Economic difficulties present challenge and opportunity

Diterbitkan: Jumaat, 21 November 2008 12:00 AM

(Ubah saiz teks)

To face the challenges ahead, we have to venture into new ground that we previously feared to tread on. This is a move we must courageously make, because competition knows no boundaries.

HOW things can change in a matter of months.

It wasn’t too long ago when Malaysians where jolted by a huge increase in fuel prices.

On June 5, the price of petrol at the pump was raised 78 sen from RM1.92 to RM2.70 per litre, a move that was driven by world oil prices that kept on rising as if only the sky was the limit.

It seemed that the sky was about to fall on us.

But earlier this week, barely six months later, the government announced a reduction in the price of petrol – the fifth since August – which brought it down to RM2 per litre, with oil prices languishing below US$55 (RM198) a barrel.

The “culprit” of course was the global economy, which at the time looked like it was chugging along fine, hence justifying the record oil prices.

Thanks to the conclusion made by just about everyone that “the worst is behind us” with regard to the sub-prime loans scandal – yes, it’s a scandal – no one was able to see then that the worst was about to emerge just around the corner.

Today, petrol prices are almost back to where they once were in June because world oil prices have climbed down significantly since then.

And oil prices are back to more sane levels because the world is about to enter a very difficult year in 2009.

Malaysia, having a relatively open economy and being one of the world’s top trading nations, will of course not be spared.

The Government is making a great effort to steer the country through these turbulent times, putting forward a RM7bil stimulus package, moving to liberalise certain sectors and industries to make the economy more competitive, as well as instituting measures to reduce the prices of goods and services ranging from fuel to rice.

The latest good news is that highway users will enjoy lower toll rates next year, with most of the highway concessionaires ex­­pected to follow in the footsteps of Plus Expressways, which an­nounced discounts and a loyalty programme this week.

The irony, though, is that as we fill up our cars with cheaper fuel and pay cheaper toll rates on our way to buying cheaper rice and products available under the price reduction campaign at our neighbourhood hypermarket, the full force of the economic downturn that will hit us next year will mean that we cannot afford to do anything but tighten our belts.

Some of us will lose our jobs or at the very least, kiss our annual increments goodbye. Bonuses? You have got to be kidding.

Although Malaysia will not be hit as hard as some of the economies in the region and the West, make no mistake, 2009 will be still be a tough year.

Not everybody will feel the same level of “pain”.

According to statistics in the Mid-Term Review of the Ninth Malaysia Plan, our mean monthly income in 2007 was RM3,686, up 4.3% from RM3,249 in 2004.

Not bad, but as always, averages can be deceiving if viewed on a solitary basis.

Rural monthly incomes in 2007 were much lower, averaging RM2,283, as opposed to RM4,356 in urban areas.

The level of disparity in incomes can also be seen in the Gini coefficient for Malaysia.

The Gini coefficient – with values ranging between 0 and 1 – is used as a measure of income distribution inequality. 0 corresponds to perfect equality, where everyone has the same income, while 1 corresponds to perfect inequality, where one person has all the income, while everyone else has none.

Malaysia’s Gini index (the Gini coefficient expressed as a percentage) was 0.441 in 2007, an improvement from 0.462 in 2004.

In general, countries that are poor have higher Gini indices – between 40 and 65 – while rich countries have lower indices, usually below 40.

Malaysia is neither very rich nor very poor, but our Gini index is telling, especially if we take into account that in 1999, it was 0.452.

In the eight years from 1999 to 2007, our efforts in addressing income distribution inequality have not resulted in significant progress, in so far as the tale is told by measurements of the Gini index.

It is as if there is this obstacle in our way that refuses to budge, and what we’ve done so far has not been enough to move it out of our way.

Before anyone goes on a stereotyping exercise, allow me to point out there is not only income disparity between ethnic groups but more so within the ethnic groups themselves.

The mean income for Bumi­puteras was RM3,156 in 2007, RM4,853 for Chinese Malaysians, and RM3,799 for Indian Malay­sians.

While these figures show relatively wide differences between the three major ethnic groupings, the 2007 Gini indices for each group – 0.430, 0.432, and 0.414, respectively – also point to significant income disparity within the various groups.

They force us to re-examine whatever prevailing stereotypes we might have in mind.

Not every Chinese is a rich towkay, not every Malay is a paddy farmer, and not every Indian is a rubber tapper.

The economic difficulties we are going through presents us with not only a challenge, but also an opportunity for us to venture into new ground that we previously feared to tread on.

It is a move we must courageously make, because competition knows no boundaries.

As we have seen, change can happen in the blink of an eye, without regard for parochial concerns.

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