Rising Food Prices - Who Should Be Blamed?

Discussion in 'Lounge' started by bslee, Mar 30, 2008.

  1. bslee

    bslee Newbie

    I just continue NOT to have anymore confidence in BN or UMNO led gahmen till the end of my days. The rakyat just have to wake up and realize that we're all ultimately shortchanged. Malaysia is almost fully dependent on essential food imports like rice, vege, coconuts, flour, fish, meat and milk products. What's happened to our industries?.. Its still in STONE AGE!. I need not elaborate the consequences the rakyat are now facing. Its all showing up and our gahmen as actually done little to improve the situation, but only know how to point fingers anywhere else except themselves.
  2. Brian

    Brian Newbie

    Bad argument there about relying on imported foods...

    Prices are increasing worldwide for staple foods such as wheat, rice and blah due to the increasing prosperity of China and India, which lead to more demand. Meat requires feedstock, which is derived from agricultural produce, whose price has been going up, and overfishing has led to reduction in stocks.

    To be honest, the only real argument there is about growing our own food is food security, not price, and we don't have much problems right now with that.

    I know Vietnam's started to reduce exports so as to keep their own prices low for rice, but they're a communist government for goodness sakes.

    Personally? I think the market's going to start making farming a much more attractive option to many people. Not a bad thing after all in a place where farmers are usually thought as poor :)

    And that's something I'm happy about :)

    No, I don't think that having all our rice produced here in Malaysia would do much for prices, unless you're proposing that we fix the price when we buy it from the farmer, which may be a lot lower than the market price, keeping them poor so we can all enjoy the benefits of cheap food.

    As for industry, the problem with Malaysia is that we have wayyyy too much government interference in industry.

    I guess we'll all have to look forward to spending more of our salaries on essential items and have much less disposable income.
    Last edited: Mar 30, 2008
  3. Adrian Wong

    Adrian Wong Da Boss Staff Member

    I don't think he was talking about food prices although it is a concern.

    The increased prosperity of China and India isn't the major cause of increased demand and higher prices. It's a fact that the increase in the price of oil and the resulting increase in biofuel product has caused a surge in demand for crops like corn, sugarcane and oil palm.

    Hence, the surge in prices of related industries as well. Like meat production, which now has to pay for higher feed prices. If the farmers can sell their corn to biofuel producers at a higher price, why should they have to sell it for food?

    Food security is one thing. Growing our own food also reduces the impact of global shortage/oversupply from affecting the country. For example, Bernas, which is supposed to encourage rice production in this country has not done that. Instead, they were more interested in being rent-seekers and make money by importing rice from Thailand.

    So, whenever there's high global demand for rice, we have no choice but to pay even more for Thai rice. Ultimately, food security is as much about stabilizing food prices as well as ensuring sufficient supply.

    Hehe.. Political idealogies aside, Communist governments like China and Vietnam are doing very well. Much better than Malaysia, that's for sure. :D

    That's true. But the government has to get rid of the Little Napoleons in the agencies who are more interested in making money by stifling local farming and importing food instead.

    Actually, based merely on market forces, increasing local production is certain to reduce prices. Right now, we import rice from Thailand. The cost of transporting the rice alone is a fixed cost we have to bear now. Local rice would definitely be cheaper if there's enough to make a difference.

    And it need not be at the expense of the farmer. Rice price is at an all-time high. Malaysian farmers should be making lots of money now....

    Yeah, too much interference and for the wrong reasons. Agencies like BERNAS should encourage rice cultivation, not discouraging it in favour of foreign rice import. Doesn't make sense.. unless you are interested in making some less-than-legal money. :)
  4. Brian

    Brian Newbie

    Rice isn't being used for biofuels in any large scale right now, yet the price of rice has jumped up (not locally, but in the global market). If it were corn or soya or palm oil, then yes you would be right.

    Global rice production to rise by 1.8 per cent in 2008, says UN agency

    Personally, it's more of a function of poverty to me more than anything else. Chinese and Vietnamese workers are certainly much more willing to work at a lower price than most Malaysians, thus they're much more competitive and you would get a larger foreign direct investments in their country and hence larger economic growth. We went through that period not too long ago too :). We now have to move on to the value added industry, providing a skilled workforce with extras that China/India/Vietnam can't offer yet.

    Doubtful. Malaysia has a price control system implemented. I doubt Bernas actually buys the rice from the farmers at market prices.

    There is indeed a fixed cost in Thai rice, but my question would be, how much more? With volume the extra cost might be negligible. We've always had problems feeding our population, even when we had 20 million people, Bernas or no Bernas. It's now almost 30 million. Even if Bernas managed to use market forces (i.e. increasing prices) to make rice cultivation a much more tempting prospect, I doubt we would get enough farmers to help reduce prices by much.

    As for Bernas, I've not read much about it, but as with other government agencies, there's probably some corruption here and there as per usual. That, however, can't be used as an excuse to keep prices steady if the market price is truly increasing (which I believe to be so, see India's restrictions on exports, Vietnam's restrictions on exports and I think Egypt's too)

    It's time we moved to a free market model
  5. Adrian Wong

    Adrian Wong Da Boss Staff Member

    Yup, rice is not used as biofuel. But the fact still remains that without self-sufficiency in any crops, we remain at the mercy of price changes.

    Right now, Vietnam and Thailand have started restricting rice exports. This means the global supply of rice will drop, increasing price. Because we do not have enough supply of rice in the country, we have to pay more for imported rice, driving up the cost of living.

    With self-sufficiency in rice (or any other crops for that matter), we can at least choose to sell or store. Now, we have no choice but to pay for what we need. Of course, the issue bslee mentioned is not about rice per se but about the cost of daily necessities.

    Well, they have a larger population but it's still a matter of supply and demand. In China, many people are already earning more than we do. It depends on what they do, and the industry they are in. If there's a high demand with little supply, then the salary will rise to commensurate with the demand and supply.

    Unfortunately, we are not going up the supply chain. The stupid government still thinks we can survive by making our graduates "cheaper". So, they try to churn out thousands of unqualified graduates. But obviously, no one wants them... so we end up with thousands of jobless graduates.

    I'm not sure what system they use, but instead of encouraging rice cultivation, Bernas is currently trying to curb it in favour of more lucrative rice importation.

    The fixed cost is only one part of the equation. Like I mentioned above, if we are self-sufficient, we can decide whether to buy (if it's cheaper) or sell (if it's more expensive). Right now, we have no choice but to buy.

    Nah, look at China. They have even more people but they are still doing fine. Feeding the people is not about how many people there are, but rather about growing enough crops to feed them.

    Actually, that's Bernas' job. They should be blamed if rice cultivation drops. That's what they are supposed to do - encourage rice cultivation. What's the point of funding Bernas if all they do is import rice? We can leave that to businessmen. ;)

    No one is saying the price should be fixed. In fact, I think we must move to a free market model. This includes the price of oil. But it must come across the board, which includes removing spurious duties and taxes on vehicles.

    That's why I say Bernas should not be importing rice but encouraging rice cultivation. Bernas' job is NOT to import rice. Their job is to ensure self-sufficiency so that we will not have to resort to imported rice. It will also reduce the effect of global price changes on the price of local rice.
  6. Brian

    Brian Newbie

    I'm fine with food security as a reason, but you seem to be quoting price changes too, so, which one are you really advocating? Prices or security? Here's my stance: I support price rises, but I agree that we should do it for the sake of food security

    Thailand hasn't yet, thank goodness, but Egypt, Vietnam, China and India have (for India, not their basmati though).

