CPI for June surges to 7.7%

Thursday July 24, 2008

By V.P. SUJATA

PUTRAJAYA: The Consumer Price Index (CPI) for June spiked to a 27-year high of 7.7%.

This figure is slightly more than double the May CPI of 3.8%. The 7.7% is also the highest since April 1981 when the CPI was recorded at 10.8%.

The substantial rise in the price of petrol and diesel announced by the Government beginning June 5 is the main reason for the surge, said Domestic Trade and Consumer Affairs Minister Datuk Shahrir Abdul Samad.

He said the inflation would probably remain at 7.7% for July because it would see the impact of increase in the electricity tariff.

Reading a report by the Statistics Department, he said the CPI for January to June this year had also increased by 3.7% compared with the same period last year, which was from 105.1 to 109.

Index for food and non-alcoholic beverages for June compared to the same month last year showed high percentage change of 10.0% while the index for non-food increased by 6.7%.

From January to June, index for food and non-alcoholic beverages increased by 6.1% and non-food 2.6%, while among the groups with high weights were transport (+4%), and housing, water, electricity, gas and other fuels (+ 1.4%).

The 6.1% increase in the index for food and non-alcoholic beverages was the result of increases in the index for items such as milk, cheese, eggs, rice, bread, cereals, meat, vegetables, seafood, fruits, sugar, jam, honey, chocolate, confectionary and fats.

Among the food items that recorded notable increase in the June index were tomatoes, chicken eggs, rice, glutinous rice, imported beef, beehoon, dried noodles, watermelon, carrots, chicken and wheat flour.

Speaking to reporters at his office here yesterday, Shahrir said his proposal to have a dedicated agency to help efficiently distribute subsidised goods to rural folks would be submitted to the Cabinet in two to three weeks.

“There is not much we can do for the price pressures but more fine-tuning of a distribution system to ensure subsidised goods reach the target group is vital,” he said.

He said he was looking to increasing the number of food items on the price-control list to help the lower income group.

Food items on the list now were only general-purpose flour, cooking oil, white bread and rice.

The basket of goods for calculating the CPI is done twice in five years with the last one in 2005, he said, adding that it has to be expedited to be more reflective of the market conditions.

Shahrir said an average of 10 billion litres of diesel was being used annually with about 50% being subsidised by the Government.

Residents say Taman Ikhlas being neglected

Friday July 18, 2008

Story by GEETHA KRISHNAN

ILLEGAL dumping and open burning are being carried out near Taman Ikhlas in Bandar Sungai Long, Kajang.

According to Taman Ikhlas residents, the illegal activities were discovered a few weeks ago when a stench started emanating from a lane close to the housing area located deep inside Bandar Sungai Long.

Taman Ikhlas Residents Association pro tem committee chairman Azizul Shahrin Mohd Azizan told a press conference early this week that the smell worsened whenever strong winds blew in the direction of the housing area.

“Some of us decided to locate the source and found garbage bags containing restaurant waste dumped along the lane. Acrid smoke also rose from a burning pile of discarded plastic material,” he said.

Other residents said they saw one-tonne lorries turning into the lane every night and suspected these vehicles of transporting the restaurant waste and toxic materials.

The lane leads to a factory manufacturing rat poison.

Besides these problems, the existence of a foreign workers settlement on a hillock near the housing area was another cause for concern.

Overall, as resident Lee Sayer pointed out, Taman Ikhlas is suffering from neglect.

Lee wants the Kajang Municipal Council to act fast to resolve all these problems.

“The grass in the playground and perimeter area has not been cut for ages and the abandoned bungalow has been a sore sight for the past five years. The swimming pool is filthy,” he said.

Bandar Sungei Long Public Services Centre head Tony Mak, who represented Dusun Tua state assembly Ismail Sani, said the Department of Environment (DOE) would be informed of the open burning.

“The indiscriminate dumping of restaurant waste would also be brought to the attention of the council for immediate action.

“We will also ask the authorities to look into the foreign workers' illegal colony problem,” Mak said.

When contacted, council president Datuk Hasan Nawawi Abd Rahman promised to look into the matter.

Plan that’s of interest to credit cardholders

Wednesday July 9, 2008

By M. KRISHNAMOORTHY

KUALA LUMPUR: Credit cardholders will have reason to smile, as the stiff 18% per annum interest rate has been reduced effective July 1.

Bank Negara has introduced a tiered interest rate to reward cardholders who pay their monthly statements before the due date.

For those who pay their credit card bills promptly for 12 consecutive months, the interest rate is reduced to 15% per annum. The cardholder will get to enjoy the lower interest rate from the 13th month.

For those who pay promptly for at least 10 out of 12 months, the interest rate is be lowered by 1% to 17%. The ceiling rate of 18% per annum will still be applicable for other cardholders.

The comforting news is that cardholders do not have to settle the outstanding amount in full – they need to pay only the minimum amount involved.

Credit cardholders have been informed of the new-tiered interest rate structure by their respective banks.

An Association of Banks Malaysia official said Bank Negara had introduced the tiered finance charges to promote more prudent financial management among credit cardholders.

On average, one-third of 2.7 million credit cardholders use their credit cards as a payment instrument, settling their credit card outstanding amount in full every month.

Over half the cardholders pay at least the minimum amount due promptly and roll over the remaining balance.

It was reported earlier that from July 1, credit cardholders who make minimum or partial repayment of their monthly outstanding amounts would no longer enjoy the 20-day interest-free period for new retail transactions.

However, those who settle their credit card outstanding amounts in full every month will continue to enjoy the interest-free period.

