Monday, July 28, 2008
Sunday, July 27, 2008
Thursday, May 22, 2008
When economic times turn tough, governments urge their citizens to spend. Economists think of citizens as "consumers" and rely on them to put their "disposable income" to work. By doing this they will support the economy, which translates into higher stock prices.
However, in times like early 2008, when consumers were reeling from the perfect storm of inflation, a global credit crunch, a global housing market in decline and concerns about stagflation, there is often a conflict with the governmental cry for consumers to spend. It's a bewildering scenario. What's the best course of action for a concerned consumer to take? The following strategies provide a road map for surviving economic downturns.
1. Don't Buy What You Can't Afford
We all want that designer sweater, leather handbag, or cute sports car, but most of us just can't afford to make the purchases. There's a simple solution to this dilemma. If you can't afford it, don't buy it. This is often the easiest point to understand, but it is one of the hardest to implement when all those goodies are staring you in the face and all your credit companies are telling you it's OK.
2. If You Can't Pay Cash, You Probably Can't Afford It
In our credit crazy world, amassing debt no longer carries a social stigma. Everybody has a car payment, a house payment and. Well, remember what your mother said about everybody jumping off of a bridge? Just because "everybody" is doing it, doesn't make it a good idea. Buying something you can't afford now, especially when the economy is unsettled, can double the pain of paying later. For example, if you purchase a $450,000 home today and the market goes into a slump and devalues your home by $200,000, you will be paying the bank twice what the home has come to be worth. Just because it was easy to get the credit to buy that home, doesn't mean it was the right time for you to buy in.
3. Paying Interest on Anything Makes Somebody Else Rich
When you pay interest on a purchase, you are overpaying for that item for the luxury of getting to use it now. The simple act of paying interest means that the price you are paying to make the purchase is greater than the sale price of the item. You are giving away even more of your hard-earned money in order to own that item than the manufacturer thought the item was worth. For example, if you buy a car for $25,000 with a loan at 7% interest for five years, in the end, you will pay almost $30,000 for the car. Once you factor in depreciation, you're left with a very cheap car that cost you thousands more than it should have.
4. If You Are in Debt, stop Spending Money
Sometimes, such as when purchasing a home, the cost of the item is so great that you simply cannot afford to pay cash. This should be the exception rather than the rule. When it cannot be avoided, you need to close your purse and stop spending. Getting yourself further it debt doesn't help your financial situation. Making a realistic budget in this case is the key to success. Once you know how much you're actually spending on those daily trips to the grocery store and coffee shop, you'll be able to find room to cut costs realistically.
5. Don't Count on Somebody Else to Save You
In times of economic uncertainty, people often think the government will be able to help them, but unfortunately this is often the time when the government has the least amount of money and freedom to help its own citizens. In most cases, the government won't save you, so you'll have to save yourself. When the economy is in a downturn, you can't just look at what you are spending, you also need to look at where the money is coming from. Your employer is facing the same difficulties you are: trying to make bill payments, balancing the flow of capital, all while sales are slowing. Just like you, your employer will be looking to reduce its costs, which could be in the form of layoffs. You could be in big trouble if you haven't planned for this possibility. The plan here is to start saving now for that eventual rainy day, and prepare an for yourself. If it is too late to start saving and you already need the money, many financial institutions will let you defer a payment or two if you prove you have a smart financial plan to eventually pull through.
Saturday, July 26, 2008
Rakyat Malaysia, khusus nya orang Melayu, perlu sedar bahawa di rantau kita, ada tiga Big Players; yakni India, China dan USA. Apakah tidak terfikir bagaimana Hindraf menggunakan India ? Apakah satu hari kelak rakyat M'sia keturunan China akan berpaksikan "motherland" mereka pula ? Ketentuan geo-politik amat penting bagi menentukan halatuju negara justeru jangan lah kita "menidakkan" peranan Uncle Sam dan seterusnya menjerit perasan konon nya kita ini benar2 merdeka. (Nota: TunM bebaru ini telah sedar bahawa konsep Bangsa Malaysia yang dilaung laungkan dalam V2020 tidak mungkin tercapai. Dalam sejarah kemanusiaan, samaada rampasan kuasa, peperangan atau revolusi jalanan ala French Revolution, ianya TIDAK akan menjadi reality tanpa pembabitan, secara overt atau covert, drpd segelintir manusia yang berada ditingkat teratas "kuasa Elitis" yakni, dalam susunan kedudukan manusia duniawi ).
