Ending Subsidies and Changing Behaviors
The recent public outcry against reducing the petroleum subsidy underscores the difficulty in changing established patterns of behavior. If we have problems with a 30-sen per gallon reduction in subsidy, imagine how formidable the opposition would be to removing other major subsidies, like special privileges. Those who call for dispensing with NEP “crutches” would do well to heed this caution.
For a study in contrast, gasoline prices tripled in the last few years in America, yet there was no protest. Nor were there any discernible changes in the behaviors of the public. Gas-guzzling cars still sell, the highways are perpetually jammed, and buses and trains remain empty.
If we believe in basic economic assumptions, such increases in price should result in concomitant reduction in demand. That it does not, reflects the difficulty in changing habits and attitudes.
Changing Human Behavior
This does not mean that human behavior cannot be changed; it can, often quickly and dramatically.
The Arab oil embargo of the 1970s precipitated widespread changes in the collective behaviors of Americans. Thermostats were turned down in winter and up in summer, motor homes remained unsold, and people took to wearing sweaters. Four cylinder cars, hitherto a rarity, suddenly became popular. Highway travel was reduced, and people drove slower to conserve gasoline. An unanticipated benefit was the dramatic drop in highway fatalities.
The Japanese occupation of Malaysia also precipitated seismic changes in behaviors and attitudes. For one, it shattered the myth of the White Man’s superiority.
There were other mundane changes. As portrayed in the movie A Town Like Alice, those “mems” hitherto used to having their every need tended to found that they too could scrounge barefooted in the villages with the natives in order to survive. My father, who had difficulty learning the much easier English language, found that he could speak Japanese and write kanji in a matter of months! The Japanese had a ruthless – and very effective – teaching technique: Learn, or you will be punished, and punished severely.
Ending Subsidies
There is a useful lesson here for those who bravely talk of ending the NEP “crutches” and other subsidies.
Take oil subsidy. If the objective is to stem the hemorrhage from Treasury, it would be wise to have slow incremental reductions. They would more likely be taken in stride, as the Americans demonstrate. If the objective is to wean off the cheap-oil lifestyle, then you would need “shock” treatment akin to the oil embargo.
Assuming the first objective, a 10-sen increase every few months would eliminate the subsidy in a few years while allowing for consumers to adjust. To cushion the impact on the poor, subsidize their season’s bus and train tickets, and hand out coupons redeemable for cooking gas. Additionally, reduce the tax or give tax credits for taxi owners and bus operators.
Regardless of the objectives, it certainly would not be wise politically and economically to reduce the subsidy and simultaneously announce a massive bailout for Malaysia Airlines.
Shock Therapy to End Subsidy Mentality
Ending the subsidy mentality among Bumiputras would involve major cultural and behavioral changes, thus requiring “shock” strategy. The objective here is less with reducing public expenditures (though that would be a significant side benefit) and more to changing societal and citizens’ attitudes and values.
A gradualist approach would not work, it would let people adjust and outsmart the system. Never underestimate human ingenuity to overcome obstacles.
Clinically, shock treatment is used for treating depression and in aversion therapy; in the hands of amateurs, it could kill.
Socially, if “shock therapy” were indiscriminately and unskillfully applied to end special privileges, there would be riots. The nation would be ripped part from the turmoil, negating whatever potential benefits that could be gained. Skillfully applied however, it could be socially and economically transforming.
One strategy would be to “shock” only the segment of society that could bear the pain most, and whose behavioral and attitudinal changes would influence the rest.
Imagine if henceforth Bumiputras who earned or have assets beyond a certain value were denied special privileges. The criterion should be such that the group would include members the royal family, ministers, members of parliament, business tycoons, professionals, and senior civil servants.
Consider the immediate positive effects. Knowing that their children would not get scholarships and other special treatment, they would now curtail their ostentatious lifestyles and save more. This would add to capital formation in the Bumiputra community, with the consequent positive economic impact. With the rich now off the public trough, more resources could then be diverted to the truly needy.
Similarly, instead of having ministers and politicians decide who would be blessed with timber concessions, Approved Permits for importing cars, and other valuable licenses, auction them off to the highest bidders, and use the proceeds to improve rural schools.
