Category: Politics & government

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Economics Environment Politics & government

[599] Of fuel subsidy, tax reduction and Malaysian budget deficit

An awful lot of Malaysians are happy with the road tax reduction in the face of rising fuel cost. The government assures more is to come. The libertarian part of me jumps with joy. My green half however warns me that the government current policy might be unsustainable.

Fuel prices have been marching forward continuously for many months now. Give and take a jump of another USD20, crude oil price will be at an all-time high. The highest price in 2005 term is USD86 per barrel. Crude oil prices are currently around USD65 per barrel. Roughly a week ago, it was USD70 per barrel.

Consequently, all countries running gasoline subsidy are finding out that the program eats a lion’s share of their expenditure. Indonesia is a perfect example of this. Its subsidy program is so huge – a quarter of government expenditure in fact – that capitals are flowing out of Indonesia at a frightening rate. That capital outflow then forces Rupiah, the Indonesian currency, to plummet 10% against the USD this year alone. This could happen to Malaysia too and it’s crucial to reduce or even eliminate Malaysian fuel subsidy.

The Rupiah today rose after the Indonensian authority confirms that they will cut fuel subsidy further. Almost similarly, Malaysian government has allowed fuel price to increase step-wisely a few times this year. Three times if I’m not mistaken. That in effect reduces deadweight loss.

Despite so, the government has made several promises that are too bold.

First and foremost, the government promises that there will be no more price hike till the end of the year. There reason why this might be more than the goverment could chew is that there can be no guarantee how the global crude oil prices will react in the short term. The market is too susceptible to immediate events like Katrina, of which had forced the crude oil to break the USD70 benchmark. Not to mention, for the northern hemisphere, winter is looming in four months time. Given the no-hike promise, a too liberal price increase could match or even outdo the reduction in deadweight loss.

Second is the promise of more tax cuts. Bigger cuts mean lower revenue.

Combining possible fall in income from taxes with the inability to reduce expenditure, this is a formula only Republicans will endorse. It’s a recipe for budget deficit. A fall in income must be followed with a fall in expenditure if a budget is to be sustainable. Of course, economics allows greater expenditure against an inferior income but it must be noted that only in time of crisis should anybody allow that. This is where normative and positive economics diverge. On top of that, Malaysian 2004 budget deficit stands at 4.5% of its GDP. 2005 deficit is expected to stand at 3.8% of the GDP.

This is type of economics practices by Republicans – from Reagan to W. Bush – might increase the expected deficit for 2005. Our government is doing what an economic populist would do.

This might backfire soon – all the cheer might turn into jeer when the deficit swells in size.

p/s – even the World Bank is worried of climate change.

pp/s – fun flash animation. Don’t you love your SUVs?

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Politics & government

[596] Of Khairy challenges Lim Kit Siang to a debate in the Parliament

UMNO strongman Khairy Jamaluddin challenges leading Malaysian opposition Lim Kit Siang to a debate in the Parliament on whether who actually is, or are the Father(s) of Independence of Malaysia/Malaya. It all started when Ronnie Liu Tian Khiew of DAP questions the legitimacy of accepting early UMNO leaders as freedom fighters. I found out about the challenge from an article by Utusan Malaysia. It’s on the front page.

Lim Kit Siang, of whom maintains a blog, gives a prompt reply. My favorite point is:

Firstly, Khairy should not challenge anyone to a debate in Parliament until he has become a MP himself.

In chess, people call it check, Khairy.

The truth is, everybody back then fought for an independent Malaya. Well, almost. Whether they were communists or Malay nationalists, radicals or moderates, apologist or whatever, they all fought what they thought best for our country. With that’s said, in many ways, the Malayan Communist Party and many others did contribute to an independent Malaya. They did fight the our independence, regardless of their political slant.

Still, I don’t agree with Mr. Ronnie Liu when he says Tunku Abdul Rahman and UMNO aren’t the real fighthers for Malaya independence. It’s foolish to discredit Tunku Abdul Rahman and anybody else for that matter based on whether they worked with or against the British.

What really needs to be addressed here is Barisan Nasional’s – and in particular UMNO – monopoly on Malaysian history. Instead of overlooking UMNO leaders, communist party or everybody elses’ contributions, we should acknowledge all Malayans and Malaysians’ contributions.

But, heh, thank god for the Malayan Emergency. It would suck to live under communist rule.

p/s – the shame is on me. I call myself a green but had never really gave a thought for the other victims of Katrina until now. Salutation to Primate Noise.

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ASEAN Liberty Politics & government

[595] Of Thai refugees and a job well done, so far

Malaysia is doing the right thing by not sending the Thai refugees immediately back to Thailand. I’m especially glad that the Malaysian government is acting so despite the country doesn’t officially recognize refugee status. This is especially so when Thaksin insists that those 131 refugees are separatists while Thai foreign minister believes that the group consists of innocent Thais instead. The Thai upper echelon does little to guarantee the refugees’ right to safety by issuing contradictory statements. Hence, it falls on Malaysia’s shoulder to provide the refugees such assurance in the name of human rights.