    Your reasoning about self sufficiency is perfectly reasonable, but the thing is, this wouldn't have been a very good strategy in an era (actually about 10 years ago) when the price of rice was actually going down in real terms instead. Sure, for food security, it is good, but if I were an investor back then I wouldn't have invested in it. Same with the farmers. The kids saw that all their parents' work didn't account for much at all, and thus left for the cities where they could earn more instead.

    bslee has a valid complaint, but BN or no BN, food prices, the price of oil has gone up. We are kidding ourselves if we're going to continue subsidies, especially if oil's going to run out soon in the next 10-15 years. Subsidise all you want, but when the money tap stops working, we're going to see a very painful correction in our markets. Which is why I advocate a slow increase in the price of our daily necessities.

    I prefer a slow gradual increase over a sharp correction, the choice is really yours. And also the cash can be used to invest into items which actually return the investment. Yes, it's true that BN will probably take 10-20% or something outta it, but overall there is still a net improvement. Besides, with today's political climate we will get a more accountable government, with PR being a viable alternative to BN, so I really doubt that they'll do any of their old tricks, or make it as blatantly obvious as before [i know it remains to be seen in the next few years, but they're doing fine as of right now].

    Many people in Malaysia are also earning more than we do, it only depends on the size of their population and the percentage of the population. In that regard I think Malaysia is still ahead of China (feel free to correct me if you find any statistics showing otherwise, I'm making an assertion not based on statistics).

    Really, my point about China is this. What is China? It's simply the world's factory. Most of its economic miracle can be attributed to one simple thing: cheap, and plentiful amounts of workers, which are mostly migrant workers. That's their main source of their boom, and we've gone through that before.

    It doesn't have anything to do with supply and demand. Point is, when it comes to making stuff, China's bloody cheap. And that's why everyone's going into China to build factories and stuff. Same with Vietnam.

    I don't disagree with you about our government's failure to produce a good educated workforce, in fact, I agree with you on most of your points.

    Again, I don't know what Bernas is for, and what crimes they've committed, so I've no comments here :)

    The point is, while it looks oh so obvious now, there was a time when supplies were plentiful and the prices were low.

    It's easy to say that we have the choice to do this and that, but the problem is this:
    Assume we have excess food production. Prices are low as usual. We have a nice store of rice and it's increasing every month, with no end in sight when it comes to the increase, and no one ever expects the price of rice to increase. Storage costs increase, we sell rice at a very small profit, which provides minimal returns compared to say, industry, factories, banking sector or something else. Is it really a good investment?

    With hindsight we could've said its obvious, but no one spotted it for many years.

    China might be self sustaining, but would you want to be told that your job is to farm and you're not allowed to pursue something else? I can't agree with that, food security or not.

    Again, I don't know what Bernas' role is, so I reserve comment.

    Personally, I'm a fan of taxes on vehicles, yes those massive 200% taxes on imported cars and stuff, though I wish they would be fair and apply it not as a form of protectionism for the local carmakers, but instead use it as a form of a progressive tax. You want a nice car? You pay extra into government's coffers. But I'm digressing....

    The inherent problem, as it appears to me, is that self sufficiency in the production of rice is one thing for food security. Price rises are another. Because it involves implying that we will fix the price with local farmers so that we can get cheap rice. And that's something I'm extremely uncomfortable about. I don't want to trample on other people so that I can get something with little cost.

    Really, I want to go back to my original assertion. The rise in prices has a fundamental factor. Increased demand due to increasing prosperity in China and India, and that includes the price of oil too. No, we're not going to see starvation, we'll just have a lag of a few years where we'll see production of foodstuffs increase to compensate for the demand as farming becomes an attractive option again. It will hurt for all of us, but I think it's a price I'm willing to pay for if it means my fellow humans in China and India can have a better standard of life.

    It appears to me that people want the best of both worlds. To be happy that others are also doing well, and yet want to have prices to be low. To an extent, this is incompatible. The choice is really yours to be honest. I've made mine.
  7. Adrian Wong

    Adrian Wong Da Boss Staff Member

    They are not exclusive, food security and food price. In fact, they are rather closely-related. You cannot change one without changing the other.

    Food price can change up or down. It doesn't necessarily have to go up. But food security (as in food sufficiency) determines how affected we are by global changes in food prices.

    Like I mentioned earlier, if we are self-sufficient in food, then we have the freedom to play the global market for our own benefit. If food prices go up, we can export. If it drops, we can always "store" the excess for the future. Either way, food prices would stay pretty stable.

    But if we NEED to import food, then we have no choice but to pay the higher costs when food prices go up. In other words, food security affects the price of our food.

    Actually, it's hard to be sure if Thailand has already restricted rice exports or not. They are denying it, but even the IHT reported that...

    Vietnam, the world's second-largest rice exporter after Thailand, announced Friday that it would reduce rice exports by 22 percent in the hope of curbing the rapidly accelerating inflation rates in the country.
    Vietnam and India move to limit rice exports - International Herald Tribune

    Oh, self sufficiency does not mean we should ignore free market forces, or not help our farmers. Rice imports have always been regulated by Bernas. It is their job to ensure that local farmers are not unduly affected by cheap rice imports.

    But Bernas' job does not stop there. In fact, restricting imports of rice should have been only a temporary measure at most (like NEP). What they should have done is increase the productivity of the local farmers so that they can achieve the same kind of competitiveness as farmers from Thailand, etc.

    If the Thais can do it, why can't we? Of course, Bernas did not do what they were supposed to do at all. ;)

    Actually, the price of oil has gone up for two reasons - increased demand AND the falling US dollar. Don't forget, most of the oil is traded in US dollars. Everytime the dollar drops, oil "appears" to be more expensive even though the demand-supply and actual value may remain the same.

    To cancel that effect, we must convert the cost of oil to the local currency because in most cases, other currencies are gaining at the US dollar's expense. Even when the price of oil goes over $100 a barrel, it does not necessarily mean the cost to non-US buyers would actually increase.

    For example, the Malaysian Ringgit has gone up from RM 3.80 for each US dollar to RM 3.10, an increase of 22.58%. Therefore, if the price of oil goes up by 22.58% since Malaysia released the peg on the Ringgit, it would still be par value for us.

    Again, I'm not for the oil subsidy. I see it as encouraging waste. But if the government is corrupt and merely leeching away our petrol-derived revenue for their own means, then I'm for the retention of petrol subsidy. No matter what, the oil belongs to the people. Revenue generated from its sale MUST be used for the good of the people, not for BN and their few well-connected cronies.

    There can be an immediate removal of the subsidy but only if the government removes or reduces taxes on cars. Honestly though, I don't trust the BN government to do what's right. It's pretty obvious that most of them are in it for the opportunity to steal money from the government coffers. Why do you think so many BN people were pissed when they were not selected to run for elections?

    Frankly speaking, the BN government is no more accountable than they were in the past. Yes, the opposition is stronger but most laws are still passed by a simple majority. The opposition can rise some hue and cry but generally, it will be business as usual for BN. In fact, I see some of them rushing to steal as much as they can from the cookie jar before the end (of BN or the petrol reserves).

    IMHO, no matter whether you are in China or Malaysia or India, it really depends on where you are working, what you do and the demand for your skills. But one thing is for sure... while the average wage for a white-collar employee in China has growned by leaps and bounds in the last 10 years, the average wage here has remained stagnant.

    Ahh.. That's no longer true. Even China is astute to know that. Which is why they have been active in developing their own industries. They know that eventually their cost will rise, which it has. The rampant inflation over there is already evidence of the rapid rise in cost.

    Unfortunately, we have not done one bit about this. Oh yeah, we have all kinds of stupid programmes from the government like K-Economy. But like always, they are merely mechanisms to help BNputras and their cronies to steal money from the government coffers. What world-renown company have we managed to create? Even Singapore has Creative Labs. We have nothing.

    Oh, it's always about supply and demand. :mrgreen:

    China used to be cheap, but even they know that Vietnam is cheaper because the high demand in China has led to a massive increase in cost. Why do you think some companies are moving to Vietnam instead?

