Wednesday, December 31, 2008
The treadmill starts again tomorrow. A new year with new budgets and new targets to meet amidst an intimidating backdrop of global and local economic headwinds. The newspaper headlines are still depressing, and it does look like it will be a tough year ahead.
With tough times, there will be increasing calls for the government to do more. And yes, I agree the government must help the most disadvantaged and poorest of society. But I am sure there'll also be appeals for help from able-bodied, capable, intelligent Malaysians, such is the subsidy mentality that permeates our society today.
Let's break out of this subsidy trap. Subsidies don't make us richer. They just make us weak and dependent. Our manufacturers claim they need cheap power and labour to be competitive. The reverse is true – it is cheap power and labour that have made us uncompetitive.
Power is so cheap in Malaysia that companies and individuals barely make any effort to consume it wisely. The best evidence – how many of us wear jackets/sweaters in the office because the air-cond is too cold? And take a look at the lights – both in your home and at the office. I'll bet there are more old-fashioned energy-hungry menthol bulbs and even worse, halogen lamps instead of energy-saving bulbs.
And consider petrol. While our businesses lobbied for lower prices, corporations such as courier company UPS in the US actively used their creativity and skills to reduce consumption. UPS looked closely at the delivery routes taken by its vans. It discovered lots of time was lost, and fuel burnt, as the vans waited to make left turns. It replanned routes to minimise left turns and maximise right turns, where wait times are far shorter. The result: Less fuel burnt AND greater productivity – one driver can now make more deliveries, which can then justify higher wages!
Cheap fuel and power only perpetuates inefficiencies, further weakening Malaysia's competitiveness against leading nations. Businesses in those countries actively sought ways to minimise energy consumption when fuel prices were high. These energy-saving methods are now part of their competitive arsenal; and they have an extra source of profit margin now that energy prices have fallen.
So, for 2009, let's resolve to use our brains and work smarter. Not use our brains to scheme for subsidies.
Happy New Year and cheers to a wealthier, more prosperous, more productive Malaysia!
Monday, December 22, 2008
The Penang state government has been actively meeting businesses to see how it can help mitigate the economic downturn and minimise retrenchments. A very common refrain is to please cut electricity tariffs. Pakatan MPs in other states are also getting similar feedback from industrialists and entrepreneurs, “The cost of business is going up, we're facing challenging times, please cut power tariffs.”
The subsidy mentality permeates all levels of our society. Cheap power is a subsidy too. And like all subsidies, we should look closely to see if it truly benefits those most in need. Before we cut power tariffs, we should find out: 1) How many Malaysians the companies actually employ and 2) What will the companies do with the savings?
“How many Malaysians the companies actually employ” is particularly pertinent. When Indonesia liberalised fuel prices, including gas prices a few years ago, many manufacturers who depended on gas left Indonesia. It used to be a major player in the latex glove market – one where Malaysians such as Top Glove and Supermax complete. They quit, Malaysia ramped up market share.
But how many Malaysians did that really benefit? Top Glove, the world's biggest maker of latex gloves, was hit with a RM11.4m fine for having 1,769 illegal foreign workers on Aug 16, 2006. It has not reduced its dependence on foreign labour. The IHT reports that it employs 3,500 migrants - about half its work force - at 12 factories across the country.
Why are we subsidising this company and all these foreign labourers? Subsidies should go towards developing core Malaysian skills and improving productivity, not employing low-skilled low-valued add foreign labour.
Which brings me to the next question, What will the companies do with the savings? Any bets it'll tell workers you're lucky to stay employed; and the owners will happily pocket the additional profit? That doesn't help Malaysia – it just means another long-term subsidy which we cannot afford. No pure handouts please. Companies must earn the cheaper power by coming up with better ways of doing business.
Wednesday, December 17, 2008
Because there's no competition in Malaysia, we have to pay whatever Astro demands and accept its over-priced packages offering us channels we don't want nor need, and we have to accept frequent service breakdowns in the rainy season. Astro then takes that money to offer cheap services to Indonesians. If Astro had not burnt that amount away in Indonesia, it could afford to give you a 50% discount on your subscription fee for one year!
But it doesn't look like it's going to happen since it has a cosy, secure monopoly granted by the BN government. If our companies are big enough to go overseas, they are big enough to face competition here in the local market. Local consumers will then benefit from lower prices and better services.
Monday, December 15, 2008
I've said it before: I take no pleasure in bearing bad news. But pretending things are fine will not help us. The crunch will be much worse when it hits if we are unprepared. The sooner we accept reality and the faster we take remedial measures the higher the chances for us to alleviate some of the pain.
Sunday, December 14, 2008
5x higher chance of being robbed, 7x raped, 8x murdered .. and we're focusing on rear seat belts??!!
Our authorities have their priorities all skewed. How important is this in the overall scheme of things? Surely our overburdened and undermanned police force has more important things to do than to harass the family man taking his family out for an evening drive? Like, for example, curbing snatch thieves, or burglaries, or Mat Rempit …. The crime rate in Malaysia is high. Here are some statistics per 100,000 population, as pointed out by Lim Kit Siang and Tony Pua:
Robbery: Malaysia 90.49 cases per 100,000 population, Japan 4.78, Hong Kong 17.56
Rape: Malaysia 11.47, Japan 1.62, Hong Kong 1.54
Homicides: Malaysia 2.12, Japan 1.09, Hong Kong 0.26
Put into layman's terms, a Malaysian is 5 times more likely to be robbed than a Hong Konger. The more serious the crime, the higher your chances - 7x better chances to be raped and 8x a murder victim! Higher chances are great if like me, you were trying for the Toto Jackpot, but certainly not to be a crime victim.
