#9 of 51 ideas for a better Malaysia

Lulu dragged me into this initiative started by Nizam Bashir. One blogger posts one idea a week. Hopefully the chain will continue until we hit 51 ideas on how to make a better Malaysia. My favourite piece so far is by Antares, the coolest grand-dad in town.

My, idea, #9 in the series, is: Plain water in restaurants, please

Water is my favourite drink. It was hard to find out in KL while growing up. If you wanted a drink while wandering around town it had to be something sweet. Times have changed. Bottled water is now abundant.

Too abundant. Have you noticed how many eating places now insist on serving bottled water? Ask for regular water and you'll get a snooty, “We only serve mineral water,” with a tone implying it's superior. That's ridiculous. My next question then is, “How do you wash your salad vegetables? Can't you serve me that same water?”

Bottled water is an extreme waste of resources. Petrochemicals and energy are used to make those plastic bottles. Then, more petrol is burnt transporting the plastic bottles to the bottled water producer. The bottled water producer fills the bottles with water, packs them into cardboard boxes (made with trees, energy and more transport) and then ships them to the shops, burning even more petrol.

Everytime you take a plastic bottle, you're creating an heirloom. It can last for a thousand years, even in a landfill. Your great, great, great ~... grandchildren can continue to admire it long after you've finished the water and long after you're gone.

All for something that can be had by just turning on the tap.

I wonder what's wrong with restaurant economics in Malaysia. Restaurants down south in Singapore serve plain water as a matter of course. Up north in Thailand you get bottled water, but that's because the tap water there isn't potable; and in any case, you're not charged an exorbitant amount. Why do restaurants in Malaysia have to make water a profit centre?

But let's accept that over-priced water is a necessary evil when eating out here. Let's do our part by insisting the restaurant serves us plain boiled or filtered water. Pay the restaurant whatever they want to charge for bottle water, but insist you don't want the bottle. Tell them they can serve you plain, boiled or filtered water. Don't force the restaurateur to give you a bottle. That bottled water may not be pristine anyway. Wasn't there a study not long ago that found quite a few brands of bottled water were “just” tap water? And remember upmarket Perrier that did a recall when benzene was found in its bottles?

Over to boo_licious for #10 in the series. I hope she'll keep the kettle boiling :-)

Why is EPF lending my retirement money to Valuecap?

One question from my RM5bn for Valuecap post has been answered. Datuk Seri Najib Tun Razak has said that the RM5bn additional investment in Valuecap will be provided by the Employees Provident Fund (EPF). But that answer creates even more questions:

1. EPF already invests a substantial amount in the stock market and has its own team of fund managers and analysts. In fact, it held RM73bn of equities as of end June. If it thinks share prices are such good value now, it should be investing the RM5bn directly. Why lend it out to someone else?
2. EPF is actually making a competitor stronger! Valuecap is going to take the money and buy shares. EPF also buys shares. What if Valuecap wants to buy the same shares as EPF? Both will end up competing and paying a higher price than necessary. The result? A very happy seller, but less profit for EPF which means smaller dividends for all us contributors.
3. “The value of shares can go up as well as down.” The standard disclaimer in all prospectuses. Will that RM5bn sum extended to Valuecap be guaranteed? If not, EPF should be charging a very high interest rate to compensate for the risk. Which brings me to the last question:
4. What interest rate will Valuecap be charged and how long will the loan be for?

Protect Malaysian Wildlife - please sign this petition

Malaysia's Protection of Wild Life Act 1972 is a 35-year-old law that is severely outdated and riddled with loopholes. The Malaysian Nature Society, TRAFFIC Southeast Asia, Wildlife Conservation Society and WWF-Malaysia are jointly calling for better law for wildlife in Peninsular Malaysia. Please support their petition.

RM5bn for Valuecap – 2 questions

Deputy Prime Minister and newly-minted Finance Minister Datuk Seri Najib Tun Razak announced the government will provide an additional RM5bn to Valuecap Sdn Bhd. This will double its size to R10bn. Valuecap is to use the money to invest in undervalued stocks and protect investments in government-owned companies.

Two questions: 1) Where is the money coming from? See my previous post – government revenues will be down with lower oil prices and a slower economy. So how is the government going to raise this RM5bn for Valuecap? and 2) Is this the best use for that RM5bn?

