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Global Trends by Martin Khor

Monday 5 January 2004


NO HONEYMOON AS 2004 KICKS OFF

Blurb:   Newly weds and new Prime Ministers are given a honeymoon period to adjust.  But New Years are not.  So 2004 has kicked off with days sharing news that are good, bad and just so-so.   A foretaste of what is to come in the twelve months ahead.


A politician who comes to power is given a hundred days or so as a “honeymoon” period during which everyone watches but criticisms are withheld so that he or she is given the chance to settle down to the new job.

Datuk Seri Abdullah Ahmad Badawi is in this lucky and comfortable situation.  So far the Prime Minister seems to be passing the “honeymoon test” with good grades.  Notwithstanding last Saturday’s Lat cartoon (in the New Straits Times) gently ribbing him for his five-day leave, which most Malaysians surely do not begrudge him for.

But if politicians and newly weds are given a honeymoon to adjust to their new roles, New Years are not.

The ultimate Powers That Be in the universe do not give the New Year a hundred-day or even a one-day error-free break as an opportunity to settle down.

And so while we are all able to wish one another a “happy new year” personally, the year 2004 started with days and events that were “normal” – good, bad, ugly and beautiful all combined.

Life goes on as usual, new year season or not.

For many Malaysian consumers hoping to buy a cheaper car, the New Year dawned with disappointment and then confusion. 

The announcement late on 31 December of new import and excise duty structures for motorcars left everyone (well, almost everyone) confused as to what it all means for car retail prices.

It now appears that some imported models may not be cheaper, some may be only marginally cheaper, and yet others may be more expensive, depending on factors such as engine capacity, whether they are of Asean or non-Asean origin, and whether they are CKD or CBU.  

The relatively little impact on price levels is due to the fact that the reduction in import duty rates are more or less offset by corresponding increases in excise duty rates.

Moreover, last Saturday’s Star Bizweek reported that the Proton and Perodua models may be more expensive by up to 3 per cent, due to the excise duty increases, unless the national car companies decide to absorb the extra tax rather than pass them on to consumers.

Proton and Perodua will continue to get preferential treatment on excise duty (Proton gets a 50 per cent discount), which is how they will continue to sell at competitive prices. 

But the key question affecting the survival of the national cars is whether they will continue to get this preferential treatment from January 2005, when the Asean Free Trade Agreement (AFTA) provisions come into effect.  

And if they do, whether this can and will be challenged by car producers in other Asean countries who can be expected to claim that it is unfair to them.

Hopefully the situation will clear up this week when representatives of the car producers and dealers meet the relevant government departments to clarify the several unclear issues.

On new year’s eve night, the celebrations went off in cheerful spirit in Kuala Lumpur, Penang and other cities, with hundreds of thousands of people enjoying concerts and fireworks in the open air.

But for Kedah Umno secretary Datuk Abdul Rahman Ariffin, it was a nightmare as he was assaulted when he tried to stop illegal motorcycle racers outside his house.

This prompted the authorities the next day to declare all-out war on illegal motorcycle racers. 

Hopefully it will lead to real results. in improvement over the long run. Often, action is promised when a well-publicised event takes place, such as big landslides over highways, buildings and houses, causing loss of lives and property.

Some action may be take initially, such as prohibiting construction on hill areas and slopes.   But after some months and years, the measures are relaxed, and it is business as usual until the next big and well-publicised incident.

Let’s hope that in 2004 we learn the lessons of the past and permanently institutionalize the measures that are so badly needed to prevent criminal and negligent acts.

On 2 January, it was heartening to read about Suhakam releasing its report on Accessibility to Basic Needs, focusing on the need for the government to meet the basic needs of Malaysians, especially the poor and marginalized.

The report has concrete proposals on how to realize Malaysians’ economic, social and cultural rights (Ecosoc), such as the right to work, food and housing and healthcare.

They include providing water and healthcare to indigenous people and to estates, improving housing laws and policies, helping squatter communities, establishing a national housing policy, and raising awareness on the environment.   

Suhakam’s Ecosoc chairman, Tan Sri Ramon Navaratnam, said the full realization of these rights was vital especially for vulnerable groups, who are more concerned about issues of livelihood and daily needs.

Suhakam should now think of working together with public interest groups and establish a systematic dialogue with the relevant Ministries and departments to have them follow up on the proposals in the Suhakam report as well as those of the other groups.

Malaysia has reached a level of economic development that allows it to pay closer attention to the practical needs of poorer and more vulnerable groups and sectors at the grassroots level. 

What a good achievement for Malaysian society in 2004 if a partnership is set up between the government and the citizen groups to take practical measures in a systematic way to meet the needs of the poor and vulnerable sectors so that they can realize their economic and social rights.

For the senior citizens, the announcement by Bank Negara that they would be eligible to buy RM 2.5 billion of Merdeka bonds in 2004 and 2005 must be welcome news, as the first bonds to be issued in February will carry a 5 percent profit rate, which is above the present 3.7 per cent one-year fixed deposit rate.

Indeed, many cautious Malaysians who do not like to “play” the stock market are looking for a safe place to park their savings and which will earn them more than the low interest available at banks. 

Hopefully Bank Negara, the EPF or other financial institutions will introduce new savings instruments with higher interest or profit rates, like the Merdeka bonds, and make them available to non-senior citizens as well.

Internationally, 2004 did not have a happy start.   The earthquake that killed over 30,000 in Iran evoked pity around the world.  The discovery of a few people still alive after a week under the rubble also inspired new wonder at the ability of human beings to survive under intense conditions.  

There were reports on new year’s day that Israel now plans to build new settlements in the Golan Heights, thus raising tensions to new heights in West Asia.  Despite a denial by the Israeli Prime Minister, the world public was left wondering whether there is a limit to Israel’s expansionist ambitions.

Expecting terrorism through the use of foreign airlines, the United States  authorities stopped some European flights into the country.  This year, visitors entering the US from most countries will have their photographs and fingerprints taken, a measure that will turn off many potential tourists.

In retaliation, Brazil immigration in the first days of 2004 also began fingerprinting Americans entering the country, which many will hail as an intelligent way to remind the US that two can play the same game.

The US dollar fell to new lows against the Euro in the last days of 2003, probably foretelling a bad year ahead for the American currency.

In Italy, it was a very bad start to 2004 for those associated with Parmalat, the Italian company involved in fraud with a whopping 8 billion euros missing.  The owner and seven executives were arrested over the new year.   

Which made one wonder whether more cases of corporate fraud and unethical behaviour will be uncovered in the months ahead.

And so 2004 has entered, carrying with it much of the remnants of the old year.  After the new year break, let’s be ready to face the challenges ahead.

 


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