Not wearing rear seat belts is a personal issue. If Mum and Dad decide their precious ones don't need to belt up, that is their own decision and they can live with the consequences, if any.
Also, thanks to our horrible public transport and outmoded auto policy, many of us don't have alternatives. Large numbers of our national car, Proton, were fitted with only two rear seat belts when manufactured. Kudos to Proton for agreeing to retrofit rear centre seat belts on these cars, totalling 226k units made between 2004 and 2008, including 82k units of the Gen 2. But the whole exercise will take 13 months to complete! So what’s the family of 5 going to do until their car is fixed? Force someone to stay home every time the family goes out? Hardly great. One would think tough times like today call for even more family unity.
Most families would understandably decide to take the risk of being caught. Which brings me to the core issue – sowing the seeds of law-breaking. Break one law and breaking others become easier.
So how about this? Creating new laws is useless if they’ll not be obeyed anyway. Parliament should take a break from law-making. Our MPs can use the time to help monitor enforcement of existing laws instead. No more new laws until the existing ones are complied with.
Wednesday, December 10, 2008
Accountability: /əkaʊntəbɪlɪti/ the state of being accountable, liable, or answerable; a state unknown to Malaysians.
I was among the speakers at “The New Economic Vision for Penang and Malaysia” International Conference in Penang over the weekend. It was heartening to see so many people who care about Penang and Malaysia and its future. About 350 participants registered and they were not just there to see the heavy-hitters – Datuk Seri Anwar Ibrahim, Penang Chief Minister Lim Guan Eng and the Menteri Besars of Perak and Selangor. The conference hall was fairly full throughout the entire 1.5 days.
Kudos to Penang Invest for running such a well-honed conference. Timekeeping was excellent, as were overall logistics. An achievement all the more impressive given the very short notice. I have attended many conferences in my previous banking career. The global banks have huge conference budgets and specialist teams to manage these affairs. Penang Invest punched well above its weight to deliver this event so smoothly.
There was lots of high level talk and aims and visions and strategies from the politicans and the heavyweight academics. I am jaded. No disrespect is intended to the learned academics. We were privileged to hear their learned thoughts. But lofty aims and visions and studies are all too prevalent in Malaysia. Execution is lacking.
We need accountability. Heads must roll when negligence is proved. University Malaya's Professor Rajah Rasiah who shared a panel with me said he had personally enticed leading specialists over to Malaysia under the “Brain Gain” programme (remember that?). Within 2 years, most had gone back overseas.
What went wrong? The government must follow-up on its policies instead of announcing a new one every few years. In this instance, investigations should have been done. Why did those specialists go back? Was the environment unsatisfactory? Did bureaucrats get in the way? Only if we know the answers can we fix the programme. And if someone was found to have been negligent, he or she should be punished. Not just transferred, but very publicly demoted and/or fired.
In my 38-year lifetime I have seen lots of plans proposed by the BN government ranging from the Malaysia Plans and Multimedia Super Corridor to Iskandar Development Region and the various Corridor Initiatives. I will agree some of the plans were decent, others less so. But the commonality is all failed – because of poor execution. Until we focus on execution, in another 38 years, we will still be saying the same things at conferences and talks, whether the government is Pakatan or BN.
Accountability works both ways. Reward those who deliver, like Penang Invest. Penalise those who don't.
Wednesday, December 3, 2008
That full year number is irrelevant – it is heavily influenced by the record oil prices and benign global economy earlier this year. The pertinent figure is what’s happening currently. And going by our Finance Minister’s 5% number, it’s not looking good.
GDP growth was over 6% for the 9 months up to Sept 08 (9M08). Now we’re told it’ll be 5% for the full year. Simple maths tells us this suggests just 1.2% growth for the last 3 months of the year (4Q08) – a very sharp slowdown!
Our GDP growth has been decelerating:
The BN government targets 3.5% growth in 2009. Against this backdrop, do you think that’s achievable? I take no pleasure in bearing bad news. But pretending things are fine will not help us. The crunch will be much worse when it hits if we are unprepared. The sooner we accept reality and the faster we take remedial measures the higher the chances for us to alleviate some of the pain.
PS: I'll be participating at "The New Economic Vision for Penang and Malaysia" conference at the Traders Hotel this Friday and Saturday. My panel slot at 2pm Friday is on "Moving up the Value Added Ladder." And after hours I look forward to the Jazz Festival and Alleycats!
Sunday, November 30, 2008
1) Greed by everyone in the chain: The people who took out loans they really shouldn’t have, the bank officers helping to falsify loan information to meet their performance targets, the CEOs out to make their big bonuses, shareholders hungry for profit growth, ratings agencies focused on fee income, investors looking for a free lunch ….
Borrowers were encouraged to over-state their income to qualify for bigger loans; or even to qualify for loans in the first place as banks rushed to hand out credit. A senior officer at Washington Mutual, one of the failed US banks said, "At WaMu it wasn't about the quality of the loans; it was about the numbers … They didn't care if we were giving loans to people that didn't qualify. Instead, it was how many loans did you guys fund."