The Sun yesterday also reported “Malaysia not in financial crisis: Najib.” I agree we are not in a financial crisis – our banks are unscathed by the happenings elsewhere, and confidence in the financial system is so strong that the local AIG operations didn’t suffer any significant aftermath from its parent’s collapse, unlike in Singapore.

So, if we’re not in a financial crisis, there is no need to support the stock market. Where would the RM5bn funds go anyway? If Valuecap buys, someone is selling. And some of those selling will be foreigners who will happily take the money out of Malaysia. Malaysians will not enjoy the full benefit of that RM5bn.

I think that RM5bn is better spent locally on small-scale projects that employ local businesses and Malaysians. How about redoing the drains in my neighbourhood for a start? They’ve not been changed since 1976 when we moved in here. Some are crumbling. Putting money to work here benefits local contractors, workers and raw material suppliers. Similarly school facilities. Don’t spend millions on laptops which may or may not be effectively used. But how about upgraded buildings, lab facilities, furniture ….

PS I know I had said the next post would be next Wed. But I just had to flag this. Next post (barring any other major news breaks) will be Sunday, when I contribute to 51 ideas for a better Malaysia.

If your pay were cut …. Your budget will have to change

Your pay has been cut by 40%. What do you do? First, cut back on non-urgent items. That new mobile phone will have to wait. Next, stretch your remaining ringgit further. Shop around for the best deal on groceries, rent a DVD instead of going to the cinema, have your coffee at the local coffee-shop instead of the fancy chain ….

Simple, basic economics that the Barisan Nasional government is denying. There is no point debating Budget 2009 as presented by the BN government. Its income forecast is hopelessly out-of-date. We need to stop pretending things will be fine and start making the hard decisions.

That Budget assumes oil at US$125/barrel. That Budget was also done at a time when crude palm oil (CPO) was closer to RM3,000/ton. Oil touched US$62 as I wrote this. CPO is at RM1,700 or so – down by nearly half. There will be far less income for Petronas and the government. Corporations will be earning less profit and paying less taxes; lots of people will also be earning less, paying less taxes and spending less.

Unfortunately, government options are limited. The normal response to a slowdown in external demand is to pump-prime, that is to run a Budget deficit, spending more locally to offset the smaller exports. But, Budget 2009, as presented and based on US$125 oil, is already in deficit to the tune of 3.6%. Government cannot spend any more. Quite the reverse. To maintain the deficit at 3.6%, it will have to cut back spending to match its smaller income.

Tough decisions must be made: Which items MUST the government spend on? What can wait? Perhaps we can do without the RM2.3bn helicopters for now. That money just goes straight to foreigners. Spend that RM2.3bn instead on local projects benefiting local businesses and employees. Yes, we should promote tourism. But RM18m to make 100 videos is probably not the most effective way.

Citizens must be informed and brought into the debate. Times will be tougher and money will be hard to come by. But times will be less tough if we can maximise the effectiveness of the limited resources we now have.

PS Next post will be the week of 26 Oct. I currently intend to post weekly, usually on Wed.

That’s palm oil in your teh tarik; when fresh milk is not whole milk

Take a closer look at the labels next time you’re shopping for fresh milk at the refrigerated section of the supermarket. I had assumed “Full Cream Milk” is made from fresh milk, especially since it’s sitting in the chiller compartment. But something made me look at the ingredients that day. I was shocked to find “Full Cream Milk” is made from milk solids, milk fat, something called choline chloride and permitted food conditioners.

Only “Fresh Milk” is actually made from fresh cow’s milk without additives. And those of you thinking you’re being healthier by going for “Low Fat Milk” – be aware that it also contains choline cloride and food conditioners.

Condensed milk has already disappeared from our shelves. Will whole milk also become impossible to find? Wait, I hear you say. You must be wrong. How do they make my teh tarik if there is no condensed milk?

Teh tarik now contains palm oil! It’s Condensed Creamer being sold nowadays. And look at the ingredients – palm oil is in it. Now, I am a strong supporter of palm oil and am dismayed by the unfair western lobby against it (Remember the misinformation that palm oil is bad for the heart? And now they’re bringing orang utans into the argument? Oops. I might have just antagonised some greenies. Let me say upfront that I’m a member of the Malaysian Nature Society and we’ll save this for another blog another time).