    It's always easy to see things in hindsight, of course. But we have to prepare for the worst, not the best. That includes food security AND price. Like it or not, food price affects our economy. Everytime food cost increases, it reduces our competitiveness, especially when we only have dubious advantage of "low cost" to rely on.

    When we assume, we make an ass out of you and me. Hehe... It's true.

    Look at the US. In the 70s, they assumed that oil will always be cheap. Then came the '73-'74 oil embargo and they suffered a massive downturn in the economy. Now, they maintain a massive Strategic Petroleum Reserve at great cost.

    Some things just cannot be measured by their immediate returns. You have to take the long view. While ensuring food sufficiency in good times may not pay well for the farmers, the government can mitigate that by buying up a portion to hoard and maintain a certain market price. Eventually, this "food reserve" may help prevent supply problems from affecting food prices too drastically.

    Think of it as insurance. You may not need it but you buy it anyway because you just never know what will happen in the future.

    Huh? Who's forcing you to farm? This is about encouraging people to farm. With the right policies, farming can be very attractive. There is NO NEED to force people to farm.

    One of the mistakes we made, for example, is to restrict automation so that more people can be employed. That's all nice for government reports (low unemployment rates) but it's bad for profit and productivity. This applies to farming as well as to our industries.

    Heh.. Well, taxation on cars is a separate issue altogether. IMHO, taxes should be decided by more environmental reasons, to encourage people to adopt more environmentally-friendly vehicles. But it's a different issue altogether. :)

    Nope. They are always intertwined. There should not be any need to fix the price of rice. The government can simply control the price in a free market economy by buying up excess, or selling stored food when prices are up.

    BTW, who's saying anything about artificially reducing the price of rice? This is what Bernas has been doing though, by importing cheap rice from Thailand to undercut the local farmers.

    Self sufficiency means you can PREVENT or REDUCE unnecessary rises in local food prices due to global changes. It doesn't mean squeezing our farmers just to make food cheaper. For cheaper food, we need to improve productivity, not fix prices. ;)

    Actually, demand for food in general does not rise with prosperity. Yeah, prosperity will increase demand for luxury food items, but not basic necessities. No matter how rich you are, there's only so much you can eat! :D

    The cost of food is affected by fuel prices, of course... but like I said, you have to measure it against the local cost, not on the cost of each barrel in USD.

    In any case, this is a free market economy. The high price of oil will drive up prices of goods. This will eventually reduce the demand. With the US economy in trouble, demand from the US will drop too. And when all that demand drops, so does the demand for oil... reducing its cost. In other words, it will self-correct over time.

    Hehe.. You can't blame people for that la.

    But one thing is for sure, coming back to the topic, the problems we are facing in this country cannot be so easily thrown upon the shoulders of faceless and nameless foreigners. Frankly, the BN government has played a VERY large role in this debacle.

    In the last 10 years, the BN government has greatly reduced our competitiveness and squandered most of our natural resources for the benefit of a few. Can you blame the people for blaming them for the misfortunes that have happened so far? :mrgreen:
  8. Brian

    Brian Newbie

    But then you're not advocating for the free market anymore, but instead you're advocating for more government intervention. Food security is for stability in food prices locally, yes, but that implies government controlling food prices, else our farmers would be much happier selling it overseas where they get a better price overseas.

    Now there, I've mentioned all those countries above, and thailand's making denials, nothing said about thailand curbing exports, no need to raise the spectre of thailand doing so.

    I know, and I've said so in another thread in this forum, but it has also increased in real terms relative to the ringgit because Bank Negara has been trying to control the rate of increase of the ringgit. [60USD -> 100USD = approx 50-60% rise]. That's still an approx 30% rise in real terms.

    Look, the government is corrupt. But for all the large sums thrown about, it's still a relatively small percentage. I'm still going to argue based on one fact: investment gives returns, subsidies don't. I'm no fan of BN, but having a viable alternative to BN will keep them on their toes. They know if they continue their practices, they'll get kicked out in 2013. They're not stupid. Which is why I've always advocated a strong Opposition in Malaysia.

    And no, I hope BN will have control of the Federal Government till 2013. The PR guys need to learn the ropes at government, too many of them have been 'Opposition' for so long, and have no experience in the reins of government. I rather a slow gradual change.

    Of course they do, and of course Malaysia sucks in comparison. But China's still cheap compared to most countries for one reason: the numbers of workers. I don't know the population in Vietnam, but I wager that China probably has 10 Vietnams worth of population. And assuming the poverty rate in China, I can see why China's still competitive vs Vietnam in terms of cheap workers, and that'll last for quite a while. Look, you might want to discredit the assuming part, but surely a poverty rate of 10% in China is way too low? And I wager that it has 1 or more vietnams in terms of population.

    If you were a white collar worker in Malaysia during its boom periods (rapid industrialisation), you would have benefited to the same degree. We are at another phase now, and we're simply the products of the boom period, a large middle class and a slower growing economy. Surely you can't say that US and UK workers are getting small increases in wages compared to us because their economy grows much more slowly than us? It's not always the rate of increase, it's the phase we're at that matters.

    Malaysia has its own equivalent of the Strategic Petroleum Reserve for rice to combat shortages. The point is: They're simply short term buffers. You simply can't store rice for too long.

    I've got a question. Is it because Thai farmers are much more competitive than our farmers, or is it because Bernas wants to kill our country for some reason or another and reduce prices from Thai farmers further so that our farmers will all die? I doubt that scenario. Either way, if Bernas is truly for what you say, then it points to their failure at making our farmers more competitive.

    China. Communist state. Central planning. Government dictates what you do, free market doesn't come into it.

    No, it will. Increased prosperity means more meat, which requires more resources and demand increases, and we get higher prices. Increased prosperity means people who previously scraped day by day for food have enough now to fill their stomachs, and that's a big difference. Also, there's waste. Poverty ensures that they eat each and every grain of rice, but as you get into middle class syndrome, you don't do that any more when you're full, and waste occurs. Multiply it by millions of people, and you get a large surge in demand.

    If the US economy goes into a recession, naturally prices will go down, but it's by no means a self-correction. A correction occurs when prices are inflated to be too high. Sure, we have speculation and stuff driving the price of oil up, but this increase is more fundamental. China and India use a lot of oil.

    Mahathir was dumb, and I think we were just a victim of a correction in the value of our ringgit. Soros did do it, but capitalism just gave him the incentive to correct the value of our ringgit.

    But what you're doing is more or less the same: It's all Bernas' fault, except that it's local now. It's not, and even with a massive stock, it will only be a short-term buffer masking a much more long term trend as of right now.

    I've never been a fan of BN. But I'm not going to jump on the bandwagon blaming them for the rising costs of living. It's global, not local. And no, insulating us from it is not the solution, because it's too short term a view to take.
  9. Adrian Wong

    Adrian Wong Da Boss Staff Member

    It is a free market. What you call intervention is mere semantics. Just like any other businessman, the government can easily influence the market by buying or selling.

    As far as selling overseas is concerned, that's up to the farmers, isn't it? I don't think they care who they sell to (government or overseas clients), as long as it's the best price they can get.

    The way I see it, government should only intervene when prices rise drastically. That means hoarding food when times are good and selling them to the market when times are bad. This is no different from what the other countries like Vietnam or India are doing now.

    Actually, that was my point. Thailand has apparently already started curbing exports, according to IHT.

    Actually, the Ringgit is controlled by a basket of different currencies. So, it's not so likely to rise or drop that fast.

    Anyway, the point is not that the price of oil is not rising. It IS rising and that's a fact. But it would not be accurate to merely blame it on increased demand by China / India. :)

    I don't understand what you mean about "it's still a relatively small percentage". What are you referring to? Subsidy?

