TMI: For many, EPF nest egg may not last the distance

For many, EPF nest egg may not last the distance

TMI: January 12, 2013

One consultant said RM100,000 in EPF savings was insufficient to fund a leisurely retirement. — Reuters pic

KUALA LUMPUR, Jan 12 — Retirement must be the sweetest moment for any employee who has worked for over 20 years as it will allow them to rest and do leisure activities with their loved ones.

However, inadequate retirement funds may bring these dreams crashing down as some may continue to work following failure to manage their Employees Provident Fund (EPF), the only retirement scheme in the country.

According to studies conducted by the EPF, 70 per cent of inactive contributors had retirement savings of below RM50,000 and will spend it within the first five years of retirement.

Without financial stability from personal saving, pension or children to support them, this situation could put many retirees in a troubling position.

According to EPF’s senior public relations manager Nik Effendi Jaafar, the EPF hoped to increase their members’ saving with the introduction of the minimum wage.

“The main contributing factor for this situation is that low income earners will contribute a small amount into their EPF until their retirement age.

“We hope the minimum wage implemented this year will increase member contributions,” he told Bernama here today.

However, he said the EPF would like to remind its members that their responsibility was to provide basic financial security for retirement but there was a possibility that the funds would not be sufficient for their needs.

Therefore, he said members were encouraged not to depend entirely on their EPF savings by choosing other investment options to increase their savings.

“In addition to that, to avoid reducing their EPF savings, members should only make pre-retirement withdrawals only when necessary. More importantly, we emphasise that a comfortable retirement is possible through sound financial planning,” he said.

Malaysian Government Pensioners Association (PPKM) president Datuk Wan Mahmood Pawan Teh said a panel to provide financial management courses to future retirees should be set up to help them save more and manage their money well after retiring.

“For example, there are suggestions for contributors to invest in asset management companies, but the government has not provided detailed information to them so that they are not exposed to risks or fraud.

“Not all contributors, including from the private sector, can manage funds well. So we want contributors to understand the way to save, invest, set up business and spend in time for their retirement,” he said.

Independent financial consultant Fiona Tahir said, at the age of 55, even if a person receives more than RM100,000 in EPF funds, they still cannot live comfortably.

The best way is to have other forms of saving and to invest at least 10 per cent of the net monthly salary.

“Saving up through normal saving with low return is useless. Savings must be invested in an instrument that yields higher returns than the inflation rate,” she said.

Therefore she advised EPF contributors to invest in unit trust as it was capable of increasing retirement saving with low risk.

“However, we must remember that unit trust is a long-term investment for financial planning during retirement, children’s education, or for emergency matters especially health-related,” she said.

 She said each investment, including property, gold and more also had risks and each individual needs to have savings or investment other than EPF to face retirement.

She added that the public should not get involved in suspicious investment schemes which promise high returns in a short period of time. — Bernama

TMI: Corruption? It’s OK lah... by Khairie Hisyam Aliman

Corruption? It’s OK lah

by Khairie Hisyam Aliman
The Malaysian Insider
Jan 07, 2013

JAN 7 — “It’s amazing how much shit people put up with, as long as you give it to them slowly.”

The above quote from Mack Leighty echoed in my head as I read that we are ranked second out of 150 countries in Global Financial Integrity’s latest report on illicit financial outflows worldwide. According to GFI, in 2010 alone we lost RM196.84 billion in funds to tax havens and Western banks, second only to China.

Earlier this month, it was Transparency International’s survey. They asked this: “During the last 12 months, do you think that your company has failed to win a contract or gain new business because a competitor has paid a bribe?” We scored the highest out of 30 countries with 50 per cent.

The same survey also found that respondents feel the misuse of public fund by public servants and politicians is common. They also said they feel it’s common for public officials to demand or accept bribes. On the whole respondents perceive government efforts to fight corruption as largely ineffective.

How did it become so bad?

The very malaise at work is our attitude. Writer William Citrin calls it the “it’s OK lah attitude.” “Simply put, the ‘it’s OK lah’ stance is a serene (and often blind) acceptance of the minor inconveniences and irritations of everyday life,” he wrote.

