11 Days from GST

We are 11 days away from the implementation of GST. You might think that the Government is going to make more money out of you. But did you know that, as a trade off, the Government stands to lose about RM20 bil from you for the implementation of GST? I will explain more later.

Actually, we have been talking about introducing a new, fairer tax system since the days when "someone" was Finance Minister in 1990s but I guess he had other ambition and priorities.

It stayed as nothing more than mere talk till one day in 2013.

On 29 August 2013 in Securities Commission, Treasurer General Tan Sri Irwan Serigar's announcement set off a media frenzy and those of us who were there saw journalists and analysts busy typing on their smartphones.

I can still recall the exact words. Tan Sri said, "GST is a must, no longer an option."

Ever since then, there are so many tax experts and web portals out there explaining about GST. I did a quick search and found the following links. Some are newcomers with easy to understand graphics:

a) www.apaitugst.com (newbie and trilingual, makes you understand from the simplest perspective)

b) www.gst.customs.gov.my (all that you need to know, textbook-ish)

c) www.loanstreet.com.my/learning-centre/GST-In-Malaysia-Explained

d) www.imoney.my/articles/why-malaysia-needs-gst

e) www.gst.com.my

There's no excuse in terms of implementation or knowledge. Every single piece of info, in whatever form, they are all out there.

From the point that it was formally announced in Parliament in Oct 2013 till today in March 2015, the entire economy and population had more than 500 days or 17 months to learn about GST and to adjust to the forthcoming GST.

It is either you want to do it and understand it, or you just can’t be bothered and prefer to be abusive and grumpy.

Over the past week, I saw and heard so many excited chatter among friends and relatives about the holiday they just booked in MATTA Fair and when the conversation moved on to politics, it was all guns blazing at GST.

It shows how ignorant we Malaysians are. The countries that you are traveling to have GST too, you know? China’s GST rate is at 17%, Korea (10%), Indonesia (10%), Thailand (7%), Vietnam (10%). Even Burkina Faso and Burundi have GST!

A total of 6.3 billion people lives under a GST regime in the 169 countries. Surely, there’s a reason why countries implement this tax system.

In Malaysia, we have over 6 mil registered taxpayers but only less than 2 mil actually pay taxes. We have over 500,000 registered tax paying companies but less than 110,000 pay taxes,

Any country in our position would have thought about GST. But it wasn't an easy move for the Government in today’s political climate.

The Government had to give something back in return for people to accept GST and these are not small sums. Take a look:

(a)   Government will abolish the Sales and Services Tax (SST). And did you know that in 2014, Government received RM17.8 bil from SST? They are gonna lose this.

(b)   Those who earn RM4,000 per month and below will no longer need to pay income tax. For the rest, it will be a 1-3% reduction in tax rate. The Government received RM26.7 bil in 2014 and just a 2% reduction means the Government is letting go RM530 million.

(c)   Government is reducing corporate, cooperative and SME income taxes. In 2014, the Government received RM68 bil. At 1% reduction, that's another RM680 million gone from Government revenue.

Welfare and cash handouts have also gone up. Just BR1M alone costs the Government RM4.9 bil for over 7 mil people.

We have not even touched public hospitals and education costs borne by the Government. They are not cheap. Medical services and facilities cost the Government RM23.3 bil per year.

Government must pay these bills. How?

There’s no other option but to re-engineer the wealth of the society and channel taxes from high end consumers back to the bottom 40% households. The more you consume, the more you pay, the more the Government has to give back to the bottom 40% households.

GST is a must, no longer an option.

Malaysia's RM 744.7b external debt

I have not read what the Ministry of Finance prepared for the Prime Minister in Parliament. But media outlets, both print and online media, went out with headlines like "Malaysia's external debt tripled to RM740 billion".

I won’t blame the media here and I must say this - Treasury should be more politically sensitive in future.

The statement gave naughty ideas to poster boys like Suara Rakyat to go all out by pushing content such as “Hutang Negara RM744.7 billion - Hutang negara di era pemerintahan PM Najib Razak!”