They were facilitated by a false sense of security after years of benign economic conditions. Over-optimistic assumptions were built into financial models. Bankers and ratings agencies conveniently assumed recent low default rates were sustainable in the long-term. Those who argued against were told, “This time it’s different”.
Some senior bankers knew it was a house of cards – remember former Citigroup boss Chuck Prince saying, “As long as the music is playing, you’ve got to get up and dance?” But bank bosses were under pressure to show profit growth. Banks competed fiercely to lend, and often dispensed with the usual covenants meant to secure such credits – ie the “cov-light” loan. Ratings agencies gave unwarranted AAA ratings.
2) The market failure was facilitated by regulatory failure. Alan Greenspan’s Federal Reserve refused to deflate the mortgage bubble. He argued that markets had efficiently found ways to diversify the risks. But regulators failed to look deeply enough into the institutions that had supposedly took on the risks. The risks appeared to have been off-loaded, but really weren’t as the insurers were not well capitalised. It turned out that even large AAA-rated firms like AIG were over-extended and could not pay up when defaults rose.
Quite frankly though, I don't think the soul-searching is worth much. History is useful if only we would learn from it. And yes, for a while, lending standards will be tighter, banks will focus on risks and regulators will be stricter.
But as the good times roll again, politicians and businessmen will push for relaxed standards. Risk managers don’t earn revenue. Loan salesmen do. We'll again hear “This time it's different. We've learnt our lessons.” We shall see.
Friday, November 28, 2008
1) It is an IOI problem. IOI cannot afford the deal because crude palm oil prices have collapsed. But a quick check with my analyst friends finds most of them forecasting about RM2bn pa of operating cashflows with CPO around RM2,000/ton. So, it doesn’t look like IOI itself has issues;
2) Which takes us to … IOI thinks the Malaysian economy will get a lot worse. And it thinks property prices will fall by at least another 20%. (Otherwise, why would it forgo the 12% deposit?);
3) Or, IOI thinks Citi is in serious trouble and will be forced to do a fire-sale later.
Wednesday, November 26, 2008
- Government in the next few months has to spend to cushion the local economy and protect society's poorest;
- In the longer-term economic policy has to be reevaluated to attract investment, both local and foreign;
- Businesses and employees must use the breathing space afforded by the government handouts to improve efficiency and productivity.
Like most things, these are easier said than done. Unfortunately, government fiscal options are limited. We had already been running Budget deficits for the past 12 years, through the good times. In fact, the deficit for this year, 2008, will hit 4.8%, higher than the 3.6% initially forecast, even with record high oil and crude palm oil prices. Next year, in 2009, there will be a lot less government revenue with oil prices down by more than half and lower corporate and income tax collections.
Fortunately, and ironically, there has been plenty of fat in the system. Most would agree that there is tremendous leakage when the Barisan government spends money. Cut out the fat, and spend what we have on projects with the maximum impact on the local economy – so small scale grassroots projects please. Mega projects with high foreign input costs should be carried out only if truly necessary.
Besides the short-term spending, the Barisan Nasional government must reconsider its economic policies. The government has been increasing its role in the economy over the years. The federal budget has increased 57% over the last three years! That is not healthy. Sustainable economic growth is always private sector-led.
The amount of capital investments in Malaysia is very low poor. We were the only Asean nation to record net capital outflows last year . And if foreign exchange rates are any indicator, we are considered a worse risk than Thailand, where quite literally there was blood in the streets. The ringgit has depreciated against the baht in the past year.
Now is the time to ask the hard questions and implement the solutions. Why is investment lagging in Malaysia? Why has the perception of our country deteriorated so much? We were once seen as close to Singapore in terms of stability and prospects; we are now compared with lesser peers.
Create a conducive environment for private sector investment. And don't just focus on the foreigners. Remember the locals too. There are many Malaysian millionaires and billionaires with cash to spare. What will it take to get them to put it back into the Malaysian economy?
As for what businesses and individuals can do, Tan Sri Ramon Navaratnam said, “Be lean and mean.” Time was short and he was closing the discussion at the open forum on The Global Financial Crisis and its Implications on Malaysia. Elaborating on his behalf, we should all be looking at ourselves and asking how we earn our income. No-one owes us a living, and in my working life, my guiding philosophy was “My employer must consider me good value.” That's the only way to job security, no matter what you do. If you're a businessman, it's “My customer must find me good value.” I'm not saying cut prices – there is a difference in price and value, which can be the subject of another blog – I'm suggesting there's also substantial room for customer service, productivity and efficiency improvement in Malaysia.
For those lucky enough to have spare cash, I personally believe this is a buying opportunity . Traditional financial theory says markets are efficient. My experience is that markets are made up of people. These people may be smart, may be very highly qualified, may be very intelligent but they are humans with very human emotions. There will be periods of euphoria and periods of pessimism.
We are entering a period of pessimism. I had drinks with a friend recently. He used to be a happy punter in the stock market. Conversation turned to personal portfolios and I recommended a stock at 1.5x P/E. His first reaction – what will earnings be next year? I said, even if earnings go down by half, the stock would be at 3x P/E. But still he wasn’t convinced – and this was a guy happily buying in the bull market when P/Es were well in the teens or 20s.