Like everything that inconveniences us every day, initially we feel upset — angry even. Why do people clutter up our mailboxes with flyers and business cards every day? Why do people deface signboards and traffic lights and lamp posts with their advertisements and car-for-rent flyers? Why is the traffic jam so horrible that we can watch a 30-minute sitcom on the Federal Highway during the rush hour? Why do we need to slip somebody “duit kopi” to get the bureaucratic wheels turning?

These things outrage us. But then we encounter them again and again day in, day out. Anger turns to exasperation and before long we grow jaded enough not to care so much. Just another pothole in the road, we drive around it and it’s behind us. We see those flyers lying around outside our mailbox and we shake our heads, then we drive off to work and we forget about them. “Duit kopi” becomes part of operating costs, unrecorded or maybe put under “entertainment” allowances.

Over time, we accept these things as facts of life that we have to deal with. As we accept them as part of the environment, they get worse. More and more potholes appear on the road, and we just slow down so that we can drive around each and every one of them. We don’t bother reporting them to the authorities, because we have other things to worry about. Let someone else make that phone call, we think.

Bit by bit we acclimatise to these “minor inconveniences”, and as they slowly get worse, we acclimatise even more, barely noticing that the pothole in the road is getting bigger and bigger. Just like the culture of corruption and bribery and “gifts” which also grow. We resign ourselves to their existence and do our best to get by, while the cynical ones begin to think of ways to benefit from it. The cycle continues and compounds the issue.

Today, corruption is monstrous. Some government officials become absurdly, suspiciously and unnaturally well-off and wealthy after assuming a public post, and we barely bat an eye at this. We still think it’s not that bad, because we’re used to it. “It’s OK lah,” we say, “country still developing what, a bit corrupt only, where got country without corruption?”

But it’s not okay. Even a small hole in the road is one hole too big, because wrong is wrong regardless of scale. We can’t rid ourselves of the corruption that infects the country in a day, but every great journey begins with the first step. The first step is to change our mentality about the pothole in the road.

It’s not OK lah.

Lim Guan Eng's speech - A Good One!

Lim Guan Eng's speech - A Good One

Date: Friday, January 4, 2013, 6:08 PM

Since Merdeka, two million Malaysians have migrated overseas because they do not see a future for themselves and for Malaysia.

It is time that we don't live in our past that is filled with hatred and fear. We should look to the future filled with hope and harmony between all Malaysians.

To put the past behind us, we must stop the politics of race and religion.

To put the past behind us, we must end corruption.

To put the past behind us, we must abolish the suppression, oppression, repression of our basic human rights and freedoms.

To put the past behind us, we must demand good governance and performance from our ministers.

To attain peace Malaysians must stand united and reject those who wish to divide us by preaching racial and religious hatred. If we want to benefit from equal opportunities and realize our human potential we must stop extremists from continually degrading others as inferiors so as to uplift ourselves.

Why should Allah not be allowed to be used in the Bible when it is used in the Middle East?

We can only achieve harmony together. Despite our differences and diversity, Malaysians can make our common aspirations of freedom, justice, democracy and truth come true if we remember key values.

That it is not who we are that is important, but what we are that is important; not the colour of our skin that is important but the content of our character; and not our past ancestry that is important but how we connect with the present and with each other to face the future.

We can only be prosperous together. The time has come to focus on the economy, in employment, education and business opportunities as the conditions for prosperity.

We must build human talent and be performance-based.

For those who say that PR do not know how to govern, the 4 PR states of Penang, Selangor, Kedah and Kelantan have proven our ability by beating the other 10 BN states by attracting RM25 billion in investments comprising 53% of Malaysia's total investments of RM47.2 billion in 2010. For the first time in history, Penang is now the new champion of investments in Malaysia, coming out top in 2010 with RM 12.2 billion.

To put the past behind us, we must end corruption.

Barisan Nasional cannot reform to end corruption. Remember, if we do not end corruption, Malaysia dies. If we end corruption, BN dies. The choice is clear.

To put the past behind us, we must abolish the suppression, oppression, repression of our basic human rights and freedom. How can we have a clean government when we do not have clean elections?

We do not want our children to live in fear of oppressive laws as we have lived. A Pakatan Rakyat government will abolish the UUCA, the Sedition Act and the Printing Presses and Publications Act and restore local government elections.

