Malaysia is now all about the purchasing power and the people are digging deep in their pockets to survive.
A report from the U.N. on poverty in Malaysia during COVID-19 is damning. It shows a dangerous trend.
Some families are on the brink of absolute breakdown without any food for tomorrow.
They also do not have any means to generate sufficient funds to survive on a day-to-day basis.
People on social media are talking about their purchasing power. They are telling stories about how they are digging deep to keep their family afloat.
But the debate is also about the government’s refusal to press the banks to extend the loan moratoriums.
Then there is also the refusal to let people take a dip in their employees provident fund or EPF.
This would allow them a breather for the next few months, they say.
SAVE FOR THE FUTURE
The government is saying people must save for the future.
The Prime Minister and the EPF says the money from the Account 1, the principal account for every holders, is for the future.
It is not for the present and is not for emergencies. This sounds like the PAP talking in Singapore.
The EPF advises against withdrawing savings from Account 1 to address the challenges brought on by Covid-19. This is inline with the Prime Minister’s ‘advise’.
The EPF says dipping from Account 1 could cause larger problems for contributions in the future.
Muhyiddin Yassin says EPF savings are meant to ensure the future wellbeing and financial security of contributors.
If people are allowed to withdraw from it, it may pose a problem for the government.
But he nor the EPF has elaborated on the problems it may pose, in the future. May be they do not know what the future holds.
But they know that its not good for the people to use the money they can depend on in emergencies!
Some people are asking what future they are talking about?
“If someone does not even have money for the next meal, but in the EPF has RM100,000, why keep the 100k? Why they won’t allow people to withdraw at least 10k for them to live for next 6 months?”
“If people can’t even live for the next day, save that 100k for what future?
There’s no future,” they say.
However, we can say this is what happens when the government is overwhelmed with challenges.
This government has proven it cannot handle crisis though it is at the heart of the crises.
In this instance, it is creating a crisis by rejecting a plan to allow people to drawdown from their own EPF.
Using the EPF Account 1 means the government do not have to borrow extra cash to bail out the people.
It also means the people would beef-up their purchasing power, hence the economy, if the use their own savings.
That is instead of using borrowed money from the government.
Another way to help the people is to extend the loan moratoriums. But it appears both the banks and the government have no clue.
The opposition is pushing for the extension of a bank loan moratorium. Several banks offered their own versions of the moratorium.
But it ended after six months and the current extension is from some banks offering an easing programme to those hit by the COVID-19 economic disaster.
Yet most people want a better format for the moratorium. What they are telling the government in laymen terms is they need such moratoriums to consolidate their purchasing power.
Purchasing power in this instance is not only the loss or gain for the people. It is more about the lack of cash that is hampering their purchasing power.
They are not losing purchasing power because prices are increasing and will not gain if prices do not decrease.
But they will gain in their purchasing power if they get extended soft loans with or without collaterals, for example. It is for the government to direct the banks to offer such assistance across the board.
They will also gain if there is technological innovation that benefits the public. Deflation is also one way to let the people benefit.
The Budget 2021 should focus on these issues. The Ministry of Finance should find ways to unleash a tech revolution in Malaysia that will stabilise the people’s purchasing power.
They could also trigger a deflationary process.
Deflation, or negative inflation, happens when prices generally fall in an economy.
This can be because the supply of goods is higher than the demand for those goods, but can also have to do with the buying power of money becoming greater.
But we do not see any of this happening, do we?