The fact remains that we were only given the rights to scream "MERDEKA" but in practise, so long as we are part of the United Nations, WTO and the world financial architecture, what we want or plan to do, as a trading nation, remain constraint by the superpowers. These are those who can impose their will, either through soft diplomacy and if the need arise ( as we have studied/witnessed in their 200 year old history) through three forms of intervention: hard diplomacy like sanctions, economic warfare as exposed by the book "Confessions of an Economics Hit Man", ongoing surveillance or covert activities and finally, overt military intervention. These has been their "method of controlling the world" and it will be foolhardy for anyone to assume that "they will change their methods". TunM's idea of asserting East Asia "independence" through the EAECaucus (read: away from APEC and away from U.S influence) has never been well supported, even by Korea and Japan. In this part of the world, only the China/Russia SCO could act as a balancing force against the hegemony of U.S. but unfortunately, our geography does not make us a natural candidate for SCO. Hence, arwah Tun Razak's declaration of SEA as a "nuclear free zone of peace and neutrality" (i can't remember the correct acronym) remains just that: A Declaration .... and year in year out, we continue to scream MERDEKA !
Walau pun jelas cucu Kutty agak authoritarian tetapi bila dia retire, keadaan ekonomi negara, halatuju negara bab V2020 dan polisi2 kerajaan sudah dipersepsikan oleh pemerhati dunia global dan kebanyakan rakyat sebagai amat jelas. Ini bermaksud bahawa semasa peralihan kuasa diantara cucu Kutty dan anak Ulama yg mahir ilmu falak, bahawa kita sudah pun berada disatu landasan yg amat baik. Justeru, apa yg perlu diteruskan oleh kepimpinan sedia ada teramatlah simple, dan sebenarnya i.e.: TO BUILD ON THE STRENGTHS AND TO RECTIFY OUR WEAKNESSES.
It is imperative that UMNO, PAS, PKR, DAP and all other influential political parties to rise above petty and gutter politics and start to display the level of political maturity only expected from Malaysia's educated citizenry who has been longing to witness the beginning of "first world mentality". Our politicians, by their very actions or inaction (as the case may be) but mostly by what they say inside and outside Parliament, must immediately arrest the rapid decline of their image and perception. Not only are they seen to be a "group of power hungry misfits and idiots", hence it is to be expected that the majority of rakyat has lost complete respect on their elected wakils; some are even saying that these scumbags are unworthy of the rakyat's trust .... the question that must be answered asap and of course, hoping to prick their conscience (if they still have any):
When will they ever learn NOT and NEVER to underestimate the Power of the People !!
We tried out this small guest house off the Jl Hergamanah, Bandung during our last trip. The superior room is cheap (less than Rph300k including breakfast) or if you 'd like a Japanese style 2 bedroom cottage the Rumah Kayu (Rph 800k) is available too. Rooms are clean with all basic amenities including satelite tv. Best thing about the guest house is the location. You just need to walk down a back alley down and up a small hill and in 5 minutes you ll be right on the doorstep of Rumah Mode and various other Factory Outlet at Jl Setiabudi
Friday, July 25, 2008
1. President of the largest steel company?
2. President of the largest gas company?
3. President of the New York Stock Exchange?
4. Greatest wheat speculator?
5. President of the Bank of International Settlement?
6. Great Bear of Wall Street?
These men were considered some of the worlds most successful of their days. Now, 85 years later, the history book asks us if we know what ultimately became of them.
1. The president of the largest steel company. Charles Schwab, died a pauper.
2. The president of the largest gas company, Edward Hopson, went insane.
3. The president of the NYSE, Richard Whitney, was released from prison to die at home.
4. The greatest wheat speculator, Arthur Cooger, died abroad, penniless.
5. The president of the Bank of International Settlement, shot himself.
6. The Great Bear of Wall Street, Cosabee Livermore, also committed suicide.
However: in that same year, 1923, the PGA Champion and the winner of the most important golf tournament, the US Open, was Gene Sarazen. What became of him?
He played golf until he was 92, died in 1999 at the age of 95. He was financially secure at the time of his death.
The Moral:Forget work. Play golf.
