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Widening wealth gap from GST

  • What social justice to talk about if even our people cannot be adequately fed? Photo courtesy: Sin Chew Daily

By LIM SUE GOAN
Translated by DOMINIC LOH
Sin Chew Daily

How serious is the wealth gap in Malaysia? Perhaps we can get some idea from two recent pieces of news:

1. Some 18,675 undergraduates in the country's universities do not have enough money to take proper meals.

2. Sale of Mercedes cars jumped by 56% or 3,913 units last year.

We have undergraduates who can only afford to drink plain water instead of rice, or a very modest RM2 plate of rice with a few pieces of vegetables and gravy. In the meantime, housing developers in the country are rushing to introduce luxurious residential units that cost several million ringgit each.

The poor will suffer more in the event of an economic recession while the income gap broadens further. To the have-nots, a RM2 plate of rice is a big deal but to the loaded, RM2,000 for golf membership is way too trivial to mention at all.

Hyperinflation and diving ringgit exchange rate will eat into the meager income of the poor. At a time when cash is king, the rich can afford to bag in great bargains when property prices tumble, and have their wealth inflated remarkably when asset prices pick up later.

While the poor are the hardest hit when goods prices soar, the rich hardly feel the pinch.

World Bank estimates that the Gini coefficient of Malaysia stands at 0.462, above the 0.4 warning level, as the richest 15% controls 80% of the entire society's wealth. After the latest storm, this gap is anticipated to widen further, sowing the seed of social instability.

In a recent survey conducted by Muslim Volunteer Malaysia on students from six local universities, it is found that 24,914 out of 25,632 respondents require a helping hand from the association, of whom 10,439 could only afford instant noodle for their meals while 14,458 could afford not more than RM5 for a whole day's food.

It is shocking that 97.2% of undergraduates responding to the survey are actually facing severe life pressure mainly due to their impoverished families. Some of these students even send home the unused portions of their PTPTN loans to help their families.

This points to the fact that life is indeed very tough for the bottom-40 (B40) families.

How could an economic downturn make life so unbearable for these families? I thought the government has implemented the minimal wage scheme? Because of this the government needs to up its BR1M handouts.

Goods prices started to climb soon after GST went into effect last April, followed by the removal of subsidies owing to the government's straitened financial situation (including electricity rebates and steep public transport fares), topped off by ringgit devaluation that sends prices of imported goods skyrocketing.

As if that is not enough, PTPTN has cut the loans for students of public universities by 5% and private colleges by 15%.

While the government can call GST savior of the national economy, the 6% tax really weighs down the poor. Lest we forget, some 40% of Malaysian families earn less than RM3,000 a month. What they earn is barely enough to make ends meet.

The treasury bagged in RM27 billion of tax revenue from GST last year, and if the poor were to bear only 1% of it, the burden is still way too much for them.

the tougher the life of our poor the more it proves the failure of our social restructuring effort. Instead of giving them fish, why not teach them how to fish? The non-elevation of the job competency of B40 has significantly impeded their potential income growth.

Meanwhile, we have been focusing too much on mega projects and the impressive transformation programs but have grossly overlooked the reformation of the poorest in our society. The government has put too much of its resources on GLCs, grooming aspiring entrepreneurs. And when oil prices tumble, social benefits have to be slashed and the poor are the ones to take the brunt.

Higher education minister Idris Jusoh has called on undergraduates who cannot afford their meals to seek assistance from their respective principals and student affairs offices. But with allocations drastically reduced, how much can these public universities help? As a matter of fact, the most effective way of addressing this problem is to bring down their tuition fees.

Our politicians have wasted too much time on their own positions. It is time for them to shift their attention to the underprivileged group in the society and care more about the revitalization of our economy, trimming of government's operating expenditures and diverting some of our resources to social welfare programs.

What social justice to talk about if even our people cannot be adequately fed?

 

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