Price War Dogs Airlines

June 2008

Already battered by record fuel prices, Malaysia's low-cost carrier, Air Asia, now has to contend with headwinds in the shape of national full-service carrier Malaysia Airlines which has launched its own low fares campaign.

However, Malaysia Airlines has denied that its new low and zero fare products are competing directly with Air Asia's business model, instead explaining that it is meant to create new demand and to generate revenue from hitherto unsold seats. According to Malaysia Airlines, the campaign was intended to help offload between three and four million unsold seats for its domestic and Asean routes annually. Passengers who book free and low-cost seats on Malaysia Airlines still have to pay for fuel surcharges, administration fees and airport taxes, similar to the Air Asia model.

In retaliation, Air Asia has launched its own sub-zero campaign, which it insists is cheaper than its competitor's fees. The LCC has also reiterated that the playing field should be leveled, and that it should be allowed to compete without restrictions against the national carrier. Notably, restrictions on the lucrative Kuala Lumpur to Singapore route are a sore point for Air Asia.

On the bright side, the ongoing skirmish between Malaysian aviation's David and Goliath has benefited consumers looking for bargains to cushion the pain of rising prices. According to media reports, the zero and low fare products enabled Malaysia Airlines to sell an additional 150,000 seats, including those at normal fares, during the week of the campaign's launch while increasing its online penetration by 900%.

On the downside, if price undercutting is sustained, foreign airlines may be discouraged from flying into the Kuala Lumpur International Airport if they are unable to compete, which would defeat the KLIA's objective of attracting and retaining more carriers and becoming a major regional airline hub.

Playing Cyber Catch-up

June 2008

In a bid to increase broadband penetration and bridge the urban-rural digital divide, Malaysia has announced a high speed broadband project (HSBB).

Under a controversial arrangement, the country's dominant telecommunications incumbent Telekom Malaysia Bhd will invest RM8.9bn (US$2.74bn) while the government will invest another RM2.4bn (US$0.74bn) over a period of three years to implement the first phase of the HSBB. The HSBB infrastructure will offer speeds of between 10 Mbps and 1 Gbps and will be developed at an estimated cost of RM15.2bn (US$4.68bn) in three phases over 10 years with the government putting in an initial investment of RM4.8bn (US$1.48bn).

The government rationalised that Telekom Malaysia was the best choice to upgrade the existing network for the HSBB roll-out as it already owned 95% of the existing fixed line infrastructure, which will minimize duplication.

Although the government has made assurances that the regulatory framework will be developed on an open network concept to ensure equal opportunity access and a level playing field, uneasy industry players have indicated that they would prefer an independent HSBB network. For transparency and their protection, telcos want the government to disclose pricing, access terms and even last mile connectivity details before signing the HSBB deal with Telekom Malaysia, to ensure fair competition since the incumbent would have a monopoly on the HSBB network, reported The Star.

It is estimated that Malaysia's gross domestic product (GDP) would grow by another 1% or an estimated RM6.68 (USD2.06) billion and create 135,000 new jobs if the targeted 50% broadband penetration rate could be achieved by 2010. Currently, Malaysia's broadband penetration rate remains very low at 18% compared with Singapore (78%), Hong Kong (80%) and South Korea (93%), reported The Edge Daily.

Bullet Train Shot Down

June 2008

YTL Corp Bhd's proposed RM8bn (USD2.47bn) bullet train project linking Singapore and Kuala Lumpur is one of the latest big-ticket projects to be derailed by the ongoing push for austerity and accountable public spending in Malaysia's transformed political landscape following March 2008's landmark general elections. Although it was tightlipped on the details, the Government confirmed that it had shelved the project because the financial model submitted required the government to bear significant costs.

Malaysia Rerated

June 2008

Standard & Poor's Equity Research recently raised its weighting on Malaysia to 'marketweight' from 'underweight', citing fair market values, improved domestic liquidity and more benign external market conditions. According to the agency, market consolidation over the past few months had improved the domestic picture and whetted potential appetite for the Malaysian market. In response, S&P has raised its year-end target for the Kuala Lumpur Composite Index to 1400 points from 1300 points. S&P's Equity Research had on March 11 this year downgraded Malaysia to 'underweight' on market uncertainty following the March 2008 general elections.

No more interest-free period for credit card users who make partial payment

Wednesday July 2, 2008

By IZATUN SHARI

PETALING JAYA: From Tuesday, credit card holders who make the minimum or partial repayment on their outstanding amount monthly would no longer enjoy the 20-day interest-free period for new retail transactions.

Those who settle their credit card outstanding amount in full every month will continue to be granted the interest-free period.

Bank Negara confirmed that the ruling took effect Tuesday as part of its effort to promote the use of credit cards as a payment instrument, and to encourage prudent spending and good financial discipline.

A year ago, Bank Negara took the initial step, announcing a new interest rate scheme for credit card users. Credit card issuers then began tracking the repayment behaviour of their cardholders from July 1 last year.

In a statement Tuesday Bank Negara said: “More than half the cardholders pay at least the minimum amount due and roll over the remaining balance.”

For credit card users with a good record of settling their credit card balances due each month promptly for 12 consecutive months, the finance charge will be reduced from the maximum of 18% a year to not more than 15%, it added.

As at the end of last year, one third of the 2.7 million credit card holders in the country settled their outstanding amount in full every month.

Bank Negara said banks and credit card issuers had already begun notifying their customers on the matter.

A spokesman for Public Bank Bhd said the bank had notified its credit card holders on the scheme in June and July last year and again in April, this year.

“We gave them ample notice because we needed to track their 12-month repayment behaviour history,” she said, adding that the bank had 900,000 credit card holders.