Monday, June 09, 2008

Fair Wage & Malaysia Bonus

The "FairWage" and Malaysia Bonus proposal was first raised in the DAP Alternative Malaysia Budget 2008 announced in September last year. Given the recent changes in the fuel subsidy system, I thought it's an idea to put up the section on the above here on this blog for discussion.

But before proceeding to share your 2 sen, let me first share the key assumptions behind the policies suggested:
  1. Welfare provision is a key responsibility of the government for the less fortunate in the country. (Otherwise, it'll just mean no subsidies or grants at all)

  2. The policies below are formulated based on the principle that product subsidies tend to be very distortionary and unevenly distributed, hence a more targeted approach is required.

  3. The exact quantum of award/bonus suggested below may require further adjustment with more precise data from Government.

  4. Please also read the following in conjunction with the other posts I've put up on this blog. It may make more sense that way ;-)
The EPF is a social security institution formed according to the Laws of Malaysia, Employees Provident Fund Act 1991 (Act 452) which provides retirement benefits for members through management of their savings in an efficient and reliable manner. With rising costs of living, extended life expectancy and more expensive medical treatments, it is critical that Malaysians save as much as possible to ensure sufficient funds for retirement. It is also important for as many Malaysians as possible to be included in the system.

However, as studies have shown, low-income Malaysians are facing significant difficulties in saving enough via EPF. As a result, the Government must act to assist this group of Malaysians who face various challenges in the face of globalisation, particularly with a stagnant or declining real wages. This is clearly reflected in the 9th Malaysia Plan Gini coefficient statistics where by income disparity among Malaysians has widened substantially. Malaysia ranked highest in terms of income inequality in Southeast Asia.

To assist low and medium-waged workers, DAP proposes to raise the Employer EPF Contribution Rate from the current 12% of total wages to 15%, representing a 25% increase. This will in turn raise the total contribution from the employer and employee to the fund to a total of 26%.

At the same time, in view of the increase in cost for the employers, which may in turn affect the competitiveness of Malaysian companies, it is proposed that a limit of RM8,000 per month or RM96,000 per annum be set to Employer contributions to the EPF. That means that for employees earning above the limit, their EPF contributions will continue to be calculated at the limit level.

However, for middle-age workers who are earning below RM1,400 per month , it is clear that they will continue to face severe challenges despite the increase in employer’s EPF contribution. Whilst younger workers may be learning the ropes and learn new skills to upgrade their income level, older workers will face difficulties in our fast-changing economic environment and are in the greatest need of assistance from the state to make ends meet.

With the oil and gas sector contributing handsomely to the state coffers, it only makes social sense to share part of these gains with the less fortunate and lower income tiers within our society. However, at the same time, we still need to continue to incentivise these workers to secure employment to avoid over-dependence on the state. Hence, DAP proposes “FairWage”, an integral component of MENUS in promoting social justice. FairWage has a 3-prong strategy for implementation:
  1. To increase that take-home pay, workers will contribute a lower rate to the EPF. For with pay below RM900 per month, employee contribution to the fund will be waived while for those with income of not more than RM1,400 per month, the employee's contribution to EPF shall be reduced from the current 11% to 5%.

  2. To make them more employable, employers will reduce their rate of contribution to the EPF. For workers above the age of 35 to 55, earning between RM900 to RM1,400 per month, the employer contribution shall remain at the current 12%. For those earning less than RM900 per month in the same age group, the employer contribution shall decline to 10%.

  3. To compensate for the above, the Government will give workers FairWage income supplements to achieve a higher level of income. For workers aged 45 and above, receiving monthly income below RM900 per month, they will receive an annual income supplement Proposed 2008 Malaysian Budget Democratic Action Party of RM2,400. For those workers above the age of 35 earning less than RM1,400 per month will receive RM1,600 per annum. Of the supplement, a quarter shall be in cash form, while the balance will be channelled into the EPF accounts. By channelling a larger portion into the EPF, it will help the workers save for their future needs. An additional 10% on top of the income supplement shall be applied to those who live in the Klang Valley, Johor Bahru as well as on the Penang Island to cope with the higher cost of living.
As an example, a 48 year old worker in Muar earning RM800 per month used to take home RM712, will find his take-home pay increased by 19.4% or RM138 (RM88 + RM50) to RM850. At the same time, despite a reduction in employer contribution to 10%, the overall contribution to the EPF account will increase from RM184 to RM230, representing a 25% increment. His total monthly income will hence be RM1,080, an increment of 19.5% from before.