But he added, “…fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now..”
The plunge in share prices has been indiscriminate. Prices of shares in good, and bad, companies are cheap. Hunker down for tough times, do your homework, find companies you’re comfortable with and put your spare cash in the stock market. “Be fearful when others are greedy, and be greedy when others are fearful.”
It will be hard to maintain equanimity in the coming months. News flow will be more negative than positive. Tan Sri Ramon at the forum reminded us that economic cycles come and go. He's seen 6 in his lifetime. We will survive this; the good times will roll again, and I’m sure we’ll see another crisis after that.
Finally, on Sunday: Who's to blame?
Monday, November 24, 2008
It can be argued they have grown too big for Malaysian markets and this is part of normal corporate development. Some would say we should be proud that Malaysia has been able to grow such large companies.
I see no reason to be proud - all these companies are either monopolies or operate in cosy oligopolies with limited competition in Malaysia. All the extra funds they have are from the supernormal profits they reaped from you and me, the average Malaysian, thanks to the government protecting them from competition.
Take Astro, which has a government-granted monopoly on satellite tv. While it was operating in highly competitive Indonesia, it was charging Indonesians less than Malaysians. And consider Telekom, spending huge sums overseas while giving us atrocious Streamyx service, charging us RM25/month minimum fixed line charges and crying to the government that it cannot afford to spend on broadband in Malaysia (and successfully getting a subsidy!).
Investments overseas don’t generate that many jobs for Malaysians. But the investments are paid for by Malaysians through inflated prices and poor service in Malaysia due to the lack of competition. Government policies need rethinking. If our companies are big enough to go overseas, they are big enough to face competition here in the local market. Local consumers will then benefit from lower prices and better services.
Sunday, November 23, 2008
Sekhar's youngest son Datuk Vinod Sekhar reportedly said his father loved creating solutions for problems that ailed the world. "This is what the School of Medicine and Science is about. It's a school that has a fully integrated scientific approach to research which will allow for faster solutions to be created," he said.
Here’s a point to ponder: Why did the Sekhars choose to spend their largesse in Scotland and not at home here in Malaysia? First, it was businessmen going overseas – the likes of Maybank, Telekom, Astro, Maxis, Genting, IOI and YTL Corp, for example. Remember Malaysia was the only ASEAN country to experience net capital outflows last year?Now even the philanthropists are taking their money out.
What’s wrong with Malaysia? We, the general public, know the answers – inept government, inefficient bureaucracy, out-dated policies …. Now if only the BN government would stop their internal party politicking and get on with preparing us better for the coming global recession.
Saturday, November 22, 2008
I expect global economic growth to come in near zero, or even negative next year. The International Monetary Fund (IMF), which has been coming up with new, ever-lower forecasts, now projects 2.2% global GDP growth. It's hard to see how even that can be achieved with the United States, the the world’s largest consumer nation, in recession, Eurozone suffering and the Arab economies struggling to deal with oil prices well below levels they had come to think of as normal.
Some ultra-pessimists are suggesting deflation and depression. With so much capacity, companies desperate for cash flow to stay afloat will slash prices and be happy with just covering variable costs. That is a possibility, but I am hopeful governments, central bankers and regulators have learnt from the Japanese lesson and will act to combat that scenario.
The base case is ugly enough. US banks are not out of the woods yet. The latest survey of syndicated debt (ie loans given out by three or more banks) found that US$373.4bn of such loans were “criticised” ie in actual or potential difficulties at the end of 2Q08 - this is nearly triple the US$114.1bn recorded in 2007. Even more worrying, the report said many of the loans could move to more severe status such as substandard, doubtful or loss-making. Such “classified” credits were also rising rapidly, soaring 128% to US$163bn.
Not surprisingly, potential capital-crimping bad loans has reduced banks' willingness to lend. The latest quarterly Fed survey in the first two weeks of Oct found a great majority of banks had “continued to tighten their lending standards and terms on all major loan categories over the previous three months.”. Prime (or good borrowers) were affected along with borrowers with poor credit histories.
- 95% had tightened lending terms to large and medium-size businesses;
- 20% had cut limits for existing credit card accounts held by prime, or strong credit, customers.
I see at least one more cycle of bank issues in the US. The contracting economy and tighter credit will hurt businesses and consumers, which in turn will lead to more loan defaults and another round of bank failures. In the meantime, the rest of us in Malaysia who didn't get to enjoy the party during the boom years will have to suffer along.
Part 3 on Wed: What we can do.
Thursday, November 20, 2008
That's because up to RM6,000 of EPF contributions and life insurance premiums are tax-deductible. Here is the calculation:
- You earn RM54,000 per year. 11% EPF = RM5,940, which is tax-deductible. There is also RM8,000 of personal relief. So your net taxable income is RM40,060. The tax on that will be RM2,183 (tax rate is RM1,525 on the first RM35k and 13% on the next RM15k).
- The EPF contribution is reduced to 8% = RM4,320. That is equal to RM1,620 extra in your pocket every year. Very nice? Did you realise that's not all yours? That extra is now taxable income! So your net taxable income is RM41,680 and you will be paying RM2,393 of federal income tax.
- The BN federal government will be taking an RM210 (RM2,393 vs RM2,183) of taxes from you ie 13% of that extra which you thought was all yours.