Likewise with the award of public tenders; there would now be competitive biddings to involve not only non-Bumiputra companies but also foreign ones. Bumiputra companies would then have to strive very hard to be competitive. Their principals would have to pay more attention to their businesses and less time lobbying politicians. The government would also realize immense savings, spared from paying the unnecessarily bloated costs as with the present practice.
On another level, the next time a vacancy occurs at the highest echelon of the civil service, public universities, and Government-linked companies, if the government were to use a reputable “head hunting” firm to recruit widely (including abroad) for a replacement, imagine the shock waves that would thunder through the establishment! That would be far more effective than the endless exhortations of gemilang, terbilang and cemerlang (excellence, glory and distinction).
Yes, there would be a political backlash from those grown gluttonous on the present system. However, the many more poor Bumiputras who would benefit from the changes would easily outvote the deprived rich ones!
Imagine the transforming effect to such a selective shock therapy. All Bumiputras would now strive hard to be competitive and less dependent on the state. The results would only be good, for Bumiputras as well as for Malaysia.
May 21st, 2006 at 5:17 pm
Speaking of which, one of the most outrageous subsidies in Malaysia must be the sugar subsidy. This in a country with a serious diabetes problem that I would guess is having a particularly detrimental impact on lower income Malays! I cannot believe that sugar is being subsidized!
Thank you for your blog. Always a good read. Stefan
May 21st, 2006 at 7:06 pm
Dr Bakri,
The time has come for the Malaysian government to develop a new benchmark or treshold for the Bumis to be eligible for any form of subsidy or privileges. I find it insulting that after 30 years of NEP the Malays are still struggling in their own homeland. What happened to the thousands of Malays that were given further education both locally and overseas? I am sure most of them have returned home and gain employment or become successful in their profession or business. For those that benefitted in the early 70’s, now their children and for some their grand children are enjoying the handouts. I recently came across a student graduating from a US University whose father and grand father had graduated from the same university. Clearly it shows that this is the third generation of this family that is enjoying the privilege. Adding salt to injury is the fact that the grandfather is a prominent businessman and the father is also a successful businessman.
I am not advocating doing away with the scholarship and study loans but be more selective and give the scholarships to those that cannot afford it or whose family income is below a certain level. I see many successful Malaysian driving around in million ringgit Mercedes Benz and living in multi million ringgit mansions in Bukit Tunku and still their children are attending college on a government scholarship.
On the oil, sugar and whatever subsidy, perhaps the government should consider issuing Food Stamps type. Lower Income Malaysians can register with the Social Welfare Department and upon verification of their income they will be issued Food Stamps that they can use to buy sugar and other groceries except cooked foodstuff. The gasoline subsidy should be stopped completely, instead the government can provide subsidy to land transportation companies and again lower income group can purchase a bus or train pass to travel to and from work.
All these subsidies are not benefitting the poor but enriching the middlemen. Sugar is being hoarded and sold to Thailand, diesel is hoarded and sold to the black market and even the fertilizers are being sold to the rural farmers. So the poor are not getting the benefit but the middlemen are laughing all the way to the bank.
The Malaysian government is already bloated from the number of Ministers to the Civil Service Surely administering the Food Stamp and welfare program can be handled without adding another Minister or more civil servants.
May 21st, 2006 at 7:41 pm
Dr. Bakri,
The percentage of income of Malaysians spent on fuel consumption is generally higher compared to the Americans. Coupled with the fact that the price of gasoline in the US is one of the cheapest in the world, a threefold increase in the price of gas will result in less harm to the Americans compared to what a relatively smaller increase will do to an average Malaysian.
May 21st, 2006 at 10:20 pm
Dr Bakri,
Away for so long? Forget how things work down here?Well, good for you. I wish my dad booked the ticket out of this country 20 years ago.
Without major overhaul i.e ‘the reformation’, things will always be the same, it is not the working malays who are really afraid of NEP, it’s the bougessi who own the land and the wealth. Cutting the NEP without any back up plan for the real left out malays will only make things worst. It is not just about NEP, it is the corruption that are killing the nation.
Majority Bumi’s or shall I say MAlay would agree on the termination of NEP if their existence can be guaranteed, guaranteed in the sense that the government can be really fair. It’s not so much about fairness among race, it’s more of a fair distribution of wealth between the rich and the poor.