Thursday, July 24, 2008
Wednesday, July 23, 2008
There is a restaurant serving Sunda food and you can choose any one of the little huts around the area as your 'room' to enjoy dinner. Just be wary of the 'sambal' that comes together with the 'lalab' (local salad mix) as it is very spicy for the unsuspecting stomach... oouch
For more information visit this site: http://www.westjavaculture.com
Tuesday, July 22, 2008
Next its Toko Tiga for Levi's jeans,
check into H Sawunggaling (w/end Rph 310k, wk/day - Rph 297k) and lunch Nasi Timbel,
then to Jln Dago for more FO, Grande, Jet Star, Blossom - more jeans, Zara, Timberland n golf tees. Dinner at Dago Tea House, more Sunda food, then cultural performances from Ciamis district…. Ended quite late so hv to cancel the trip up the hill to the Valley
Day 1 - Arrival at Husseinsastranegara Airport Bandung, just a small airport just enough for the Air Asia 737 to land next to a cemetary. Note the small terminal and even smaller arrival hall. In the photo the queue is for immigration check and once you go past that you have to scan your bags on the left and collect your baggage.
We check into Retanata homestay (Rph 300k), off Jl Hergamanah. Nice quite place just behind the Jl Juanda where there are quite a few Factory Outlets to raid later. Backalley trail to Dapur Sangkuriang for lunch (pricey but maybe becoz lots off tourist buses) Sunda food and the gurame bakar then to Rumah Mode, then to Diaz at Jl Sederhana for more handbags for the missus.Off to Jl Sukajadi for Rainbow FO (cheap golf tee/Hard Rock cafe Tees/kids Osh Kosh/Nike/Ralph/Benetton) dinner at Ampera Sunda food (local fast food chain) next to it.
Thursday, July 17, 2008
Speech by YBM Tengku Razaleigh Hamzah At The Bankers Club Business Luncheon Forum
On Tuesday, 15TH July, 2008, at 12.30 p.m.
From the General Elections to the “Transition Plan”
Ladies and Gentlemen:
On the night of March 8, like many of you I watched in disbelief as the results rolled in. Through the early hours of the morning, we all felt the political ground shift beneath us, whatever our affiliations, whatever our hopes. It gradually became clear that the 12th General Elections had changed the political landscape of the country, and that we had been thrown, not nudged, into a new era. Each of us here will remember the feelings we went through that night, the fears and hopes we felt. But four months later, where are we? Have our hopes materialized, our fears been confirmed?
2. Four months after the momentous election results of March 8, we find ourselves in a perilous impasse, in danger of losing our bearings, and seemingly unable to see a way forward through a situation of unbelievable fluidity. I don’t pretend to have a lamp to pierce this fog. Instead, I thought that today we might try to establish a common description of what is going on so that we can have a more fruitful discussion afterwards of what is the way forward. I always prefer the dialogue to the lecture.
3. Thus let me try to achieve a perspective on what happened then, where we are now, and how we can move forward. The perspective I am going to offer is from the trenches of the party political struggle that I have been involved in. As I hope will become clear to you, the present struggle I am involved in for the soul of UMNO is very much a struggle for the future of this nation.
4. From the perspective of the BN and UMNO the result of the polls was the biggest setback in our history. In one stroke four states emerged in Opposition control and we lost our 2/3rds majority in Parliament. I said at the time this put UMNO in a state of Emergency. The Party’s losses would seriously hamper our ability to govern:
a) The Federal government was now weakened in its ability to raise funds, coordinate with the States, and implement policies. Barisan lost control of 3 states from which 75% of the GDP originates.
b) With its failure in the Malay heartland states of Kedah and Kelantan, UMNO lost its legitimacy as the natural party of the Malays. Simultaneously MCA and MIC lost their leadership roles over the other major races of this country and Gerakan was more or less wiped out. A political system that had maintained stability for fifty years had been reduced to ruins.
c) With the loss of its 2/3rds majority in Parliament, the government would now face great difficulty passing the kind of inventive and bold measures that we had taken in the past to set up institutions such as Petronas and Felda. As a developing country we need such flexibility and decisiveness. More so amidst the extraordinary global challenges of our time.
