Monday, April 27, 2015

Power: 10 Points

We see many media reports nowadays about the abuse of power across the board. Why?

1. Human beings have been abusing their powers all their human lives on earth. They conquer their surroundings, they conquer other creatures, they conquer other people. But they have no conquered themselves.

Each of us starts by being nothing. We get bullied when young, and we didn't like it. One reaction is to begin to bully others when we have the power. The other is not to bully at all, because we disagree with it and we don't like it.

2. We start being a nobody at first. One goal in life then is to try to become someone. Many try to be someone by associating themselves with well-known people and claiming friendship with these people. They name drop often. They become sycophants. When they manage to get themselves to be recognised by the general public, they start lying about their importance. They can also enhance their importance by lying about other people to their well-known friends.

3. When the government sanctions that a certain section of society or any of its characteristic is privileged. Privileged is taken to be special and exclusive. "I have the right, you do not have the right." This sense of privilege is dangerous because it can be easily taken to extreme. All the massacres in history came from here. It started from lowliness, fear and insecurity. This government-sanctioned right, privilege and exclusivity of a certain section of society is dangerous.

4. Power cannot be bestowed on anyone. This is why human beings are born ignorant, myopic, and short-lived. The Tree of Knowledge is a dangerous thing, especially when it grows in a person without wisdom. Knowledge is power, and that's why power must be exercised with great caution, restraint, discipline and reluctance, together called enlightenment.

5. Power must be accompanied by compassion. So that we can use our power to do good. If you cannot do good and offer power, you do decline the power. Don't acquire power to abuse others or yourself. The whole world is not about you. You are about you, but not necessarily all about you. Pity those who have no power. Help them with the power you have.

6. Fear power. You may not be good enough to handle it for your own good, or for the good of others.

7. Power in the hands of the incompetent is a dangerous thing.

8. Wise people with real power pretend to be powerless. Ignorant people with no real power pretend to be powerful.

9. Don't seek power; seek energy.

10. Don't just seek knowledge, seek wisdom which is real power.

Wednesday, April 15, 2015

EPF

I think the Employees' Provident Fund (EPF) has been doing an excellent job in firstly safekeeping our retirement fund and secondly in providing probably one of the best rates of return on investments for those funds.

What the banks give as interest rates on savings are at best half of the EPF rates of return. For those retirees who are going to just rely on their retirement funds as sustenance in their twilight years, the best thing to do is to leave their money with the EPF for as long as they can (currently, 75 years of age) or until the deposit rates in financial institutions in Malaysia rise to decent rates.

Of course, there are people who have their dreams to pursue on retirement (currently 60 years of age). There is this "big" sum of money that they are going to get their hands on to "solve" all the money problems they have been having all their lives. Or, for once in their lives, they do not want to be bossed about anymore and they are going to be their own bosses. They are going to invest their own funds and set up their own businesses ("fried kway teow" stalls used to be a very common idea). Some may simply want to "take their money out" and live abroad and be done with their wonderful country which has been feeding their grandparents, parents, themselves, children and grandchildren. Everybody has dreams that the "grass on the other side is greener."

This is not the current issue. Everybody can do what they like about their own money, their "hard earned" money, money they have "slogged all their lives." The issue is whether the age for full lump sum withdrawal should be increased from 55 to 60 years of age, as this official retirement age has now been extended from the government sector to the private sector in 2013.

It is logical for EPF to consider whether this issue of raising the age of full withdrawal from 55 to 60 years of age. It is an administrative issue which needs to be addressed, whether EPF likes the idea or not.

The most logical answer is that, in line with the increase in the official retirement age for all employees in Malaysia to 60 years, according the age for the full withdrawal of EPF funds should also be on retirement on reaching 60 years of age.

But there is such a thing as "early retirement" or "optional retirement" and it is only natural that these options should be built into the scheme for full withdrawal. Nobody wants to be caught in a situation when one opts for early retirement but have no access to one's entire EPF funds.

The argument that usually the entire EPF funds upon withdrawal will be gone within three years or so. (I know of a case where the cash didn't last three months because of excitement over an investment dream.)

But this is not for EPF to impose its value judgment on the retiree. It is for the retiree to take full responsibility for his or her money.

The only thing that EPF can do in this regard over the quick disappearance of fully withdrawal EPF funds is to offer more attractive schemes for the retirees to keep their money in the EPF. If EPF is interested in doing a customer outreach or a PR exercise, it may want to put some effort in building the confidence that EPF is the best place to keep your hard earned savings, as it is safe and the returns are the best. EPF can think think more like an insurance company.

I think various schemes have been rolled out in the past and they are good. But this may be the time to overhaul the entire EPF framework to take of retirees who do not seem to be in a hurry to go. I think this is an opportunity for EPF to put its best foot forward and do real public good. There may be hope for Malaysia in EPF.

Tuesday, April 14, 2015

Service Charge

The systematic attack on the poor consumer by the authorities and the businesses is a concern which should not be taken lightly. The service charge is a virus.

The story of the service charge started with the imposition of the service tax in 1975. The service tax is the precursor to the current goods and services tax imposed on 1 April 2015. The GST extends the indirect tax to goods after having restricted itself to services. It was the wisdom of the government of the day that a value-added tax such as the GST is very difficult to impose in a society like Malaysia because of the varying structure of commerce and businesses as well as education. So the decision to cut off the tax for small businesses and only restricting them to hotels and restaurants which were assumed to be run orderly by a hotel or restaurant manager with accountants and lawyers to assist them.

But, of course, once the government has sanctioned a way for itself and businesses to impose a sum of money on the consumer which has very little to do with the food or drink or even service, the government has created a whole new avenue for all sorts of charges to be imposed.

In some restaurant tradition, the tips to the staff are taken from the towels, peanuts and tea that they serve. This was understood by the restaurant owners and the workers. With the advent of the service tax, for restaurants that were not supposed to impose the service tax, they created a new entry called service charge. This service charge could be imposed in lieu of the towels, peanuts and tea. Worse, the service charge could also be imposed on top of the towels, peanuts and tea.

The most recent adaptation of the charging system is that there is a service charge and the service tax is called government tax, because they may have too many customers asking why there are two service fees.

The biggest problem of the current GST is that it is reawakening everybody to the same old world of how the government can collect more taxes and how businesses can abuse the system alongside it. The government is being badly advised and the civil servants have very elementary knowledge of how to tax properly without damaging the economy. To make a bad idea work, we now have the enforcement agencies newly hiring ignorant fresh officers to harass businesses that are not compliant with the GST laws. At the same time, businesses are now having a great time imposing GST or some other charges on the poor consumer whether they are supposed to or not. The exemptions are an art in themselves, and the consequence of this confusion will be that everything will now be charged more.

The consequence of this confusion is a major economic slowdown as investors cannot read the future. This can have major political implications.