People would never protested the petrol subsidy cut if the government were committed, the fact that the government is using public transport as the escape route is just sickening coz they have done nothing ever since.
It’s ok to be in AMERICA when you do have the buying power and cars are so cheap that everyone don’t need to thing about monthly payment on top of the bizarre petrol price. Worst of all, people have no option coz the public transport system is so bad, allowing no alternative plan the moment someone in your family get sick in the middle of the night - YOU NEED CAR…
WHAT CHANGING BEHAVIOUR can you perform if the condusive environment wont allow you. So sorry for the emotion, but the fact is, you’ve got to be in the prison before planning any break-out, if not you’re sending wrong information to the inmates…
May 22nd, 2006 at 12:50 am
I fear the “shock” will come soon, whether we want it or not. The signs are there:
- Oil reserves will run out in 10-20 years. If you think 30 sen increase is high, wait until we run out of oil and the global price jumps even higher.
- Rampant logging and forest clearing, especially in Eastern Malaysia. It is unsustainable, despite the government’s claim otherwise. What will happen when the timber runs out?
- Flash floods increasingly common in the Klang Valley, brought by over-development.
- Dwindling water supply, caused by pollution, wastage, and population growth. No comprehensive plan to manage water supply. For a country with as much rainfall as Malaysia, we often still see reports of “water shortage”.
Malaysia is in a lot of debt, thanks to massive spending during Mahathir’s time and bailout of government corporations. Yet Abdullah’s solution in the 9MP is to spend more money!
As Bakri said, a wrong “shock” can kill. I just hope the coming “shock”, when it comes, won’t kill Malaysia.
May 22nd, 2006 at 1:12 am
I would like to echo the sentiments of “teman_org_perak” but in my own way….
I think it is not good to punish the small and middle class people by depriving them of one of their most reliable equaliser…. subsidies…..
Wth reduction in fuel subsidies…. a double whammy for the ordinary people… who besides losing their “equaliser” …..also have to pay for higher fuel prices and higher prices in general….. as manufacturers, traders and retailer…all jack up their prices…blaming them on the rise of fuel prices!
Is that fair?
Or perhaps fairness is just an illusion?
….An illusion that is being constantly manipulated to justify the actions or policies …..that only promises present sacrifices (like changing/downgrading lifestyles) …. for only a possibility of future success or happiness….. (the promise that the economy will be more efficient… but efficient for whom?)
May 22nd, 2006 at 1:16 am
Subsidies is being taken away because the Government has not only been wasting money on grandiose projects, but also because of the shoddy management of, and the lack of transparency in utilising, public funds earmarked for development that resulted in uncompleted or poorly constructed projects, in turn forcing the Govt to incur additional costs on revival, repairs, rescue etc. We are seeing a lot of this lately…
This has already resulted in the shrinking of public funds meant for scholarhips to deserving Malaysians to pursue higher education and help the country builds its human capital. Nowadays, our graduates are already in debt even before they graduated - let alone employed - through the study loans.
Now, the target is fuel subsidies. Later, it would be other remaining subsidies like that for health treatment and medicine at Government hospitals/clinics. As it is, Tenaga’s subsidised tariff will be reviewed and watch out for the host of controlled prices that have not been revised since mid/late 90s and early 2000s.
I am nothing against changing the subsidy mentality, but like in the case of fuel subsidies, can we please have efficient, integrated and affordable public transportation first, rather than putting the proverbial cart before the horses (hope I get the expression right!!!) i.e. cut fuel subsidies and raise fuel prices to force people to change their habits and becomes efficient.
And talk about changing lifestyle, have you seen many ministers (and their spouses) on weekends taking public transport or drive their own cars with the the petrol paid out of their pockets like other average joes? Do they need a large convoy to accompany them to official functions with some of the cars in the convoy running around half emtpy?
There’s no point comparing with US since the economy is super-efficient, the prices of non-energy goods and services are cheap, and the people are generally “wealthier”.
In Malaysia, only 20%-25% of people pay income tax, implying the majority of the workforce in the country are earning less than RM2,500-RM3,000 a month. That is “hand-to-mouth” existence, nothing less, nothing more.
