Sunday, June 08, 2008

Oil Price Crisis in Malaysia, Currency Crisis in the Gulf


As reported by all major media last Wednesday in Malaysia, petrol price rose RM1.92 to RM2.70 a litre, cutting down the annual subsidy for petrol to only 30 sen per litre. The subsidy for diesel was also cut, raising the diesel price from RM1.58 to RM2.58 per litre.

To ease the pain, the government was said to introduce cash rebate of RM625 for private vehicles with engine capacity of 2000cc and below and RM150 for private motorcycles with engine capacity of 250cc and below. But this rebate measure will not be able to compensate the public from more increase in other prices.

Somehow, floating Ringgit maybe a cause to the current crisis. The former PM wrote in his blog that
In the first place the Government should not have floated the Ringgit. A floating rate creates uncertainties and we cannot gain anything from the strengthened Ringgit. Certainly the people have not experienced any increase in their purchasing power because of the appreciation in the exchange rate between the US Dollar and the Ringgit.
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The world is facing economic turmoil due to the depreciation of the US Dollar, the sub-prime loan crisis, rising oil and raw material prices, food shortages and the continued activities of the greedy hedge funds. The possibility of a US recession is real. In a way the US is already in recession. The world economy will be dragged down by it.


In the Gulf, the inflation and ever increasing cost of living are major concern to majority of expatriates. It is also related to pegging of Gulf countries currencies to USD which has been depreciating and bringing Gulf currencies down.

The UAE government declares that it will not de-peg Dirham from USD any time soon. Is this a good move?


Currency depegging not a panacea for Gulf economies

Recently released statistics point out to growing inflationary pressures in Kuwait notwithstanding the delinking of dinar with the dollar. Yet, the development suggests that fighting inflationary pressures requires collective monetary and fiscal policy measures.
According to a report issued by Central Bank of Kuwait, inflation rate stood at a whopping 10.4 per cent in February. In contrast, inflation rates amounted to 9.5 per cent in January and still a lower 7.5 per cent in December 2007.
The report advised that rises in property and food and beverages were chiefly responsible for the spiralling growth of inflation rates. More specifically, rental rates increased by some 16 per cent, only to be followed by rises of 15 per cent in drinks and tobacco products and nine per cent in food items.
Undoubtedly, inflation rate in Kuwait remains less of a problem compared to Qatar and the UAE, which in turn suffered from rises of 14 per cent and 11 per cent in 2007, respectively. However, Kuwaiti authorities had assumed that ending the link with the American currency would help bringing inflation under control.
In May 2007, the Kuwaiti government ended a four-year old practice of linking its dinar to the dollar. Instead, the authorities decided to return to the customary practice of linking the dinar to a basket of currencies.
Still, it is believed that the dollar carries a significant weight in the basket, some 60 per cent by one estimate. So is the case because a sizable portion of Kuwait's international trade is denominated in the greenback. This is particularly true of the petroleum industry, which in turn dominates Kuwait's exports.
The persistent decline in the value of dollar is partly responsible for inflationary pressures.
Nevertheless, the significance of other factors including consequences of rising oil prices on importing countries cannot be overlooked. Kuwait imports products from some of these importing countries, which in turn suffer from ever-rising prices of petroleum products.
The other factors causing rising inflation rates concern consequences of extraordinary growth of gross domestic products (GDPs) of major emerging economies such as China, India and Brazil. Chinese real GDP grew by some 10 per cent in 2007.
Still, there are other local factors adding to inflationary pressures, notably the solid governmental spending on the back of rising oil income, in turn allowing for steady rise in spending.
Actual results for fiscal year 2007-08 that ended in April indicated total revenue jumping by a hefty 138 per cent to $72 billion. Oil sector alone contributed $67 billion of total income, considerably higher than the projected figures of $31 billion.
Containing inflationary pressures would possibly require adoption of a mix of monetary and fiscal policies. These entail placing a cap on growth of public sector spending, as part of a broader fiscal policy. Still, similar to Qatar, Kuwaiti officials may have to consider other policy options such as putting a cap on rental rises.
Likewise, Kuwaiti authorities need to deal effectively with declining interest rates in the US. To be sure, Kuwait continues to import interest rates prevailing in the US despite linking the dinar to a basket of currencies.
At any rate, the Kuwaiti experience shows that a single measure, namely ending the link to the dollar, could not contain inflationary pressures. Solving the inflationary problem is much more complicated than probably assumed.

