Saturday, January 3, 2009

Lower and Middle income earners are effected

Media Statement by M. Kula Segaran MP for Ipoh Barat and DAP National Vice Chairman released in Ipoh on the 3rd of January 2009

Call for an immediate DEBT MORATORIUM by Bank Negara to ease the crippling effect on the lower and middle income earning group from the anticipatory economic slow down confronting Malaysia.

The global economic slowdown has crippled many nations. A world wide recession is highly expected in 2009.

Malaysia though having forecasted a budget deficit of more than 4% of GDP for year 2009 but however with its RM119 billion trade surplus for the year 2008 (Jan – Oct), a strong foreign exchange reserve to the tune of US 96 billion and acceptable foreign direct investment of RM41 billion from January to October 2008 has maintained economic fundamentals that is noteworthy.

These respectable economic fundamentals can be attributed to the many public listed companies and large corporations with their good market performance though confronted with difficult times.

However Malaysia is not expected to escape the anticipatory economic slowdown due to declining global trade demands to which our economic fundamentals are strongly dependant upon.

While many public listed companies and large corporations may have already put in place various strategies to withstand this difficult time in the immediate and mid term period without the assistance of the Malaysian Government, the same cannot be said for the lower and middle income earning group which may well include small and medium size industries including cottage industries which is the back bone of almost all nations.

Amidst a revised GDP forecast from 5.7% to 3.5% by the Government of Malaysia, some analysts are openly predicting negative growth for Malaysia in 2009. A negative growth for a period of two months will plunge Malaysia into a recession. The result of a recession is one that we have experienced in the mid 80’s and late 90’s with devastating consequences to many.

We are already witnessing lay offs. Many factories have begun to cut over-time work of its employees. Some for example Carsem Semi Conductors with employment capacity of approximately 10,000 is expected to implement four days a week working hours.

Such urgent measures and drastic steps implemented by these companies indicate that the worse is yet to come thus calling for an immediate intervention by the government of the day to minimise the impact of this slow down and further safe guard the interest of the nation as a whole.
A government statistics released in Parliament on the average household income of Malaysians during the last sitting reveals that 80% of the Malaysian population namely those in low and middle income earning group including small businesses and cottage industries earn less than RM5000.00 a month which makes them vulnerable group and is expected to be hit the hardest during the anticipated economic slow down.- see Appendix-1

The sudden and unexpected increase of fuel (petrol and diesel) prices in June last year had a serious impact on the dramatic increases in the prices of basic and essential goods and business rents. Though in recent months the fuel prices had seen a steady decline but the prices of these basic and essential goods remain with no indication of any decrease thus deeply hurting the purchasing power of these vulnerable group of people.

Surveys conducted show that the low and middle income earning families spend more than 70% of their earning on basic needs leaving them with no surplus for any contingent events.

Low and middle income earners having tightened their belts because of recent unpopular government economic policies are now expected to tighten their belts further with serious consequences that may lead to loss of purchasing power and disappearance market liquidity. The result could be catastrophic.

Some alarming facts that require the urgent attention of the Government are as follows:-
1. The outstanding housing loan to financial institution as at year 2007 is RM86.7 billion (excluding RM26.8 billion to Treasury Housing Loan Division).
2. With the current economic slow-down, many industries in Malaysia had implemented a 3 or 4 days a week flexi working hours. The possibility of large scale voluntary separation schemes and retrenchments of workers are inevitable if the situation worsens.
3. If the middle and low income earning group of workers under forced reduction of pay represents only 10% of the outstanding housing loans, and with a possible loan defaults, a sum of RM18.67b would be expected as non performing loans (NPL) with bankruptcies and forced liquidation. These forecasted scenarios will have adverse social consequences and will affect the prices of houses in secondary market which will put pressure on the primary market.

We call upon Bank Negara to immediately intervene and take urgent steps to mitigate the worsening economic situation by necessary banking directives to financial institutions to permit and impose a debt moratorium to earners of household income of RM5000.00 and below in the following manner :-1. A debt moratorium on monthly progress payment on interest free basis for a period of two years or until such reasonable period of time depending on the stabilisation of market conditions.
2. Re-scheduling of end-financing loan documents (This CSR initiative by financial institutions had been recently adopted in UK).

A timely intervention by Bank Negara to provide assistance to these affected groups may prevent unmitigated social ills including the flourishing of illegal and unsupervised money lenders with unchecked and uncontrollable financial transaction that can pose serious threat the national security and stability of our country.

M.Kulasegaran .

