Nong Chik Says Low-Cost Home Dwellers Can Afford 6.5% Interest

Pakatan asks if RM1.5b EPF loan is to unlock DBKL assets
By Shazwan Mustafa Kamal Mar 17, 2012

KUALA LUMPUR, March 17 — Pakatan Rakyat (PR) lawmakers are questioning the rationale behind using RM1.5 billion from Malaysia’s largest pension fund to finance Kuala Lumpur City Hall’s (DBKL) low-cost housing schemes, and whether it is to liquidate the capital city’s assets.

Noting that Putrajaya has yet to clarify the matter, they also flayed Federal Territories and Urban Well-being Minister Raja Datuk Nong Chik Raja Zainal Abidin for saying that prospective buyers who did not qualify for bank loans would have no problems repaying loans from the Employees Provident Fund (EPF) at a 6.5 per cent interest rate.

“My fear is that EPF is being used as a last resort, as the government’s personal piggy bank.  There is concern ... that the EPF funds are being used as a source to finance new projects and this scheme will be used to unlock illiquid assets,” PKR vice-president Nurul Izzah Anwar told The Malaysian Insider.

[...]

DAP publicity secretary Tony Pua stressed that the responsibility of building low-cost houses should fall under the purview of the federal government using federal funds instead of EPF money.

“Why must the taxpayers’ retirement funds be tapped? What has happened to the taxes we have paid to the government? Is the federal government so bankrupt now that they can’t afford to build low-cost homes without tapping into our retirement savings?’ he asked The Malaysian Insider.

The EPF is providing the first tranche of RM300 million to a special purpose vehicle (SPV) undertaking the financing for those buying some 24,000 low-cost flats in the capital city.

Raja Nong Chik  said on Thursday DBKL “did not ask [for] money from the government” as it wanted to “avoid politics” in the scheme described as a “liquidation exercise.”  The minister had told reporters that DBKL had decided against making direct loans to up to 35,000 city dwellers who are still renting and unable to borrow from banks as it needs funds for “future projects.”

Raja Nong Chik had earlier told Parliament that under the current rate of 6.5 per cent, a loan of RM36,100 over 25 years would incur a monthly repayment of RM243, or 50 per cent more than would be applicable with a 2.5 per cent interest rate.

“If we reduce it to 2.5 per cent, it will be RM161. It is only RM82 difference. This is just political posturing by the opposition,” the senator had said, and that the RM36,100 figure was for the newest and most expensive low-cost homes; the rest would be sold for less.

This did not sit well with PR MPs, who accused the Umno minister of being “insensitive” to rising costs of living among the poor in the city.

“RM82 is a large amount for the majority of the people, it is slightly more than 10 per cent of a standard household disposable income. This shows the minister does not understand the realities of urban living costs which are increasing due to government policies.

“There should not be any discrimination towards low-income earners seeing as independent power producers (IPPs) and the National Feedlot Corporation (NFCorp) received lower soft loan interest rates,” Nurul Izzah said.

[...]

“Raja Nong Chik is unfit to be the minister of urban well-being when he completely failed to understand and empathise with the poor man on the street.  He has the cheek to dismiss a RM82 instalment difference as a ‘small amount’ when these low-cost housing dwellers earn less than RM1,000 per month,” DAP’s Pua said.

Pua said the responsibility of building low-cost houses should fall under the purview of the federal government using federal funds instead of EPF money.

[...]

For the full article in The Malaysian Insider, click here.

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GST to Fund the Poor?

Recent months have seen various Ministers, including the Prime Minister Datuk Seri Najib Razak himself putting forward the proposal that as the Goods & Services Tax (GST) gets implemented, the Government will concurrently reduce our income tax levels.

The latest Minister who has joined the fray is Datuk Idris Jala, the CEO for PEMANDU and Minister in the Prime Minister’s department, who went further to argue that only with the GST, accompanied by reductions in income taxes will the Government be able to fund its policies for the poor.

Datuk Idris Jala said that “with the GST in place, all 28 million Malaysians will pay a little bit which then allows to reduce corporate and income tax and that’s how we can find enough money for the poor people.” The statement is a little shocking coming from Datuk Idris Jala, who’s normally fairly sensible, and completely perverse in its logic.

Today, only approximately 15% of the working population earn enough to afford paying taxes, and that means that the overwhelming majority of the work force is earning less than RM3,000 a month. They are not paying taxes not because they do not want to, but because they are not earning enough to.

What the BN government is proposing to do is to reduce the taxes paid by the wealthier 15% of the working population, and redistributing the tax burden to the 85% who currently do not earn enough to qualify to pay taxes.

The irony is that now the Government is arguing that by taxing the rich less, taxing the poor more, they will be able to source increased funds to support the poor! In effect, the Government is arguing that the wealthier segments, particularly the corporates should stop funding policies in support of the poor, and the poor should fund policies for themselves!

