OutSyed The Box

OutSyed The Box

Budget 2013

Posted: 08 Oct 2012 12:25 AM PDT


I have had requests from a few people for my thoughts over the recent Budget 2013. 

Here is Yoges :  "Lagi satu sir, I have yet to see your comment or article in regards to the recent Budget?  I mean your ulasan sir.  Memang ramai dah ulas, but still waiting for your ulasan sir, nak tahu whats your pendapat. Hopefully there will be one. -  Humble Request from all of us."

Thanks Yoges. The Budget is certainly full of goodies. But who gets more? You, me or the rich people?  And who gets less - you, me or the rich people.  

Remember  a Budget uses  taxpayers funds (I am saying this because I know at least one Minister who may dispute this). There is only so much taxpayers money available to dish out. The 2013  Budget adds up to about RM250 Billion (about 29% of our GDP of about RM855 Billion.) 

My view has always been never burden the ordinary man in the street.  And secondly never tax the rich too much or punish them. The rich generate more economic activity. They must not be hindered. It is not a sin or a crime to be rich. We all want to be rich. Our aim is to be a high income nation by 2020. So dont penalise someone just because he is rich.  

Having said that, never take what should be due to the ordinary man and give it to the rich. The rich do not need as much help as the poor and the middle income. Let the rich make their own money. Do not hinder them or tax them too much. They are clever people. But there is no need to give them free money, especially money that is taken away from the poor. 

Of course once again I am talking about taxpayers funds - the Budget is all about taxpayers funds. 

Before I begin, all of us Malaysians must realise that our economy is also becoming more sophisticated. There are more things happening in the economy. We have no choice but we too must become more well read and more sophisticated. Lets keep our eyes and ears open and understand what is going on in the world around us. Otherwise we will not understand  important things that will have an impact on our lives. 

Clever, educated people in Government, also with good intentions  may see only one way of doing something good for the economy. Their actions may benefit some people and impoverish others. Or it may unintentionally benefit one group at the expense of another group. Poor versus rich or rich versus poor.  There is no need to go looking for conspiracies, UMNO plots and things like that but if you are not careful even your brother in law will burn a hole in your pocket.  Am I right or am I right?  Thats how things work in the real world.  So lets keep our eyes open. 

I want to say that our Budget is increasingly being influenced by the rich. These are the Ministers, the GLC people, the korporat etc who have vast economic interest in the economy. The plantation lobbyists (both GLC and private corporates), the increasingly powerful oil and gas lobby (also GLC and private corporates), the telecommunications lobby, the banking lobby - they all have major inputs into the Budget process.  

And folks their input is NOT at the "town hall meetings."  The town hall meetings are reserved for people like you and me (though I have never been invited to a Budget planning session).  The rich and connected have their own input into the Budget planning process - more personal and carries more weight.  

I see a lot of positives in the 2013 Budget as well.  As I said do not hinder the rich people (the corporates, the businessmen, the tycoons). Do not  punish the rich with too much taxes. But at the same time, when it comes to taxpayers money, dont give the rich too many freebies from taxpayers funds either. The rich are clever people. Let them make their own money.

To save time,  I will comment quickly about what the Budget has dished out.
  • BR1M of RM250 for unmarried aged 21 and above, earning not mory froe than RM2,000 
This will help the poor. I hope the administration of this handout is smooth and does not add too much expenses. But where will this RM250 be spent? 
  • 1Malaysia book voucher for students  to RM250 from RM200 
This is excellent. This will be money well spent because it adds to our young people's productivity. Give the students more.
  • pension raised to a minimum of RM820 per month from the previous RM720. also a one-and-half month's bonus for civil servants
Almost 29% of the Budget goes to Civil Servant salaries (23.5%) and pensions (5.4%).  That is about RM75 billion. This is fine. We need to get more output for all this money. There must be give and take.  
  • a reduction in income tax of one percentage point for the first RM50,000 of chargeable income.
OK terima kasih. We need a more simplified and equitable tax structure. Say a 15% income tax rate, irrespective of how much you earn. Let everyone who earns pay a reasonable tax.
  • the fiscal deficit at 4% compared with 2012's deficit of 4.5%.
OK this is good. This means the amount of hutang the Gomen needs to borrow (over RM40 billion?) to fund Budget 2013 makes up only 4.5% of our GDP. But it makes up 16% of the 2013 Budget. And the Gomen's debt servicing (bayar bunga) for 2013 is 9% or RM22.5 Billion. Thats still a lot of money. We should reduce it further.