Some even went as far as saying that the Government was hiding numbers and massaging statistics in the past few years.

In actual fact, it was in 2013 when the International Monetary Fund (IMF) proposed a wider coverage for external debt. The international standards was prescribed to all member countries to comply with. This redefinition of external debt was to include several more items that were not covered before.

External debt now takes into account the non-resident holdings of local-currency denominated debt, deposits, loans, liabilities etc irrespective of the currency denomination of the debt.

External debt by maturity and instruments	Old definition	New definition
Inter-bank borrowing in foreign currencies	Maintain
Inter-company borrowing in foreign currencies	Maintain
Bonds issued abroad	Maintain
Other loans in foreign currencies	Maintain
Trade credits	-	NEW
Non resident holdings of domestic money market instruments	-	NEW
Non resident holding of domestic bonds	-	NEW
Current and deposits	-	NEW
Other liabilities by non resident	-	NEW

Source: BNM Q1 Bulletin - Economic and Financial Developments in the Malaysian Economy

In Q1 2014, BNM adopted this new definition of external debt and the first redefined external debt number was published. That was one year ago! So before anyone gets excited, please don't. Sudah basi, old news!

BNM’s Q1 2014 bulletin reported that our country's external debt (both private and public) was RM700.1 billion and the higher external debt was attributed largely to higher offshore borrowings by the private sector and non-resident holdings of ringgit denominated debt securities.

It is related to the company that many of you work with, it is related to the Mat Salleh in your company HQ with an account here, it is related to your Japanese banker whom your company owe money to.

If anyone actually bothered to dig further by clicking and opening BNM's External Debt report on their website, you will notice that

-  Federal Government debt - medium and long term offshore borrowings - have remained stable and low. It was RM13.8 bil in 2009 and for the financial year ending 2014, it only increased marginally to RM16.8 bil.

-  In terms of ringgit denominated Government securities held by non-residents, it currently stands at RM151.4 bil.

If you add both up, the total debt exposure of Federal Government 'externally' is just RM168.2 bil (22.6 percent of total external debt).

The balance here which is RM744.7 bil - RM168.2 bil = RM576.5 bil, this is not Government's debt at all. These belong to the private sector, the banking sector, and others such as deposits held by non-residents.

To pin the whole country's external debt on Najib is unfair.

It is clear to many that debt is not necessarily a bad thing as long as you have growth. You borrow to grow your wealth through strategic investments, just like how we borrow money to buy properties.

As long as Najib and Zeti sets the right policies for sustainable economic growth and solid fundamentals in our financial systems, debt and debt repayment should not be a concern.

By the way, there are easily 30 countries, if not more, with external debt higher than us such as South Korea (Q3 2014: USD65.8 bil, General Government) and Japan (Q3 2014: USD926 bil, General Government).

But of course, it is too late now for anyone to reach out to the masses who don’t understand the national accounting and economic terms. Damage has been done. Ini semua salah Najib, kan?

This is perhaps the most disastrous year in terms of communications for the Government.

Gender Inequality and Women in Malaysia

It might sound awkward that a man is talking about gender equality but just to clear this, in Emma Watson’s words, “Men, gender equality is your issue too”. I will take that invitation and begin to talk about gender inequality and women in Malaysia.

Let’s look at the Gender Gap Report which first started in 2006 and look at how we fared in 2014.

Gender Gap Report	Ranking (Malaysia)
Rankings – categories	2006	2009	2014
Overall	72	100	107
Economic participation and opportunity	68	103	104
Educational attainment	62	77	100
Health and survival	80	103	102
Political empowerment	90	113	132

I am not sure how to explain the rankings nor do I have the time to go through the complex methodologies used but in relative terms against other countries, perhaps what I can conclude is

• we are progressing but at a slow pace
• male domination and chauvinism still exists

Let’s try to have a fair assessment on where we stand with local statistics.