I like palm oil; I use it to cook at home and it’s great for deep-frying my chicken chop. But I absolutely hate palm oil in my tea! I noticed the emergence of palm oil two years ago, when my favourite coffee-shop drink, teh-C-kosong started tasting odd. Because there is no sugar to mask the taste, the “funny” taste of the “milk” quickly became apparent. That was when I started looking more closely and realised that most manufacturers were selling Evaporated Creamer instead of Evaporated Milk. The difference – palm oil is used instead of milk.

What are the health implications? Are we sowing the seeds for a whole generation of calcium-deficient adults? How many parents realise that the ‘milk’ they are putting into the Milo/Horlicks/Nescafe/tea/coffee is actually creamer? Nutrition is not my forte; so comments here would be very welcome.

From the economic perspective, it is clear evidence that price controls do not work. Condensed milk is a “controlled-price” item. If the controlled price is too low, there will first be lower quality as poorer ingredients are used, then shortages as less efficient producers pull out and ultimately no product at all when it is unprofitable for anybody at all to make it.

Next, it also leads to a misleading inflation (CPI) number. If the price is controlled and does not change, then the CPI shows no inflation. But the product itself is also not available in the market, so consumers either have to settle for inferior substitutes, or more-expensive products. Minister of Domestic Trade & Consumer Affairs Shahrir Samad had honestly and sensibly pointed out in March that price controls are in place on products that do not exist! He said he was working on resolving these. I do hope he does, at the very least so that I will be able to get decent teh-C-kosong again.

(With thanks to Lulu for help with background).

MIC-A for Malaysia

I received an email chain-letter the other day. The writer fumed about the various pro-bumiputera policies in place and the ever-shrinking share of non-bumis in Malaysia.

Titled “WAKE UP!!!” the email contained 55 assertions along the lines of “12% is what ASB/ASN (Malays Own banks) got per annum while banks fixed deposit is only about 3.5% per annum”, "99% of 2000 Petronas gasoline stations are owned by Malays”, “0 Chinese or Indians were sent to Japan and Korea under 'Look East Policy'” (assertions reproduced here verbatim for context and to give an indication of the tone of the email. I have not confirmed the assertions)

The writer concluded with “FIGHT FOR YOUR OWN RACE”. I understand the angst, but believe we should step up from this “Us” against “Them” attitude. All Malaysians should work together to grow the economy for all, and a helping hand should be extended to those most in need.

It is an unfortunate fact that after 38 years of the NEP and its successor policies, bumiputeras are still, on average, the poorer section of society. The average bumi household earns RM2,711/month, Chinese RM4,437, Indians RM3,456 and Others RM2,312 (Source: 9^th Malaysia Plan, data for 2004). If we believe in social justice and measures to help the poorest, then by design the policies will benefit bumiputeras and others more than Chinese or Indians, because they are the ones in greater need.

The pertinent issue is, who benefited from all the pro-bumiputera policies if the average bumiputera did not? The wealth transfers over the last 30 years were immense. Consider one example – all companies going for listing on Bursa Malaysia have to allocate 30% of their shares to bumiputeras. And another example – APs to import cars, given primarily to bumiputeras, were reportedly worth tens of thousands of ringgit EACH. Why then is the average bumiputera income still lagging so far behind after all these efforts?

The answer is the increasing gap between the richest and the poorest. Malaysia's gini coefficient (a measure of income disparity between the richest and the poorest) has been rising. The higher the number, the greater the disparity. And for bumiputeras, the Gini coefficient rose from 0.433 in 1999 to 0.452 in 2004 (Source: 9^th Malaysia Plan). These pro-bumiputra policies, which were intended to help poor bumiputras, were and are still being reaped mainly by an elite few instead. And I am sure you will agree, most of this elite few are UMNO-related.

Malaysia economic policy should not be about Malays, Chinese, Indians dan lain lain fighting for a share of the pie. It should not be each community hunkered into our own silos and scheming to deprive the other of their assets. The issue should be all of us working to grow the pie, and giving a share to those most in need. It should be all of us standing up against UMNO corruption and arrogance. Hmmm ... how about a Malaysian political party ... MIC-A – Malays, Indians, Chinese ... ALL for Malaysia.