In light of the ongoing battle against inflation which our economic policy-makers are making less than satisfactory progress, I thought I might suggest some personal measures that ordinary Malaysians may use to fight against inflation.

Don't bother fighting for more subsidies. It's not going to happen. In fact, more subsidies will be removed over time. Neither do I believe Pakatan Rakyat's promise to lower the petrol prices overnight if they get elected. Even if they try to do it, it won't last. It's just not sustainable over the long-term.

Instead, here are some more effective inflation-fighting measures. At a policy level, citizens have to insist that:

a. The government statistics department reports directly to parliament (and not to the ruling government) including for appointments, remuneration, promotions etc. Any changes have to be approved by the opposition.

Reason: Remove the government's power to fudge the figures and methodology. If you think the bumi equity calculation is the only number that the government fudges think again.

Governments around the world have a vested interest in understating inflation numbers in the official statistics they produce. It reduces wage claims by their public servants, reduces the required rate of return on government borrowings etc.

Everyone has personal experience that the basket of goods they consume (be it housing rent, rice, petrol, tolls) is rising in price much faster than the official inflation figures suggest. Multiply the official inflation figures by a factor of 3 or 4 and we get a little closer to what your average Malaysian is facing in terms of price spirals.

b. Once we have sorted out (a), then tie MPs’ salaries and packages (including perks) reviews to the inflation rate. MPs here include ministers, the deputy prime minister and the prime minister.

Reason: This will better align the interests of our MPs to that of the rakyat ie their salary increases will be tied to how well they manage to fight inflation. The lower inflation is, the higher their salary reviews will be.

More importantly, the if the inflation rate exceeds X%, their salary packages start to fall in nominal or absolute ringgit terms. Then MPs will feel the rakyat's pain. Having a clear formula makes the process very transparent and makes fighting inflation front and center of the government and opposition of the day.

Taking it one step futher, tie the renumeration reviews of all Bank Negara staff to that formula too. Both policy-maker and policy-executor have to be properly incentivised to fight inflation.

c. All privatisation contracts be made public especially as their built-in revenue (eg, toll rates, electricity rates, gas rates, water rates) collection increases. Subsidised inputs (eg, gas to independent power producers [IPPs]) will also need to be disclosed.

d. Interest rates (including bank deposit rates) have to rise above the true rate of inflation. Forget the 4% - 5% ‘official’ headline inflation figure. I estimate Malaysia's true rate of inflation to be in the 10% - 15% range.

Singapore's inflation rate is already reaching 8%. Most of our other Asian neighbours are touching or even exceeding 10%. There is no way Malaysia's inflation can be at 5% or below. It is statistically impossible (unless the statistics have been fudged - see [a])

e. The government and Bank Negara stop debasing the ringgit in order to keep exports up. Keeping the ringgit artificially undervalued reduces the power of our national currrency to fight imported inflation (ie, international inflation transmitted domestically through imports).

This is particularly pernicious for open economies like Malaysia's where exports and imports make a large portion of the GDP. The Malaysian exporters say their exports become uncompetitive then but sorry, look at where the Euro and Yen are trading today.

Do you see German and Japanese exporters lobbying for lower exchange rates? Even if their governments tried, they could not impact the value of these currencies as they are determined by currency markets.

Instead, they compete by increasing the value-add and quality of their products. This is the only known way to increase the income of an exporting nation without debasing the currency. No nation in the world has ever increased its wealth and production by debasing its currency.

Just look at Indonesia, Argentina, and Italy (before it joined the Euro). Find me one banana currency republic that has increased its nation's wealth by devaluing its currency, and I'll personally migrate there tomorrow.

At a personal level:

1. If you have savings and investments, diversify them into inflation-hedging investments. Subject to not having any impending oversupply, gold (bullion or coins, not the type you wear as jewellery) and property usually work well. Shares and bonds do not work so well in an inflationary environment.

2. Diversify assets and savings into different currencies. Why hold on to a falling currency like the ringgit?

3. If you don't have savings or investment, increase your income by increasing your skills set (easier said then done, but it can be done). Save and invest the surplus you earn.

4. If your are lucky enough to be employed by an exporting company earning hard currency, then negotiate that your salary be denominated in that hard currency. (This usually works best when your are negotiating for a new job.)

5. If you are fortunate enough to be offered employment in another country with sounder fiscal and monetary policies...(need I say more?)

6. For the poor and lower-income groups, growing your own food may help (assuming you have the land to do so. This works better for small towns and rural folk. Maybe its time to reverse some of that urban migration patterns?)

7. Barter trade. Throughout history, when currencies are sytematically being debased, people have reverted to barter trade or using alternative means of payment which cannot be debased by governments (eg, gold, cigarettes, livestock, maybe even palm oil).

Hey, even our government attempted to trade palm oil for Russian fighter jets during the Asian financial crisis when the ringgit was brought low by our own economic mismanagment (notice how I don't blame hedge funds or Jews for our financial problems unlike our previous PM).

In short, let's take charge of our own economic and political future.