There is no question that the Government cannot rely heavily on taxes derived from the oil and gas sector which today constitutes close to 40% of all government revenue collection. However, the way to do it is not by crudely taxing the rakyat more, particularly those from the lower income groups. Otherwise, should Petronas “strike oil” again and is able to increase its revenue contribution to say, 60% of total government revenue, does it mean that the Government will then increase GST to say 10% for the purposes of “broadening the tax base”?

The appropriate method to increase and broaden our income tax base is to implement policies funded by our oil and gas windfall profits which will raise the income and productivity of ordinary Malaysians. Such policies will include drastically improving the quality of education as well as setting a reasonable minimum wage. Once the income levels of Malaysians increase, automatically, based on existing tax structures, more Malaysians will be paying taxes and the Government will be able to “broaden” its tax base without burdening the poor.

In the short term, the best measures for the Government to implement to increase revenues and reduce expenditure is to introduce competition into all its policies – such as competitive auctions for state land to maximise revenue, and competitive tenders for all privatisation and procurement projects to minimise cost and reduce leakages through wastage, rent-seeking and corruption. Such measures, if imposed with political will, will be more than sufficient to fund policies for the poor in the short to medium term.

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New Economic Policy Rhetoric

I'm kinda late blogging this issue, as the matter was discussed and a ruckus was created in Parliament last Thursday morning in Parliament. You would have read all about it here (Malaysiakini) or here (The Sun).

The question from REMBAU was:

...adakah kerajaan bercadang untuk mengubah polisi yang telah digubal berlandaskan semangat Dasar Ekonomi Baru, terutamanya yang menolong kaum bumiputera sejajar dengan desakan pembangkang untuk menolak dasar ini.

The replies from the Government, which has been asked numerous times on this issue in this session, of which written replies has been provided has been standard and rhetorical and does not at all address the issues at hand. To quote some of the standard replies provided, the Minister in the Prime Minister's Office, Senator Datuk Amirsham A Aziz stated that:

DEB telah digubal pada awal 1970-an dengan matlamat utama iaitu untuk mencapai perpaduan nasional dan pembentukan negara melalui strategi serampang dua mata.

Pertama, pembasmian kemiskinan tanpa mengira kumpulan etnik dan kedua, penyusunan semula masyarakat bagi menghapuskan pengenalan etnik mengikut fungsi ekonomi. Semangat DEB kemudiannya telah diterapkan dalam dasar-dasar ekonomi selepasnya iaitu Dasar Pembangunan Nasional, Dasar Wawasan Negara dan Misi Nasional di bawah Rancangan Malaysia Kesembilan bagi menangani masalah jurang sosial ekonomi antara dan di kalangan kumpulan etnik bandar dan luar bandar.

I won't quote the entire thing but you can read the rest of his "standard" reply here from the Hansard. The government has never responded to the issue that the problem and objection with the DEB doesn't really lie with the "noble" objectives but with its discriminatory practices and overzealous implementation.

Anyway, the whole episode got "politicised" when REMBAU asked in his supplementary question:

Ahli Yang Berhormat daripada bahagian yang juga Ketua Menteri Pulau Pinang telah berikrar untuk menghapuskan Dasar Ekonomi Baru daripada pentadbiran Kerajaan Negeri Pulau Pinang kerana DEB ini, “Breeds corruption, cronyism and systematic inefficiency”, dengan izin.

Saya hendak bertanya Yang Berhormat Menteri, adakah adil untuk Yang Berhormat
Bagan membuat rumusan umum seolah-olah rakyat yang mendapat faedah daripada DEB, yang miskin tidak kira kaum, berjuta-juta pelajar dan profesional bumiputera termasuk Yang Berhormat Menteri sendiri yang menjadi produk DEB, yang menjadi ketua pegawai eksekutif bank yang terbesar di Malaysia seolah-olah kita semua ini kroni dan kaki rasuah. Adakah ini kenyataan yang adil, Yang Berhormat Menteri? Adakah ini adil?

That was when the Minister started reading his 2-page prepared text which clearly demonstrated that the answer was prepared in advance, making a mockery of the parliamentary question time. There was obvious collusion between REMBAU and the Minister, to attack BAGAN on his statement to eliminate the corruption and cronyism associated with the New Economic Policy.

Datuk Amirsham started his reply with

...saya berpendapat kenyataan Ketua Menteri Pulau Pinang itu tidak tepat dan langsung tidak memahami objektif DEB... Kalau itu kesimpulan beliau tentang DEB, maka sesiapa sahaja yang mendapat bantuan melalui DEB sama ada dalam bentuk pinjaman, peluang pekerjaan, peluang perniagaan, biasiswa dan lain-lain itu adalah kroni dan kaki rasuah...

An answer like that from a so-called technocrat and professional Minister certainly deserves, in my opinion, the heckling from the opposition members he received subsequently. IPOH TIMUR rightly asked, "Panjangnya jawapan tambahan, siapa sediakan?" You can watch the video here.

