According to Bank Negara assistant governor, Lilian Leong, our Malaysian government has plans to phase out our one sen coins gradually, following the rounding system to bring payments to the nearest 5 sens which will take effect from 1st April, 2008. However, it is my fervent hope that the government would not withdraw the humble one sen as legal tender.
One may ask why do I disagree with our Domestic Trade and Consumer Affairs Minister, Datuk Shafie Apdal's opinion that the rounding system is something that would benefit consumers, businesses and the government. After all, how much is its monetary worth and how much is its purchasing power in today's terms?? However, I am looking from the economics point of view. Its repurcussions and implications would be far more serious than anyone in favour of this move could expect. A B3 size photocopy at Bormas will no longer cost RM0.03. As such, the photocopy price for a piece of A4 size will no longer cost RM0.05 at a proper photocopy shop.
When the 1 sen coin is withdrawn from circulation, the next lowest denomination will be the 5 sen coin. The 5 sen coin will then become our next lowest effective unit. This will lead to price increase by as much as 20% since businessmen would have to respond to the move by recouping their effective losses by 2 to 4 times in order to survive.
I know one reason why the government intends to withdraw the one sen coin from circulation is its high minting cost. If this is the main reason, then don't use copper to display the one sen value... But there again, there may be other reasons which I do not know and that is why I am still adamant to stick to belief that the move is not good for consumers in the long run.
The currency system of many highly-industrialized countries such as UK, US, Australia and Singapore still keep their unit value though some have implemented the rounding system. US still keeps its one cent coin and UK still keeps its penny/ half pence. Malaysia should not be complacent and continue comparing its Ringgit to Rupiahs and Pesos. Use the Singapore $ as a benchmark. Singapore does not have as much natural resources to exploit unlike Malaysia and yet, their Sing $ is stronger than our Ringgit. To sustain the buying power of the Ringgit to that of the Sing $, we cannot afford to withdraw our lowest denomination from circulation.
Malaysians cannot afford another round of price increase while we are still trying to get use the fact that we have to brace for higher fuel prices in future. The headlines of yesterday's (11 February, 2008) Borneo Post read: "S'wakians 5 times richer now". To me, this is crap. No doubt our per capita income has increased by 5 times over the past two decades but bear in mind that cost of living has also increased.
One may ask why do I disagree with our Domestic Trade and Consumer Affairs Minister, Datuk Shafie Apdal's opinion that the rounding system is something that would benefit consumers, businesses and the government. After all, how much is its monetary worth and how much is its purchasing power in today's terms?? However, I am looking from the economics point of view. Its repurcussions and implications would be far more serious than anyone in favour of this move could expect. A B3 size photocopy at Bormas will no longer cost RM0.03. As such, the photocopy price for a piece of A4 size will no longer cost RM0.05 at a proper photocopy shop.
When the 1 sen coin is withdrawn from circulation, the next lowest denomination will be the 5 sen coin. The 5 sen coin will then become our next lowest effective unit. This will lead to price increase by as much as 20% since businessmen would have to respond to the move by recouping their effective losses by 2 to 4 times in order to survive.
I know one reason why the government intends to withdraw the one sen coin from circulation is its high minting cost. If this is the main reason, then don't use copper to display the one sen value... But there again, there may be other reasons which I do not know and that is why I am still adamant to stick to belief that the move is not good for consumers in the long run.
The currency system of many highly-industrialized countries such as UK, US, Australia and Singapore still keep their unit value though some have implemented the rounding system. US still keeps its one cent coin and UK still keeps its penny/ half pence. Malaysia should not be complacent and continue comparing its Ringgit to Rupiahs and Pesos. Use the Singapore $ as a benchmark. Singapore does not have as much natural resources to exploit unlike Malaysia and yet, their Sing $ is stronger than our Ringgit. To sustain the buying power of the Ringgit to that of the Sing $, we cannot afford to withdraw our lowest denomination from circulation.
Malaysians cannot afford another round of price increase while we are still trying to get use the fact that we have to brace for higher fuel prices in future. The headlines of yesterday's (11 February, 2008) Borneo Post read: "S'wakians 5 times richer now". To me, this is crap. No doubt our per capita income has increased by 5 times over the past two decades but bear in mind that cost of living has also increased.
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