    Anyway, I don't think it's quite that simple. Things have changed quite drastically for the Opposition but they are still the Opposition. Plus, I don't share your optimism of the intelligence of our politicians. Time and time again, they have shown us just how stupid they can be. :haha: :haha: :mrgreen:

    Probably a prudent thing to do... but some will say that if there's no drastic change in the way the country is run, we will be dead ducks when the oil runs out.

    Ahhh.. Not so la. Of course, not all of China is rich... but those in the industralized areas are damn rich la.. and they are not just getting rich by working at factories. So many Chinese entrepreneurs are making big bucks developing business connections overseas.

    If labour cost is the only factor, then there are much poorer countries in Afrika and Asia where you can employ people for much less money. No, China now offers more than "cheap labour". They have a large pool of well-educated and very industrious people. The same goes for India, which also has the advantage that their large workforce is English-educated.

    Err.. I don't know how you got here but I really don't know what has that got to do with the topic (cost of living) that bslee brought up.

    Actually you can if you want to. Even the Americans store their grains.

    As I understand it, the top dogs in Bernas are more interested in importing rice from Thailand as that's where they can get kickbacks because Bernas controls rice imports in Malaysia. Let me save you the trouble. Here's a link you should read for some background material - FAC News

    LOL! Don't let that fool you. Take a trip to China. You will see that they are FAR from being Communist. :mrgreen:

    BTW, a Communist government does not dictate what you do. Here's a definition of communism - "a socioeconomic structure that promotes the establishment of a classless, stateless society based on common ownership of the means of production.". There's no mention of dictatorship or authoritarian rule.

    Ahh.. You are assuming once again that more prosperous people will want to eat more meat. I have not seen any data for or against such an assumption but if you are right, then why are prices of grains and vegetables rising as well? :)

    But I agree that poverty means you eat less. I would just like to say that even with a sudden increase in appetite and waste, there's only so much food one can eat and waste. IMHO, the problem is far more than just increased demand. Try googling online about biofuel and you will see that many NGOs are blaming it for increasing food prices. That's just ONE aspect.

    Of course, China and India uses a lot of oil. They have large populations like the US and Russia. But this is really irrelevant. Price changes are affected by a lot of things and even my prediction is an oversimplification of the theoretical self-correcting ability of a free market economy. If anyone can accurately predict the rise or fall of the value of any commodity in the market, he/she will be a millionaire overnight.

    Correction? I was there when the Ringgit fell in value. Trust me, that was no correction. It was way beyond mere correction. It was a run on the Ringgit.

    The true value of the Ringgit was definitely higher than RM 3.80 to the US dollar. Why do you think there has been so much pressure in recent years for Malaysia (and other countries like China) to drop their pegs?

    Ahh.. That's the thing. I never said that the hoarding is anything more than a temporary buffer. The key is self-sufficiency, or at least as much as possible. Self-sufficiency and a buffer will help us keep prices stable.

    Just look at what Vietnam is doing. They are roughly the model I'm referring to. They have more than enough rice so they can export it. But if supply of rice in the country drops (due to pest/weather/etc.) or if inflation is running too high, then they can cut back on exports to stabilize the prices.

    Again, the point I'm trying to make is the government should not try to CONTROL prices, which is what they have been trying to do with subsidies. The most they should do is promote food sufficiency and put in place mechanisms to STABLIZE food prices so that in the event of a major shift in global prices, we can gradually adapt to it.

    Hehe.. You are assuming I'm blaming BN for all our woes. No. The fact of the matter is high inflation is hitting most countries around the world. No one is denying that. But that does NOT absolve the BN government for failing to protect us against it.

    Let me be very clear and repeat that when I say protect us, it does not mean the typical BN way of coddling the people (e.g. subsidies, NEP, lowering of uni grades, etc.) The only way to protect the country against inflation and global woes is to attain a degree of self-sufficiency.

    For a country that has petroleum reserves and by all measures, should be doing really well, we have done very badly. Even if we are hit by inflation, it's nothing if our spending power increases FASTER than inflation. But look at where we are - a country with large middle and lower economic classes that are less capable of competing on a global scale.

    So if you ask me, no, BN cannot be blamed for all our woes. But BN MUST be blamed for bringing us to the edge of the precipice. Don't forget - global issues affect every country in the world. If we cannot handle it, we should not just blame "global issues". We need to take a good, hard look at ourselves. Just my 2 sen. :mrgreen:
  10. Brian

    Brian Newbie

    That's our views on government then. My view is of a small government, it should only regulate to ensure that the market functions properly and should never be a player in markets. Semantics? I personally think it's our own views on what government should be instead.

    It is accurate. I said the rise was due to increased demand in China/India. I didn't muddle it and say we've had a 100% rise in the last x years because of increased demand in China/India. I only mentioned the rise, and not the magnitude of it. And in that, it's increased demand from China/India, which we agree upon.

    Percentage of cash meant for projects gone to some cronies hands. They're certainly stealing from us, but they're not robbing us dry either.

    Well, they might be dumb, but we're stupider then if they can steal so much from us :) We did vote them in you know... :)

    But you've ignored the fact that India lacks good infrastructure, and that democracy sometimes means that progress is much slower, with planning permissions and stuff, while in a single party state you get a lot faster progress, that many African countries don't have stable governments and infrastructure. They're costs that you've ignored.

    But we have tons of rich Malaysians too, through industrialisation, which is more or less the same isn't it? But when you consider it in terms of percentages, it's minute. I reckon it's the same with China.

    It was a direct rebuttal of your point that wages are rising faster for Chinese workers than Malaysian workers.

    But you assume that there's no cost in storing grains. Even if you justify that cost, no single country will ever be able to store enough grains to last its population indefinitely, or at least for years on end.

    I've only seen this. They're stealing cash from the poor farmers and stuff, but what about the competitiveness of our own farmers? This points to Bernas as a failure to help our own farmers modernise. Surely Thailand isn't selling their rice at a loss.

    But you're falling into your own trap of semantics here. Here's my question: Does China have their own production quotas for rice production? How do they do it without subsidies? No, the answer isn't the free market, and so I'll let you decide what the answer is. [there's also a historical element in it]

    But you're exaggerating what I'm saying about China and communism. China's certainly moved on to capitalism, but by no means is it a free market, in fact it's far from it.

    Increased demand for grains and vegetables too. Grains particularly because of biofuels and increasing prosperity.

    BBC NEWS | Magazine | China drinks its milk
    Michael Gerson - A Prosperity Dilemma - washingtonpost.com

    Nope, see this: BBC News | ASIA-PACIFIC | S Koreans told to stop wasting food
    BBC NEWS | UK | Britons throw away third of food

    I really don't think it's a cultural thing, it happens everywhere really to me.

    Biofuels are an aspect, but what's your reason then for the increase in price for vegetables, given that most of them aren't used for biofuels at all?

    I disagree, I think our farmers should be able to sell to the highest bidder in the market(and I mean global), and if our government wants to help stabilise prices using some form of subsidy, they should buy it at the global price and then subsidise it. It shouldn't be a case of forcing the farmer to sell to the government in the name of food security.

    No, it's an observation. Many Malaysians are pissed that they voted BN in in 2004, and that these things are popping up now, and then there's a significant swing in the mood to the other way instead, blaming BN not for everything, but more than their fair share of what they're responsible for. You might argue that your stance is fair and responsible for BN, but from my point of view, no it isn't. We may never agree on it again, but well least we agree to disagree :)
  11. Adrian Wong

    Adrian Wong Da Boss Staff Member

    It is semantics. :mrgreen: And I will tell you why.

    You say "regulate" but doesn't regulating the market mean interfering with the market forces? It's the same thing really, just how you phrase it.

    The difference I see is that when you regulate, you do so with a higher authority (others cannot object) while it is a little different if you participate on an equal footing.