When can we find justice for Teoh Beng Hock, Ahmad Sarbani and A Kugan? When will we have Freedom of Information & Freedom of Speech? When can we have justice that is not only done, but is seen to be done.

To put the past behind us, we demand good governance and performance from our ministers.

Malaysia can be an international and intelligent country. We must have digital intelligence with broadband connectivity. We must also have integrity intelligence, so ensure that only honest people are the decision-makers. We must have institutional intelligence under the rule of law. We demand good governance and performance from our ministers.

Has the Transport Ministry done its duty to run our airports and seaports well? Look at the Penang International Airport whose completion has been delayed more than 3 times.

And the Penang Port is to be reduced to be a feeder port and privatized to a 3rd party at the expense of Penangites. Why is there no consultation with the people of Penang to restore the port to its former glory? Instead of looking after airports and ports, the Transport Ministry is more interested in vehicle registration numbers and wants to increase the maximum traffic fines to RM2,000.

(YB Lim forgot to add the abuse from AES to make money for the cronies by MCA).

Director-General of Tourism is wrongly charged of corruption but the Tourism Minister finds nothing wrong with spending RM1.8 million in doing up her Facebook page, when we all know that it can be done for free.

The Health Ministry wants to privatise healthcare when it should be a public good given as an affordable right to all Malaysians. Why allow the wastage of public funds and affect the quality and affordability of drugs when drugs are bought through a middleman at higher prices when it could be bought cheaper direct from the manufacturers, some of which are operating in Malaysia.

The Housing and Local Government Ministry opposes local government elections in Penang, denying our fundamental democratic right to elect our councillors and our mayors.

We believe that Malaysians deserve better. For the last 50 years, the wealth of the nation has been robbed. Let us protect the future of our children by ensuring we have a people-centric government that protects you instead of harming you, that rewards you instead of stealing from you, that respects you instead of abusing your rights. Let us clean up Malaysia to save our children's future.

We must put the past behind us where profits matter more than our health. Lynas concerns all of us because if Lynas is allowed to operate, Barisan Nasional will proceed with building two nuclear reactors. If we continue to put health above profits, what is the use of having all the money in the world if you cannot enjoy it healthily?

The next elections shall be fought on the economy. We refuse to allow BN to use race as the issue in the next elections. We need to increase the incomes of our poor or else they will fall victims to the Ah Longs. For example, Bank Negara's Annual Report 2010 revealed that Malaysia's household debt at the end of 2010 was RM581 billion or 76 per cent of GDP, thus giving us the dubious honour of having the second-highest level of household debt in Asia.

In addition, the Malaysian household debt service ratio stood at 47.8 per cent in 2010, meaning that nearly half of the average family's income goes to repaying debts. As a rule, banks would not lend money to those whose total servicing of loans exceeded one third of their income. In other words, we are spiralling into an indebted nation.

According to the New Economic Model documents, the bottom 40% of Malaysian households are living with a monthly average income of RM1,500 (and three-quarters of them are bumiputera) while 60% of the households (of four persons averagely) live with a less than RM3,000 income, which is near subsistence if one lives in the cities.

These are families living in fear. We will help them live with dignity and not in fear, by increasing their incomes and cutting down their costs, with a minimum wage, getting rid of monopolies, expanding internet connectivity and encouraging creativity, innovation and productivity.

South Korea is a very good example of a nation that chose democracy, performance and freedom of opportunity to become a developed country. With a population of 48 million, its GDP per capita of USD20,000 is more than double Malaysia's. But in 1970, South Korea's per capita GDP was only USD260 compared to Malaysia's USD380. We used to regularly beat South Korea at football. And now our children are fans of K-pop culture and their football team are regulars at the World Cup.

Only when we free ourselves of fear of change, can we be free to prosper. BN cannot change. They need to be changed, for BN wants to rule by fear.

Thomas Jefferson has said "When the governments fear the people, there is liberty. When the people fear the government, there is tyranny".

The choice is yours, my friends. I urge you - Let us change so we can have liberty and live with dignity.