In our workforce, Malaysia has come a long way since 1982. There were less than 1.8 mil women employed in 1982 with a labour force participation rate of 44.5% and unemployment rate of 4.6%.

But in the most recent 2013 statistics, we saw the number of women employed almost tripled to about 5 mil with a labour force participation rate of 52.4% and unemployment rate of 3.4%.

This means that more than half of women of working age are employed and this is a first in the Najib Administration and the only time we have breached 50% since 1982.

I believe it will most likely remain at this band of 50%-60%.

Another recent encouraging news we read was from Hays Asia Salary Guide 2015. The employment of women in senior management roles in Malaysia has actually increased from 29 per cent in 2014 to 34 percent in 2015.

But if anyone wants to be negative about this, we can. Put this in another way, after so long, we still see men dominating the senior management roles.

In political leadership, the numbers are disappointing. I realized that there are only two women Ministers in our Cabinet - Nancy Shukri (Minister in PM's Department) and Rohani Abd Karim (Women, Family and Community Development Minister). In Penang's State Exco, there's only Chong Eng. In Selangor's State Exco, they have two - Daroyah Alwi and Elizabeth Wong. In Kelantan's State Exco, they have one women Exco - Mumtaz Md Nawi.

We can perhaps understand why if we look at the pattern in the GE 13 election results. In the recent 13th General Election, we saw a total of 168 female candidates named out of the 727 Parliament and State Seats. 71 women candidates were from Barisan Nasional, 77 from Pakatan Rakyat while the rest were independents or non BN and non PR. That is just 23%.

The results? 80 female elected representatives only. That’s a winning rate of 48% and participation rate of 11% in our houses of representatives. That’s not good. How did this happen?

Here’s my message to the voters. If gender was a key criterion when you voted in the 13th GE, perhaps you should do us a favour and stay at home in the next election.

In the Federal Government, we have seen a marked improvement where women today hold almost all of the key posts - from international trade and economic planning to welfare, education and healthcare. We have a total of 11 top ranked women in Government today. Perhaps, I should name them here:

Name	Position
Tan Sri Mazidah Abd Majid	Deputy Secretary General Cabinet, Prime Minister’s Department
Tan Sri Madinah Mohamad	Secretary General Education
Datuk Farida Mohd Ali	Secretary General Health
Datuk Dr Rebecca Fatima Sta Maria	Secretary General International Trade and Industry
Datuk Loo Took Gee	Secretary General Energy, Green Technology and Water
Datuk Seri Dr Rahamat Bivi binti Yusof	Director General Economic Planning Unit
Dato' Sri Noorul Ainur Mohd Nur	Secretary General Science, Technology and Innovation
Dato' Sri Dr Sharifah Zarah Syed Ahmad	Secretary General Communications and Multimedia
Dato' Seri Arpah Abd Razak	Secretary General Housing and Local Government
Dato' Hasanah Ab Hamid	Director General Research, Prime Minister's Department
Dato' Sabariah Hassan	Secretary General Women, Family & Community Development

I have personally worked with a few of them in the list above plus a few other Director Generals of other Federal Government agencies. They are more than capable to lead!

But the Government can’t do this alone. It is as good as banking on only one sports legend – Nicol David – to carry the Jalur Gemilang in the sports arena when there are dozens if not a hundred different types of sport.

Based on a 2013 survey by Talent Corp, only 8% of board members of all listed companies were women and this is a long way off the Government's target of 30% by 2016. Why is it a Government target, I’m not sure, but although we must not forego meritocracy for the sake of meeting the numbers, any form of gender inequality on equal merits must not be tolerated especially by the private sector.

Perhaps what is lacking in Malaysia is an inspirational icon who can lead, educate and champion the cause for equality.

The fight against gender inequality must go on, especially in Malaysia. We cannot afford to slide further in the Gender Gap Report or slack in other initiatives.

Not just because Kofi Annan said that, “Gender equality is a precondition for meeting the challenge of reducing poverty, promoting sustainable development and building good governance”.