Causes of our loss
5. In a speech in Gua Musang a month after March 8, I listed three core reasons for UMNO’s loss of legitimacy and what we must do:
a) Democracy had been suppressed in Umno. Via requirements such as the nominations quota for senior positions the Party prevented the renewal of talent and leadership . We must restore democracy in UMNO, and begin by restoring power to the grassroots to select their leaders at every level up to the President
b) We had failed to articulate a vision and a set of policies that transcends race. While defending its traditional vision Umno must be the party that sponsors Malay leadershp to win the trust of all Malaysians, a national party that promotes the welfare of all.
c) Too many of our leaders had been arrogant and corrupt. People of all races saw us as being high-handed, out of touch and ill mannered. We must recover our humility, our spirit of service and solidarity with the rakyat and among ourselves.
6. On that occasion I expressed wonder that a month after the Election the leadership remained in denial about the root causes of UMNO’s crisis, and hence unable to address those causes. I said Party leaders continued to block discussion and to block my call for an EGM for us to reflect deeply together, as a party, on where we had gone wrong.
7. I did not imagine that four months later, the leadership would be in even deeper denial, and would seem even more determined to prevent any party-wide accounting of what had gone wrong. Over the last months, as have suffered massive price hikes, business confidence has plummeted, billions have been wiped off our stock markets and capital has drained from our economy, the Malaysian public has grown increasingly worried as the leadership crisis continues.
8. In any normal political system, having shown such poor results, this leadership should have resigned with heads bowed. Instead we have now been handed a Transition Plan to take place in 2010, ignoring the party elections to come this December, and treating Party positions as transferable personal property. They forget that party positions are elected by the combined membership of 3 million, not inherited between 2 persons. This display of entitlement, this subversion of democratic process and legality coming after our members have expressed their demand to be heard, gives cause for people to suspect that our current leadership has lost the plot.
Denial is dangerous
9. The election was a political disaster for the Barisan government. Viewed from a historical perspective, it may have raised some hope that democracy would be reinvigorated. The easy dominance of the ruling coalition seemed to have been broken decisively.
10. That dominance had served us well in difficult phases of our history, when we faced challenges of development, modernization and nation building. It enabled us to administer one of the most stable postcolonial governments seen anywhere and to oversee steady, equitable economic development. It gave us the power to restructure our economy to promote growth and equity in a challenging multiracial context. However that same long dominance had made the party complacent and flabby.
11. The Elections showed that the Malaysian public is ahead of its political parties in demanding democratic reform and accountability. Many hoped that this would be an impetus for the BN component parties to reform themselves and for the government to finally fulfill its promises. But they also feared that the new political landscape would cause instability and stunt growth when we could least afford it, in the middle of an economic downturn.
12. Whether the present circumstances become a blessing or a curse to us depends on how the present leadership responds to it. Sadly, four months on this much is clear: our leaders lag behind in adapting to the challenges of the new political landscape, they remain locked in denial and in personal politics.
13. Instead of heeding the message of reform sent by voters and by its own grassroots the leadership has dug in to perpetuate itself with “business as usual” practices. On its present course UMNO is risking not only its own survival but also the future of the nation. The Party leadership needs to realize that we have reached a major decision point. UMNO cannot go back to the way it had been conducting itself. It must return to being the party of the common people, a political party that was also a broad social movement calling on the idealism of millions. At present, we risk destroying the party and plunging the nation into a spiral of decline.
The imperative of reform, the challenges before us:
14. Let me stand back a little from the day-to-day politics that I have been engaged in to give a more general description of our condition, so that we can think together about what might be done.
a) The nation is in a state of crisis that threatens to go well into 2010 if the so-called Transition Plan becomes fait accompli. The BN is decimated, with UMNO remaining the only sizeable party. The Opposition remains a contradictory assortment of parties with little to bind them but the personality of their de facto leader. Notwithstanding the hype of crossovers, they are in no position to take over. UMNO is the party with the history, tradition and maturity to lead the government. For this it must reform successfully.
b) Meanwhile, UMNO appears trapped with a weakened leadership that seems to lurch from crisis to crisis. The Party’s democratic processes have so atrophied that it is now neither able to hold its leadership accountable nor to renew that leadership. Any organisation, be it a corporation or a sepak takraw team or the United Nations, that finds itself in this condition is in deep trouble. The root of this crisis is of course that democracy has withered in UMNO. Democratic practices within the party have been subverted one by one over the years so that now a small group holds enormous power over millions of dis-empowered members. The top down nature of power within Umno ensures the long survival and indeed the recycling of “warlords”. These same people are rewarded with government positions, which they use to fortify their party positions. Only a genuine movement from the grassroots can retrieve the Party now. I have tried to lead such a movement by going all over the country to meet local leaders and ordinary party members to discuss the situation with them.
