JULY 23 — Caution: mixed signals; get real to overcome the dizzy spin ahead.
This could very well be the handy advice thrown to Malaysians today as the country wades through the unpredictability of international economic conditions. Look, for instance, at the wealth and cost of living issues through the following headlines that came up so crisscrossed over the past one week:
● Malaysia set to be a high-income nation in five years, earlier than anticipated;
● Chicken prices up, minister suggests switch in diet, consumers upset;
● Malaysians top buyers of London properties;
● Malaysia’s household debts going through the roof, more young people declared bankrupt; and
● Forbes releases latest list of 50 richest Malaysians, their net worth can actually buy into this whole country many times over.
If this is not convoluted enough, there is a deep lament all over the social media about the escalating cost of living and a purchasing power that seems to be on a slippery slope.
One posting makes a comparison between the basic conditions in 1978 and now for a person entering the labour market. It says although the average starting salary of a graduate is now around RM2,500 compared with RM1,100 in 1978, today’s scenario is much worse off.
Examples: a two-storey house will set the fresh graduate in Kuala Lumpur back by 140 months of current salary (as against just 56 months in 1978), that too the only two-storey house he could afford now would be in far-off Nilai or Kuala Selangor, whereas in 1978, it would be in posh Taman Tun Dr Ismail. Added to that, a loan for a Honda Civic would cost him 52 months of salary (just 12 months in 1978).
The posting further makes a comparison between Kuala Lumpur and some major cities as to the average working hours required to buy certain stuff. A McDonald’s Big Mac hamburger, for instance, needed 41 minutes work-hours in our city to acquire as against 14 in Sydney and New York, 12 in Tokyo and 13 in London.
All this points to a very negative summary about the financial situation and purchasing power of the average Joe in this country, especially if he resides in Kuala Lumpur.
And the statement by Finance Minister II Datuk Seri Ahmad Husni Hanadzlah last week about household debts could not have come at a better time. He said the debts (in our case covering basic needs like housing, car loans and credit cards) make up 83 per cent of the nation’s gross domestic product (GDP), which could be “one of the highest in the world and said the government was looking at measures to lower the percentage”.
So if we talk about Malaysia moving into the big league by becoming a high-income nation in five years, how serious can we be? What does it mean to a family man earning RM3,000 or even RM5,000 a month?
His expenditure for the month and many more months to come (that is, until he gets a big increment or a promotion) will be typically something like this: First he needs to service his housing loan of RM750 (low-cost or low medium-cost housing repayment for 30 years, which can stretch on after retirement).
Then there is the set and unsympathetic car instalment — RM400 (a modest Proton Saga, seven-year repayment period). Private car ownership has become essential in most parts of Malaysia because of the horrendous public transport system and the rising crime rate.
Other regular items in the expenditure include:
● electricity and water bills — RM100 (no air-conditioning, home-theatre system or water heater);
● phone bills (Telekom Malaysia Bhd and handphone which is also essential) — RM200;
● food — RM900 (based on three meals for the whole family of husband, wife and two children at RM30 per day);
● petrol — RM300 (driving in the city to go to work and take the son to school with very minimal toll payment);
● tuition (a norm everywhere these days) — RM80 (if there is one that cheap);
● pocket money for the son to take to school — RM20 (that’s less than RM1 a day, is that enough?);
● school fees for various activities, books and uniforms — RM130 (there is always something to be paid);
● milk powder for the younger child — RM50 (the least expensive);
● Astro charges — RM100; and
● miscellaneous — RM100 (shampoo, soap, detergent, rice, sauce, toilet paper and other household items).
The above alone works out to a total of RM3,130 and even though the figures are conservative, they already make up a clear deficit for the RM3,000 wage earner. There are also many items not taken into account, such as income tax deductions, seasonal festive expenditures, clothing and children’s constant demand for pizzas, happy meals and Manchester United jerseys.
For the fresh graduate, there is also the high cost of getting married to deal with — the marriage rite fees, the hantaran (dowry) for Muslims and the very costly wedding reception. These people cannot get bank loans because of their household debt percentages. So the Ah Long telephone numbers scrawled on the lamp-posts are forever tempting.
Then they get into a trap and get very angry when someone throws a “Don’t eat chicken” line at them.
* This is the personal opinion of the columnist.