*Lim Guan Eng, DAP Secretary General & MP for Bagan

TMI: Malaysia’s strong economy and new politics ― by Mohamed Ariff

Malaysia’s strong economy and new politics ― Mohamed Ariff

The Malaysian Insider, January 02, 2013

JAN 2 ― Surprisingly, the Malaysian economy grew at a credible pace in 2012, despite dismal export performance associated with the slow expansion of the US economy as well as recession and stagnation in Europe.

Malaysia’s quarterly growth rates have been fairly impressive: 4.9 per cent, 5.4 per cent and 5.2 per cent respectively in the first three quarters. The economy needs just 4.1 per cent growth in the fourth quarter of 2012 to garner 5.0 per cent growth for the year as a whole.

So all indications are that Malaysia’s GDP growth will slightly exceed the government’s target of 5.0 per cent growth in 2012. The main growth drivers are domestic consumption and investment, both private and public. Construction and services have been the fastest growing sectors in 2012.

It is noteworthy that inflation has become increasingly tame, decelerating from 2.7 per cent in January to 1.3 per cent in October 2012. The inflation rate for the full year in 2012 is projected to settle at 1.7 per cent.

The unemployment situation has been somewhat steady, in the region of 3.0–3.3 per cent. The banking sector stayed healthy and well capitalised with a net impaired loans ratio of just 1.4 per cent.

The central bank has kept its overnight policy rate at 3.0 per cent in the face of ample liquidity. Malaysia continues to register a current account surplus in its balance of payments, although the size of its surplus has been diminishing.

International reserves at the end of September stood at US$135.6 billion, providing a retained import cover for 9.4 months, which is more than comfortable.

The Malaysian fiscal story, however, is unflattering, as the country has continually run budget deficits since 1998. With elections around the corner, government subsidies and cash handouts have been flying in the face of fiscal discipline, with no attempts made to address much-needed tax reforms that would reduce the current overdependence on oil and gas, which accounts for roughly 40 per cent of government revenue.

Government revenue has failed to grow in tandem with GDP growth in recent times, with the ratio of revenue to GDP falling from 33 per cent in 2007 to 24 per cent of GDP in 2011 and to an estimated 22 per cent of GDP in 2012.

All this may have an adverse effect on the country’s international credit ratings, and hence the need to rein in sovereign debt. Government debt has ballooned to RM502.4 billion in the third quarter of 2012, breaching the self-imposed debt ceiling of 55 per cent of GDP.

The debt ceiling was raised from 40 per cent to 45 per cent of GDP in April 2008 and lifted further to 55 per cent in July 2009. Malaysia’s debt-to-revenue ratio of about 250 per cent is close to Italy’s 260 per cent.

The near-term outlook for the Malaysian economy is very much dependent on the economic performance of its major trading partners. Export market diversification efforts currently underway may help reduce Malaysia’s vulnerability to external impacts but cannot lessen its exposure to the external world.

Likewise, a dynamic domestic economy can contribute to greater resilience but cannot be a substitute for the more lucrative external sector, given the relatively small size of the domestic market. GDP growth in 2013 is forecast to be in the region of 5.5 per cent.

Malaysia, an advanced developing country with an impressive development track record, now caught in the throes of the current global economic slide, needs to escape the middle-income trap before it can join the league of developed nations as envisaged in its Vision 2020.

Malaysia needs to reinvent itself to accomplish this goal. To this end, the government has taken a number of strategic reform initiatives to enhance the country’s competitiveness and improve its growth potential.

While economic imperatives can explain the government’s reform agenda, the rapidly changing political landscape in the country appears to be the main driver of change.

After 55 years of one-party administration by the ruling coalition, Malaysia has arrived at a new crossroads with a strong opposition effectively offering an alternative government to the Malaysians.

For the first time in history, the ruling coalition is facing a formidable opposition. All signs suggest that a two-party system is already in place, regardless of the outcome of the forthcoming elections, which remain too close to call.

Malaysia has finally come of age politically after 55 years of independence. The race-based politics of yester year are giving way to an issues-oriented political process that cuts across racial boundaries.

Simply put, it is not going to be business as usual any more in Malaysia — which bodes well for the nation’s future. To be sure, pluralism is Malaysia’s strength, not its weakness.

* Mohamed Ariff is Emeritus Professor at the Department of Economics and Governance, Global University of Islamic Finance (INCEIF).

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