    You can say that both can be considered as intervention, but frankly speaking, anyone who participates in the purchase or sale of anything (including you and me) directly influence or intervene in the market place. It's a fact.

    That's the point I'm trying to make. It's not just about increased demand for food in China or India. Demand for food can only go up so much at one time. There MUST be a sudden drop in food supply for such a crisis to happen.

    Look at the news today. Cost of rice went up in Thailand by 50% in the last one month. Does that mean that suddenly, there are 50% more consumers of Thai rice?

    If you read further, you will find out that the rice crisis is happening because of unforeseen problems like floods in Bangladesh, pests in Vietnam and bad weather in China. Compound that with increased demand, export restrictions, panic hoarding, etc... of course the price will rise.

    In other words, problems like this happen as a result of a few factors coming into play. Nothing ever happens merely because of one issue.

    How do you know that they have not done their best in robbing us blind? LOL! Do you think that they would leave some money for us, out of the goodness of their hearts? :D

    DYKT : Our government is the only one in the world that insists that companies must PREDICT their future profits and pay their taxes BEFORE the start of the financial year?

    DYKT : Companies who do not do a good job of predicting their profits and paying the appropriate taxes are fined?

    You have to ask yourself why? Obviously, our government is now strapped for cash. Our government is supposed to be rich with oil money. In the past, the government had never needed to do this. Why do they need to do this now?

    If you actually believe they are not robbing us dry... :wall: :wall:

    Hehe... I never voted for them. Of course, those who voted for them are stupid (or benefit from the corruption). :mrgreen:

    Hehe.. You forgot. I lived in India and it wasn't the rich part of India. ;)

    Anyway, this is a pointless argument cause when I quote China, you say that it is a communist country and therefore they force people to farm. But when I quote India, you say that as a democracy, progress is much slower. LOL! It's literally a "Die if I do, die if I don't" situation. :haha: :haha: :haha:

    Well, it's hardly a rebuttal because you merely reckoned it's the same. I don't have the numbers with me right now, but I did read that the average wage of a white collar worker in Shanghai (for example) is much higher than that of a white collar worker in KL.

    You can do a little Googling for average wages and see if that's true. If it's wrong, then you got your rebuttal. :thumb:

    LOL!! No one sane would store years and years of food la... Even the US Strategic Petroleum Reserves has less than 2 months of reserves.

    Again and again, I have been repeating that such a buffer can only be temporary. It has to work hand-in-hand with food sufficiency to ensure some stability or at least reduce the effect of any global food crisis.

    Obviously, they are making money. That's why farming can pay well, if you do it right. It's just like any other occupation in the world. If you are good at what you do, you will do well.

    No, it's not about them stealing cash. It's about them not doing what they are supposed to do - encourage rice cultivation and help the farmers improve their productivity. Instead, BERNAS is out to make a quick buck and the local farmers are their competitors.

    How can it be semantics? What China does now is no longer the same as what they used to preach. They are no longer the communists that they wanted to be in the '50s.

    Err.. Do you have anything to support your assertion that China forces its people to farm? Or that they have some sort of production quota for each farm to fulfill or something? Cause I have not read or seen anything like that. When I was over there, what they were doing sure looked like free enterprise to me.

    Well, they are officially still communists, but we all know differently. Hehe... :D

    Anyway, that's quite a contradiction isn't it... if you say that they are now capitalists but do not support a free market. :think:

    Yup, no doubt there's increased demand... but again, this is not a one-dimensional problem.

    When it comes to increased demand due to prosperity or population growth, people can see it coming from a mile away. Countries can prepare for it by increasing food output, etc. In this case though, there's a sudden and unexpected reduction of food production. There's also the sudden surge of interest in biofuels after the rise in oil prices, etc....

    LOL!! I'm not saying rich people don't waste food. But it would be really shallow to assume that this is the only issue at hand.

    If you think it's matter of waste, then let me throw in the factor of population decimation in places like Iraq, Afghanistan, Myanmar, North Korea, etc. What about the 2006 Tsunami and numerous earthquakes after that which wiped out so many people in Indonesia and elsewhere?

    If we follow your logic, then food prices should drop because of the lower demand, right? Of course not, because demand is not the only factor in the equation. This is probably the third time I'm repeating this... but again, there are many factors when you talk about food prices but to blame it on a single factor - increased demand by China and India would be really unfair to both of them. Hehe... :mrgreen:

    My reason? I don't have ONE reason because I don't trade in vegetables but I can come up with a bunch of reasons, which are more or less related because in life, everything's related one way or another.

    LOL!! Didn't I just say that earlier (see above)? Again, I will repeat that the government should participate as an EQUAL buyer/seller. You are the one (see above again) who thinks the government should "regulate" the market. :mrgreen:

    By participating as an ordinary business interest, the government can buy or sell food to help stabilize the price without resorting to "regulating" the market. Of course, their role will not be to make money but to ensure that even in the event there's a glut or run on food, they can help stabilize the market so that there's a smooth transition to a higher or lower price point.

    Actually, I think the people have been rather slow at blaming BN. Do you really think BN only cheated the people's money in the last 5-10 years? No, it has been happening for a long time now. For certain, the old man, Dr. M has dirty hands. Oh yeah...

    So why didn't the people vote Dr. M out? Because Mahathir understood what Nikita Khrushchev meant when he said that "When you are skinning your customers, you should leave some skin on to heal, so that you can skin them again." :mrgreen:

    Mahathir was smart. He knew that if he did not leave a little for the people, he will eventually get kicked out. Plus, by leaving "some skin" to heal, he can keep skinning "his customers" for many years to come. :mrgreen:

    Under Badawi's weak rule though, UMNO warlords were able to run rampant looting government coffers for whatever they want. It is during his "administration" or lack thereof that our government has started to insist that companies must predict and pay their taxes in advance.

    So if you ask me, I do believe that we have not yet given BN their fair share of blame. They still have much to answer for. Until today, they are still hiding behind the lies and spin generated by the local media.

    Just look at what the government has done recently? Asked the village heads to quit en masse and cutting off all tourism-related MOUs with Opposition-controlled states. Are we done blaming BN yet? Hell, no! :mrgreen:

    But I agree with what you said - the blame should be placed where it deserves to be. In the case of the increased cost of living that bslee mentioned, I have to say that BN should be blamed partially for it. Every country in the world is affected by it but unfortunately, we are totally unprepared for it.

    The government's only recourse is to subsidize our food... and that's stupid because they are using OUR money to pull wool over our eyes so that everything looks hunky-dory. With a good government, there will be NO need for subsidies. Food prices can go up or down but there will be proper mechanisms in place to ensure that there won't be a massive change in price like what we are seeing in Thailand, etc.
    Last edited: Apr 11, 2008
  12. Brian

    Brian Newbie

    The regulation i'm referring to is one where the government is only there to ensure a proper market functions, and we have competition. That involves things like breaking up monopolies. They DO NOT participate in the market. I don't see where the semantics are to be honest.

    I view it as the market not having anticipated the increase in demand, and the resulting tightness in supplies lead to a very inelastic market, where small events lead to massive increases in price, which is what we've seen with crude oil. The large increase in the price of oil hasn't been pure demand either, it's also a tightness of supply in the market. You may argue that it's another factor in the price of oil, but the tightness of supply is caused by the demand itself.

    We both agree that there's a tight supply now, but I'm wagering that it's fundamentally more demand more than problems in Vietnam or anything else (note, they still managed to produce more rice than last year even with the pest problems).

    I give it to you that it gives you an added perspective. But it does not make your view any more valid than mine unless you can back it up with facts about the infrastructure vs China using your place in India or the places you visited.

    Well, explain this then: for over 50 years, India's been a democracy, has had an English-based education system, and yet it's only really rising right now. The Chinese, only really embraced capitalism in the 80's, and they're certainly ahead of India now. It's a gross simplification, but it's certainly where we are today.