I think we can accept the gradual withdrawal of subsidies of any form if the pieces are in place already, which is inclusive of a strong and robust economy where people can withstand the “shock”. In the curent environment, its nothing more than piling on more hardships on the people who have already make a lot of sacrifice, especially in terms on putting up with “rising” cost of living but “falling” standard of living.
May 22nd, 2006 at 2:00 am
Alo brader,
Kalau takda subsidi, duit kerajaan yang banyak-banyak tu nak buat apa? Tolong perinci sket!
I’d rather go for subsidy. As usual, money saved from the ending of the subsidy may never came into my pocket.
May 22nd, 2006 at 4:28 am
Actually, most people will certainly agreed to subsidy, otherwise we really will never see the money in our pocket. All those money are the taxes that we paid, but what we have for all Malaysia Plan is highway, hospital, education and many others that are mosly concentrated in Klang Valley, where people in Johor, Kelantan and Perak wont felt any different, not to say in Borneo. Thats is the reason that BN lost 9 seats in Sarawak.
If this continue, I believe BN will lost more in next GE, because those young and educated are coming up.
To end subsidy, do you think the current Gov will let it happen. I do not think so, because thats the way to keep the voter believe in them. However, we have to end it soon, because, it is true that we dont understand how come NEP is still on, and how come Malays still need help. Cant they stand on their own, Cant they help themselves. Hey, be mature, this is a global world that we are going to live in, one day, we can earn money anywhere in this world, just with a laptop and also internet connection.
However, with our living cost in Malaysia, I doubt this will happen. I can buy a car in US with USD 5000, but you will need RM 50000 to buy a new one in Malaysia. How much a can of coke cost in US, here is RM 1.50. We dont really know how come the cost of living in Malaysia is so high, and our pay is so low. An engineer earn RM 1800 in Malaysia, but in Singapore an engineer salaryis SGD 2500. But a coke is 80 cent over there. In New Zealand, an engineer salary is NZD 3500, more than malaysia for sure. So how can someone work in Malaysia without subsidy live in Malaysia with that kind of pay where their counterpart are enjoying their life oversea. For sure, they will try to run away from Malaysia, first class facilities and third class pays. Without subsidy, they will die.
So ending subsidy, maybe, after DAP, PAS or any other daring people goes up. But sure will come up in a short while, because it wont get the support from Malays, which is 70% of the population not to say other minority.
After all, all the question point back to Malays, either to end it or continue, minority races are just enjoying the fruit for the Malays, and certainly we are not proud of it.
May 22nd, 2006 at 5:19 am
At last I have found something to agree with Dr Bakri. I agree with him that the global subsidies given to Melayus must come to an end (no surprises there). But I also agree with his suggested strategy of going about that business.
LJ
May 22nd, 2006 at 9:29 am
What subsidy does a kampong malay farmer get that a chinese farmer does not get? petrol? diesel? fertiliser? rice? sugar? none
With the limited number of scholarships compared to the 70s, and all being converted to loans irrespective of being a malay or chinese or kadazan, what extra does a poor malay get to justify the “subsidised malay” tag?
Compare that to the GIANT SUBSIDY that contractors and manufacturerrs and other employers get by the legalised import of foreign workers at the expense of higher wages and TRAINING of the poor Malays, Chinese and Indian workers!!
If the saving per year per foreign worker is RM1000 per year, with 4 million foreign workers the SUBSIDY per year is to the tune of 4 billion.
Add to that the subsidy that developers get for low land premiums for state lands and what the poor get are the two room flat, just like the barracks in estates. And you call the 5% discount a subsidy. That is an insult!!
Add to that the subsidy to the water concessionaire and the IPPs? and add to that the subsidy to building and not building bridges. There are many more subsidies given out.
So, if you want to remove the crutches, do you start with employers, bridge builders, IPPs or the poor farmer?
They may be poor but they are not stupid and they know thier rights. You may give or stop subsidy but not in thier name. THey want more scholarships!
May 22nd, 2006 at 2:25 pm
Bakri,
Your column is spot on. All the comments on why the subsidy is needed shows how deeply the subsidy mentality is entrenched in Malaysia. The rakyat simply do not trust the government to do things efficiently, period.