Is that why the BN government made the 8% option automatic? Perhaps you'd better head over to EPF and insist you want to keep paying 11%.
Wednesday, November 19, 2008
When a Wall Street firm helped him get into a trade that seemed perfect in every way, he said to the salesman, “I appreciate this, but I just want to know one thing: How are you going to screw me?”
Heh heh heh, c’mon. We’d never do that, the trader started to say, but Moses was politely insistent: We both know that unadulterated good things like this trade don’t just happen between little hedge funds and big Wall Street firms. I’ll do it, but only after you explain to me how you are going to screw me. And the salesman explained how he was going to screw him. And Moses did the trade.
At the peak, banks offered “No money down” mortgages and arrangements such as ARMs (Adjustable Rate Mortgages). ARMs allowed borrowers to pay very low interest rates for periods of two to three years. After that, market rates would be charged and principal repayments also started, but borrowers were convinced that by that time property prices would be higher. They would just sell their property, repay what was necessary and still reap a healthy profit.
Some alarm bells were raised. Some pundits suggested mortgages were increasingly being offered to people who couldn’t afford them. But regulators, lead by Alan Greenspan, said markets had found new ways of dealing with and pricing risks and there was no systemic problem (ie individual institutions that took on too much risk may go under, but the entire financial system was robust)
With hindsight, Greenspan was proven hugely wrong at enormous cost to the taxpayer. All good things must come to an end, eventually.
There are only so many people and so many potential housebuyers. After years of scraping the bottom-of-the barrel for the marginal borrower, to the point where lenders closed one eye as borrowers over-stated their incomes so they could go for bigger mortgages, there were no more new borrowers to be found. No new borrowers meant reduced demand for properties, which meant asset prices started to fall.
The house of cards started unravelling. Default rates on the CDOs turned out to be higher than expected. Even AAA-rated CDOs turned sour. Not surprising – considering the mortgages on which these CDOs were based were given to consumers with poor credit histories or to consumers who could not afford them.
Wait! Weren’t some CDOs backed by credit default swaps (CDS)? The CDSs turned out to be not worth the paper they were printed on. The institutions that were supposed to pay-up were woefully under-capitalised!
The problem was made even worse by the absence of open markets for these CDOs. These were traded over-the-counter with valuations based on complex mathematical models. But investors had lost faith in the assumptions going into the models so values could not be determined with certainty.
Also, it turned out that the banks were also liable for some of these CDOs. To entice investors to take the CDOs, the banks had agreed to buy back at least some of these if default rates turned out to be higher than expected. No-one expected the default rates to be that high, but when they hit that level, the banks had to buy back, incurring losses.
This lead to inter-bank credit markets freezing. Any bank, on any particular day, could be a net borrower in the inter-bank market. It is not bad management, it is just a matter of cash flow. For example, a company the bank had already approved a huge loan to draws down that day. The bank knows another borrower is due to repay tomorrow, but in the meantime, it has to borrow today to cover the gap. Tomorrow, when a loan is repaid, it may become a net lender in the inter-bank market.
But the inter-bank market froze. Banks became reluctant to lend to each other as they could not tell if the other bank would still exist tomorrow. Imagine if you were the bank lending to Bear Stearns or Lehman the day before they went under!
Initially the US Federal Reserve and the European Central Bank tried to restore the inter-bank market by making funds available for banks to borrow on more favourable terms and cutting interest rates. This did not help: 1) Banks were unwilling to take Federal funds because it would indicate weakness; and 2) cutting interest rates did not help because it did not address the core issue – banks were unwilling to lend to each other at any price.
The financial problem was turning into a real economy problem. Because banks could not tap the inter-bank market to cover short-term cash shortfalls, every bank wanted to be net cash. They started cutting back on loans to companies and individuals. In turn, companies and individuals would also want to hoard cash. The curtailing of credit facilities threatened the foundations of the economy – business activity would slow leading to job losses, bankruptcies and recession.
British Prime Minister Gordon Brown in the end got it right. Contrary to his long-held views, he extended government backing to the banks. This led to a flood of central banks around the world, including Malaysia, to guarantee deposits. With government guarantees, banks became willing to lend to each other again and credit markets were restored.
Next on Saturday: Brace for tough times
Saturday, November 15, 2008
On Wednesday evening I participated in an open forum on The Global Financial Crisis and its Implications on Malaysia, organised at Universiti Malaya by the Centre of Public Policy Studies. The 5 member panel of Datuks, Drs and one Encik (me :-) had a very good 2 hour dialogue with members of the public, very ably moderated by Tan Sri Ramon Navaratnam. The Nut Graph was there …
The roots of our current crisis are in the US housing and consumer-credit boom. This was fuelled by the Wall Street innovation called CDOs – Collateralised Debt Obligations.
The amount that any financial institution can lend is constrained by the capital it has. Historically, banks kept the mortgages on their balance sheets – these are their assets on which they earn interest income. Against these mortgages, they had to keep a certain level of capital aside to insulate against defaults.
Then, Wall Street invented special purpose vehicles (SPVs) just to buy and pool thousands and thousands of mortgages together. These SPVs raised the money to buy the mortgages by issuing their own securities – the CDOs. Banks were happy to sell their mortgages to the SPVs because it freed up their capital to make new loans.
