Friday, 28 September 2012

Das Kapital


Recent Malaysia Budget 2013 is basically a continuation of the practice over the past few years; Malaysian Prime Minister Najib Razak pledged to boost help for the poor to cushion the impact of inflation by promising it'll reduce the impact of rising costs on Malaysians.

Our poverty level looks good on paper but woefully ignores reality. Statistics are supposed to accurately measure our economic environment, so that in this case, pin-point policies to deal with poverty can be crafted.

An income that is necessary to buy a group of foods that would meet the nutritional needs of the members of a household. The income is also to meet other basic necessities such as clothing, rent, fuel and utilities, transport and communications, medical expenses, education and recreation.

Take a quick glance at Job Street’s salary report a fresh graduate is only able to earn about RM2500 per month. With living costs having risen exponentially in recent years, how are we expected to take out a decent living with these figures?

Today considering our public transportation system is still yet to improve; a fresh graduate must own a transportation to commute to work. This situation requires Malaysian to choose between buying a car or a house first, and many have committed to own a car first. Petrol costs RM 1.80 per litre and most of the roads are toll roads. It will cost easily around RM 300 for a average home to office.

It will easily cost them around two years of their salary to put down deposit for a local car. If we take into consideration their living expenses and other commitments, it may take them even longer to settle their car loan. Hence, it has left them with very little option but to take the maximum car loan financing tenure of nine years.

For young graduate in Malaysia, buying a car is more expensive both in real terms, and in terms of debt-to-income ratio due to the purchase price of the car are expensive because of tax . In reality, it means they have to either purchase a car with lower price tag or commit to a longer term loan to own a car, which cost them the opportunity of owning a home.

When Malaysian spend a substantial amount of their salary paying for a car, they are left with little savings to own a house, and their house affordability level decreases over the years as prices rise due to inflation.

Unfortunately by the time they can afford to purchase a home, be it three, five or nine years later, the price of a property would have escalated due to among other things, inflation, higher construction cost and higher land prices.

For example, an apartment today costs roughly about RM250,000 — translating to a R25,000 deposits. With an average salary of RM3,000, one may perhaps save RM500 per month (after deducting expenses) and take up to 50 months to save up for an apartment. That’s 4 years! How would young married couples cope with such costs?

Since most middle-class Malaysians earn within this average, it’s easy to see how one would be hard-pressed to afford a house, especially since property prices continue to skyrocket.

While it may be safe to say that their salary would also increase, generally speaking the increment may not aligned to the rate of inflation. In most cases, owning a home will be a huge debt lasting 30 to 40 years of housing loan repayment.

It should be in the government’s vision to ensure that Malaysian is paid well enough to buy a house and feed themselves. This is not even scratching the surface of the problem as there are many other Malaysians who earn less than RM3, 000 or even RM1, 500 for that matter.

Without stringent enforcement and specific policies to reduce income inequality and increase equality of opportunities, efforts to meet the 2020 target would be futile if not everyone can benefit from the increased economic growth.

Note:- Das Kapital, by Karl Marx, is a critical analysis of capitalism as political economy, meant to reveal the economic laws of the capitalist mode of production, and how it is the precursor of the socialist mode of production.

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