The problem with Malaysia is that due to the peg, the ringgit has devalued significantly and therefore purchasing power now is very low; inflation is very high.
Re: TCW, I think your comment is slightly exaggerated. You most definitely cannot buy a new car in US for USD5000. Maybe USD 10k you can. And when I started work in Malaysia as an engineer 8 years ago, I got RM2200 as starting pay. Currently, my company is paying RM2800 as starting pay for new hires. My point is that the pay range is pretty large from company to company.
May 22nd, 2006 at 3:49 pm
I think the BN government should subsidise the cost of prophylactic. It is too expensive for those of us who have no intention to start a family.
May 22nd, 2006 at 9:20 pm
Alo brader-brader,
Be realistic sikitla! Subsidy to the Malay, what? What are those subsidies? As that brader esham of inspigoblog (wow.. your nick reminds me of the Da Vinci Code, full of mysteries and secrets!) had put it, subsidy to the Malays is peanut if compared to for example, the businessmen. Who are these businessmen? Majority of them? The Merovingians?
Not saying subsidy is good. It’s best in the context of Malaysia!
I need subsidy for my Dunhill!
May 23rd, 2006 at 6:51 am
What’s wrong with subsidies? I define it as ways to distribute wealth fairly, although not accurately. Subsidy per se is not wrong but needed to assist those less well-off in society. I live in the UK, and here also in europe it’s not called subsidies but benefits. You get all type of benefits, child benefit, unemployment benefit, housing benefit, council tax benefit, disability benefit etc. The only difference is that all applicants are means tested. Of course there are some flaws but all in all, it works.
May 23rd, 2006 at 9:22 pm
A bit off tangent here, but someone mentioned about sugar price earlier. The Minister of Domestic Trade and Consumer Affair Shafiee Apdal blamed smugglers for the shortage of sugar, but said the controlled price will stay. This comes from a guy who use the very same script on fuel prices - blaming smugglers for shortage of diesel last year, but then denied fuel prices will be raised anytime soon, and hey presto! fuel price increased… BTW, as per the toll concession agreement, toll rate will be hiked come 1 January 2007, and expect another big fuel price hike - maybe 50 sen per litre - after CNY next year…
May 23rd, 2006 at 10:09 pm
Getting more confused here!
Mr Economist the theorist will say, take away subsidy! Market will adjust, economy will be more efficient and market oriented, productivity will increase, price will drop, people will be happy.. bla bla bla!
Hantu Gigi Jarang will say, ****shit! It’s all theories! Since when the economist is talking based on facts? Theory, Assumption, Forecast, forecast, forecast! That’s all the only things they know!
May 23rd, 2006 at 11:02 pm
Andrew wrote,
‘All the comments on why the subsidy is needed shows how deeply the subsidy mentality is entrenched in Malaysia’
Where do you think de money should go? Into the greedy politicians via MEGA-PROJECT or back to the people the subsidy or shall I say ‘benefit’ (the western way)?.
Normal citizen wouldn’t understand the pegging and unpegging, they want result, and as an elected government with majority reprentatives in the parliment, they need to perform. If they don’t, there’s no point in giving them all the benefits i.e the salary, the cars, the putrajaya etc.
more from Andrew,
‘ The rakyat simply do not trust the government to do things efficiently’
How can trust them when ‘closing one eye’ mentality embended into the roots of their ever so small brain(kind of big when they were thinking about swindling rakyats money).
Rewarding thru connection not afford - I do it my way… and that’s the BN. We need saviour…. and maybe he’s in AMERICA dreamland..
May 23rd, 2006 at 11:04 pm
sorry effort not afford
May 24th, 2006 at 12:09 am
This subsidy thing is quite emotional… but for understandable reasons……
As for me……., I don’t mind losing all subsidies if the govt is whole hearted in making the economy efficient….
But even as of today the news: “M’sia won’t simply tear down protective barriers in auto industry ” . This news begs the question why shift the burden of efficiency to the small people……….
And I wonder if there are practising economists amongst us….. Is there a monetary figure on how much the average person receives in subsidies… (versus how much Proton, DRB and the big companies receive) . That would help to put the discussion in more rational terms….
Aha…M bakri also mentions NEP……..