As a separate example, a 42 year old worker in Kuala Terengganu earning RM1,200 per month will find his take-home pay increased by 9.9% or RM105.33 (RM72 + RM33.33) from
RM1,068 to RM1,173. At the same time, the overall contribution to the EPF account will increase from RM276 to RM316 monthly, representing a 14.5% increment. His total monthly income will hence be RM1,489, an increment of 10.8% from before.

“FairWage” is not an original idea but an adaptation of best practices successfully implemented in other advanced countries. For example, in the United States, “Earned Income Tax Credit” acts like a negative income tax for low-wage workers, supplementing their earned income. Similarly, the UK has implemented a “Working Tax Credit” which has helped to reduce poverty and encourage work. While most recently, Singapore has introduced “Workfare” which supplements the income of older low-wage workers.

In addition to assisting current workers registered with the EPF, FairWage will also provide incentives for more workers, particularly odd-job or ad hoc labourers to insist on registration with the EPF by their employers due to higher pay. As a result, the overall system will be more inclusive for Malaysians, particularly those from lower income groups.

On top of that, DAP would introduce a “Malaysia Bonus” which will vary in accordance to the performance of the economy whereby poorer Malaysians will be able to share the fruits of the country's wealth. For 2oo8, the Malaysia Bonus shall be paid to those who have worked at least 6 months in 2007 based on their last drawn pay in December 2007. The Malaysia Bonus shall be channelled directly into the worker's EPF account and shall be available for immediate withdrawal.
  1. Those earning less than RM3,000 per month but at least RM2,400 will receive RM300
  2. Those earning less than RM2,400 per month but at least RM1,800 will receive RM600
  3. Those earning less than RM1,800 per month but at least RM1,200 will receive RM900
  4. Those earning less than RM1,200 per month will receive RM1,200
We will review the above schemes annually to determine the best mechanisms to achieve a better living quality for all Malaysians without detrimental effects to a person's incentive to seek work. As an integral part of MENUS, the above policies will ensure that all Malaysians in need are taken cared of by the Government, the country's wealth is shared equitably and no community will be left behind.

(The above policies form the foundation of DAP's call for up to RM3,000 be granted to deserving Malaysians to help them achieve a fairer deal. By our estimates, the above policy will cost substantially less than what the Government currently spends on subsidies but it goes directly to the people who needs it.)


Anonymous said...

A common DAP refrain throughout the years has been that EPF is badly managed. EPF interest rates are lower than they should be. When EPF took over management of RHB I believe you were opposed to the move because it seems to be outside EPF's mandate. In hindsight, however, some people feel that the takeover has worked well. Any new thoughts on that?

But my immediate concern is this... is it wise to broaden the scope of EPF's functions? You propose to channel the Malaysia Bonus through EPF. You also suggested that the RM625/RM150 "wang ehsan" to small vehicle owners should have been channeled through EPF instead of through Pos Malaysia. I do wonder why Sharir declined to use EPF to channel the funds... it seems like the obvious way to do it... maybe there is some reason? Maybe they are just not logistically equipped for such a large volume of transactions?

Also, in the back of my mind, I am wondering about the prospects of privatizing EPF and providing wage-earners with more choice of different fund-managers, much like the Australian system where wage-earners can choose from a variety of superannuation funds.

I can't decide if broadening the scope of EPF's functions would take us closer or farther away from that goal. As for whether or not that goal is a worthy goal... that's another topic for discussion, perhaps another time :)

Anonymous said...

I am 100% with you on this policy proposal. It is timely. It is, in fact, overdue. A wage policy will take care of the downtrodden in Malaysia. In this era of inflationary price spirals this is a responsible thing to do.

WY said...

Hi Tony,

It's nice to see DAP coming out with solid policy statement like this, rather than nuisance CEC statement regarding the sokong issue.

