Below is the actual RM that I get from the same amount of USD for the past three month.

Statistically, my PayPal conversions have been reducing 2.1% from 17/08 to 19/09 and another 3.3% from 19/09 to 17/10. The conversion is staggeringly less by 5.3% when you compare the difference from 17/08 to 17/10! If the trend continues, one of my PayPal account payment will be losing RM1.2k in 5 months or 15% from the gross income. Ouch, it really hurt…

And this is classic example on how export oriented companies losses money from currency conversion. One of the known example is when IOI losing RM100 mil in forex losses just three months!

The fact is, as US are currently under economic meltdown, it natural for its currency going south. However, less affected countries like Malaysia will experience spike in its currency. Though it’s good to know that, the harm will be on export oriented company with very low profit margin like manufacturing company.

Should you involved in overseas income and given that our currency strengthen against USD, you have to increase prices in USD just to make sure getting the same revenue in RM. Without any improvement, what makes you think people will keep on paying higher price for the same products?

And this very question is crucial if we plan to survive in the next economic wave. If you find the answer, it’s what exactly ‘high-income country’ should be (like what Najib aspire what Malaysia should be in 10 years time).

I think, we are currently in a super-critical crossroad here: depend on cheap labour to manufacture products since our currency is so much lower than USD or move up the value chain for higher income as our currency become more ‘expensive’? The latter is definitely no easy job, but we’ll be caught in ‘middle-income trap’ if we keep on depending on depressed currency.

Honestly speaking, I like the business transformation in IBM. IBM used to be selling computer hardware. Its products cover various components which include server, hard disk and of course PC too. Until certain point where it sees business flat, no more profits growth, cannot subsidized employees annual increment or bonuses, the management back then decided for historic transformation and bold move.

They focus on solution-oriented services rather than selling physical components. To me, the most successful growth story is when they solve high traffic problems in Sweden.

The working principle is simple.

They design a system for the local authority to impose higher fees for car that are passing the road in peak hours and less in other time. Rather than conventional toll system, they make it free flow but used some sort of scanner to grab the plat number, store it in their hard disk, sent it to centralised database for personal details which then up to authority to send the bill statement by end of the month.

Look at how they add value to their product and move up the value chain.

Are we ready for the transformation? Do we have enough capability? And most importantly, are we dare to sail the sea that have no sight?

If you are running any kind of businesses, keep on thinking how you can add value to solve your customer problems. For now, that’s all I should do to at least maintain my online income. Never think of putting adsense everywhere will make me millionaire anytime sooner.