Micro Economy Strategy

  • High tariff and import restriction help keep car price high in Malaysia.
    Fully imported (CBU) Mitsubishi spacegear MPV (RM145k) by parallel importer is cheaper than local assembled (CBU) Mitsubishi spacegear MPV (RM152k) by USF, a member of DRB-Hicom.
    The fully imported (CBU) Kia sophia is similarly priced as the local produced Proton Wira, is so popular that the highest authority has banned or severely restricted its importing quantity.
    The above proved that protectionism will increase the domestic car industry pricing and profit but ill prepare it for eventual liberalisation in year 2003.

  • How To Spot Companies That Will Go-under During Good Times
    The likelihood for these companies to fail is high;
    - Buying corporate jet.
    - CEO or Chairman has high media exposure rate.
    - Buying expensive artwork (eg painting) in auction.
    - Building expensive Italian fountain at corporate headquarter. 1st. August 98

  • Car Park Cost in Kuala Lumpur
    Car park in central Kuala Lumpur cost from RM2 to RM5 per hour. According to 'The Times', one year parking permit in Westminster, London's most central borough, cost GBP88 (less than MYR630). Car park cost in central KL is ways over priced. 1st. August 98.

  • Ease on Car Loans
    Demand of new cars is the product of expected disposable income. In the current economic climate ease of finance restriction will only encourage debtors to refinance. At 7 years repayment period and 85% finance margin, the car (collateral) will depreciate faster than outstanding loan, will increased finance companies risk disproportionately. Unless Proton is able to play the old trick to increase car price every quarterly to hold or increase the used car price. 30th. July 98

  • Levy At Causeway
    The proposed increase in levy on lorry using causeway is counter-productive and making local exporters uncompetitive. To encourage useage of Port Klang is to make Port Klang more competitive.
    Currently; haulage charges from Kuala Lumpur to Port Klang is about the same as lorry freight cost from Kuala Lumpur to Singapore. Shipping cost to Asean ports from Port Klang is either similar or more expensive than from European ports. Shipping cost between Port Klang and Singapore is one of the most expensive in the world for cost per mile. Poor haulage service (eg unpredicatble pick up or delivery time)
    The Government should promote large capacity daily feeder service from Port Klang to Asean ports (eg Yangoon, Medan, Jarkata), East India, Sri Lanka, etc at a price lower than Singapore to boost transhipment; liberalize haulage service and toll road. Once, these inefficiency is addressed, exporters and importers will utilize Port Klang. 18th. July

  • Ground Transport At KLIA
    Ground transport is an integral transport system to KLIA. By charging monopoly pricing on ground tranport making KLIA one of the most expensive airport in Asia. The only captured market is domestic travellers and will discouraged foreigners to us Kuala Lumpur as a hub. Furthermore, monopolize ground transport at airport is not practice in any developed country as it is less efficient. The whole KLIA particularly Malaysian Airline will be suffered from dropped in demand. We called to liberalize ground transportation at KLIA before irrevocable damage is done and to develop KLIA as a ground transportation hub eg permitting outstation coach service from KLIA to towns not served by KLIA (eg Melacca, Batu Pahat, Muar, Ipoh, etc) or at least allow oustation coach to pick up or drop off passengers at KLIA.
    6th. July 1998

  • Urban Public Transport
    To achieve the objective of urban public transport; to transport public from one place to another at low price, price of tickets must be cheap. Low ticket price can only be achieved by operating the transport efficiently at maximum capacity and lowest cost. And these can only be done by competition (eg between bus and minibus, more than one company on one route, etc), high frequency schedule and allowing self-employed operators.
    Traditionally, urban public transport in most if not all developed countries are either making losses or required Government subsidaries. Because these urban transport companies are too big and created high overhead, less frequent schedule and bureaucracy. Hence, transport cost is spiralling every year to fill revenue deficit from drop in passengers.
    We recommend to liberalize urban public transport to permit self-employed minibus operators and additional public transport companies. Otherwise, existing transport companies will be in the trap of making losses from drop in passengers. 16th. May 98

  • Buyers behaviour before expected price rise Demand of essential goods will increased dramatically before expected price rise. Any shortage of supply will fuel further demand and causing actue shortage. After the lapse of expected price rise, demand will dropped below normal requirement until excessive stock pile is consumed. 10th. Jan 98.

  • Sub-contractor v Employee The advantage of sub-contracting work is the rate is fixed. The actual total cost of an employee after including EPF, medicals, leave, bonus, support staffs, etc is 1.3 to 1.8 times of his wages. Due to high actual cost and poor productivity, employers in Malaysia prefer to subcontract large portion of their works. As sub-contractors is based on piece works, they resist to change, improve or upgrading of production technics, quality, procedure, practice and machinery, which may reduce their unit price. Industry that employ large portion of sub-contract works tend to be slow in improvement, unprofitable, poor quality and have low barrier of entry. 31st. Dec 97

  • The basic requirement of a person or family is food, clothes, house and car. For a long term equilibrium, a person or family should not spend more than 10% of his income on food, 5% of income on clothes, 3 years of income on house and 12 months of income on car. 30th. Nov 97.

  • Average wage earner in Kuala Lumpur is about RM30000 p.a. gross or RM24000 nett for take home. The average or expected living standard for the average family is living in a flat/house cost RM150k to RM200k, driving a RM45k Proton Wira, wearing a pair of RM200 Guess jeans, etc.
    To make ends meet, many if not most of these average persons have to find additional income by job hopping, engaged in direct sales, become a part time insurance salesman, gamble in stock market and speculate in property. 30th. Nov 97.

  • Issue: Food Because of demand in Singapore and limited agricultural land, food cost in Malaysia is out of proportion. Food in the supermarket and restaurants is actually cost more than in the USA and average household spend about 15% to 30% of income on food.
    Strategy: To permit automatic conversion of Malay Reserved Land to Agricultural land. 30th. Nov 97.

  • Issue: Public Transport LRT and Electric train covered only limited residential area and is expensive.
    Strategy: To extend LRT further and provide more buses to service LRT station. 30th. Nov 97.

  • Issue: Public Buses In all cities in the world, wherever there is a monopoly public bus service. The bus service is expensive and infrequent.
    Strategy: To allow multiple bus company to operate on the same route. 30th. Nov 97.

  • Issue:Residential Property Before July 97, certain residential property (i.e. Bandar Utama) is more expensive than equivalent property in London.
    Strategy: As price in property market is market forces i.e. supply and demand. But the Goverment can help to curb speculators. For property that resell in less than 3 years must pay 30% to 45% of stamp duty. 30th. Nov 97.


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