Some comments:

1) Speaking on an extreme reaction by private firms, - by forcing higher employers' EPF contribution, without leveling it through government tax break, it creates LESS incentive to hire these low income workers. Instead of finding themselves with higher wages, they ll find themselves with no wages.

2) EPF scheme is a saving scheme - surely it can be extended to be a social security welfare system. However, EPF is potentially bankrupt in near future, as our baby boomers start to retire. More importantly, EFP, as someone nicely stated above, doesn't give enough returns for retirement.

3) For porposal for the middle-age workers who are earning below RM1,400 per month, to get additional wages through employers' EPF contribution while is good, it would just create more incentive to fire these middle-aged unskilled workers, to get younger workers. I would rather suggest tax break for company with older workers.

4) The FAIRWAGE proposal is nothing more than direct cash rebate for people with low wages ..akin
minimum wages for private sector. I think DAP will find it difficult to find funds for this, without substantially increase inflation (which would eat into whatever nominal wage increase that the workers received). I am not a big fan of minimum wages as well, as it creates other distortion in terms of labour use and nation competitiveness.

In whole, i desist the idea of subsidy as I think it has more distortion than direct corporate tax cut. Our economy is already a very distorted one, as only 10% of the population is paying taxes, and too many people are earning sub-subsidence incomes. This has to do with general health of the economy.

Golf Afflicted said...

Hi Kam,

Some short response to some of your points:

1. The increase in EPF for lower wage workers is at least partially balanced off by the cap on the top earner's EPF. Imagine a CEO earning more than RM30,000 and the company still fork out the proportionate 11% when these group of workers don't need it.

2. EPF, and I've criticised it previously here, may not be perfect, but it's the most logical source to manage the disbursement. Any other mechanism of directing grants will result in probably worse problems.

3. Needs further study. S'pore has much higher contribution rates but doesn't result in such actions. Not saying we are the same, but definitely higher contribution rates doesn't equate to higher unemployment.

4. I disagree with the "funding inflation" bit, especially when it comes from low income earners. These funds were previously allocated via subsidies which are much worse in terms of economic impact.

And yes, I agree that the economy has been artificially "propped up" with a whole gamut of subsidies, which gave an artificial picture of health. But once the screws go loose... sigh.

;-) Tony

Anonymous said...

I've given further thought to your proposal. I hope you will take the trouble to read my comments at my blog which supports your central plank.

petluc said...


Very timely to resurrect this discussion.

Infact, I would even suggest taking another step forward. Can DAP Central or perhaps even just DAP Damansara or even just MP PJ Utara's office, organise a dialogue to brainstorm this issue.

This I believe is much much more positive than having protests after protests. Protests are fine; it helps get peoples voices heard but in most cases it is exploited for political purposes.

Therefore a dialouge/brainstorm session produces a positive response and probable solutions to the problem at hand. We cannot run away from the reality of oil price hike and thus inflation.

If ever you are thinking of organising such an dailogue, I will be the first one there to help organise it - pro-bono!

With the changes of 8th March, I also hope to see changes in mind-set, even (if I may say it here) changes in DAP's mind-set. Away from purely OPPOSING to oppose but rather OPPOSING to PROPOSE, to progress!

WY said...

Hey Tony,

Thanks for the response. Some shorter even reply to your response:

1. Capping top earners's employers contribution might be a hard thing to get companies to accept. it's like additional tax to higher income bracket. at the moment, we re already taxing 10% for 90%.

2. I prefer if Pakatan Rakyat push for a EPF reforms, where it can be modeled against social security in US/uk/australia etc. compulsory signing up for welfare benefits. include employment and unemployment benefits.

3. your proposed middle-aged low income subsidy is probably a bad category. i think subsidy shoul dbe low-income based, and if necessary, possibly family based (married, married with X number of kids.)

4. You implied that your low income subsidy might means a whole set of other subsidies might be removed? we need to create a set of welfare-subsidy system that doesn't just reward ppl for being poor. Subsidy can be targetted to provide incentives for certain behaviour: education training (subsidized providers), food (food coupons), agricultural food crops subsidy, etc.

