By Fathol Zaman Bukhari
My two thirty-something sons are in a bind. Both are married and are doting parents to a girl and a boy, respectively. They are gainfully employed and, unlike, many kids their age, do not depend on their parents for support and the proverbial roof over their heads mantra. Being financially independent, they are capable of taking care of themselves and their young families.
On that score I am fortunate. A number of my friends are not as lucky. Their extended families include their children, their children’s spouses and their grandchildren – all living blissfully under a single roof.
Most are in their mid to late sixties and had held senior positions when serving the armed forces before retirement over a decade ago. They are, by definition, pensioners as they get a monthly stipend from the government, the amount a good percentage of their last drawn pay.
I have often been teased (taunted is a better word) by my retired friends, as they are not as blessed as I am. They do not “get paid” like I do.
So there are two distinct classes of oldies in Malaysia. One consists of pensioners, the other, retirees. Which of the two is privileged? That is up to your judgment. I better avoid discussing the subject, considering its sensitivity. No, not when the dreaded Goods and Services Tax is looming ominously on the horizon.
The intention of my discussion today is not about the merits and demerits of being a pensioner or a retiree. It has much to do with the state of affairs of the country at the moment. Although Prime Minister Najib Razak has painted a rosy picture of things to come, Malaysians are hardly impressed. Escalating prices of necessities are having a far-reaching effect on laymen than racial and religious tensions.
The latest report by Khazanah Research Institute on the state of households is most depressing, as it is a sad reflection of Malaysians, in general. The report highlights inequality in several areas. The poor are getting poorer while the rich are getting richer, a natural phenomenon of a classic Third World country, of which resource-rich Malaysia is one.
The report describes the spending habits of the poor and the rich. Consumers who opt for instalment payment could pay up to 50 per cent in annual percentage rate for products, such as televisions, washing machines and fridges.
“The wealthiest pay by cash, the better-off by credit based on interest rates and the least well-off choose instalment payment which they think they can afford,” said the report.
“Low-income households, who have low financial literacy and limited access to credit, appear to choose financing based on the affordability of the monthly or weekly instalments rather than the true annual percentage rate.”
A Perodua Viva costing RM24,936 at an annual interest rate of 3.38% for nine years may cost only RM271 a month. The purchaser, upon completion of his nine-year obligation, would be paying RM6827 in interest, or 27.4 per cent of the car price.
The report said that households earning less than RM3000 have a relatively low share of total household debt, but their borrowings are proportionately higher than the rest, at seven times their annual income.
“They spend most of their income and have little savings, making them susceptible to financial stress should interest rates and inflation rise,” said the report.
The same applies to houses, where the repayment period has been extended to 35 years. Prices of houses in the country have virtually gone through the roof. Affordable homes, once the buzzword of the ruling party, are pure fiction. Houses, apartments and even the dingy two-bedroom flats are priced beyond the reach of most wage-earners.
Owning a house today is an elusive dream and the despondency of my two boys is fast becoming apparent. So what options do I have? “Bequeath your houses to them,” said a friend. That sounds logical. But would they want to stay in Ipoh when I am dead and gone?