Basic financial/statistical theory is that it is hard or impossible to predict if any single mortgage will default. But if you have a pool of, say 10,000 separate mortgages, you can be reasonably sure that, say, 98% will be fine and 2% will default. So the SPVs issued CDOs with varying risk levels. If you had a senior CDO, you got paid before everyone else. Of course you also received a lower interest rate than another investor buying a junior CDO, which would suffer first if the default rates were higher than expected, but that interest rate was still more compelling than other alternatives.
Wall Street and the SPVs managed to convince the credit ratings agencies (like Moody’s and Standard and Poors) that the more senior of these CDOs deserved AAA credit-ratings, suggesting they were very safe for pension funds and insurance companies to invest in. And on top of that, a new market in credit derivatives (CDS – credit default swaps) allowed buyers of CDOs to purchase insurance against default.
Markets were working like a dream. Banks rushed to give as many mortgages as possible. Millions of poor Americans who were hitherto considered poor credit risks (sub-prime) became new homeowners, millions of existing homeowners got to upgrade and others were able to “unlock home equity” ie take a mortgage on the rising value of their houses to spend as they wished.
Banks’ profits went up from the mortgages they generated. They didn’t care about the risks because these mortgages would quickly be sold to SPVs. The SPVs had no problems selling the CDOs to investors. Investors were happy because they got higher interest rates on the CDOs, at apparently little incremental risk. Even the junior CDOs did well. Everyone was happy. Investors made high returns and financial institutions and CEOs reaped billions in profits and millions in bonuses.
Then the gears jammed ….
Next (on Wed): Why governments had to bail out the banks
Monday, November 10, 2008
Given that we are still running a trade surplus, the reserves must have fallen due to capital flows.
Foreign investors had been leaving Malaysia. Data on the equity market is impossible to find, but debt market data shows foreign investors sold RM19.1bn of debt papers in Aug, accelerating from RM4.2bn in July. I’m sure the outflow continues, not helped by inflation at a 26-year high, the government saying the 2008 deficit will be worse at 4.8% (from 3.1% initially forecast) despite record high oil revenues and raising the 2009 budget deficit forecast to what many consider an optimistic 4.8% (previously 3.6%). Foreigners now hold just RM81.5bn of debt paper as at end Aug, down from RM100.6bn in July and the peak of RM126.5bn in April.
Perhaps locals too joined in the exodus. You would be worried if you could be arrested "for your own protection." The ringgit continued to plunge against the US$, down another 2.7% in Oct, after falling 7.3% in the 6 months ended Sept. Yes, it’s true investors have been exiting emerging markets generally, and the dollar is finding unexpected strength, but we are doing poorly even when compared to Thailand. Last month, a bank offered me 8.7 baht to the ringgit. I was shocked. Last year I got 10 baht. I had expected 11 or 12 baht this time because quite literally there was blood on the streets in Thailand.
What does this say for confidence in the ability of the Barisan Nasional government?
So let’s focus on the Budget, and specifically, the RM7bn stimulus plan announced last week by Finance Minister Datuk Seri Najib Razak. A leading investment research house put it succinctly: “.. based on past experience … economic packages introduced by the government have not been effective in preventing the economy from rapidly slowing.”
1) RM1.6bn is allocated to various small scale projects – village roads and community halls, repairing schools …. Excellent. This is the type of spending I advocate – locally oriented with maximum immediate impact to the community and local economy.
2) RM1.0bn goes to education and skills training programmes. Another excellent move. Now is a good time to retrain and improve local employee productivity.
3) RM1.0bn towards bolstering public transport and better facilities for our men-in-uniform. Again, wonderful
So that’s RM3.6bn (about half the package) going to projects that should directly help Malaysians. I say should because I fear for the implementation. Take public transport for example. There have been huge allocations already in the past few years, but the system is still atrocious. Some might say it’s gotten worse, what with LRT accidents!
Taking another case, who decides which private institutions get to run the training programmes? Forgive me for being cynical, but I see many “consultants” and “advisers” already counting their fees. To maximise the impact of these programmes, I call on the BN government to make public the specific project awards and the contractors. Better yet, put the projects out on open tender. Make it easy for anyone to apply. Let’s cut out the middle-men and the “consultants” and “advisors”.
Moving on the bits I am ambivalent about, RM1.5bn is going to building low and medium-cost houses, reviving abandoned projects and increasing the number of business premises in small towns. I fully support decent, affordable housing for all. But there is also a huge overhang of unsold properties. Instead of building more and adding to the supply, how about finding a way to utilise the existing stocks? And what is this about increasing the number of business premises? Commercial property development is best led by the private sector, not government.
Finally, RM1.9bn (a quarter of the RM7.0bn) is earmarked for an investment fund to attract strategic industries and high speed broadband. Government should get out of the business of funding businesses. It’s investment record isn’t particularly good, and entrepreneurs with good ideas should be able to find capital on their own. Government’s role should be to facilitate setting-up businesses – streamline the bureaucracy and cut out the red tape. As for broadband, I would love to have broadband, but I think the cost is over-stated and Telekom, with its atrocious service record, should not be leading this.