I would stress again, that our current welfare system is flawed and non-existent - which is why our pooor is suffering. our subsidies, as Jeff/Lim and many others have pointed, often benefitted the riches (IPP for exmple). it's time to get the political will to scrap our patronage "welfare" feudal system - and swap for a real democratic social welfare - one piece by one piece..without going to anarchy state.

the seminarian said...

check me out at my blog - ... if you've time tony ! cheers !

NEIL said...

YB,What EPF should do is to raise the interest rate so as to benefit more people when they retire.You see the cost of living has been on the rise but EPF never raise the interest rate.In this way our hard saving money will not be enough when we reach retirement co's everything will be too expensive.EPF,being entrusted to look after the money is not doing a good job.Instead of making our lives better when we retire,it's going to herd us into RETIREMENT HOMES instead.EPF policies are out of date.Wake EPF!!

Sunbear said...

Hi YB Tony,

This is not regarding Fair Wage. But it is regarding the recent 10% cut in Minister's Entertainment Budget. Does that mean that there is still a budget of RM18 Billion to entertain our ministers? I am not sure whether this is a proper channel to talk about this, but I decided to do it anyway.

I entered the workforce 2 years ago, and I could still be very ignorant. But this seems outrageous for me.

As I understand, companies budget a sum of money yearly to entertain their customers and keep them happy. Or company could budget a sum of money for Sports & Recreational Fund for their employees to keep them happy.

In the case of Malaysia, if this "company" is producing RM1200 Billion of goods/services in 2007, "management" is budgeting 1.67% of the nation's GDP to entertain the nation's Ministers. Is this common in the corporate world and/or nations to spend close to 2% of your annual revenue on Entertainment? And are there any guidelines for how the ministers can spend these humongous sum of money?

You might argue that this is none of my business. But the reason I am asking is because RM20 Billion (before 10% cut) is a huge sum of money. And if utilized properly, can benefit many Malaysians.

Thank you.

Anonymous said...

I have made quite a few comments in YAB LKS blog. Rgds, PJBOY.

Anonymous said...

The economy is retracting & taken a big blow. First: unstable government (ie. within UMNO) after 12th GE & now Second: fuel-price hike. We should just give the UMNO-BN a small island for them to govern & leave us all Malaysians alone. We will see if they can survive on their own. Too much personal interest is hurting the country. PR must take over with higher majority, otherwise more instability will be caused by BN-UMNO. They are all small-wind (siu-hei) people.

I can accept the fuel-subsidy removal & even pay up to RM4-/ltr or petrol but:

1. all tolls must be abolished & to be under the state or nationalised.

2. no taxes on energy conserving vehicles; eg. hybrids, ngv, fuel-cell etc.

3. abolish sales tax of non-national cars (eg. around 20K for a VIOS). International price for small engine cars <1500cc are USD 20,000- or less. This tax has nothing to do with fuel-subsidy.

Anonymous said...

I don't mind your proposals per se, I think the balance is there, and I don't really subscribe to this "if you pay the poor for being poor then they will remain poor" thinking anyway. I think that theory fails for the same reason that Wikipedia is a success... there are psychological and cultural considerations that do have a significant impact as well.

But if you are going to involve EPF as part of delivery, I think we should also keep an eye on the eventual, if not immediate, reform of EPF.

I certainly don't think that's biting off more than we can chew... a holistic solution can - and should - be presented to the voters.

But all in all, thanks for doing a good job. I was getting quite tired countering this "DAP just oppose only" criticism continuously hurled at us. ;)

Fernando said...


Today is my 2nd month "anniversary" as a blogger in the cyberspace, and I am glad that I am still going strong and kicking ..)

NEO said...

Dear YB,

Fair Wages is aceeptable but not Malaysia Bonus. Our country still inherent with "X" billions of national debts from the Barisan Nasional.

I think it will be better for us to set our priority as follow: -

1) Promote Sustainable Econ Growth
2) Fair Distribution of Wealth (inc wages)
3) Clear National Debts
4) Create Cross-Generation Funds
5) Malaysia Bonus

Anonymous said...


