At last.....

It has been over 2 months since I posted anything. Today I can start again. I just got my results for my 1st semester MBA. Passed both... wheeew.... All those weeks of stress and tension actually paid off.

There are a couple things on my mind currently.

1. Yim Pek Ha

Yim Pek Ha was sentenced to 18 years jail for causing grievous hurt to her maid Nirmala Bonat. The judge actually wanted her 3 sentences to run consecutively but being the compassionate judge that he is, he allowed her sentence to run concurently.

Makes you kind of wonder, 18 years for aggravated assault. Why not just "accidently" kill the maid and plead manslaughter, make be sentenced for less. 18 years is too harsh a punishment. 5-8 years seems fairer to the accused. Furthermore, the expert consulted by the defence was dismissed altogether. Apparently the judge is more familiar to the human body and mind better than the expert.

By sentencing her to such a harsh punishment will set tongues wagging. Is it because of the races of both parties? You be the judge.

2. The economy

The economy is facing a downturn at the moment. The government feels that we are well placed to weather this crisis. Well, I'm no expert but I feel our beloved BN government wouldn't know a downturn if it crawled up their bottoms and spew out of their mouth.

It is true that the 1st half of 2008 was great but when I assessed the situation from my company's and customer's records, most profits earned in the first 2 quarters were wiped of by losses in the 3rd quarter. Businesses drop between 40 - 75% overall. Come next year, when we declare our company taxes in July, most businesses across the board will record net losses, minimal net profit ( below 3%) or break even. This in turn will affect the revenue of the government in the form of taxes collected.

In addition, with such an economic climate, our government needs to implement an expansionary fiscal policy ( meaning spend, spend and spend). What will the government do then? No money = contractionary budget. My, my what a fine mess we are in. Will the government again dip its filthy hands into the cookie jar (EPF)? That's my retirement fund. By the way has the PTPTN repaid the RM 2 billion loan yet? Just checking.

3. EPF contributions will be lowered from 11% to 8%.

From the 1st of January 2009, the government will lower EPF contributions to 8%. This is in-line to the government's call to increase spending to prop up the economy. In theory this is correct. However in the real world, this is not a good idea. As contributors, there are 2 things we must realise.

• By reducing the contributions will in-effect increase our personal income tax. This is true when you earn more than RM2500 per annum. However, this arguement is flawed in a sense. The total you can deduct for your income tax is only so much. The figure deducted includes insurance purchases as well. Therefore the tax increase is actually minimal. This is especially true to high income earners.
  
• The second point is the clincher. When you reduce your contributions, the potential loss of dividend is substantial over the long term (accrued interest). Therefore the more you spend now, the less you have when you retire.
  

From another standpoint, if we do not reduce our contributions and the government keeps dipping its hands into the EPF ( read Valuecap), we are screwed. From where I stand, we are screwed either way.

Thanks for reading. If you thought the economy is still ok, scared now?