Government blind to crisis – Lim Sue Goan

Politics is in a big mess now, and our politicians only care about themselves, leaving no one to care about people like us.

They only know how to bring up their own salaries, and would not spare the slightest thought for poor people who are struggling to make ends meet.

According to a recent survey conducted by Bank Negara Malaysia (BNM) on some 4,000 wage earners across the country, 76% of respondents say they have problems taking out RM1,000 to meet their emergency needs while 94% say they will be in trouble if they are unemployed for more than six months.

To a high-income minister, RM1,000 is peanuts, but to many families making less than RM5,000 a month, the amount is "astronomical". As a matter of fact, RM1,000 cannot buy us too many things at a time when the price of goods are skyrocketing, and may not be even sufficient for a family for one month.

If you are not impressed by the above figures, perhaps the following could prove that we are indeed still miles from the high-income threshold. Even Umno's agenda to consolidate the Bumiputra community's economic status is also far from being successful.

For instance, Federal Territories Minister Datuk Seri Tengku Adnan Tengku Mansor has discovered that there are actually dirt-poor people in our cities, as some people could not even afford the RM124 monthly rent for a DBKL flat.

KWSP Economic & Capital Markets Department chief Nurhisham Hussein disclosed recently that Malaysians' household savings only make up 8% of the GDP. If not for EPF contributions, the actual savings could be a pathetic 1.5%, significantly lower than the 5% dangerous level. In the United States, household savings rate is well above 8% while most developing countries manage between 4-6%.

The country's bank deposits growth also moderated to 3.7% in October, of which fixed deposits shrank by 12.4% while current and savings account deposits were down by a hefty 25.4%.

The country's household debts are in excess of RM800 billion, or 88% of the GDP, the highest in the region. Meanwhile, debt service ratio stands at 43%, meaning for every RM100 we earn, RM43 will be used to service our debts or loans.

While these numbers are indeed uninspiring, they are there to tell us that many Malaysians simply lack the ability to save or to manage their wealth, resulting in incredibly low savings rate. If we are unemployed for more than six months, we will not be able to keep ourselves adequately fed.

Almost a third of Malaysian families also lack financial assets that could keep them afloat in the event of a loan default.

BNM's study shows that the debts of 40% of respondents are 14 times their annual incomes, meaning it is the end of the world if they ever lose their jobs.

Additionally, 19% of respondents admit they have excessively high debts while only 26% claim that they can settle their monthly credit card debts. EPF deposits can only be drawn when a person retires, and 70% of depositors may finish up their savings by the third year after retirement.

The government has to slash bursaries and scholarships as a result of dwindling revenue, and the National Welfare Foundation has also decided to scrap the dialysis subsidy. The plunging ringgit has sparked a sharp increase in goods prices, not to mention public transport fee hike, making life even tougher for the poor.

Unfortunately our government has not come up with economic revitalisation packages, like in Japan and Indonesia, to enhance the disposable income of the poor.

Given the inadequate safety net provided by the government, individuals and families are poorly prepared in the event of a crisis. As such, it is imperative for the authorities to ensure political and economic stability, otherwise the ringgit may continue to dive and the heavily indebted low-income individuals will have to take the brunt when a crisis strikes again, eventually impacting our financial sector as bad debts run high.

The question is, our politicians do not seem to sense the danger, and continue to indulge in their vicious squabble and allow the RM2.6 billion political donation and 1Malaysia Development Berhad (1MDB) issues to further erode investor confidence.

The fact that the Chinese government is willing to purchase our sovereign bonds at market prices has somewhat stabilised the ringgit for the time being, but the key still lies with our domestic factors. If we ourselves don't buck up, how do we expect foreigners to keep supporting us?

Our biggest crisis is that our leaders are totally unaware of the imminent crisis. – mysinchew.com, December 7, 2015.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.