The conflict in southern Thailand may well indeed be Thai internal matter. ASEAN members at the same time practice non-interventionist principle. However, it’s clear that Thailand has been unable to contain its internal problem and now, it’s spilling into Malaysian northern state of Kelantan. According to some sources, about 1000 more Thais are planning to cross into Malaysia. The presence of 131 refuge seekers in Kelantan and the possibility of another exodus of refugees make the conflict as a Malaysian matter too, regardless of Thaksin’s opinion.

Thailand in recent past accuses Malaysia of shielding some of Pattani separatist leaders. Malaysia denies that and some within Malaysia have hinted that Thaksin might be looking for a scapegoat. Whatever it might be, southern Thailand crisis is rocking the relationship between the two countries and the recent refugee development is rocking the boat even further.

Malaysia is stuck in a quagmire – return the refugees back to Thailand and face possible domestic and international criticisms, or, keep the refugees safe for the moment and take the Malaysian-Thai relationship to a new low.

I personally prefer the latter to the former option. It is simply so because, as stated in an earlier entry, I believe Malaysia has a moral obligation to do so. To me, it’s simply a matter of human rights. To me, the gain from sheltering the refugees is greater than the cost.

Hence, again, I am glad that the Malaysian government refuses to handover the refugees to Thai authority just yet. Those that have interest in Malaysian human rights issues should be glad too. So, let’s applaud the Malaysian government just this one time.

p/s – w00t! Malaysian Federalism: Pattani coming soon. Heh, read Brunei and Sumatra to anticipate the fun of a greater federation!

Remember though, this is for fun, not my official standing. I might not mind having Brunei as the new 14th state however. =p

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ASEAN Liberty Politics & government

[591] Of Malaysia, human rights and Thai refugees

There has been new development in southern Thailand. Three bombs exploded earlier and 15 are confirmed dead. Fearing backlash from the Thai military, a number of Thais have crossed into Malaysia. Further report has it that security near the Malaysian-Thai border has been tightened. Bangkok Post has more.

Malaysia has yet to sign the United Nations Convention on the Status of Refugees and hence, does not officially recognize any asylum seekers (pdf). In fact, it’s all too possible that these refugees might be deported back to Thailand ,as what had happened to asylum seekers from Aceh. But surely, we don’t need to sign another piece of paper in order to be humane.

The bombing is a deplorable act and will only worsen the conflict in southern Thailand. Malaysia must assist Thailand in the name of, heh, ASEAN spirit. That however doesn’t mean Malaysia has no responsibility towards those refugees. Malaysia has the moral obligation to guarantee these Thai refugees safety.

And trust me, the world, even those misguided fundamentalists, will have our back if we stand up for the refugees.

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Environment Politics & government

[584] Of why an agreeable Iraqi Constitution is a green issue

Suddenly, I’m seeing the current negotiation for the new Iraqi Constitution with a certain shade of green.

The United Nations had planned to carry out a conference to rehabilitate of what was once the largest marshland in the world – the Tigris-Eupharates marshes – in Tokyo this week. The conference was expected to be attended by those that are interested in sponsoring the noble effort to care the land of the two rivers. Japan in particular has pledged $11 million for the rehabilitation project. Currently however, according to Associated Press, due to the current situation regarding the Iraqi Constitution, the United Nations has decided to postpone the meeting.

Iraqi politicians haven’t made much progress towards a charter that is agreeable to all sides. On the floor right now in Baghdad, three fractions – the Shiites, the Kurds and the Sunnis – are contending on three major issues – Islam, oil revenue and governance. The US has relented on Islam’s influence on a new constitution. I’m not quite happy with that but the Iraqis deserve to decide their fate for themselves but American’s compromise on Islam has allowed the negotiation to move forwards.

The deadline for negotiation was first set on August 15 but the Iraqis have agreed to give themselves a 7-day extension after failing to show up at their own date. Hence, the next deadline was to be on the 22nd but again, negotiation failed and the Iraqi Parliament gave the negotiators three more days to discuss the charter. The new deadline is looming and major disagreements still exist. With three fractions on three issues, many suspect that the Iraqi politicians will again fail to beat the deadline.

The NYT has said that the imposition of deadline on this issue is unhealthy. Part of me is starting to agree with them.

The difficulty of the issue at hand has led some to speculate the eventuality of civil war. Nobody wants a civil war but already there are sect clashes in Iraq, however minor it might be. And if civil war is an inescapable scenario, effort to restore the marshes will come to a halt.

The restoration project has been going slowly but steadily. Once covered nearly 20,000 sq km, Saddam Hussein audaciously reduced the marshes to less than 10% of the original size. Since the fall of Saddam Hussein, the United Nations Environmental Protection and others have restored up to 40% of the area. With Japan’s aid, it is possible to run the project at a sustainable pace. Yet, all this ultimately depends on the development of the Iraqi Constitution.

At the same time, a civil war will putthe constitution talk to a stop indefinately. Therefore, subsequently, civil war is the last thing that all self-declared greens, and in fact the world, need in Iraq.

The rehabilitation effort must not come to a standstill. It must be carried out until the Garden of Eden on Earth is fully restored to its former glory. For this very reason, all greens should support any effort that might produce a constitution acceptable to all three Iraqi sides.