Less than RM1,000 per month- Total household is 496,500
301,000 - Malay, 50,900 - Chinese, 29,000 - Indian, 29,300 - Kadazan, 7,500 - Orang Asli, 78,800 - Other ethnic group

From RM1,001 to RM2,000 - Total household is 1,695,900
976,500 - Malay, 338,300 - Chinese125,300, - Indian38,800 - Kadazan, 9,800 - Orang Asli, 207,200 - Other ethnic group

From RM2,001 to RM3,000 – Total household is 1,144,700
614,700 - Malay, 300,800 - Chinese, 121,500 - Indians, 15,300 - Kadazan, 2,500 - Orang Asli, 89,900 - Other ethnic group

From RM3,001 hingga RM4,000 - Total household is 743,000
380,500 - Malay, 234,700 - Chinese, 73,300 - Indian, 8,900 - Kadazan, 1,000 - Orang Asli, 44,600 - Other ethnic group

From RM4,001 to RM5,000 – Total household is 497,800
254,700 - Malay, 166,600 - Chinese, 44,800 - Indian, 6,900 - Kadazan, 200 - Orang Asli, 24,600 - Other ethnic group

From RM5,000 to RM10,000 – Total household is 914,200
419,200 - Malay, 368,400 - Chinese, 76,800 - Indian, 13,400 - Kadazan, 36,500 - Other ethnic group

From RM10,001 to RM20,000 - Total household is 235,300
85,700 - Malay, 118, 700 - Chinese, 23,400 - Indian, 800 - Kadazan, 6,700 - Other ethnic group

RM20,000 and above – Total household is 49,500

16,500 - Malay, 27,900 - Chinese, 3,600 - Indian, 1,500 - Other ethnic group

Me not quitting the DAP!
Special Note :

Many have called me to day to ask is it true I have resigned as a City Councillor and worst still from the DAP. How can i resign when my term as a City Councillor expired on 31stDecember2008! My membership in DAP is in tact. I have never ever dreamed of living the DAP. Even to day i recruited some new members.

The write up in the NST should be ignored and it is as follows:

IPOH: DAP stalwart M. Kulasegaran has dropped a bombshell on the party -- he will announce today his resignation as an Ipoh city councillor.

Sources told the New Straits Times that the member of parliament for Ipoh Barat was forced to take this drastic action as he felt that he could not serve effectively the people in his "lowly" position as councillor.Observers said that Kulasegaran's decision was because of a power play in DAP.It is another blow to the credibility of the Pakatan Rakyat state government, which is facing a "revolt" from certain Parti Keadilan Rakyat elected representatives, who defied a directive against holding elections for village chiefs. The brewing political storm in Perak comes in the wake of the war of words between Kapar member of parliament S. Manikavasagam and Klang member of parliament Char-les Santiago with the Selangor assembly speaker Teng Chang Khim over the relocation of the Klang bus station to Meru.

A DAP assemblyman revealed that Kulasegaran might be taking a preemptive move against Local Government Committee chairman Nga Kor Ming's plan to appoint a lawyer as deputy mayor.Kulasegaran, a three-term MP, was promised the post of deputy mayor shortly after the March 8 general election."How would you feel if you were in Kulasegaran's shoes?" asked the assemblyman.The lawyer, in his early 50s, had previously worked with Nga.When Pakatan Rakyat took over the state government after March 8, Kulasegaran was hotly tipped for the Ipoh mayor post.Political considerations, however, forced a change of plan and Kulasegaran was promised the No. 2 post instead."The Indian community has high expectations of Kulasegaran and failing to secure the post has embarrassed him."I know for a fact that he did not take even a single sen from his councillor allowance as a matter of principle," said an associate.

The appointment of a deputy mayor was raised several times in the past, which saw Nga passing the buck to Menteri Besar Datuk Seri Mohammad Nizar Jamaluddin."It is up to him to decide," Nga was quoted as saying.The decision to sideline Kulasegaran could stem from Nga's insecurity, said a source."Nga knows that Kulasegaran will do a good job as deputy mayor. He is afraid Kulasegaran will overshadow him in his (Nga) capacity as the exco in charge of local government." Kulasegaran said he would call a press conference today.


Kanivanan said...

Thank the heavens. Please tell NSTP to publish a correction for the following morning's paper.

Anonymous said...

that's right. The S is NST stands for something else, eh?

I would not believe for a second that you would be leaving, not living, DAP

such desperate and below the belt method employed

James Lim said...

YB Kula,

Looks like the BN-controlled mouthpiece of the NST is at it again, publishing distorted, concocted and twisted facts. They think the rakyat will be fooled by their stories but they forgot the March 8 GE last election that the rakyat do not buy their stories when they campaign for their political masters. They also forgot that there are such things such as the internet and blogs.

Nice try NST but we, the rakyat are no fools!

HH said...

Are you going to be re-appoint as councillior? Can you tell you you can function well in this position?