    If you can give me a satisfactory answer for that, I'll accept it.

    And no, I'm not implying that China are pure communists, but I'm saying they're not close to free marketeers either. E.g. price controls on the price of fuel, which led to fuel shortages in China.

    Fuel shortages spread into central China - International Herald Tribune

    While I did mention that they had a legacy of communism and central planning, I did not say that they forced people to farm. They certainly do have their quotas to ensure self sufficiency though. I do admit that I was too ambiguous about it though, and I apologise for that.

    China's move to ensure domestic grain supply benefits world, analyst says_English_Xinhua

    I don't know if this is the case with Malaysia, but this is certainly not having a free market to incentivise farmers. Not being able to sell at (perhaps higher prices) the global market.

    I disagree, see price controls (they set the price at which they buy stuff at). They're still transitioning, or maybe not yet. I personally don't know.

    I really can't agree with you on this. Hindsight is always perfect, and the same argument could've been used for crude oil, the subprime crisis, etc. etc.

    I'm not saying that other factors have not played a role, rather I'm advocating the fact that the principal reason behind the increase is simply increased demand from more prosperity in China and India, and that we should welcome it.

    No, it was a rebuttal to the thing you said earlier. People can only waste so much food. Well, they seem to be able to waste a lot more than even I thought myself.

    So let me make this clear: You're supporting the following. Government should be a buffer between the global and local market, and subsidise the cost of rice locally after buying rice at global market prices.

    And no, I don't support governments as business entities for one reason alone: nearly unlimited cash. But that's a personal choice I guess.

    Fine, I made a mistake, your reasons then. :)

    Nope, you're assuming that (I mean 5-10 years). BN's certainly has had more than its fair share of bailouts in Mahathir's era, Perwaja, Ku Li's Bank Bumi's bailout 20-25 years ago

    I cannot agree on that. I agree that Bernas has failed in their main objective, but I cannot support the assertion that they're competing with the local farmers. If a local farmer, who is uncompetitive, decides that he wants to sell his rice to Bernas at a higher price than Thai rice, I wouldn't support him. If Bernas doesn't buy the rice from such a farmer, I wouldn't blame them either, it's not a matter of competing against them, but it's a matter of making more profits, which Bernas is supposed to do as a private entity.

    However, Bernas has failed in their objective to make local farmers more productive and competitive in the global market and I think we both agree on that.

    But then again, we're just on different sides of the fence I guess, we both blame Bernas for it, but (I think) you're advocating that Bernas should still support local farmers even if their asking price for their rice is higher than what Thai rice is being sold at in the name of food security. Is that what you're saying? [It goes without saying that Bernas would help that farmer be more competitive on the way, and then he can reduce his prices further until it's competitive with Thai rice, since that's a benchmark we've chosen]

    (sorry, my quotes are all about the place)
    Last edited: Apr 11, 2008
  13. peaz

    peaz ARP Webmaster Staff Member

    Whoa... heated and nice discussions between Brian and Adrian :D

    Anyways, to be honest, I don't think there's any one model that works well for anyone. It's an ever dynamic economy and the govenment just have to adapt in every way possible to make it work best for it's people.

    Yes, corruption and cronyism will always exist. Name me a country which is absolutely 0% clean and I'll buy you a good lunch. Seriously, a non inteferring government simply cannot exist. It's oxymoronic no matter how you look at it.

    As for us, if we can afford it since we are so cash rich thanks to our oil, why not implement subsidies and price controls where we can? Or why not just offload the burden of taxes from the people? And mind you, when you take a look at the amount of oil we sell factored by our total population we are actually extremely rich. Unfortunately, many of these oil wells are kept secret and only known to a few select group. Even the oil companies have to keep mum about oil well discoveries. Interesting isn't it how the country is being run today.

    My take is this, if Malaysia is doing so well over the past few years, why then am I still feeling the pinch even when I'm beginning to earn a nice salary. I'm not trying to boast about it here but simply jsut making a point. I'm today earning a package that's above the average salary of a manager. yes. let's just say the amount of digits is the same as the number of fingers (thumb included) on your hands.

    Yet, even when I want to buy a car costing more than 50K i think more than 10 times. Yes of course my living standards increase and all that crap. But heck, why do I still feel that there's just so many things that I've to pay the government, YET still need to take care of all the darn basics in life. like health care insurance and all those. Aren't the taxes paying for anything at all???

    And yet, with all this happening, you just wonder who are those who are buying those ferarris, touregs, cayenes on the road.
  14. Brian

    Brian Newbie

    I can't peaz, because of the following reason:

    Subsidies make us uncompetitive - we are lulled into a false sense of being competitive. Why is this so? Imagine some company X running a factory. It can pay its workers lower wages because they have subsidies lowering their cost of living, and thus gives a false impression of them being competitive. But in the case of oil - this subsidy doesn't last forever, and when it runs out, it'll hurt us very badly.

    I'm fine with subsidies, but only if they're temporary, and that they're sustainable. Using oil revenues isn't a sustainable one. Using some form of progressive taxation system is sustainable, which is why I'm a fan of progressive taxation, tax the rich to help the poor.

    Subsidies also divert cash that can be used to invest into the economy into things like infrastructure, and also indirectly lead to higher taxes.

    I do agree that it will have to lie somewhere in between (governments), but I advocate a smaller one because it means less taxes and relies more on people's free enterprise instead.

    We all hate getting taxed, but taxes are relatively low in Malaysia relative to countries which have social healthcare systems
  15. peaz

    peaz ARP Webmaster Staff Member

    one should read the petronas annual report to understand how rich our country actually is. and how it's been nicely organised so that only the few elite benefits from it.
  16. peaz

    peaz ARP Webmaster Staff Member

    well, even if it's not via subsidy.. the money should be well spent. NOT to fund some stupid corridors.
  17. Adrian Wong

    Adrian Wong Da Boss Staff Member

    LOL!! I now dread this thread. Not because I don't like discussing this with it. It's pretty cool, really. But it sure takes up a LOT of time! :haha: :haha:

    Plus, it's getting darn confusing because our forums only allows single quotes. Maybe we should allow at least double-quoting.... :think:

    Anyway... Here goes my take. LOL!!! :haha:

    Hmm.. Proper market functions? In a free market system, what role does the government have? None. So you cannot have a truly free market economy if you want to government to "watch" over it. That's a form of interference. That's why I say both what we suggested involves some kind of government intervention. That's what I meant by semantics.

    Anyway, there is nothing wrong for governments to compete with businesses on a EQUAL footing. Canada did something similar in the past when the government created their own insurance company. Instead of undercutting the other insurance companies, their competition improved the insurance industry and ensured that Canadians received fair rates for their insurance.

    IMHO, free market economy does not preclude the government from participating in it. As long as the said GLC operates independently and on a level playing field with their competitors, what's wrong. It is a free and OPEN market, right? :)

    That's just your POV. The fact of the matter is that the market did anticipate the increase in demand. Heck, market pundits have been predicting increases in fuel and food prices for a long time now. Like I said, you can see this coming from a mile away.

    However, while they may have seen it coming for some time now, it takes time to crank things up. You can't plant more rice/wheat/corn immediately even if you wanted to. Neither can you force your cows and pigs to breed more offsprings right away. Like love, it takes time to develop. Hehe...

    The trouble is while we have seen this coming... we were also hit by unexpected disasters (as explained earlier). Hence, the sudden shift from a growing problem to a sudden crisis.

    Of course! I agree. After all, I have been saying all along that increased demand alone cannot account for the rise in fuel and food prices.

    No need to wager. It's happening right now. Check the news. Food supply shortages everywhere. There are even riots now. It's not like they suddenly developed increased appetite for food. It's just that there's a lack of food on the open market.