c) Our key institutions are at breaking point. These include the judiciary, the police, sectors of the civil service and our schools and universities. They have been on a downward slide for a while. It is time we acknowledge this challenge openly. Under a more authoritarian government it might have been possible to carry on with weak institutions, and indeed that same authoritarianism is what sapped those institutions in the first place. In our new context, those weaknesses just show up relentlessly. Put together institutional weakness, weak leadership and increasingly powerful public opinion, and the result is a crippling loss of confidence in our key institutions. Many of the embarrassments and policy reversals that you read about weekly are the result of such institutional weakness. These problems cannot be hidden anymore. We are in danger of going into a decline from which we shall not emerge for a very long time.
d) After fifty years of independence our Constitution has not yet been established as a living document among the people. To the extent it plays a role in public debate, it is used partially, rhetorically and without understanding of its intent. The very principle of constitutionality and rule of law has eroded, so that even in political parties such as Umno, there is little understanding of what it means to be a constitutionally governed organisation. The implications of this are great, not least in the matters of race and religion that are our constant challenge. If we are to emerge as a confident, united people not swayed by racial or religious rabble-rousing, we must look at ways to ensure that our leaders and our people internalise the principles of the Constitution.
e) Our politics remain a politics of personalities rather than of issues and ideas. Of patronage rather than results. When personality dominated politics degenerates you see the destruction of reputations, intrigues, spy scandals, succession plans and whatnot as stratagems to resolve leadership contests, rather than the Constitutional and democratically provided avenue of seeking an elected mandate. When group dominated by personality politics comes under challenge, the leaders dig in, call for “unity” – meaning they are not to be challenged -- and hold the country hostage to their career plans.
f) Our economic policy remains haphazard, driven by whims and special interest projects rather than by a cohesive design geared to shape areas of distinct national competitive advantage. The stillborn “Corridor” projects do not seem to have been thought out as part of a cohesive national economic strategy. Like so much we have done recently, they seem ad hoc and uncoordinated in their selection of specialisations. The term economic corridor now inspires skepticism rather than confidence. Meanwhile, the Economic Planning Unit (EPU), which used to coordinate and plan our economic strategy, has been largely bypassed under this administration. We need to staff the EPU with talented professionals again, not political appointees.
15. There is one thing each of the problems I have just described has in common: each represents a deficit in norms and institutions. Each of them demands that we renew our commitment to rigorous policy process, to the law and the rule of law. Each is a call to reform.
Ladies and Gentlemen:
16. I would love to get your ideas on my own thoughts on such ideas as the reform or Educational and Medical financing, the improvement of our cities, a renewed emphasis on rural development, and how we can return economic development initiative to the states, together with the funds to undertake those initiatives. We can talk about decentralizing economic growth, eradicating rural poverty and returning investor confidence.
17. We can talk about these during question time if anyone is interested.
18. But recent events confirm we are now in such a deep political crisis that I want to use my remaining time to press a single point: the need to prepare ourselves to retrieve the basic understandings, discipline and practices that constitute a nation.
19. We must reform and strengthen core institutions: the judiciary, security services, the schools and the civil service. These form the core institutional capability of a country. Without this in place we are in danger of taking one step forward only to take two steps back. Right now we are looking at the frightening possibility of seeing those backward steps happen before our eyes.
20. This emphasis on institutional reform applies to UMNO as much as to organizations such as the Judiciary and the Economic Planning Unit (EPU). In each case we will have to work hard to
a) re-clarify the norms, and attach clear sanctions and goals to them.
b) The law must be enforced rigorously and impartially, with the checks and balances between institutions restored
c) Lead, educate and train people to internalise these norms and practices. This requires a deep reform of our declining Education system, and it means we need to look at how we train our civil servants.
d) Meanwhile, we should look at improving the way our political institutions reflect law-governed democratic practice. The constitutions of the political parties should be made to adhere without exception to the Societies Act. Unlawful restrictions in party constitutions should be challenged and removed.
e) We need to arrest the decline in the quality of people seeking employment in these key institutions.
21. The reform of our basic institutions requires credible, committed leadership. For a while now we have had leaders more fascinated with the flashy hardware of modernity than attentive to the invisible infrastructure effective, trusted national institutions.
