Friday, October 10, 2014

Tougher living environment in the Greater Kuala Lumpur (KL), Malaysia

The economy situation in Malaysia has turned to worse from bad after the general election in May, 2013. Government has over spent the money to create feel good factors before the general election. The sweet dream painted by the government was faded off post election, and now the people has to the reality and prepare for a tougher environment especially for residents in the greater KL.

What makes up the tougher environments?

1. Implementation of 6% GST in April, 2014
While government is promoting the pros of the GST implementation, it will definitely create massive inflation and reduce the free capital in available in the market.
GST is said by the government as inevitable measure to sustain the overall national well being. Meanwhile the concepts sounds good, but I personally feel that unless we have an efficient government that spend and invest wisely, if not it is just another tools for corruptions and wrong spending at the people cost.

Just look at other third world country in ASEAN that implemented GST or VAT, they are still remain in the third world country, and the rich get richer and the poor get poorer.
It is not about GST or VAT, it is good governance that matter.

2. RON 95 petrol, diesel prices up by 20 sen from 2-October-2014
RON95 petrol and diesel price has increased again in 2014. The energy price increase has already create the domino effect on the inflation not forgetting that there is a major inflation waiting for all Malaysians in April 2015 due to the 6% GST.
My personal view is that under the subsidy rationalization program, there shall be further price hike for RON95 and diesel in 2015.

3. Devaluation of Malaysian Ringgit
The massive projects like MRT lines, LRT lines extensions, etc required huge investment to carry out. Government and involved corporates are issuing bond to fund the projects. As such, additional supply of Malaysian Ringgit are "created" and pumped into the market.
If the real GDP is not growing at the same pace as the Malaysian Ringgit currency, the value of the Malaysian Ringgit will decline.
The property price surge is a good evidence of the phenomenon of Malaysian Ringgit devaluation.

When living environment get tougher, the phenomenon of "Rich get richer and poor get poorer" will occurs. Folks, stay tough and get through this together.

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