    There's really no need to. Would it change anything if I prove that China is just as much of a capitalist country as India, if not more? Not really, because it has no relevance on the topic at hand - rise in food prices. I think we have more than enough to discuss without going off into another topic. :mrgreen:

    LOL! Let me give you an analogy. China = Singapore. Malaysia = India. I think it's pretty much self-explanatory.

    India is really just like us. Loads of resources, many good people. But corruption and bad policy ensured that most of the population remained poor (at the expense of a small super-rich minority) with poor development.

    China's like Singapore. They abhor corruption. In China, they even shoot you for corruption. Can't beat that, right? You do not have to be communist to push for good development. If what you suggest is correct, then heck, the USSR should have won the Cold War, no?

    Huh? Price controls means they do not practice free market? Heck, isn't that what OUR government is doing? We have price controls on all kinds of food items and let's not forget the price control on fuel as well. Does that make us communists? :mrgreen:

    Many countries control prices on certain critical food items. It's a natural thing to do if they want to ensure stability. Heck, I still remember the Indians protesting and rioting when the price of onions went up. When the government intervened to reduce the price, I don't think that made them communists. ;)

    Honestly, I don't think they actually enforce any kind of quotas. I would love to see some kind of report on that. Haven't read anything like that yet.

    But your link... on China's move to ensure domestic grain supply. That's what every food exporting country in the world is doing now, including Vietnam, India, etc. It's self-preservation. Hehe..

    Malaysia? We are not even in the same league! :D

    Don't forget, only countries with EXCESS food to export can afford to cut down on food exports. What food do we export? Heck, we are a net IMPORTER of critical food stuff like rice. We are at the mercy of those countries.

    Trust me. The farmers in China are not complaining. These governments only act to restrict export when the prices are too HIGH domestically. That means the farmers are already making a lot of money selling domestically.

    Why should the governments let their own citizens suffer even more when these farmers have a national duty to feed their countrymen first. Heck, it's not like they are not making good money from the higher prices.

    Price controls are everywhere. What do you think is going on in THIS country? The prices of most food items in Malaysia are controlled by the government. Heck, we also control the price of other things like steel, cement, etc. If price control = communism, then we are the world's no. 1 communists, Comrade! :mrgreen:

    Oh, hindsight is always perfect which is why we can now see that the oil and food crises are not due merely to increased demand. There has been increased demand since China went into a boom so many years ago. The increase did not just start a few months ago. It was there for years.

    IMHO, there's no one principle cause. Like accidents, it takes a whole chain of different events and causes to bring us to this particular crisis. It is true when they say it takes two hands to clap.

    Sure, they can waste food. But what's an extra third (33%)? Even if you throw away as much food as you consume (100%), it still won't explain the huge DECREASE in food supplies globally. Forget about the demand. Just look at the supply side alone and you will see there's a marked drop in supply. Greed or waste cannot explain that.

    Nope. I'm not in favour of subsidies. As mentioned many times already, the government's duty lies in preparing the country for eventualities and that means self-sufficiency in food. In case of emergencies, they can help reduce the effect of global crises on the local market by using food stockpiles as a price/supply buffer.

    Unlimited cash? Then you must be assuming they would operate as government agencies. Even so, they would have limited budgets.

    No, government-link corporations function just like any other business entities. It's only because our government and judiciary is so corrupt that GLCs are used by politicians to do all sorts of magic tricks.

    A properly-functioning GLC should be considered as nothing more than just another business entity. The only difference is the government owns it or has a substantial investment in it.

    1. Fuel prices go up = higher transportation costs = higher vegetable costs
    2. Fuel prices go up = higher food prices = higher labour costs = higher vegetable costs
    3. Price of other commodities go up = farmers switch to more lucractive crops = lower supplies of vegetables = higher vegetable prices
    4. Higher cost of fertilizer = higher cost of vegetables.
    5. Greedy farmers take opportunity to raise prices
    6. Poorer harvest = lower supply = higher cost of vegetables

    You can go on and on...

    Oh, of course. Like I said, the Old Man's hands sure are dirty. Naughty, naughty old man.

    But even the Old Man did not preside over the BIGGEST bailout in the history of our country - the RM 4.6 billion bail-out of PKFZ.

    I wonder why KWSP (EPF) suddenly announced an extraordinarily low interest this year for our retirement funds. Did the government dip into KWSP (OUR retirement funds) to bail out corrupt BN politicians and their cronies? I wonder....

    Hehe.. It really doesn't matter whether you disagree or do not support the assertion because this is what has been going on. No matter how you refuse to believe it, it's not going to disappear. :mrgreen:

    The point is Bernas has the SOLE rights to import rice. Don't you think it's a kind of a conflict of interest. On one hand, you are supposed to encourage and help farmers to improve their yield and productivity. On the other hand, it's in your best FINANCIAL interest to bring in loads and loads of cheap Thai rice so you can sell for easy profit. No prize for those who can guess what they chose to do. ;)

    Nope. They should never have been given the SOLE right to import rice. Their job should be to improve the productivity of the local farmers so that they can produce rice as cheaply as the Thais. It's all about being COMPETITIVE. If you can be competitive, where's the need for regulation.. or even imports?
  18. Adrian Wong

    Adrian Wong Da Boss Staff Member

    I agree. Like NEP, subsidies ultimately cripples the recipient. However, the people deserves to benefit from the country's resources. If it doesn't come in the form of fuel subsidies, then it has to come in some other form (lower taxes, free healthcare, etc.).

    Actually, most if not all countries in the world use progressive taxation so this is really not an issue.

    Unfortunately, in Malaysia, most of the oil money seems to be invested only in palaces and mansions for corrupt BN politicians.

    Actually, the tax is relatively high in Malaysia. In fact, Singapore has LOWER taxes than Malaysia. Plus, our country is probably the only one in the world to insist that all companies must PREDICT future profits and PRE-PAY their taxes before the beginning of the financial year.
  19. Brian

    Brian Newbie

    You're right on that bit where you meant semantics, though I never saw it from your POV at the time.

    Can't agree on governments competing with businesses. E.g. if a government owns a bank, and competes directly with other banks, you're virtually guaranteeing savers with taxpayers' money. It's this unlimited cash thing I cannot agree with, because governments can bail out failed companies with their virtually unlimited cash.

    I cannot agree. When oil prices were at 40USD, people were saying it was mainly speculators, and it should be 30USD. And when it was 60USD, people said it should be 40USD.

    For example: BP CEO Lord Browne says oil price will fall to 40 usd per barrel mid-term - Forbes.com

    Even today, people are still predicting that it's a bubble:
    The Oil Puzzle | China International Business

    Lower Oil Prices Slow in Reaching Pump - washingtonpost.com, from which I quote:

    This was early 2007, and clearly, not many pundits ever anticipated 100USD in early 2008. And we're not talking about some random guy on the street speculating; these are the big investment banks.

    Hindsight is perfect vision as they say.

    That didn't use to be the case in China not so long ago. With their reforms recently only have they started prosecuting big Communist officials for corruption. I think that they may start reaching Singapore-esque levels given enough time, but the fact that they've executed or jailed many of the big Communist Party officials tells me that it's a new phenomenon, else those officials would have never had the chance to reach those posts in the first place.

    Well, the USSR didn't exactly follow capitalism very much did they? China is imo, a grand experiment where you have a Communist government advocating capitalistic principles. Seems to be working well, but I still believe that liberal democracy is the best way in the long term, but then again, that's another topic for another day.

    Our government is extremely interventionist. Proton doesn't act in a free market (they might now, but they didn't use to). I've never said that our government is a big supporter of free markets either.

    Again, you're painting a black and white picture. I've stated before that China's moved from their old policies to a more capitalistic approach, but they're by no means advocates of a free market, and the same is with Malaysia and every other country. We're all in the middle, shades of grey.