It will certainly help if there is a figure on how much benefit the average Malay receive with regards to NEP…. Of course… on the other side of the coin… how much disincentives the non-Malays suffer with regard to NEP…
Only then we can discuss whether the effects of NEP. As far as I am concerned M Bakri hidden and vague attack of the NEP is just a polemic…. I mean….I fully understand the ideology of the so-called Washington consensus economics/ economists, who love to bash affirmative actions and subsidies…whilst conveniently forgetting their assertions are not conclusively proven.
Those who wants to bash me…as I seem to support NEP…. please do so… but it will help if you can cite empirical evidence…….
May 24th, 2006 at 12:52 am
Typo: Incomplete sentence: I rephrase
Only then we can discuss rationally the effects of NEP…. especially with regards to its net benefit or net cost to society.
As far as I see even in this blog…. many either support the NEP or seem intent to blast it to pieces…. Understandably many give evidence to supporty their assertions… but mind you the evidence is so far fragmented…. which is to say that they can either be manipulated either way……
May 24th, 2006 at 3:33 am
amit,
Yours a very good piece, my brader. I’m also wondering how much I get in terms of subsidy as a Malay in this country of mine. As for now, I can’t see anything that is so material, so worth mentioning, provided to me by the Government at the expense of my other fellow countrymen.
I dont have even a slightest evidence! Therefore, I support the status quo!
BTW, I’m a smoker. I pay a lot of tax on this and I love paying tax for the country!
May 24th, 2006 at 9:51 am
Dear Hantu
Just go buy a house, any house and you’ll get a discount. Ranges from 5% to 10%. Any Malay like you should be able to get it, no sweat and it’s part of the affirmative action policy that’s in your favor. I would also like you to know that the discount is factored into the non bumi prices. I found this out from one of my uncles who works for a developer.
In spite of this I found that in urban areas many Malays like to buy/stay in low cost houses or a council flats. Very few take up the discounts offered and there’s always a glut of unsold bumiputra lots in many housing projects. I heard the govt is setting up a RM2 billion fund to buy up certain properties, another initiative by the govt for your sake.
I am amazed you are not even aware of all the goodies surrounding you and you want status quo!! You guys are spoilt to the hilt and you aren’t even aware of it? I hope you are happy to know we are working our butts out so that you can continue to enjoy your perks.
May 24th, 2006 at 10:58 am
Dear amit, hantu, teman_orang,
I am not against subsidies per se. It’s a useful tool, when used properly. However, the petrol subsidy is not useful to the economy. It gives more subsidy to the rich (who drive bigger cars), and it artificially encourages people to drive old cars that are not fuel efficient. What should be done is to abolish/drastically reduce the taxation on cars, and remove the subsidy on petrol. This brings us back to the REAL market, where cars are actually cheap, and petrol is the one that is expensive. And as a side benefit, it’s also better for the environment! I say we give the national car industry 8 years to buck up (we should have done this 10 years back). 8 years where the protection is gradually reduced, bit by bit. If they can’t make it by then, they don’t deserve to exist.
The money saved by the subsidies should go to development. Much outside Klang Valley is not developed, and yet most of development inside the Valley is funded by other states tax payers. I’m amazed that people would rather get subsidies from the government rather than push the government to do proper development and do their JOB.
Re: the NEP. There aren’t many figures on how much the NEP has ravaged on the country, but that is because we are not open to conduct such research. Fundamentally, I believe that any race-based policy is flawed. We should be focussing on income-based policies. It is no secret that a certain race is “favoured” in anything the government touches with regard to promotions, benefits, etc. This perception (which will continue until the government embraces meritocracy) has caused the GLCs and civil service to severely lack diversity. The NEP is the anti-thesis to meritocracy, and has led many of Malaysia’s brighter minds (Dr. Bakri included) to leave. Frankly, if we had implemented an income-based affirmative action policy from the start, I daresay the Malay community would have been much better off today then the current NEP.
OK, enough of my rambling…. back to work.
May 24th, 2006 at 6:36 pm
Dear Jan, the reason why many Bumis didn’t take up the 7% bumi discounts on property up for sales and still flock to the low-cost and affordable units is precisely that - they can’t afford it as they are mostly lower-middle income and low income groups.