But what about the hutang by the GLC's. Ultimately the taxpayers also have to bear the burden of the GLCs. We have all heard of corporate bailouts. And GLCs often do business with the Gomen. Left pocket, right pocket. It could telescope their business and financial risk to the taxpayer. There must be more FELDA type outfits - which are free from Government funding entirely.  
  • * RM500mil will be allocated for the River of Life project to rejuvenate Klang River
This project sounds great. But spend the money wisely ok. Please dont pay five times market price for contractors and services. Get started quickly and avoid delays. During Tun Dr Mahathir we built the KLIA in under four years, the N-S Hiway in under four years, 1200MW IPPs in under 24 months, flyovers in six months, the LRT in under 24 months. Work more talk less. 
  • *Halal Industry Fund will provide RM200mil to fund working capital for SMEs that produce halal products
I think this is bullshit. This money will be used to create even more stupid halal rules (eg. halal fish farm in Melaka must only be fed the intestines and offal of dead chicken which were "ayam sembelih". What kind of crap is that?  Just give the money to the SMEs for food production.
  • *Government to set up group insurance coverage scheme for hawkers and small business owners
Another sinkhole. Hawkers dont even have bank accounts, let alone buy insurance.
  • *Tax incentives for private entrepreneurs in the oil & gas industry, including 100% income tax waiver for 10 years, exemption of withholding tax & stamp duty
These folks are already rich. Oil and gas are NOT new technology or greenfield industries. They dont need 100% tax exemption. This is just making the rich richer. Give tax incentives for airplane factories, engine factories, medical engineering factories etc. Oil and gas does not need any stimulus.
  • *Tax incentive for the Global Incentive for Trading (GIFT) programme to make Malaysia an international commodity trading hub in line with global demand for liquefied natural gas (LNG). Approved commodity trading will include commodities such as in agriculture, refined raw materials, base minerals & chemicals. GIFT will see a 100% income tax waiver for the first 3 years of operation
Make the rich richer. People who get involved in this business are the quick witted who are business and money savvy.  Tak payah lah to give them 100% income tax waiver. They dont invest anything except maybe I Pad and I Phone.
  • *Tun Razak Exchange expected to attract 250 international companies and offer 40,000 jobs; 10-year tax exemption for companies with TRX status
This is just a property flip. Why give 10 year tax break to international companies if they rent or buy office space here? Then why increase the RPGT to 15%? Kera di hutan di susukan, anak sendiri di rumah biar kebuluran. This is solely designed to benefit 1 Malaysia Development Bhd - the influential and very rich GLC.
  • *RM230mil in incentives for fishermen, RM2.4bil in subsidies and incentives for paddy sectors
Again it is how this subsidy is handled. Here is my suggestion - make the subsidy subject to productivity. You catch more fish, you get more subsidy. Weigh how much the fisherman catches only then the subsidy is given according to weight of catch. No giving cash in hand even before he gets his feet wet in the sea or even before he plants one acre of paddy. 
  • *Securities Commission will provide the framework for the issuance of AgroSukuk for companies involved in agriculture. For AgroSukuk, the government has allocated a double tax deduction for a 4-year period from 2012-2015