    The difference, I believe, we have with China when it comes to price controls is this: China sets the prices, and does not subsidise it, leading to shortages as companies do not want to make a loss on it. Malaysia sets the prices, and subsidises it, thus ensuring that shortages do not occur, but (to me) wasting oil revenue that could be invested.

    I'm fine with countries doing price controls in the name of national security, as I would also agree that it leads to instability.

    But they could be making more couldn't they? :)

    You're then mixing nationalism with free markets then. I don't. And that's where our POVs diverge.

    Yes, comrade, painting the world as black and white :)

    Business - World rice production to rise 1.8%, says FAO - INQUIRER.net

    Well, production hasn't gone down, but up instead overall. So the supply side hasn't really crashed very much, in fact, it's gone the other way. What we have is a tightness of supply, where stocks are starting to dwindle and you will get small shocks leading to large panics in the market. And I pin that on increased prosperity, one way or another.

    BBC NEWS | Business | Rice prices 'to keep on rising'

    I'm fine with the food security reason as I've said previously, but if our farmers are grossly uncompetitive, I'd think twice about it.

    You're kidding me aren't you?

    The Malaysian Bar - Govt bailout looms for Port Klang project

    - and I remember the MAS scandal very clearly, where the Government decided to buy the shares much higher than the market price dictated.

    That Old Man's a lot worse than Abdullah, except that he pulled wool over most of our eyes for a long long time.....

    The BMF scandal took up RM2.4-2.5 billion in 1983, which is approximately RM4.5-4.9 billion in today's money, in a single event. So no, in real terms, it's just another event as far as I'm concerned.

    It then points to a failure of the government for not forcing Bernas to help farmers be more competitive, in which I agree with you.

    It is, however, strange to see that the Agriculture Ministry being involved in rice production still. I've always been of the impression that Bernas is in sole charge of everything.

    Agriculture Ministry seeks RM6bil to boost rice production

    I'm interested in this bit. Do you have any sources for this?

    I don't know what the tax rates are in Singapore to be honest, but I've no qualms in agreeing with you that they're light years ahead of us.

    I agree, but my idea of progressive taxation would probably hurt people like Peaz :p

    Yeah, it's taking way too much time. Perhaps we should meet someday and debate it over coffee or something lol. Hopefully I won't be checking much on this thread, tons of exams coming right up :)
  20. Adrian Wong

    Adrian Wong Da Boss Staff Member

    Huh? Who told you the government will bail out banks? In most countries, banks that fail are left to die. Even here in Malaysia, our banks are only protected by insurance that limits everyone up to RM 60K of their deposits.

    If there's a run on a bank, yes, Bank Negara can help provide temporary liquidity. But no government in the world can simply use tax money to prop up badly-run banks.

    BTW, GLCs function like normal businesses. The government cannot simply pour our money into the GLCs, unless it's a bail-out (like PKFZ). They can't take out the money either.. unless it's in Malaysia, where such magic tricks are the norm. :)

    Hehe.. You can quote those.. but I can similarly quote an equal number (if not more) links to articles that say otherwise. Do note that not everything printed are their actual opinions. Many banks and companies use the press to push their agendas.

    In fact, I would do the same too. For example, if I know that oil prices will rise and I want to buy more shares in oil, I would try my best to convince everyone else that it won't rise. It is in my benefit to convince people that this is so, even if I don't personally believe it.

    No matter what people may say... always look at what they actually DO. If people really believe that oil will remain cheap, why the heck do so many countries start providing incentives for the development of biofuel? Didn't you notice the sudden surge of interest in biofuel? If they talk one thing and do something else, I sure would pay more attention to what they are actually doing. ;)

    Well, China is still more corrupt than Singapore. Look at the hanky-panky going on in their food industry. But frankly speaking, if China has anything to be proud of in their dark days, it's the relatively low corruption. Officials may abuse their positions but they do generally avoid corruption.

    In fact, I would say that their liberalisation have increased corruption. Hence, the increase in cases of corruption. It's not that the older officials are not susceptible to corruption.. but rather there was very little avenue for them to be corrupt in the past. ;)

    USSR was never capitalist but neither were they the real model of communism. Nothing in the world really works out according to the perfect model. Just like how America is not really democratic (as far as the original concept is concerned) nor liberal.

    AFAIK, there's no government in the world that really practices a hands-off approach. Every government intervenes to a certain degree. It's actually expected of good governments. There's nothing wrong if they intervene to correct the bad or to uphold the right.

    Actually, I'm not. If you read back, I've been the one who's trying to tell you that the world are really made up of shades of gray. There's no clear-cut black or white. There's no such thing as China's a 100% communist country or America's a 100% democratic country. No such thing.

    Ahhh.. You are wrong. Malaysia does the same thing. Take for example, steel. Prices have gone sky-high but our government insists that the local steel industry supply their steel at a fixed price. Hence, the steel industry did their best to minimise the production of those regulated products.

    This is also the reason for the sudden "shortage" of oil cooking and sugar in the recent past. Do you actually think we lack palm oil and sugarcane? No. It's the industry protesting against the price regulation. If they are losing money, they would rather produce and sell less.

    It's not nationalism. It's self-preservation. Think about this....

    The government's duty is not to ensure you make the most money. A good government will ensure that there's stability in the country. Stability is good for business.. and health. ;)

    If the government does not intervene to ensure that their citizens benefit from the food that their farmers produce, then why the heck do we need them? We might as well kick them out and make the whole world one giant open village.

    No sane government will allow their farmers to export food if their own citizens are starving.

    DYKT the first report actually rebuts your assertion that the world did not see it coming. Farming takes time. You have to buy some land, clear it, prepare it for farming BEFORE you can even plant the first seeds.

    So, it takes time for them to increase production. If they intend to increase it, it shows that they think demand for rice will increase and become more expensive, hence making it profitable for them to grow more rice. Again, this is actual action being done as opposed to mere opinions by pundits.

    Actually, if you read more, you would know that even Australia was hit by a severe drought which caused them to lose a significant part of their harvest. Australia, I believe, is the world's second largest exporter of wheat.

    Plus, an increase of 1.8% is not much. It is expected as it takes time to ramp up production of foodstuff. But it's hardly going to help much if a drought in China or Thailand (for example) wipes out 5-10% of the export market.

    If there's no genuine technological and monetary support to help improve productivity, how can they be competitive? This is a major failing of our government.

    Why? You think our government can whistle up RM 4.6 billion just like that?

    I would disagree with that. The Old Man did a lot of damage but he was in power for so long. Abdullah Badawi and his BNputras did all this damage in his FIRST TERM! If we let thim continue, I don't think the country will last another full term.

    If you think it's just another event, then you have to be blind, deaf AND forgetful. Hehe... :mrgreen:

    No offence but go read up on the Putrajaya project, where they cheated the people of RM 5.8 billion. What about Terengganu's Wang Ehsan (running into several billion ringgit already) or the RM 300 million PER YEAR Monsoon Cup (that's RM 1.5 BILLION in 5 years!!!)? Forgotten Abdullah Badawi's RM 50 million private jet plane and his RM 30 million yacht? Fuh... What a list of amazing accomplishments our most "esteemed" Prime Minister has! :D

    It's the same case with our public transportation system. Why do you need so many different types of LRT or monorail systems? Why not a single integrated system? Because everyone of their cronies want their cut of the pie...

    LOL! Ask any accountant... They started it in 2006 or 2007.

    Light years ahead in technology and economy is one thing. But they have just proven that they can keep the taxes low even without the advantages of FREE natural resources that we have (land, oil, etc.).

    Hehe.. He IS RICH alright!! :haha: :haha:

    LOL!! Well, take it easy la.. No need to immediately reply. I will split this topic to a different thread. ;)

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