Hornbill Unleashed

November 6, 2014

Malaysians start feeling the socio-economic crunch

Filed under: Politics — Hornbill Unleashed @ 8:00 AM
Tags: , , ,

Ng Kee Seng

Malaysia’s socio-economic status is not all dandy. And the federal government and its leaders are not fooling anyone whenever they try to paint a rosy picture of Malaysia’s economic and financial health.

How can Malaysia’s economic health be dandy when its federal debt, officially, is at RM568.9 billion or 52.8 per cent of gross domestic product (GDP) as of June.
However, many economists believe the figures and statistics had not included other hidden debts.

Then International Trade and Industry Deputy Minister Datuk Mukhriz Mahathir had “accidentally” revealed in end of 2012 that the federal debt was at RM800 billion or more than 70 per cent of GDP, way above the 55 per cent federal debt ceiling.
Currently two matters arising clearly indicate all is not dandy as painted by federal government leaders:
•  The 5-15 per cent cut in National Higher Education Fund Corporation (PTPTN); and
•  The raising of RON95 pump price despite the US crude price falling to around US$78.30 a barrel today (Nov 4), its lowest since mid-2012.
What is the rational in cutting aid for education? Education is key to a country’s continuous socio-economic growth.
The only rational is the government just don’t have the money to remain sustainable in its policies. Cutting financial aid for education despite spiralling costs of living? An act of desperation?
This can only spell misery for the rural and urban poor families, and also hurt the pockets of middle-income families.
National news agency Bernama reported on Monday that the PTPTN has decided to reduce the amount of funding for students in institutions of higher learning due to lack of funds as many borrowers fail to make repayment on schedule.
That’s just an excuse. The government certainly has all the means within its power to recover any such loans. The real reason is that the government cannot continue to borrow, due to its mammoth federal debt level, to keep its administration going.
It has to cut subsidies and aid to the rakyat (people) because it must start cutting down on rising federal debt.
PTPTN chairman Datuk Shamsul Anuar Nasarah said PTPTN required RM5 billion annually to provide loans to students in institutions of higher learning, and the unsatisfactory repayment performance had affected its funds.

Shamsul Anuar

“This is the effect when many borrowers do not repay their loans,” he added.
He said the total PTPTN loan repayment received up to Aug 31 was RM5.37 billion or 45.62 per cent, while the actual amount that the corporation should receive was RM11.77 billion.
“The number of borrowers who have never made repayment for their loans is 552,638 people, involving RM4.21 billion,” he told Bernama.
Shamsul Anuar was commenting on media reports on the PTPTN loan cut of 5 per cent for students in public institutions of higher learning and 15 per cent for those studying in private institutions of higher learning which came into force on Nov 1.
And there is more gloomy global economic news coming from New York.
Reuters on Tuesday quoted famed bond investor Bill Gross warning that deflation remained a growing possibility despite aggressive monetary policies by central banks around the world.
In his second investment outlook letter since joining Janus Capital Group Inc, Gross said history showed that economies experience periods of inflation and deflation, and both “are the enemies of stability and growth”.
“Prices change”, Gross wrote in his November outlook, “and while they usually go up these days, sometimes they do not. We are at such a moment of uncertainty.”
The roughly US$7 trillion (RM23 trillion) pumped into the financial system since the financial crisis by the world’s three biggest central banks has succeeded mostly in lifting prices of securities rather than the cost of goods and workers’ wages, he said.
“Prices go up, but not the right prices,” Gross wrote.
Gross, who oversees the Janus Global Unconstrained Bond Fund, said Alibaba Group Holding Ltd shares had soared from US$68 (RM221) to US$92 (RM299) in the first minute of their public debut, but other prices, including wages, “simply sit there for years on end”.
“One economy (the financial one) thrives, while the other economy (the real one) withers,” he said.
The US Federal Reserve, Bank of Japan and European Central Bank all have taken extraordinary policy measures since the 2008 crisis to stabilise their economies and create a moderate amount of inflation. Results have largely been disappointing, with none of the three able to guide their preferred measures of inflation to their target levels of around two per cent.
Of course Malaysians, who are struggling daily to put food on the table for their loved ones, can relate the global socio-economic warnings and why they are not buying the federal government’s “all is dandy” propaganda.
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2 Comments »

  1. Too many graduates that are unemployed because the degrees are not relevant to the needs of the industry.

    Comment by RMJ — November 8, 2014 @ 11:26 AM | Reply

  2. The government can enforce auto salary deduction from PTPTN loan defaulters.

    Comment by gookang — November 6, 2014 @ 10:50 AM | Reply


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