22. As we ensure we are doing the basic things right, we can be confident that we can once more invent the strategies and institutions to enable us to thrive in a world economy that has been completely transformed in the years since we first dared to raid its centres of power and deal our own terms with its corporate behemoths.
23. The mold is broken, the vessel split. There is no returning to the political scenario pre March 8. This is the frightening and also exhilarating thing about where we stand. We could be standing at the edge of long-term instability and decay. Or we could be on the very edge of an opportunity to re-establish ourselves as democratic, united and confident country ready once more to make our own destiny among the nations. We are in unusual times, calling for unusual effort and boldness in doing the right thing. I ask you all to join me in doing everything you can to make sure that the second scenario comes true for us all.
Tuesday, July 15, 2008
part of the article from http://futurefastforward.com/component/content/article/188
UMNO'S AND BUMIPUTERAS' DEATH WISH - THE TREACHERY OF ABDULLAH BADAWI - By Matthias Chang (LATEST UPDATE) Future FastForward, Sunday, 13 July 2008 05:26
The US is the largest debtor country in the world and its current account deficit (in the US$ trillions) cannot be balanced at any time in the near future (i.e. 20 years minimum). The dollar is now toilet paper. Tan Sri Hassan Merican, Chairman and President of Petronas has warned that very soon (between 2010 to 2012) we will be net importer of oil. There is no Plan B for the Bumiputeras and their future generations when the oil tap runs dry. In the short term, there will be very painful adjustments and disillusionment. This is also a given.
(iv) Impact of the US$ Toilet Paper
Most of our exports are paid in US$ toilet papers - crude, palm oil, electronics etc., and Malaysia is at a huge disadvantage.
Let me explain to those who have no experience of selling goods overseas and getting paid in US$.
When a Malaysian exporter gets paid in US$, the company does not get physical dollars, like when one exchanges ringgit for US$ with the Money-Changer at the shopping mall or at the local bank.
The foreign importer's bank transmits "digital money" – these are mere digits in the computer to the computer of your local bank holding the dollar account. So when the company wants ringgit, it will have to exchange the "digital dollars" for ringgit. This is done by the local bank via Bank Negara, our central bank. At any one time, Bank Negara either prints extra ringgit to exchange for the digital US$ or creates "credit digits" in the account of your local bank. When the exchange rate is RM3.8 to 1 US$, Bank Negara must create "new ringgit" to facilitate the exchange. As a result, there will be more ringgits in our economy and this is the principal cause for our domestic inflation!
This is also how Bank Negara accumulates our country's foreign (dollar) reserves which I believe stands at approximately US$128 billion.
What this means is that the so-called mighty US is buying goods from all over the world for free. The US pays for its imports by creating digits in the computer as payment for the imports. When we say that the US is in a current account deficit, it means that the US is buying more than what it sells. To overcome the shortfall in revenue from its declining exports, the US Federal Reserve creates money out of thin air, by creating "digits" in their computers (i.e. digital money). It is a global fraudulent scam, but the US has been getting away with it for so many years, because it is a big bully and the US demands that countries must accept its "digits" or else face the threat of an invasion.
(v) When Dollar Goes Into Free Fall
When the dollar goes into a free fall, as it assuredly will, the value of our dollar reserves plunges. We may have US$128 billion worth of "digits" but they will not buy US$128 billion worth of anything.
Monday, July 14, 2008
THE MALAYSIAN SOCIAL CONTRACT
Posted by Dr. Mahathir Mohamad at July 12, 2008 11:27 AM
1. Before there was Malaya and Malaysia the peninsular was known as Tanah Melayu, or Malay Land.
2. Saying this alone would result in accusations of being racist.
3. But I need to go back in history if I am going to be able to explain about Malaysia's social contract.
4. Through treaties signed by the Rulers of the Malay States of the Peninsular the British acquired the right to rule the Malay States. These treaties obviously recognised and legitimised the States as Malay States. No one disputed this. Even the aborigines accepted this as shown by their submission to the rule of the Malay Sultans.
5. Initially the peoples living in the States were divided into indigenous Malays and aborigines who were subjects of the Malay rulers and foreign guests who were not subjects of the rulers. There were no citizenship or documents about citizenship status as in most countries.