Again benefiting the rich bankers and financiers. This is not a "cash out" situation but it represents a revenue loss for the Government.  The bankers and financiers will enjoy the tax break. There is no need to burden or punish the bankers but why give them free money? They are already rich. Plus they know how to make more money. No need tax breaks for them. 
  • *RM350mil for all entreprenuers, including RM50mil for Indian entrepreneurs
Jangan pula put MIC and PPP in charge of the RM50.0 million for the Indians. Just tell them to walk up to the counter, isi all the borang, tunjuk IC and they should be eligible for the RM50.0 million. And let it be for productive use.
  • *RM38.7bil to improve quality of education in the country with an additional RM500mil to training teachers in the core subjects of English, Bahasa Malaysia, Science and Maths.
Since Merdeka our Education budget is larger than our Defense budget. This is unusual for a developing country. This is the reason for our success. But we are now losing out to other countries. Despite such huge spending on Education, not one Malaysian university is in the Top 400 ranked Universities in the world. Satu pun tak ada. And we are still setting up new universities everywhere - they cost at least RM1.0 billion each. That is a lot of money. And the graduates are unemployable in the private sector or the world market. We need to spend our "Education" money more productively.
  • *Tax-free incentives and grants for setting up of new nurseries and kindergartens. RM1.2bil allocation for pre-school development
  • *Total of 1bil to upgrade schools - RM400mil for national schools, and RM100mil each for Chinese, Tamil, mission, religious, boarding schools and MRSM
I agree with this completely. Syabas for pre school education. Teach our 5 year olds the ABC, counting 1 to 100, how to brush their teeth, wash their hands, be hygienic and teach them music and dance and we will have geniuses in the country.  I hope the schools will spend the money wisely. Dont pay five times market for computers or build computer labs that will collapse. 
  • *RM1bil fund to be set up to help bumiputra SMEs to increase their equity share in the economy
This is a subsidy again. The subsidy must be tied to productivity. You produce, then you get the subsidy.  Giving them cash handouts even before kilang siap is inviting trouble. Beli kereta baru sebelum bisness berjalan.
  • *Government will establish the Graduate Employability Taskforce with an allocation of RM200mil to strengthen employability of unemployed graduates under Graduate Employability Blueprint by end-2012
This is another waste of money and time.  If the university student cannot pass an acceptable English Test and an acceptable 'Interviewing Skills Test"  then cut the salary of the university's Vice Chancellors. See what happens.  We can save RM200 million.
  • *The Government will allocate RM440mil to the Skills Development Fund Corporation (PTPK), to provide loans for trainees to undergo skills training
Another rip off. Ask Talent Corp how to rip off taxpayers funds. Skills training will include flying off to UK and teaching university students how to fill up forms for job applications. This is what Talent Corporation has done.  
  • *SOCSO will allocate RM200mil to enable its 1.4 million members to undertake free health screening in Government hospitals or SOCSO's panel clinics to detect non-communicable diseases.
Err...I say kawan, how can it be free if SOCSO has to allocate RM200 million? This means SOCSO members have already paid for it ma - through their SOCSO contributions.  Please make sure the free health screening is worth the RM200 million - there must be a minimum screening package like X rays, ECG, stress test, complete blood screening and consultation with a real Doctor.  