To me, it is about respect.

Happy International Women’s Day. #makeithappen

Extreme 'nudity' in the Najib Administration

Has anyone of you read the Singapore's 2013 Auditor General Report? Here's an extract.

Based on the audits for this year and the last six years, AGO observed that procurement has continued to be an area prone to lapses....AGO observed instances of non-compliance .... These included - waiving competition on weak grounds, allowing bid alterations by certain bidders after tender had closed, not disclosing evaluation criteria upfront in tender documents, not evaluating tenders properly and obtaining approvals retrospectively.
Yes, I’m not kidding. That was from Singapore’s 2013 Auditor General Report. Google it! But I’m not here to talk about their report. Today I think we should focus on the ‘extreme nudity' in Najib's Administration.

After Najib’s first election victory as Prime Minister and Chairman of Barisan Nasional in the 13th General Election, he made an announcement which stunned many critics and supporters.

His first 'bold' move was when he invited a "predator" into the Cabinet by announcing that the then Transparency International President Datuk Paul Low will be his Cabinet Minister in the war against corruption. My colleagues and I were speechless in front of the TV when that announcement was made. I went as far as tweeting "Bro @NajibRazak, terus terang saya cakap. Bro ada bola".

To invite your enemy or critic into your own office or home is only possible if you have nothing to hide.

In 2012/3, PEMANDU called for a public consultation to prepare the Government Transformation Programme (GTP) 2.0. I remember hearing comments that some of the NGO reps, activists and Government officers who participated in the Fighting Corruption workstream actually told the Prime Minister "Sir, you gotta get this done. You need to have the political will and do this for the country".

What was it that they were referring to?

They wanted Najib to change the reporting practice of the Auditor General's report to three times a year instead of once a year. The series of 3 reports will be concise but must continue to contain key information, instead of a thick brick, so that none of the issues escape public attention. Just to put into context, Singapore's annual Auditor General Report (tabled once a year) is about 80 pages long while ours is 894 pages with extremely detailed information.

All eyes were on Najib at that time but I heard he was expressionless. No one knew what he was thinking. After hearing this at that time, I told my friends that Najib won’t do it. Come on, who wants to change the format from a thick annual AG report into three series that will be tabled three times a year? The Government will be grilled three times instead of one and there will be a high level of scrutiny on every single line each time.

Weeks later, I was told that many of those in Government were stunned when the Prime Minister made his decision. He actually agreed to do this 3 parts or series AG Report which will be presented to all three times a year. He also went a step further and agreed that the issues highlighted in the reports will be hung out as dirty laundry permanently in a dashboard until action is taken. You can see it here - http://arts.audit.gov.my

Now, why would he agree to carry out these initiatives?

A week or two ago, I came across a blog post by my blogosphere senior Datuk Ahiruddin Attan. Apparently, Najib personally appointed journalist R Nadeswaran (aka Citizen Nades) to one of MACC's main panels. He is not exactly a friend of Barisan Nasional, if you know what I mean, and I believe many would have advised Najib against this decision. Yet, Najib and the MACC Chief went ahead to give him his appointment letter.

Why?

Yesterday, 1MDB and Deloitte were both summoned to meet the Prime Minister and Cabinet to explain the allegations thrown at 1MDB. Who would have thought that the Prime Minister informed Cabinet that he has instructed the Auditor General to independently verify 1MDB’s account after which the report will be passed for transparent inspection to the Public Accounts Committee?

Let’s be clear here. PAC members include critics like Nur Jazlan as well as Tony Pua and Tan Seng Giaw who are both senior DAP leaders.

Why?

There is a pattern here. I believe the message from Najib is clear and consistent to all since he became Prime Minister – "If any wrongdoing is proven, the law will be enforced without exception". This is transparency and accountability at a degree that no other Prime Ministers of Malaysia can boast of. There’s just no two ways around this.

If what has been done by this administration is not ‘extreme nudity’, I don’t know what it is.