May 24th, 2006 at 6:52 pm
Jan,
Wrong!. I bought my house in Taman Melawati without any discount! In fact, all the Malays within my area got theirs without that discount you mentioned. Go and check with Negara Properties. Remember! My posts were about me, myself!
I also dont agree to the 5%-10% discount. If the policy is to have a mix of people of various races within an area, they should, rather than giving discounts, reduce the prices instead. But, who are these developers? Again, majority of them? You think they dont get some incentives or benefits or subsidy from the government, whatever you call it? Again, you care to study how much this 5%,10% discounts as compared to the incentives given to the developers?
May 24th, 2006 at 10:25 pm
Hantu, this is the first time I heard a bumi not getting any house discount, either your area is exclusively a Malay area where everybody is treated the same or the developer is a bumiputra company.
I heard from other sources that at one time some developers who did not offer discount were promptly visited by kris waving guys. On top of that the approving authorities threaten difficulties. Thereafter I have never heard of any developer who dare to do away with the discount for the bumis.
I checked with my uncle again and he said there weren’t any incentives as far as his company is concerned but you can bribe certain authorities to reduce certain requirements like the mandatory 30% low cost housing and many other pesky requirements which sometimes he thought were put in place just to provide opportunities to extract more money. Incentives which you said could have been for GLCs not Chinaman developers.
May 25th, 2006 at 1:37 am
Wow…. good responses…. out there…
I have to say thanks to Hantu Gigi Jarang…..
Anyway…. I’m still waiting for those practicing economist for further information…
Under the current circumstances, I think it is premature to say that NEP is bad. The reason is so simple: there is no conclusive evidence.
Again, still waiting for the practising economists………..
May 25th, 2006 at 4:17 am
Hantu Gigi Jarang
The fact that subsidies makes the economy less efficient is a proven fact, not a theory by some dreamy economist.
May 25th, 2006 at 6:51 pm
Of course subsidies make the economy less efficient, it makes the recipients of subsidies less productive and at the same time cost more to produce elsewhere.
NEP is one big subsidy and it isn’t so bad if the recipients are the needy but in Malaysia’s case the recipients are the majority race which is 65% of the population which includes very wealthy people who don’t need it in the first place. But they must have it, this in the name of Ketuanaan something. Therefore I have to work my butts out to buy my first house because it has cost more to include the discount given to somebody else whereas the guy who got the discount had it easy and need not work that hard. This is one example of making the economy less efficient which does the country no good much less the very people it’s supposed to help.
Another very damaging subsidy area is in education. How on earth can the MOE justify having 2 different entrance exams into public universities, one for the bumis and one for the non bumis and still call it “meritocracy” straight in your face? This is done to help the majority race no doubt but this has resulted in the falling standards in our education as espoused by Dr Bakri in his blog. The chickens have come home to roost, judging by the increasingly number of unemployable (as opposed to unemployed) graduates. The standard of our education will continue to fall when these inferior graduates takes up teaching positions in the universities. The vicious cycle goes on and on until we are behind 3rd and 4th world countries. In fact this is already happening, one Thai university has caught up with our premier uni, MU. If this big subsidy goes on like our friend Hantu wanted status quo then I am afraid the country will go down the drain with massive cultures of mediocrity everywhere like in govt which is already happening and a retarded economy. Everybody will suffer especially people like Hantu who may not be able to cope with the onslaught of globalisation. Don’t say I didn’t want you.
May 26th, 2006 at 1:09 am
Jan just said:
“The standard of our education will continue to fall when these inferior graduates takes up teaching positions in the universities. The vicious cycle goes on and on until we are behind 3rd and 4th world countries. In fact this is already happening, one Thai university has caught up with our premier uni, MU.”
well put. How not to, we even have a VC of MU who don’t even have a phd ! The whole world is laughing at us.
May 29th, 2006 at 5:17 am
“…..Of course subsidies make the economy less efficient, it makes the recipients of subsidies less productive and at the same time cost more to produce elsewhere….”
Wow… M Bakri just illustrated how efficient and productive the US agriculture industry is…
I mean… do you know how much per-capita subsidy does the US farmer gets?… and what about Europe?
How do you explain that?
January 19th, 2007 at 8:49 am
Scorpio…
I like what I am reading here. Hey, do drop by at my website if you…