Our "piggy brain" govt always compared our petrol to NON
oil-producing countries like Singapore and Thailand but got
no balls to do the comparison with other oil producing countries
like below. Check for yourself:-

UAE - RM1.19/litre
Eygpt - RM1.03/litre
Bahrain - RM0.87/litre
Qatar - RM0.68/litre
Kuwait - RM0.67/litre
Saudi Arabia - RM0.38/litre
Iran - RM0.35/litre
Brunei - RM1.10/litre
Nigeria - RM0.32/litre
Turkmenistan - RM0.25/litre
Venezuela - RM0.16/litre

MALAYSIA - RM2.70/litre

Anonymous said...

Tony Pua, as news in malaysiakini, what the hell you think "petrol price in malaysia is too low"??

Do you know LOT OF MALAYSIA (malay, majority) out there earn just 2K (or much less), but got to support retired parent and 2-5 kids?

Use your brain please before speak like a spokeman of DAP!

Lot of my malay friends just "marked" DAP just same as uxxo in issue of petrol price, just because your irresponsible speech!

You have just destroyed a hard earned support of DAP.

NEIL said...

YB, get more topics for us to comment like chedek,Dr Chua. Don't forget to include sarawak's topic,sabah also.In this way your blog can reach Billions.Ya!

WY said...


didn't you notice that none of the countries in your list is developed, or independence from reliance to oil?

subsidy is a curse sometimes.

Anonymous said...

Dear Mr. Tony,

I second NEO's comment, which is to set Malaysia Bonus as lowest priority.

1) Promote Sustainable Econ Growth
2) Fair Distribution of Wealth (inc wages)
3) Clear National Debts
4) Create Cross-Generation Funds
5) Malaysia Bonus


julian said...

on supplementing incomes, i just want to direct some attention to the creative use of approximately RM50b said to be spent on subsidies. these subsidies can be removed and directly returned to taxpayers and gradually reduced over 2 or 3 years to mitigate the inflationary shock. the consumption/savings dynamics can be greater than merely helping to cope with fuel inflation as the taxpayers can either save, invest or expand spending beyond petrol.

assuming we have a 10m workforce (and assuming my zeros are correct), a RM50b subsidy elimination returned to the workforce is worth RM5000 per employee per year. For a family with two working parents, that totals $10,000 per year. refining it further, assuming 30% of the workforce is considered "rich" then ther remainder of the 70% can enjoy RM7142 each per annum or about RM14k per double-income family per year.

this scheme has a high refinement flexibility to account for a combination of eg. graduated scale for different income groups, supplementation according to car model, means testing, adjustment for a govt fiscal savings that can be channelled into easing transportation bottlenecks etc etc.

the most important effect of this scheme is to immediately remove the subsidy curse without causing a big burden to the lower income group. this scheme is also able to operate on an economy-neutral mode that subscribes to the notion that petronas is a national resource owned by malaysians. it also hasn't accounted for further gains coming from the battle with corruption and fiscal prudence.

Anonymous said...

I would also suggest that DAP and other Pakatan Rakyat parties the need to educate the people on awareness of personal financial responsibility. By educating the people about financial responsibility, we can also reduce the people on relying too much on the government too.

KIMHO8 said...

Can you imagine many of the government servants start to look for extra income part-time job?

How can a government servant works
with great efficiency while he is more interested in his part-time

What will happen to people like us small trader, hawker & etc. No more place for us anymore.

Due to competition, they will definitely slash the price to attract more customers. As least they have a full-time METAL RICE BOWL job's income to backup but WE DON'T.

With all the conveniences as top priority, they might misused their connections or powers as extra advantages for their extra income part-time job.

The market and traders will killed by all these people at the end.

Everyone please consider this serious situation.

KinWah.lai said...

i really really wish our government will agree with the Fair Wage and carry out effectively.

i'm so happy that the free water for selangor is still on and will start from June. it is really a good news after the fuel price hike.

KIMHO8 said...

Mengapa kerajaan tidak menggunakan dasar yang sama (Singapre) terhadap Thailand,iaitu memastikan kemasukan kereta thai mesti bertangki 3/4 penuh juga?

Takkan nak kita bayar subsidi kepada mereka pula!