6. The foreign guests prospered in the British ruled Malay States and in the British colonies of Penang, Malacca and Singapore. The Malay subjects of the Rulers and the Rulers themselves did not feel threatened by the numbers of these non-Malays and the disparities between the general wealth and progress of the foreign guests and the subjects of the Rulers. They did not think that the foreigners who had settled in the country would ever demand citizenship rights.
7. When Japan conquered the Malay States and the colonies of the Straits Settlements, the Chinese felt insecure as the Japanese were their historical enemies.
8. Many Chinese formed and joined guerilla forces and disappeared into the jungle. When Japan surrendered the Chinese guerillas came out and seized many police stations in the interior and declared that they were the rulers of the country. They seized many people, Chinese and Malays and executed a number of them.
9. Malay villagers retaliated by killing the Chinese in the rural areas. Tension rose and a Sino-Malay war was only averted because of the arrival of British forces. But the ill feeling and animosity between the two races remained high.
10. It was in this tensed situation that the British proposed the Malayan Union which would give the "guests" the right of citizenship as indistinguishable from that of the Malays.
11. The Malays rejected the Malayan Union and its citizenship proposal. They forced the British to return to the status quo ante in a new Federation of Malaya.
12. Only Chinese who were British subjects in the colonies of the Straits Settlements were eligible to become citizens in this new Federation. Naturally the Malay citizens far outnumbered the Chinese Malayan citizens.
13. Chinese leaders appealed to the British, who then persuaded the UMNO President, Dato Onn Jaafar to propose to open UMNO to all races. This proposal was rejected by the other UMNO leaders and Dato Onn had to resign.
14. The British kept up the pressure for the Malays to be more liberal with citizenship for non-Malays.
15. Tunku Abdul Rahman, the President of UMNO decided on a coalition with MCA (Malaysian Chinese Association) and the MIC (Malaysian Indian Congress). In the 1955 elections to the Federal Legislative Assembly, since there were very few constituencies with Chinese or Indian majorities, the MCA and MIC partners had to put up candidates in Malay majority constituencies after UMNO undertook not to contest in these constituencies but to support MCA Chinese and MIC Indian candidates instead.
16. Such was the support of the Malays for the MCA and MIC alliance candidates that they won even against Malay candidates from PAS. The MCA and MIC candidates all won. Only UMNO lost one constituency against PAS.
17. The Tunku as Chief Minister of a self-governing Federation of Malaya then decided to go for independence. The British continued to inisist on citizenship rights for the Chinese and Indians as a condition for giving independence.
18. To overcome British resistance to independence and to gain the support of the Chinese and Indians, the Tunku decided to give one million citizenship to the two communities based purely on residence. One notable new citizen was (Tun) Leong Yew Koh, a former general in the Chinese National Army who was later appointed Governor of Malacca.
19. It was at this stage that the leaders of the three communal parties who had formed the Government of self-governing British Federation of Malaya, discussed and reached agreement on the relationship between the three communities in an independent Federation of Malaya.
20. It was to be a quid pro quo arrangement. In exchange for the one million citizenships the non-Malays must recognise the special position of the Malays as the indigenous people. Certain laws such as the pre-eminence of Islam as the state religion, the preservation of Malay reserve land, the position of the Malay Rulers and Malay customs and the distribution of Government jobs were included in the understanding.
21. On the question of national language it was agreed that Malay would be the national language. English should be the second language. The Chinese and Indians could continue to use their own languages but not in official communication.
22. Chinese and Tamil primary schools can use their languages as teaching media. They can also be used in secondary schools but these have to be private schools.
23. For their part the Chinese and Indian leaders representing their parties and communities demanded that their citizenship should be a right which could not be annulled, that they should retain their language, religion and culture, that as citizens they should have political rights as accorded to all citizens.
24. Much of these agreements and understandings are reflected in the Federal Constitution of Independent Malaya. For everything that is accorded the Malays, there is always a provision for non-Malays. Few ever mention this fact. The only thing that attracts everyone's attention and made a subject of dispute is what is accorded the Malays and other indigenous people.
25. Thus although Malay is to be the National Language, Chinese and Tamil can be used freely and in the Chinese and Tamil schools. In no other country has there been a similar provision. Even the most liberal countries do not have this constitutional guarantee.
26. The national language is to be learnt by everyone so that Malayan citizens can communicate with each other everywhere.