Wednesday, November 5, 2008
In fact, the main beneficiary of the 24% electricity tariff hike is Petronas, which more than doubled its gas price to Tenaga – to RM14.31/mmBTU, from RM6.50/mmBTU! Besides higher gas prices, Tenaga is also incurring higher coal prices, which at about US$95 today are still 25% higher than the average US$76/MT Tenaga incurred in its last financial year ended Aug 08. The pain will be made even worse by the depreciating ringgit.
Some numbers will illustrate this. That 24% tariff hike will add about RM5.5bn pa to Tenaga’s revenue. Of that, RM5.3bn goes to third parties, leaving Tenaga with just a measly RM200m of the RM5.5bn additional revenue:
- RM4.2bn (76%) goes to Petronas to cover the increased price of gas;
- RM1.0bn to cover higher coal prices:
a. RM0.3bn because of the the US$ increase in price to US$95; and b. An additional RM0.7bn due to the weaker ringgit, assuming an average RM3.70:US$1 instead of RM3.30
- RM135m for capacity payments to new IPP Jimah.
In fact, by next year, Tenaga will be in a negative situation again because capacity payments to Jimah will rise to RM 700m! If you want lower power tariffs, the appropriate targets are the IPPs which have earned exorbitant returns and Petronas, not Tenaga.
Tenaga is under-appreciated. Its services have improved tremendously in recent years. So tremendously that we don’t appreciate how much effort goes into delivering that stable and reliable power supply. If Telekom were running the power sector, we would still be suffering frequent brownouts (noisy fixed lines is the telecoms equivalent), blackouts (unstable Streamyx connections) and some areas without power at all (sorry, tak cukup kapasiti di sana untuk talian baru).
And yet Telekom gets a RM2.4bn handout of taxpayers’ money to do high-speed broadband while Tenaga is pilloried for high power tariffs which are not its fault in the first place.
If there’s one GLC to target for inefficiency, it’s Telekom. Why do we still have to pay Telekom RM25/month for fixed line ‘rental’? My housing estate was built in the 1970s. Surely after over 30 years Telekom has already more than covered its capital cost of laying down the telephone lines. And then there are the huge issues with Streamyx ….
Wednesday, October 29, 2008
More form over substance. A road name is just a road name, a marker for a location, unless the observer has some sort of personal connection with the honoured. I drive along Jalan Yap Kwan Seng, Jalan Raja Abdullah and Jalan Tun Sambanthan everyday, roads undoubtedly named for historic personalities. But they could very well be named Jalan Satu, Dua and Tiga and I would not notice nor care for the names do not carry any significance to me.
Naming a road after a historical personality will have a meaningful impact only if the public feels some connection to the person. So let’s focus on the substance. Let’s teach history better for a start. I barely passed my SPM history. It was such a boring collection of facts. My memory of Melaka history, as taught in school, was having to memorise a list of Sultans from 1400-1511; the Emergency and struggle for independence were dry academic treatises.
It was only long after I left school that I came across an Economist feature that brought to life the intrigues of the spice trade and why Melaka was so keenly fought over by the European powers. Most recently, Five Arts Centre’s Emergency Festival! offered entertaining and thought-provoking perspectives on that period.
There have been calls recently for the social contract to be taught in schools again. I fully agree – our history syllabus needs a thorough revamping in content and delivery. We should not need DBKL or politicians to rename roads. Roads should only be renamed when the people speak out and ask for their heroes to be honoured.
Sunday, October 26, 2008
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 :-)
Friday, October 24, 2008
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:
- 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.
- “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:
- What interest rate will Valuecap be charged and how long will the loan be for?
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.
Wednesday, October 22, 2008
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.
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.
Saturday, October 18, 2008
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.
Saturday, October 11, 2008
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).
Wednesday, October 8, 2008
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: 9th 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: 9th 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.
Friday, September 26, 2008
Foreign direct investment (FDI) outflow from Malaysia nearly doubled to RM38bn in 2007 from RM21bn in 2006, according to the United Nations Conference on Trade and Development World Investment Report. The RM38bn outflow was far higher than the RM29bn inflow, leading to a net outflow of RM9bn.
This is the first time ever that Malaysia has experienced net outflow, and Malaysia is the only one among 10 ASEAN countries to suffer net outflow. The poor numbers are even more disappointing given that 2007 was the year that the southeast asian region recorded it highest ever FDI inflow, up 81% to RM209bn.
Malaysia is rich in oil and agricultural potential and should be gaining large investments due to the boom in commodities. Instead we are not just lagging behind, we are in negative territory. There are myriad explanations for this, but they all boil down to one core reason: lack of confidence in the government.
- On stability, Barisan has a clear majority in Parliament and needs only 8 more seats to have a 2/3rd majority, Anwar needs 30 MPs to take over. Who should be in the stronger position? And yet Barisan appears busier reacting to Anwar than actually governing. Stability also applies to government policies, which right now seem capricious – take the latest U-turn over the windfall tax for IPPs. Announced in June to very adverse market reaction and now removed. On one hand the government can say it is responding to market feedback. On the other hand, perhaps the implications of the action were not properly thought out in the first place.
- Transparency – the efforts to root out corruption do not seem to be working. Malaysia fell in Transparency International’s Corruption Perception Index from 43rd place (out of 179 countries) in 2007 to 47th (out of 180 countries) in 2008.
