Thursday, November 6, 2008

Reduce EPF from 11% to 8%

Recently Malaysia "New" finance minister aka "Next March" prime minister announced some measures to "Save" our economy, shortly after he said our economy didn't need to be saved.  Anyway, this time around I don't have much complains.  Most of the measures are acceptable for the purpose to 'Improve' economy.  Although not perfect and some measures are "Arguable" but nevertheless none is definitely stupid.

One of the measures is to allow salary earners to reduce EPF contribution from 11% to 8%.  This particular announcement has attracted quite some debates.  Basically general public response is that we should save for our retirement and should NOT use our future money.  I cann't held to be so delighted when this respond comes from the public.  It shows that we are indeed having better senses and sensitive in planning our future.  ( But there is a higher chance that people just want to complain no matter what the announcement is

I over heard from radio this morning that if 50% of the people does reduce contribution, we will have $24,000,000,000 to circulate in market which will help 'simulate' the market.  The radio hosts talk with excitement and as if that is the solution of all our problems.

if ALL reduce 3% would give $48 billions
so that means total salary drawn is $1.6 trillions or $1,600 billions

Malaysia population is 24,821,286 as of July 2007.

So even if we assume all population are working and the 24 billions are allocation for 2 years, then average montly income of a person is $2,778 

Actually working population is about 18 millions which comes to an average salary of $3,074

So it is quite obvious that the figure of 24 billions fund to 'boost' economy is a false figure.  This is not the first time this radio host publish wrong figures.  She tends to be very self center and simply announce figures that comes in her hand without proper analysis.  I am fine if she is just announcing it.  But the thing is she use that figure to justify the conclusion and reject all other callers opinion. 

So ... whatever offer you get or numbers you heard, do the math ... you will soon discover many things that seems to be 'Right' are actually ambigously 'Wrong' ...