There's nothing really wrong with the group ....

In the aftermath of the news of Sime Darby's losses in the billions, an interesting article appeared in the New Straits Times today on this Malaysian conglomerate. The article started with an expression of sympathy to the CEO of Sime Darby, Ahmad Zubir Murshid, who was recently dismissed. The not so well written article by Dr Chan Chin Cheung who had been in Sime Darby from 1974 to 1992 attempted to explain the "true story of Sime Darby" in a disorderly haphazard manner as though it was written in a great hurry.

Except for Ahmad Zubir and some politicians , past and present, no other names were mentioned and that the people involved were referred to as the "lady", "someone", the "gentlemen", the "expatriate" and so on. The article related to some bad business transactions, missed opportunities, about good assets being sold prematurely, and so on during the period when Dr Chan was in the top echelon of management. The ridiculous thing about his criticism of Sime Darby was that he claimed the people in the executive management were more powerful than the board of directors even to this day, and that Sime Darby should have ventured overseas rather than compete with local industries at home. What nonsense ! The idea of business is to make money for the investors, anywhere !

On another note, yesterday I think, the clown chairman of Sime Darby defiantly said that why should the Board and indeed he himself resign, stressing that only the shareholders of Sime Darby - meaning PNB and a few others - could ask him to resign. Just before this, to show that he was tough, he ranted that there will be investigations on all the operations of Sime Darby units only to be corrected today that any investigations would be on those operations related to the Energy and Utilities Division, meaning Bakun and Qatar, which was what it should be.

Let the Euro, the Pound and the Dollar sink in the Atlantic...

We, the peoples of Asian and African countries have been made to suffer all this while by the peoples of Europe and America. They have bought raw materials from us at dirt cheap prices and sold their products back to us at exorbitant prices. They have lent us their money and made us repay the money at high interest rates. Its now time for us to hit back. Let the Europeans and Americans toil for a change. Let them feel how much we have suffered when the Yuans, Rupees, Yens, Dinars, Rupiahs become hard currencies and their worth are backed by real wealth rather than the bubbly wealth backing the Euros and the Pounds and the printing machine backing the USDs.

The trouble with the Europeans and the Americans is that they like to live it up, spending money on vacations, indulging in drinking and fornication, and borrowing money to support their lifestyle.

Of GST and such .....

I abhor GST. For one, GST is tax on your income, albeit indirectly. For another, once introduced, no government in the right mind would ever remove it in the future. And for another, it's broadbased - every product that can be made or any service that can be provided can and will be taxed. And yet for another reason, it will be increased gradually over the years.

Look at Britain for example. When they introduced the GST (or VAT as they called it) in April 1973, the rate was 10 percent. Now it is 17.5 % and lately I read that the new British government is contemplating to increase it to 20 %. Greece, which is now mired in debts, planned to raised its GST from the current 21 % to 23 %. The country imposing the highest tax rate of 25 % is Sweden.

Let's take an example of say the about-to-be introduced GST tax of 4 % in Malaysia. A raw materials supplier charged the manufacturer RM 1,040 per tonne (price of RM 1,000 + 4% tax) for his raw materials. The manufacturer produced 1,000 items out of this one tonne of raw materials. The manufacturer sells all his 1,000 items to his distributor for RM 104,000 (price of RM 100 + 4 % tax each). The distributor then sells to his dealers and charge them RM 130,000 (price of RM 125+ 4% tax each). And finally, the dealer sells all the items charging the consumers RM 169,000 (price of RM 162.50+ 4 % tax each). The total GST tax is therefore the sum of RM 40+4,000+5,000+6,500 which is RM 15,540. Compare this amount to the current 5 % sales tax and if the end product price is RM 162.50 per item, then the 5% sales tax amount to 162.50x1,000x0.05 or RM 8,125 which is considerably lower than the 4 % GST. To be sure, if the sales tax is 10%, then the tax amount is RM 16,250, which is RM 710 more than the 4 % GST amount.

Why, you may ask, would the government sacrifice RM 710 to introduce new tax system to replace the present sales tax system ? The truth is that the sales tax varies from a minimum of 5 % to a maximum of 10 % so the customs dept. may gain the RM 710 or suffer a shortfall of RM 8,125 (19,250-8,125) for the 1,000 items that end users consumed. It's therefore in the interest of the government coffers to introduce the GST. For one, the government improves its cashflow at each stage of the process from raw materials to end product. It does not have to wait for the end product to be ultimately sold before collecting the tax because it has collected the tax up to the dealers level already. For another, and best of all, it can gradually increase the GST annually on whatever excuse that it could come up with such as budget deficit, financial crisis, or whatever. The government might announce that at every budget time, the increase of GST is only 0.5 % or 1.0 %. Small amounts ! What is there to complain about on such insignificant increase. The public might not initially realise the implication of this increase because over the years, increases add up to a hefty increase at the expense of the taxpayers. Look at Greece. The government is planning to increase its GST by 2 % to 23 % in order to stave off its deficit.

To continue .........