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Wednesday, May 30, 2012

Gap between rich and poor


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(SinChew Daily) - I doubt whether the government has the ability to distribute the aid every year. The government has spent RM2.15 billion in the previous round, not including the manpower and other resources spent. The government's fiscal deficit is high and it should spend within its means. Moreover, instead of keep giving them fish, it is better to teach them how to catch fish.
The government might bring another good news to low-income families. MCA President Datuk Sri Dr Chua Soi Lek said that he will make a proposal of giving another round of Bantuan Rakyat 1Malaysia (BR1M) aid at a meeting of National Economic Council.
The first round of the aid had benefited 4.3 million families and although the response was positive, the effect has faded. And now, as the general election is approaching, another round of aid distribution could earn some votes for the BN, particularly in Selangor.
However, I doubt whether the government has the ability to distribute the aid every year. The government has spent RM2.15 billion in the previous round, not including the manpower and other resources spent. The government's fiscal deficit is high and it should spend within its means. Moreover, instead of keep giving them fish, it is better to teach them how to catch fish.
Personally, I think that the low-income problem should be resolved through economic reform and restructuring to increase the income of the blue-collar wage earners and clerks. Subsidies and aids are not a long-term solution.
Moreover, it is not easy to increase salary. It must be linked to productivity and efficiency. If the minimum wage policy turns business unprofitable for businessmen, it will encounter resistance. For example, nine trade organisations in Terengganu have asked to be exempted from the planned minimum wage ruling.
Salaries are unable to keep up with the standard of living because of the rising food prices and many people are unable to repay housing and car loans. As of April this year, 241,740 people fell into the poor category and one quarter of them was because they were unable to repay car loans. Cuepacs also pointed out that 60% of civil servants earning less than RM3,000 per month could not afford to buy a house.
If the government does not restrain housing prices and reduce car taxes, low-income earners can never escape the nightmare.
There are many poor people in the country, but there are many rich people, too. Many foreign artists have came to hold concerts here have proven that the spending power of middle-class is not low at all.
The enthusiastic bidding for WWW plates also reflected that there are many rich people in Malaysia. A total of 18,243 applications for WWW plates with bidding value worth RM64,225,838.51 were received during the 15-day bidding period, bringing the authority a total revenue of RM11.3 million. Bid prices for some popular numbers were even high enough to buy a house.
When the rich are enjoying quality life, the poor are suffering. This is what we called disparity between the rich and the poor. According to the latest ICAEW regional financial report, Malaysia was ranked the country with the second worst wealth disparity among Asean countries, after Thailand. The situation here is even worse than China, India and other powerful countries.
The disparity between the rich and the poor will lead to social instability, particularly during economic downturn. No one can predict what impact would the Europe debt crisis bring. If the unemployment rate increases, it is possible for an outbreak of wealth disparity problem.
The Economic Transformation Programme (ETP) of the Performance Management and Delivery Unit (Pemandu) has focused on major development and investment projects. It is now the time for them to work towards the elimination of poverty to narrow the gap between the rich and the poor.
To become a high-income country, Malaysia must first cross the low-income threshold.

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