- Rule of law – ISA detentions of journalists and elected MPs which are not subject to judicial review give the impression of authoritarian government ignoring civil liberties. It also appears the law is selectively applied – Opposition politicians are quickly investigated when reports are lodged but action seems slower when it involves government personalities.
Investors have to be reassured that their investments will not be subject to sudden policy changes, they have access to independent judicial redress in the event of contractual disagreements and that their dealings with the government can be on open and transparent terms. What we need: 1) An Independent Commission Against Corruption and open court trials and jail terms for the corrupt. Not just “transfers” to another department, 2) The ISA to be used only as a last resort and certainly not against journalists reporting facts, 3) The police force acting as and being perceived as neutral, independent enforcers of the law.
Thursday, September 25, 2008
Food prices alone are up nearly 12%, and transport costs have been rising rapidly too. In contrast, our southern neighbour Singapore saw its CPI moderate to a 6.4% hike in August.
High fuel and food prices are a global phenomenon, but it’s surprising that tiny Singapore, which has to import everything, is suffering less than oil and agriculture-rich Malaysia. Or is it?
Over here agriculture has been neglected while the Barisan chases high profile “development” projects like the Port Klang Free Zone scandal, dropping Protons on the north pole and sending a Malaysian into space (great headlines; but what’s been done since then to develop science and technology in Malaysia?). ….
Even worse, we have seen attempts that would have destroyed agriculture – for instance, the plan for a massive padi complex in Selangor that would have entailed building over the most productive padi fields in Malaysia. That plan was ultimately aborted … but how about moves to learn best practices from these farmers and propagate across Malaysia so we no longer have to import rice. No need for a MPs’ study tour to Taiwan … just send farmers from less productive areas to a tour in Sekinchan!
Besides producing food, transporting the food to the markets is a significant cost. Government policies here have deterred investment in efficient trucking and transport equipment. Real transport operators have to rent their licenses from connected parties who add no value besides their ability to get the licence. The recent Puspakom scandal is another example of how corruption increases the transporters’ cost of doing business. Yamin Vong of NST’s Cars, Bikes, Trucks has written extensively on these issues over the past months. Also check out “Much Soreness in the Transport Sector”.
Moving on to the subject of fuel. I agree that fuel prices should reflect global realities, but the impact on the people can be mitigated by efficient public transport. This, the Barisan government has failed to achieve in over 50 years of rule. Just yesterday, two LRT trains crashed, injuring 6 people. I use the LRT fairly regularly. It is not a nice ride – airconds sometimes don’t work in the mid-day sun, occasionally trains run late without explanation – just the generic announcements along the lines of “We apologise for the delay …
Everyday, the people risk their lives on poorly maintained and managed trains, buses and taxis while Barisan exco members enjoy their Mercedes cars. PM Abdullah promised way back in 2004 that savings from reducing fuel subsidies would go towards improving public transport. I have yet to see improvements. In fact, I see the reverse - increasingly crowded and dilapidated trains. How about less talk and massive plans and some implementation that we can actually feel on the ground?
Wednesday, September 17, 2008
I was born in Ipoh in 1971. My parents moved to PJ in 1976, but we continued to make many balik kampung trips, so I have lived some of Lat’s “Kampung Boy” and “Town Boy”.
I had excellent teachers at Methodist Primary School and a great education at La Salle PJ (thank yous, some posthumous, to Puan Maimon, Mrs Murugesu, Mrs Cheah, Tiger Thong, Mrs Chan, Mrs LC Choong, Mr Clement, Mr Rex Michael …..). I learnt discipline and diligence at MPS and acceptance and a broader view at La Salle, a melting pot of ethnic groups and social classes – the No 1 student of my year was in my class, so was the barely-literate last. I wish my children would be able to have a similar education, but that’s a pipe-dream after years of education policy mismanagement.
I have “done well” in the conventional sense, winning two scholarships for study in the UK (for which I am grateful to the University of Warwick and the British government), having lots of paper qualifications (a first-class honours B Sc degree from Warwick, a Cambridge MBA and the CFA charter) and a career which involved jetting around the world business-class and being whisked around Stockholm, Milan, London and New York in chauffeured cars.
Malaysia is my home, and has been home for my family ever since my great-grand father boarded a ship from China. I am third-generation born in Malaysia, which makes my roots deeper than some very senior UMNO politicians. My grandfather, my grandmother, my mother and all my parents’ siblings were teachers or civil servants contributing to nation-building while some of today’s bumiputeras were still growing up in Indonesia.
My family tries to practise low impact living. We do our best to minimise plastic usage – we use our own containers to “ta pau” food and take plastic bags to the pasar malam, we recycle where we can and make compost at home (which is a modest 2-storey terrace), I drive a diesel car (and continue to yearn for better-quality diesel), … but I’m far from a pleasure-denying ascetic. I enjoy teh tarik, canai and daun pisang, sambal belacan, ayam masak merah and nasi kerabu, and yes …. siew yok and wine .. my musical tastes range from AC/DC to Ramli Sarip, Search, Jackson Browne and Theresa Teng …. My guitar heros include Bala, Julian Mokhtar and Angus Young …
Everything in moderation is my philosophy … and I wish all of us can get together AGAIN and ENJOY Malaysia’s diversity rather than just tolerate the differences. “AGAIN”, because my childhood fun included so many birthday parties in so many homes with everyone eating and playing without thought of immaterial differences.