Harga beras wangi thai yang tinggi kita bayar itu, dah masuk ke pocket mereka atau pocket siapa?

Dr Tang Weng Heng said...

Interesting to note that the IT business whizkid-turned DAP politician has taken a slightly different stand from his colleagues in PR. Short of disagreeing with the populist stand of questioning the appropriateness and timing of the fuel price hike, Mr Tony Pua has intelligently shifted the attention of his readers to the DAP Alternative Budget, which he played in major role in formulating.

Instead of sharing his personal thought on the matter, Mr Tony Pua chose to highlight excerpts from a potential PhD candidate in his blog as "interesting food for thought" Mr Tony Pua, if you do read this blog, can you please state your stand?

This long-term pain, may or may not, turn out to be a gain. However given our Malaysian experience, forgive me for holding the pessimist's view. The greater the hope is, the greater the disappointment will be. I shall be more than glad to be proven wrong.

Anonymous said...

In response to Anonymous 4.16pm

"Do you know LOT OF MALAYSIA (malay, majority) out there earn just 2K (or much less), but got to support retired parent and 2-5 kids?"

Does the expression 'cut your coat according to your cloth' mean anything to you? SOME MALAYSIANS (non malay, majority?) plan their families and order their lives according to what they can afford.

"Lot of my malay friends just "marked" DAP just same as uxxo in issue of petrol price, just because your irresponsible speech! You have just destroyed a hard earned support of DAP."

Do you mean that you and your friends will only support a government that maintains handouts and subsidies indefinitely, at the expense of the long term well being (and yes, survival even) of the country? That's so sad.

Maybe you should become a Class F contractor then - at least you'll get to build community halls all over the Malaysia and keep rolling it in when everyone else is tightening their belts.

Anonymous said...

Hi Tony,
I dont see the point on getting rid of subsidies while implementing all the bogus yearly bonus and EPF schemes...

According to your plans you want subsidies to be abolished and introduce this ‘yearly bonus’ scheme.
But lets do more in-depth calculation:
RM 1200 / 12 = RM100 per mth
RM 900 / 12 = RM75 per mth
RM 600 / 12 = RM50 per mth
RM 300 / 12 = RM25 per mth

RM25 or even RM100 doesnt get you many items from the groceries at our current market when subsidy is still going on.
If the subsidies are abolished, RM100 can be deem worthless…!!!
I wonder what is the difference between your scheme and RM650 scheme from BN.

There is no attraction to those skilled or professionals whose income is above RM3000 to stay in Malaysia anymore.
If our income is above that bracket, we loose out on bonus, we pay higher tax than any other income group, but hello, we feel the pinch as well…
Why should we stay in MY when other countries are offering more money and prices are not as ridiculous ravaged by inflation as high as in MY?
Malaysia is supposed to be blessed with abundance.. so is it wrong for Malaysians to enjoy the bounty of the harvest in simple term, cheaper petrol prices?

I personally dont think you can justify the amount for rebate/bonus to malaysian based on income as you can never quantify the amount solely based on what we have enjoyed when everything in the market is relatively cheaper because subsidy is in placed… therefore subsidy must still persist as we are supposed to be benefiting from our abundance...

I wouldnt mind the concept of DSAI about taking e.g. 20% of Petronas’ earnings and as subsidy for the nation. I think that is brilliant…
Prices of petrol goes up, our earning from petrol goes up, the amount of subsidy from 20% goes up. Vice versa. Petrol price in MY can still be stabilised.

Having said that, considering your EPF scheme, or whatever scheme, if it goes hand in hand with subsidy, i think all is good.
At least the middle-class and above people are not the only ones to bear the full brunt of the hike in oil price.. and still feel they are benefiting in some way or rather...
If you come up with even the most brilliant schemes while abolishing subsidies, you might as well save your energy...


Anonymous said...

Once a system like this is implemented once PR comes into power, things will begin to look much better. Fix the education system & put it all in English from high school onwards & implement universal health care as we'll. Competetiveness & growth will slowly come back.

However without a higher level of Unity we will not get there. There is so much dividing us, we must change education system & out effective mechanisms into everyday life & also PR must live the change first. Then, with more unity, we will be stronger as a community & as Malaysians & our ranking in the world will go up.