Not that 'One Stop Centre' where the "unemployable elsewhere" nurse checks your feet, checks your eyes, checks your BP and says 'Encik boleh minta appointment untuk jumpa doktor, tiga bulan dari sekarang'. Then the doctor does a spiritual "inspection" of your body without touching or talking. 
  • *To further boost the production and utilisation of green technology-based products, the fund for GTFS will be increased by RM2bil and the application period will be extended for another three years ending Dec 31, 2015.
  • So far, RM805mil worth of projects benefiting some 65 companies have been approved by over 20 participating banks in the country, while over RM250mil worth of loans have been disbursed.
  • GTFS is a soft loan financing scheme established by the Government. Under the funding scheme, between RM10mil and RM50mil is allocated for a project, depending on the criteria. The Government will bear 2% of the total interest rate and also guarantee 60% of the financing amount. 
See I told you so. The banks are going to get richer. The Gomen will guarantee 60% of their green technology loans. Using our taxpayers money to make the banks and the green tech companies rich.  Banyak cantik. 

And I think this "green tech" is another ripoff. I am in the development business as well. This green tech stuff often does not make sense. Now DBKL has changed the rules. Bungalow houses must have rainwater catchment tanks. Fine. They need water pumps which consume more electricity than the value of the rainwater that is harvested. Manufacturing the pipes and the raiwater storage tanks create more pollution and carbon footprints than the rainwater that is harvested. This is RM2.0 billion too much. Someone is going to get rich.   
  • *Efforts to further reduce the crime rate will continue to be enhanced, with an allocation of RM591mil in 2013
Change the Minister. Its a cheaper option.
  • *A total of 500 women will be trained as board members under the Women Directors' Programme
Err...company sudah ada ke? Directors sudah train tapi kalau company tak ada macam mana?
  • *To assist young ICT entrepreneurs, a New Entrepreneur Foundation (NEF) will be established with an initial allocation of RM50mil. The NEF will be the platform to provide training and guidance programmes.
What happened to the previous RM500 million for software development, game development etc?
  • RM200 for the purchase of one unit of 3G smartphone. A sum of RM300mil is allocated benefiting 1.5 million youths.
The share prices of the telcos have gone up after this announcement. Here I agree with this one off payment. Cars and telephones are absolute essentials. The sooner the kids can have them (legally) the better for them to get started in life.
  • *50% discount on KTM Komuter fares extended to all Malaysians with a monthly income of RM3,000 and below and who travel by KTM Komuter.
How do you prove your income to KTM? Extra admin burden. 
  • *Government will allocate RM1.9bil to build 123,000 affordable housing units in strategic locations in 2013. The initiative will be implemented by PR1MA, Syarikat Perumahan Nasional Berhad (SPNB) and Jabatan Perumahan Negara
  • *A total of RM500mil will be spent by PR1MA to build 80,000 houses in major locations nationwide with the selling price ranging between RM100,000 and RM400,000 per unit. Among the locations are Kuala Lumpur, Shah Alam, Johor Bahru, Seremban and Kuantan.
  • *PR1MA will provide the Housing Facilitation Fund totalling RM500mil to build houses in collaboration with private housing developers. The house prices under this programme will be 20% lower than the market price and distributed through an open balloting system.
Ok this is good. Tapi rumah mesti ada bilik, ada pintu, ada tingkap. Not those two room pigeon holes sharing one bathroom. At least three rooms, an extra study room, a living area, separate dining, separate kitchen and proper places to wash and hang clothes to dry (with plumbing and electric points for washing, ironing etc).
  • *In a bid to curb speculation, the Government proposes the real property gains tax (RPGT) from the disposal of properties made within a period not exceeding 2 years from the date of purchase will be taxed at the rate of between 15% and 10% of disposal of property within a period of 2 to 5 years. For property disposed after 5 years from the date of acquisition, RPGT is not applicable
The TRX project (developer is 1MDB) gets tax exemption pula for their property development project.  Orang lain pula kena RPGT.  I say this is not fair lah.  

To curb property speculation go after the bankers and the financiers. They are the real crooks. Put curbs on lending. First house 90% financing max. 2nd house 70% financing max. All other houses only 60% financing.  Dont penalise the rich who can buy ten houses. Just tell them to use more of their own money.

If someone buys and sells a house using say 90% of his own funds, then no RPGT.  Why penalise rich people who have their own money?
  • *RM386mil to ensure the prices of essential goods in Sabah and Sarawak as well as in Labuan are sold at lower prices through the opening of 57 KR1M; and to bear the cost of delivering products from Peninsular Malaysia to Sabah, Sarawak and Labuan including the interior areas.
I say there is no such thing as making the goods cheaper in Sabah lah.  Someone has to pay for this miracle to happen. In this case RM386 million of taxpayers funds will be used to magically make the goods cheaper in Sabah and Sarawak. Someone gets rich here. The suppliers and the wholesalers. They will be earning an extra RM386 million. Ini budak Darjah Dua pun boleh faham.  
  • *Government to give school bus operators assistance of a RM10,000 cash rebate and a 2% interest rate subsidy on full loans for the purchase of new buses to replace buses that have exceeded 25 years old with new 12 to 18-seater buses.
Here is a NO MONEY OUT OF POCKET suggestion. Just make school buses duty free, excise free etc. Just like the Army and the Police who can buy all their vehicles duty free (at one third or one quarter the market price) let the school bus operators buy school buses duty free. They will save more than RM10,000. Put conditions - individuals can buy maximum of two 'duty free'  school buses every eight years (from date of purchase). Companies with paid up capital of say RM50,000 can buy maximum of five school buses every eight years (from date of purchase).  All buses must be painted yellow and can only be used to ferry  school kids.  How many million school buses are there in the country? Just a few thousands. Yet they affect the lives of millions of schoolchildren.

