Happy Chinese New Year

Dear readers,

In view of the upcoming Chinese New Year, I will be taking a short break from writing to focus on my family & my studies (knowledge upgrading).

To all who celebrates Chinese New Year, Happy Chinese New Year to all. May the Year of the Ram brings better tidings to all of us after a tumultuous Year of Horse.

A400M - Boost in MAF Strategic Capabilities

On February 3 2015, the first RMAF A400M Atlas took to its maiden test flight. The historic flight means soon RMAF will have strategic lift capabilities, and thus will elevate MAF abilities to move fast to face the ever evolving threat matrix.

The first RMAF A400M in flight.  Photo courtesy of Airbus Defence & Space

The first RMAF A400M in flight.  Photo courtesy of Airbus Defence & Space

RMAF Current Transport Aircraft

Currently, RMAF are operating 2 types of transport aircrafts; the venerable Lockheed Martin Hercules C-130, which is affectionately called Charlie, and Indonesian-made CN-235 transport planes.

Threat from Daish - Religion or Ideological War?

The rise of a previously obscure militant group that sought to overthrow Syrian President Bashir al Assad were first noted somewhere around September or October 2013.  The then militant group that called itself as ad-Dawlah al-Islāmīyah fī al-‘Irāq wash-Shām (loosely translated to ISIL or Islamic State of Iraq and Levant) was headed by Abu Bakr al-Baghdadi, a man believed to be a former inmate of the infamous Abu Ghraib Prison (he was imprisoned in Camp Bucca, where former interns of Abu Ghraib were placed after the Abu Ghraib scandal was broken to the world.

Back then, the civil war in Syria had worsened and US government had begun to supply weapons to militant groups in Syria that were opposed to Bashar's government.  Apparently, some of the weapons that were supplied by the US were later found to have made their way back to Iraq and were used in several attacks within Iraq itself.  It was only then that the US government realized that the ISIL that they had been supplying weapons to fight the Syrian government were actually the same Al Qaeda in Iraq (AQI or Tanzim Qaidat al-Jihad fi Bilad al-Rafidayn).  This was despite the fact that Iraqi military intelligence had warned the Americans of the links between the two groups.

DS Hishammuddin in answering the Q&A session during 3rd National Aspiration and Leadership Symposium

The Fallacy of a Patriotic Tax Payer

'I want this to be done this way, this way and not that way'

'I have the right to say because I am a tax payer'

'Do you know how much tax I pay? I pay ten times more than you'

Often we hear and read such retorts whenever we are in the midst of heated arguments on the direction of one's country or state. The view was that every single tax payer has the right to determine how his or her tax is being used in the development of his/her country.

Often, many choose to highlight the tax they paid as their patriotic contribution in nation-building.

Murkier Account of Battle of Mamasapono

The aftermath of Mamasapono attack that cost the lives of 44 Philippine National Police Special Action Force (PNP - SAF) together with 17 MILF and 5 other civilian lives is getting murkier.  After the initial shock that 44 police commandos had lost their lives in the erstwhile successful raid that was said to have managed to eliminate Marwan @ Zulkifli Hir, holes begin to appear in the official version of the incident.

Condolences to Philippines National Police Special Action Forces (PNP - SAF)

We were lucky.

In the Kampung Siminul Jaya ambush that killed 6 of our men, of which one of them was the husband of my ex-colleague, we were lucky that Kiram's terrorists did not press their advantage. Why they did not press their advantages, we will never know.

My View on BR1M

BR1M by and large is being maligned on both sides of the political divide; pro-BN side (or rather pro-Mahathir side) holds onto Tun M's argument that BR1M is a waste of valuable govt resources and should be used in subsidizing the petrol price, while pro-PR sides had claimed that BR1M is a form of bribery, a means to buy vote.

However, for those who come from economics background will understand that BR1M is what we called as negative taxation.

Govt has 2 tools in managing an economy;
1. Fiscal policy,
2. Monetary policy.

Monetary policy, ie increase/decrease of interest rates may not help to stimulate the economy. In fact, in Malaysian economic context, monetary policy is no longer flexible enough to be stimulate the economy. A decrease in interest rate will help to push people to spend, but it will result in increased loans in the property market, which has already pushed housing price far away from the reach of most working class Malaysians.

Increasing interest rate on the other hand will stifle market liquidity as cost of loans increased, and individuals may choose to save the money instead of investing them into ventures.

Another component of monetary policy, the exchange rate, can and is still be manipulated by Bank Negara. While ringgit isn't tagged to any currency anymore, revaluation of currency to stimulate the economy may have an even more adverse effect on the long term economy.

A strengthened ringgit will help to lower cost of living in Malaysia, but conversely, it will result in higher outflow of liquidity as more money is spent on imported products. Local manufacturing will also suffer hits as dropping demands for their products due to drop in foreign exports due to pricier goods and increased demand of imported goods will be a double whammy. These will affect the liquidity of these producers and they may have to close their businesses. This in turn will result in job losses which in turn force the economy to contract.

That leaves fiscal policy. Usually, in most economies, especially western economics, the step that is taken is by affecting changes in the tax.

Lowering tax is a sure way to free more money into the market.

But lowering tax rate will result in benefits that would be enjoyed mostly by higher income group. As those in this group usually have high disposable income, this may in turn result in the tax savings being saved instead of being spent.

Since the poor don't pay tax, a negative tax is introduced, ie BR1M. The effect of BR1M by large is similar to reduced tax rate, but since the recipients have less disposable income, this benefit will definitely be spent and thus, turn the economic wheel.

The problem however is at our rather inefficient distribution of BR1M.

Ideally, BR1M distribution via banking account is the most perfect method. However, due to large number of population in East Malaysia do not have and do not need banking accounts, distribution of BR1M to both states have to be via direct disbursement.

Direct disbursement in cash is dangerous. You might have instances where the money is embezzled by individuals or even by the distribution team.

Thus, printed vouchers with (security features) that need to be acknowledged had to be used (note increase in cost).

Due to lack of banking accounts, the vouchers will need to be distributed by banks. Cost to transport the cash to these locations will then again cost money.

And not to forget the allowance paid by the respective services to their staffs in helping to distribute the aid.

First published on 15th Jan 2015 at 12.37pm at https://www.facebook.com/danny.liew.18/posts/786366261400630