Divided, we fall.

Anonymous said...

Happy Fathers' Day, YB Tony Pua =)

Anonymous said...


MCA & MIC have BETRAYED both The Chinese & The Indian community by strongly supported UMNO with the NEP & Malay Privileges proposal together with Tunku Abdul Rahman as part of the Pre-Independence deal negotiated with The British colony at that time in exchange for their business interest in return especially in MCA.

MAY 13 is book written by Professor Dr Kua Kia Soong and YB Dr Kua was an Ex-Member of Parliament for Petaling Jaya for many years.

His book can be found at The Big Book Shop at The Atria, Damansara Jaya at only RM20.

The NEP & Malay Privileges did not help the poor Malays in Malaysia but sadly to mentioned the fact that NEP & Malay Privileges ONLY BENEFITED the Rich Malays and UMNO Cronies at the same time exploiting the hard core Malays and other minority races in Malaysia.

President of Transparency International Malaysia Tan Sri Ramon Navaratnam recently said the Corruption Index is at the highest point largely contributed by the Malaysian Police Force at 3.8% out of the total 5% mark!

Hence, contributed to High Inflation Rate and a BIG DROP in foreign direct investment!

Therefore, as long as the NEP is still in existence and The Pakatan Rakyat Government In Waiting must take FAST ACTION to demolish the NEP and stop all these nonsense by growing from bad to worst!

All of us here representing the great citizens of Malaysia know if the NEP is prolong further without a transparent and clean purpose, will definitely lead our beloved country Malaysia to Hell in the coming years!

Long Live DAP!

Jonas Lee said...

I have reservations with the proposed policy to set a higher minimum wage and use the EPF to revamp the wage structure. Most important is that PR will send the message to foreign investors that it has no faith in the free market by futher increasing the controls in Msia's already overcontrolled system.

Here in this post at, I explain the problem:

"In macroeconomics under the reknown Solow growth model, the standard of living in a country is dependent on the productivity of her people. And productivity is dependent on how much wealth we can generate from three things: (1) people, (2) capital and (3) land.

Until today, no economist has ever come up with the true reason for people to become economically productive. However, many economists agree about what are the right conditions or environment in which people tend to perform their best. That environment is indisputably a market-driven economy where people who work hard and smart will be duly rewarded by the market place and not by the government.

In fact, the best thing the government can do, apart from helping the underpriveleged and leveling the playing field for true competition), is to enhance the effectiveness of the market economy and ensure there is trust among employers, employees and institutions. The free market system of meritocacy is a system that is set up by Adam Smith's invisible hand, not by the hand of any bureacrat or well-intentioned politician.

So Pakatan Rakyat's call to revamp the NEP, eradicate corruption at its roots and enhance transparency are all economic measures that Malaysia should have done ten years ago when China and India were not as globally powerful as today (and oil prices were still low).

The free-floating of the Ringgit to a stronger value will also help the manufacturing-dependent economy to stand on its own feet. But in the world of 2008 when oil prices are US$130-140 per barrel and rising, Malaysia's grace period of living in a sheltered castle are over.

At the end of the day, the government's micro-managing efforts to keep interest rates low and administer fixed prices and minimum wages for the lower income groups will delay the economy's ability to be more flexible and adjust to the tougher economic times ahead.

This is why I believe the long-run problems of economic productivity which Malaysia should have fixed when the Asian tigers of Chindia were just infants have now come to roost. The best remedy now is to have a complete change in the mindset of the people through a total reform of the NEP so that trust among the races is established and a race-based system of patronage is totally replaced by respect for hard work and true innovation.

Once this human capital issue is addressed, then other micro issues can be settled efficiently following on the same logic. However, if the government continues to debate whether English should be maintained in the teaching of Science and Maths, then it is obvious Malaysia does not even have the ability and the DNA to speak the same "language" as global players.

Thus, politicans from both sides of the House should cease their politicking and start discussing policies intelligently with a view of how to prosper this nation in the next ten to twenty years. Panic efforts to prevent a sharp economic slump through populist policies in the short-term may just bring the country back into the besieged fortress of protectionism."