By Jasim Ali
The writer is a Member of Parliament in Bahrain.

Perihal Kasut



Lupakan sebentar isu harga minyak dan politik semasa. Terlalu ramai yang sudah memberi pendapat dan juga penjelasan. Minyak naik dan naik minyak.

Mari bercerita pasal kasut.

Kasut adalah salah satu aksesori 'pakaian' yang penting dalam kehidupan seharian. Kasut juga boleh melambangkan status, kelas, citarasa dan stail individu. Sememangnya sejak tercipta kasut, industri kasut berkembang untuk melengkapkan pakaian manusia.

Kisah paling popular ialah mengenai Imelda Marcos dan kasut-kasut yang dimilikinya. Kini kasut-kasut yang berjumlah ribuan itu menjadi koleksi muzium untuk tatapan rakyat yang mungkin ramai tidak mampu untuk membeli kasut.

Saya tidak mempunyai koleksi kasut yang hebat, tidak pernah membeli yang lebih dari RM100 atau AED100. Selalunya dalam RM80/AED80 sahaja. Selalunya selepas setahun, lunyai dan beli baru. Tidak pernah memilik lebih dari dua kasut, satu untuk kerja dan satu lagi untuk sukan. Bukan kedekut, kata orang, "Pakai apa yang perlu, bukan apa yang dimahukan...!"

Baru-baru ini kasut yang dibeli dua tahun lalu dan diperbaiki di Malaysia tahun lepas terus lunyai. Terpaksa membeli sepasang kasut baru.

Terlalu banyak pilihan dengan pelbagai fesyen. Masih saja konservatif. Suka fesyen lama seperti gambar di atas. Yang berkenan sepasang kasut berharga AED25 di sebuah pasaraya terkemuka.

Bukan kasut kulit, PVC sahaja. Nampak macam kulit, buatan India.

Sebenarnya, majikan ada memberi dua pasang kasut 'mahal' percuma. "Safety shoes" yang digunakan untuk melawat tapak projek dan selalunya digunakan di pejabat juga. Kadang macam koboi pula.

Tetapi kasut baru AED25 ini berbunyi bising kalau melangkah di lantai kayu dalam pejabat portacabin. Membuatkan ramai menjeling atau menjengok, siapa gerangan yang berkasut bunyi terompah. Bunyi yang agak kuat.

Walau ramai yang kasut mereka sama berbunyi kuat sewaktu melangkah, tetapi apabila kasut sendiri yang berbunyi memang tidak menyenangkan hati dan perasaan. Terasa ramai yang mengutuk. Perasan....



Lantas setelah sebulan memakai 'terompah', saya mencari-cari sepasang lagi kasut baru kerana terasa malu pula jadi perhatian. Mungkin kasut murah membuat bunyi kuat. Tiada masalah dengan kasut sebelum ini yang dibeli di kedai 'Discount'.

Kebetulan Jun ini, kedai "Sun and Sand" mengadakan jualan murah sehingga 50%. Segera menjenguk di Deira City Centre. Nah, ada sepasang kasut kulit cantik bergaya diberi diskaun hebat, dari AED400 turun ke AED100. Iaitu 75%!

Tiada saiz sesuai, yang tinggal saiz besar sedikit. Itu sahaja yang ada dan tiada pilihan. Terus membeli setelah mencuba dan berpuashati.

Hari ini saya memakainya ke pejabat dengan perasaan gembira. Diharapkan tiada lagi bunyi terompah. Boleh berjalan dengan aman tanpa menarik perhatian orang.

Sebaik melangkah perlahan dalam pejabat, memang tidak berbunyi apa-apa. Sehingga dua tiga langkah berikut, tiba-tiba bunyi dush dush macam keluar angin membuatkan saya terhenti seketika.

Masalah kasut berbunyi berjalan di atas lantai portacabin belum selesai...tetapi kami akan berpindah ke pejabat baru Ogos nanti...kawan-kawan di pejabat terpaksalah terus bersabar mendengar bunyi bising dari sepasang kasut!