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Friday, April 11, 2014

Navigating economic turbulence under the radar of Gen-Y – Syahir Sulaiman

APRIL 10, 2014

While our thoughts and prayers remain with the families on board flight MH370, our current state of economic affairs is distressing too.

On April 7, 2014, the GST bill was passed by Parliament, affecting Malaysians rich and poor, old and young, employed or unemployed, who will be paying the same regressive rate of 6% tax on their consumption of goods and services come April 1, 2015.

Pity the younger generation, as we will grow up in a high debt and high tax society.

By all means, excuses were given to justify the adoption of this last resort of revenue – we need to cut our deficits, 6% GST is lower than the existing 10% SST, 160 countries have implemented GST thus Malaysia must follow, etc.

This came after the inaction of Putrajaya over wastages, leakages and mismanagement as corroborated by the Auditor General Report, and the GST bill was coincidently approved after the tabling of a supplementary budget to ratify government’s overspending in 2013.

The audit report continues to reveal a series of endless possibilities of corruptions, wastages, leakages and mismanagement, except that it depicts different projects every year, albeit the need to strengthen fiscal prudence in Malaysia as the deficit gap and national debt level heading towards single direction, skyward.

So much efforts have been made by the auditors to highlight their audit findings and recommendations, yet the thick report will end up a dust collector.

Given these macro circumstances, the younger generation should anticipate several bleak economic turbulences in the near future. As these are not unprecedented, there's nothing better than being prepared.

First, always stick to your budget. Budget is a tool to plan the the "in and out" of your pocket. If you spend less than your income, you will have a surplus that leads into savings and investments. If vice versa, it’s a deficit that requires borrowings or just tighten your belt.

In reality, you will ride a cycle on which you will land on a balance, surplus and deficit budget. But if you continuously sit on deficit budgets, say over 18 years, you are heading into deep trouble. We need a fiscal discipline.

Second, save for the rainy days. There are two types of rainy days. Predictable rain is when you know it will fall.

When you just don’t know when or how bad it will be, it is the unpredictable rain. By saving each month, you won’t be blindsided when something happens. This applies to our family, and of course, our country too.

Needless to say, spending depends on affordability and rationality. Cut wastages and leakages. There is a saying, “Too many people spend money they haven't earned, to buy things they don't need, to impress people they don't like.” Do you need an Auditor General to prove otherwise?

Third, be honest with yourself. If you spend your own money for yourself, it is prudent. If you spend your own money for others, it is generosity.

If you spend someone else’s money for someone else’s interest, it is a trustee, and this is what the government is.

After all, the real engine of economic growth is the people. It all depends on our propensity to produce, to consume, to save, and to borrow. We have to live and consume within our means, thus to save wisely and to leverage only on productive and quality debt. It’s all about the choices we made, be it daily or five-yearly.

Malaysia is certainly at a crossroads. A fundamental change is required, not just on economic performance and social justice, but also in people’s mindset and delivery of public services that underpin our ability to develop the country. The journey will be long and arduous, but God willing, we will succeed. – April 10, 2014.

* Syahir Sulaiman is a member of the PAS Youth exco, and advocates Negara Berkebajikan.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.

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