Be aware of the Economy Reality by Improving Personal Financial Management

Bank Negara already increased the Overnight Policy Rate or OPR twice since the end of the MCO (Malaysian movement control order). 

"At the height of the Covid-19 pandemic in July 2020, BNM reduced the OPR to 1.75% – Malaysia's lowest level ever. It maintained this level until May 11 this year, when it raised the OPR by 25 basis points or 0.25% to 2.00%."

"On July 6, the central bank raised the OPR again by another 25 basis points to 2.25%."

https://www.malaysianow.com/news/2022/07/15/economists-tell-who-will-feel-the-pinch-if-opr-is-raised-again

During the first OPR increment, my property investment required me to pay additional RM310.30. I have many loans in a total more than RM one million. Today, after the second OPR increment, the banks finally increase again the monthly loan payment. I have to add another RM161.00 to the existing loans. In total, I have to pay additional RM471.30 to service my existing loans. The total increment is almost 7.6% of my total loan monthly payment. 

This also means, many Malaysian have to pay additional 7.6% to their loan or monthly expenses. In other words, many Malaysians have less 7.6% ability to spend. Combining the high inflation and 7.6% less ability to spend, Malaysia economy growth will stay slow until next year. This also means I don't agree with the Malaysia GDP expansion as calculated by the ministry of finance or Bank Negara. If you look carefully, the growth during Q1 (3.8%) and Q2 (8.9%) are based on comparison with 2021. 

 

Read more at: https://www.nst.com.my/business/2022/08/821605/malaysias-economy-grows-faster-89pct-q2-first-half-growth-69pct

The actual comparison should be the comparison with 2019 when the MCO have not occurred! Measuring the economy performance when the economy at bottom low is not only inaccuracy, it is misleading as if our economy is a Trust Fund performance! So many people are being fooled by a Trust Fund performance using this technique. If the performance is really high, why the dividend return is low? If Malaysia economy is so good, look at the reality of today economy performance which is your pocket. It has minimum effect to those who work in government. But it is hard for those who work in private sector especially when prices of daily consumption has increased a lot.

Another clear indicator that the economy has not been back to the original level as before MCO, look for the retail shops around you. There are still many empty shop lots with banners "For Rent" or "For Sale". How bad is the area being hit is depending on how many shops are still vacant. Some of the retailers cannot survive when they cannot operate the business and have to close the shop forever. Some of them try to relocate to a cheaper or affordable location. If we are observant, we can see some new retailers have moved into the vacant shops. While some of the shops are still vacant.

All I can advise is spent your money wisely and carefully. We should work harder and look for opportunities for more income streams. But, my wife just bought a new CRV TCP1.5 AWD car!! It is time for us to use some of our success in property investment. But, you should beware for another OPR increment in the near future. It is closer than you think.

Happy investing!

A Sign of a Troubling Time for certain businesses

Yesterday, I brought my family for monthly kitchen resupply. As usual, we went to Jusco Taman Universiti. At first, I was excited to finally find Faiza Basmati rice. We use this rice for our daily meals. The price is affordable to my family. But, it is difficult to find the rice in a small retail shop (even it is difficult to find the rice in a two lot retail shops)

Then, I also found the new rice from Faiza (not really that new). Moghul Basmathi rice. The first time we tasted the rice was about two weeks ago. I attended my friend's daughter wedding and received a small portion of Moghul Basmathi rice as a token back home. The price?

Wow! It is a lot more expensive than the normal Faiza Kashmir Basmathi which can be bought at RM30 to RM32 for 5kg. Since I already bought 5kg of Faiza Kashmir Basmathi a few days ago, I should postpone buying a new pack of rice. May be I should try using Faiza Moghul Basmathi rice in the future.

However, I was curious with Jusco Taman Universiti. Is the business getting bad for them? There were some changes to the way the Jusco hypermarket operates since it was taken over by a local company from AEON Japan. It is harder to get regular brands. Surprisingly, I found rows of freezers being used to stock a lot of frozen foods are under maintenance.

I don't buy it they are under maintenance at the same time! These are normally where  I bought sausage, burger meat, pau, raw french fries etc. Now, more than 50% are empty due to under maintenance.

These are where I usually bought other type of frozen foods such as yong tau foo ingredients, etc. The basic business formula is to ensure there are many places to stock your supply. It is ridiculous to let the freezers left empty even for maintenance. And this is not the first time I saw this. It has been normal seeing empty freezers in Jusco Taman University for the last six months.

But at least they are still surviving compared to Giant at U-Mall which has been closed months ago! I believe, Jusco Taman Universiti is going to close down. The new owner of Jusco chain has made big blunder by changing many proven regulation by the previous owner. My family have to look for a new place to do monthly resupply.