GST ~ sudah dua tahun

[Henry T]

Actually slightly more than two years since its implementation on 1 Apr 2015.

It has affected our cost of living, some more than others. In a case of bad timing, our Ringgit started to slide just as GST was implemented. And to compound the problem we have the oil price plummeting and traders taking advantage to increase prices whether justified or not.

This is a triple whammy for sure.

I have calculated that had the Ringgit remain at 3.30 to the USD many things can be cheaper with GST.

In reality it is not GST but the depreciation of the Ringgit that did the damage.

[opulant]

The crux of the problem is the low wages and the increase of wages cannot catch up with increase of price and service.

The root to the low wages is the official figure of low inflation rate because salary incremental (to a large extent) either public or private will refer to the rate of incremental living cost as guideline on rate of salary increase.

The compounded impact of artificially low inflation rate that have been around for more than 50 years have caused irrevocable damage to the real wages and hence people will feel “money not enough” when subsidies on essential items like sugar, flour, fuel, etc have been removed or partially removed.

[opulant]

In reality it is not GST but the depreciation of the Ringgit that did the damage.

GST
I also think GST is not the culprit as many essential items are GST-exempted.

Weakening MYR
People with different income bracket will have different impact due to the weakening MYR, and hence different methods to mitigate the impact. If you can capitalize on the higher saving interest rate here (around 3-4% per annum) then the depreciation of MYR vs major currencies like USD, GBP can be minimized.

I have done a calculation for short term 3 years comparison between keeping money in a MYR account or a foreign currency account. The actual outcome proved to match my calculation that the money in a MYR account will generate more money even the MYR has depreciated. The reason is interest rate of forex account is very low (less than 1%). You can't change the weakening MYR, just have to generate more MYR from the exsiting sum to mitigate the depreciation impact.


Crude price plummeting
This is actually good news, generally speaking. The fuel price here is still managed in a regulated regime thus the impact has been taken care. We don’t seem like benefits from the low crude price like what is happening now because the regulated mechanism works toward absorbing the impact when the crude price is high. Away from this country, low crude price is definitely a good news. For example, a round trip ticket to Tokyo was RM3000 in 2008 and it is less than RM2000 now. The main contributor to lower flight fare is the lower fuel cost.

[opulant]

Nowadays, I think less people think financially prudent is a good virtue ....

I read a piece of interesting news recently about the True Fitness that suddenly closed down unexpectedly. Among the members who suffered the losses is a young man who subscriped the whole-life package of this fitness centre. He took a loan to pay for the sum of RM8200 for this whole-life package !! Of course, one lum sum payment is cheaper than paying monthly or yearly membership fee but not when you have to borrow money !! I fail to understand why joining fitness centre is so important that one has to resort to borrowing ?? I think many people is just like him... they just borrow to purchase their version of essential items like handphone, electrical gadgets, etc.

[opulant]

" As many as 500 clinics run by general practitioners (GPs) were estimated to have closed between 2014 and 2016 due to poor business. And the Malaysian Medical Association (MMA) is worried that the situation may worsen. Its president Dr Ravindran R. Naidu said a study involving 1,800 GPs revealed widespread concern over the financial sustainability of their clinics."



http://www.thestar.com.my/news/natio...jYfEv7KFj3z.99

[Scooty]

I read a piece of interesting news recently about the True Fitness that suddenly closed down unexpectedly. Among the members who suffered the losses is a young man who subscribed the whole-life package of this fitness centre. He took a loan to pay for the sum of RM8200 for this whole-life package !!

Seriously?! He did?! Thought only Moe, Curly or Larry would have gone for it!

[Henry T]

Subsidies make the masses happy but it disregard the supply and demand principle. The price the country pays due to subsidies is there for all to see and the picture is not very nice.

[Henry T]

Malaysia is a signatory in WTO. We also signed Free Trade Agreements with many countries. Being a signatory we have to abide by the terms and conditions and reciprocate. One of the terms being the lowering of import duties and tafiffs. In fact many products can be imported with 0% import duty because of the FTAs. This would mean a reduction of revenue for the Gomen. GST will more than compensate for this loss because they can now tax every man, woman and child.

With the much reduced import duties and inspite of GST the landed cost for many imported products are cheaper if the RM had remained at 3.30 to the USD. But the badly depreciated Ringgit negated any gains from the implementation of GST.