Thats what I think of the Budget. Yes the ordinary guys get goodies. But not much. How long will the RM250  BR1M payment last anyone?  But the corporates, the GLCs and the Banks get big bucks. 

Rich people have an undue amount of influence in crafting the Budget.

Syria : Iran Withdraws Vital Support Element

Posted: 07 Oct 2012 08:05 PM PDT

While the world was turning, there were people who stood and watched some bridges burning. Here is some news about Syria.

  • 'Iran withdraws elite Qods Force brigade from Syria' 
  • The Sunday Times' reports Iran has withdrawn 275 members of elite brigade 
  • brigade known as Unit 400, fought alongside Assad against Sunni rebels
  • the unit flew out of Syria last week. 
  • indicator of waning confidence among Iran's Shi'ite leaders in Assad
  • complaints about $5 billion of Iranian money to prop up Assad regime 
  • Iran's oil wealth is eroding. 
  • sanctions are taking toll, evident in the fall of the rial and soaring food prices.
  • damage to Iran's economy and ordinary Iranians suffering soaring inflation.
  • Commander Iranian Revolutionary Guard Corps (IRGC): "Qods Force in Syria."
  • this month, group of 48 men from Iran entered Syria, ostensibly to visit Shi'ite shrine.
  • gunmen from Free Syrian Army kidnapped the men and have held them ever since. 
  • Iranian Foreign Minister said kidnapped men are "retired" IRGC members. 
  • Quds Force, a powerful, shadowy unit managing Iran's overseas operations.
  • established in 1984 to operate in Iraq during the Iran-Iraq war
  • headed by Gen. Qassem Suleimani, 15,000 operatives, answers direct to  Khamenei.
  • US's 2003 invasion, Quds Force returned to Iraq, training and arming Shi'ite militias 
  • operates in Syria, Lebanon, Afghanistan, Gaza (possibly Malaysia as well).
  • the [Iranian] ambassador in Baghdad is a Quds Force member. 
  • carries out variety of clandestine activities beyond Iran's borders. 
  • organize, train, equip, finance and direct Shi'ite, sometimes Sunni, Islamist networks," 
  • trying to help Bashar Assad, Iran's sole regional ally, survive.
  • "hundreds from Quds Force in Syria, including officers and soldiers," 
  • in Lebanon provide Hezbollah training, tactical advice, logistics, bunker construction.
  • "very loyal to the Iranian supreme leader," 
  • Ahmadinejad has lost control of Quds Force to Ayatollah Ali Khamenei," 
  • Quds Force experiencing a drop in its abilities.
  • high-profile failures in Thailand, Georgia and Azerbaijan
  • Iran's chief instrument for wielding regional influence 
This is the clandestine arm of Iranian power projection overseas - like the US Green Berets (now also the SEALS) or the British SAS.  Well if they have left Syria last week that does not augur well for the longevity of Bashar Assad in Syria.

(There are an estimated 125,000 Iranians in Malaysia. There are also Malaysian Shias. Considering that it is Iranian State policy to support and promote the Shia religion all around the world, I will be most surprised if there are NO Qods Force members operating in Malaysia. Hisham wake up!!)

Since the economic sanctions began against Iran, the Iranian rial has dropped to about 1/4 of its value. The official exchange rate between the US Dollar and the Iranian rial was 12,600 rials to the US Dollar. Presently the "market" exchange rate is between 35,000 to 40,000 rials to the US Dollar.  

Folks the average, ordinary Iranian is suffering. All because of the politics of their leaders. I dont know for how much longer they have to suffer. They suffered during the Iranian Revolution. They have not exactly been enjoying a great life since 1979. (Otherwise there will not be 125,000 Iranians here in Malaysia). Now they are suffering again. 
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