27. It was understood also that the Chinese language referred in the understanding were the Chinese dialects spoken in Malaysia, not the national language of China. Similarly for Malayan Indians the language was Tamil, not Hindi or Urdu or whatever became the national language of India. However, the Chinese educationists later insisted that the Chinese language must be the national language of China i.e. Mandarin.
28. The official religion is Islam but other religions may be practised by their adherents without any restriction. As the official religion, Islam would receive Government support. Nothing was said about support for the other religions. The non-Malays did not press this point and the Federal Constitution does not mention Government support for the other religions. Nevertheless such support have been given.
29. A quota was fixed for the Malayan Civil Service wherein the Malays would get four posts for every one given to Chinese or Indians. However it was recognised that the professional post would be open to all races as it was never thought possible there would be enough Malays to take up these posts.
30. The result was that in the early years of independence there were more non-Malays in Division 1 than Malays.
31. The Agong or the Rulers of the States should determine quotas of scholarships and licences for Malays. But no one should be deprived of whatever permits or licences in order to give to Bumiputras.
32. The position of the Malay Rulers was entrenched and could not be challenged. There would be a Paramount Ruler chosen from among the nine Rulers who would serve for five years.
33. The rulers were to be constitutional rulers. Executive power was to be exercised by elected Menteris Besar, Ketua Menteri (Chief Minister) and Prime Minister, assisted by members of councils and cabinets. The British practice was to be the model.
34. The most important understanding was the adoption of Parliamentary Democracy with a Constitutional Monarch, again after the United Kingdom model. It should be remembered that the British imposed an authoritarian colonial Government on the Malay State, the power resting with the Colonial Office in London.
35. Before these the Malay States were feudal with the Malay Rulers enjoying near absolute power. Only the elites played a role in State politics. The Malay subjects had no political rights at all. Certainly the guests had no say in politics. Even the Chinese and Indian British citizens had no say though they may be appointed as Municipal or Legislative Councillors.
36. The decision to adopt a democratic system of Government was a radical step in the governance of the Federation of Malaya and of the Malay States. This was agreed to by the leaders of the three major communities as represented by their political parties i.e. UMNO, MCA and MIC. There can be no doubt that these parties represented the vast majority of the three communities in Malaya. The Communists and the other leftists did not signify their agreement to the understanding.
37. The Reid Commission was briefed on all these agreements and understanding so that they will be reflected in the Constitution to be drawn up. All the three parties approved this Constitution after several amendments were made. In effect the Constitution became a contract binding on all the three communities in the Federation of Malaya upon attaining independence in 1957.
38. When Sabah and Sarawak joined the Peninsular States to form Malaysia the social contract was extended to the two Borneo States. The natives of Sabah and Sarawak were given the same status as the Malays. At this time the word Bumiputra was introduced to distinguish the indigenous Malays and Sabah, Sarawak natives from those descendants of foreign immigrants. Because Malay was widely used in the Borneo States there was no difficulty in the acceptance of Malay as the national language. The fact that the natives of the two states are not all Muslims necessitated no change in the Constitution once the word Bumiputra was accepted. But the official definition of a Malay remained.
39. The embodiment of the social contract is therefore the Constitution of first, the Federation of Malaya and then Malaysia.
40. To say it does not exist is to deny the contents of the Constitution which was based upon the acceptance by the leaders of the three communities of the original social contract.
41. All subsequent actions by the Government were the results of this social contract. The fact that the initiators of this social contract and their successors were endorsed by the people in every election reflects the undertaking of the people to honour this social contract.
42. Saying that the social contract does not exist is like saying that Malaysia exists in a vacuum, without a Constitution and laws based on this Constitution.
43. Implementing the social contract requires understanding of its spirit as much as the letter. The social contract is aimed at creating a multi-racial nation that is stable and harmonious. Any factor which would cause instability and result in confrontation between the races must be regarded as incompatible with the spirit of the social contract.
44. For 50 years no one seriously questioned the social contract. Even today the majority of Chinese and Indians and the indigenous Malays and natives of Sabah and Sarawak accept the social contract. But because Dato Seri Abdullah Ahmad Badawi basically lost the 2008 election and now heads a weak Government the extremists and erstwhile detractors have questioned the social contract. The Bar Council has now become a political party believing that its expertise in law will exempt it from being questioned as to its credentials and its political objectives.
45. Abdullah's UMNO is incapable of countering any attack on the social contract. If anything untoward happens Abdullah and UMNO must bear responsibility.