[opulant]

Seriously?! He did?! Thought only Moe, Curly or Larry would have gone for it!

http://www.sinchew.com.my/node/16524...B7%A5%E5%B1%80

You scroll down to the middle of this page, after the 3rd photo, there is a write-up.

According to the write-up, he and his wife both subscribed to the package last year (USJ Taipan branch), totalling RM16,400 and they are still servicing the loan installments !!

[opulant]

...With the much reduced import duties and inspite of GST the landed cost for many imported products are cheaper if the RM had remained at 3.30 to the USD. But the badly depreciated Ringgit negated any gains from the implementation of GST.

The 1gomen actually benefited from the weaker Ringgit because the imported item is now more expensive in Ringgit and the 6% is charged on a higher price.

I recently sent my car for scheduled mileage maintenance, I paid RM172 for the freaking GST !!

[Henry T]

The 1gomen actually benefited from the weaker Ringgit because the imported item is now more expensive in Ringgit and the 6% is charged on a higher price.

I recently sent my car for scheduled mileage maintenance, I paid RM172 for the freaking GST !!

I bought four tyres recently and the GST is more than 100 bucks.

[Naka]

Sometimes, I also wonder this scenario.

In 1963, Singapore dollar vs Malaysia Ringgit was 1 to 1.

54 years later or say half a century later it is about 1 to 3

In another 50 years time, what will it be?

1 to 6 or 1 to 9?

Yes, someone keeps mentioning that Malaysia bank interests is above 4% way above that of Singapore, UK or Australia.

Is this the yardstick to determine the financial strength of a country?

[opulant]

You can't change the weakening MYR, just have to generate more MYR from the exsiting sum to mitigate the depreciation impact.

Obviously, someone is suffering from reading disorder...

OR

That someone intentionally want to pick bone ... and instigate something..

[opulant]

You can't change the weakening MYR, just have to generate more MYR from the exsiting sum to mitigate the depreciation impact..

Ok.. I elaborate further just to help those who can't read simple inggeris...

In Apr 2016, a banker asked me to park minimum MYR500k in a USD or GBP account as MYR was destined to depreciate further at that time. The lock-in period is 3 years.

I did a calculation to check the viability of the offer. Here is a brief of my calculation

On 2 Apr 2016, exchange rate is 5.655 for GBP and 3.933 for USD, and interest rate is 0.455% (GBP account) and 0.875% (USD account). MYR500,000 is equivilent to GBP88,417 and USD127,129 on 2 Apr 2016,

a) If I keep MYR500,000 in a MYR FD, after 3 years with 4% compounding interest, it will become MYR562,432

b) If I keep GBP88,147 in a GBP FD, after 3 years with 0.455% compounding interest, it will become GBP89,630

c) If I keep USD127,129 in a USD FD, after 3 years with 0.875% compounding interest, it will become USD130,496


Now, fast forward to today, 22 June 2017 (one year and two months from Apr 2016), the exchange rate today is 5.449 (GBP) and 4.289 for (USD).

Using today conversion rate, I will get MYR488,394 from (b) and MYR559,697 from (c) which is still lower than MYR562,432 of (a)

Tell me, why the F I keep my money in USD or GBP. The “sensitivity analysis" of my calculation shown unless MYR depreciate to 4.721 vs USD, then it is worth to think of parking the money in USD account. Having said that, do anyone seriously think at current low point of MYR, it will depreciate further to 4.72 vs USD ??

Btw, I don't even bother to look at AUD....

[opulant]

Fiscal policy like the taxation, and monetary policy like interest rate are the tools use by a central bank to create/manage economic growth. Currency exchange rate is also another tool used by the central bank. However, most governments can only regulate exchange rates indirectly because exchange rates are set on the open foreign exchange market, i.e. supply and demand.

You have to look at where are you in the economy of the country that you live before you can take advantage of the benefits or mitigate the adverse impact of the fiscal policies. In this country, since your income and expenses are in MYR, that's no point to keep on blaming the weakening MYR. You should look at how the depreciating MYR affects you in a bigger picture and how the overall fiscal policies in this country can help you to mitigate the depreciating currency. People like to cite SGD as a stronger currency but in reality, ask the Singaporeans what are the tangible benefits from the stronger SGD (vs MYR) to them in their everyday life ?? SGD also weakened vs USD around 15% since 2011.

Most people just like to blame (this include people who have higher education).They can't even use common sense to evaluate logically the situation.