at RM1.80/litre or RM18,000. By midnight, they sell the petrol at RM2.70/litre, minus operation cost, they made RM26,000 from selling the stock. A gain of RM8,000 was made. Therefore these people had made a lot of money from the price hike, but when the government cut the price, the priority is on the petrol operators' welfare.