I had stood to ask an additional supplementary question, but the opportunity went to BATU KAWAN [Prof Ramasamy]. I had wanted to ask the Minister:

Bukankah satu dasar yang memberikan tumpuan khusus kepada membantu golongan miskin jauh lebih berkesan membantu kaum bumiputera yang kurang berkeupayaan berbanding dengan DEB yang memberikan tumpuan mengikut bangsa, kerana ramai yang diberikan bantuan kerajaan bukannya golongan miskin kaum bumiputera, tetapi kaum UMNOputera yang telah kaya-raya, dan yang menerima manfaat yang lumayan sekali?

It's a question I hope to get the opportunity to ask one day in Parliament, as I would really like to hear the answer from the Ministers involved.

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The Malaysian Apartheid

Datuk Seri Rafidah Aziz was a furious lady in India, especially when she had to defend herself from accusations of apartheid practices in Malaysia.

Holding up the DNA newspaper of Nov 28, the International Trade and Industry Minister said that the article quoted a 22-year-old Sri Lankan-born poet who had spent 17 years in Malaysia, as saying that she fled Malaysia last month to escape “systematic racial harassment.”

“Fleeing Malaysia? Oh my goodness gracious. Can you imagine? This is really telling lies,” Rafidah told reporters yesterday after chairing a Wanita Umno meeting.

[...]

Rafidah added that Sharanya had said in the article that “countless (Hindu) temples have been demolished and idols smashed – oftentimes in the middle of prayer sessions and devotees attacked”.

“What a lie. Words like this are terrible. The article really hurts,” she said.

Now, what did the poet write that made the Iron Lady so worked up?

In the article, “The Malaysian Apartheid” which appeared in the 4 December 2007 edition of ‘The New Indian Express’, Sharanya was eloquently wrote that:

…The entire bureaucratic system of Malaysia privileges the Malay above all of these groups.

Historically, Indians of Malaysian origin have been at the lowest rungs of the race/class ladder because of how they migrated there in the first place, usually in the servitude of the British empire. Post-colonial Malaysia did not only keep the divide-and-conquer system intact, it augmented it, making race essentially the be-all and end-all of everything.

And yes, the Indian minority does have it worst — socially, economically and politically. But under a political system that thrives on division and uses the threat of discord as a means of ensuring silent acquiescence, everybody suffers. To different degrees, admittedly, and a few, maybe not at all.

But by and large, living in a society that judges, rewards and punishes on purely race-based motives takes its toll. To live conscious of inequality makes one a participant, willing or not, victim or not.

Readers can make their own judgement as to who is closer to telling the truth, and who, on the other hand is covering it up.

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Royal Address on Inequality

The Yang Di-Pertuan Agong, Sultan Mizan Zainal Abidin in his maiden address when opening the first meeting of the Fourth Session of the 11th Parliament, said the implementation of the distribution strategy must be continued so as to eliminate the income disparity among the races which is still wide. He said that “the Government must ensure the target to reduce the income rato between bumiputra and Chinese to 1:1.5 by 2010 is met. The ratio between bumiputra and Indians is to be reduced to 1:1.15 over the same period.”

I believe that income inequality, whether amongst Malaysians or between races must be reduced significantly or eliminated altogether. However, the mechanism to achieve such a result must be based on a needs-based affirmative action policy and not a race-based one, such as the New Economic Policy (NEP).

While there may be significant income inequality between bumiputras and the other ethnic groups, a race-based policy will inadvertently perpetuate inequality between the various races, and further accentuate the income inequality within the bumiputra ethnic group.

When a policy specifically targets a racial group instead of those who are specifcally in need, those who are best able to take advantage of the affirmative action policy will naturally be those with better education, better connections with the political elite as well as those with greater financial power. Hence, a policy such as the NEP will only serve to benefit parties like UMNOputras as epitomised by the Selangor state assemblyman, Datuk Zakaria Mohd Deros.

The continuation of the existing policy will also exacerbate the already widening ">income gap within the bumiputra community. As highlighted in the 9th Malaysia plan, the Bumiputra community not only have the highest income inequality in the country, the inequality has also grown by the fastest between 1999 to 2004.

If the government is serious about raising the plight of the bumiputras, the affirmative policy has to be needs-based. Only then will all the necessary benefits go to the poor bumiputeras, as well as the poor of other communities. This way, it will eliminate leakage to the already wealthy and powerful amongst bumiputras, and hence becoming more effective in raising the income levels of the poor, meeting the objectives set out by the King.

Therefore even though the King has called for redressing the ethnic income disparity between the various races in the country, it is critical for the Government to terminate its affirmative action policy based on race, such as the NEP, and focus purely on merit and needs. It is the most effective and practical way not only to raise the income of the poor bumiputras, but also the poor of other neglected communities like the Indians and Chinese.

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