Tuesday 19 March 2024

Who Are Active MM2H Pass Holders?

Chinese nationals are the highest number of active MM2H pass holders, at 44 per cent (24,765). This is followed by individuals from South Korea (4,940), Japan (4,733), Bangladesh (3,604), Australia (9,265), and the United Kingdom (2,234). In addition, there are more than a thousand current MM2H pass holders from Taiwan, the US, Singapore, and India.




In order to increase participation and promote the arrival of tourists and foreign investors in Malaysia, (the Tourism Ministry), in conjunction with the Home Ministry and the Immigration Department, are currently fine-tuning and outlining each proposal to improve the requirements of the program, taking into account input and feedback from stakeholders and industry players. This is according to the Minister of Tourism, Arts and Culture.

He explained that among the conditions examined are age eligibility, financial ability, minimum residency period, MM2H pass period and ease of residential property ownership. And after the plans are finalised at the ministry level, the new conditions will be brought to the Cabinet for approval before being implemented.

This is a better development and possible boost for fund inflow. We need to encourage eligible young and not so young people to come to Malaysia to work, do business or just retire and enjoy the country. Let’s not get hyped by racial or religious issues on this!


Reference:

Chinese nationals hold highest number of active MM2H pass holders, Rittika Choudhury, The Sun, 13 March 2024




Monday 18 March 2024

Proposal for a Land Corporation!

One proposal announced by no less than Deputy Prime Minister went relatively unnoticed at the recently concluded Bumiputera Economic Congress (BEC). The government plans to set up a Bumiputera Land Corporation (Perbadanan Tanah Bumiputera) to preserve land ownership, as part of an effort to strengthen the community.

If the lease size exceeds 50 acres (20.23ha) for agricultural land or 20 acres for industrial use, the proposal calls for 20 percent of the land to be handed back to the government upon lease renewal or extension. The returned portion of land would be then overseen by the corporation. The implications are tragic!

Source: https://en.wikipedia.org

If you had a small plantation of 50 acres growing oil palm for instance, and if you were non-bumiputera, you have to give up 10 acres upon lease renewal or even a mere extension. That will impact your yearly output. The amount of fresh fruit bunches decreases by 20 percent and so will your revenue. Profit may decrease even more than that because of loss of economies of scale. The corporation may hand it over to a privileged bumiputera who can then sell it back to the original lessor for a huge premium. That’s a quick and easy way to make money. Is this another “cepat kaya” scheme?

It also rivals approved permits and the infamous 30 percent bumiputera equity stipulation. Imagine the kind of havoc it will cause - factories, offices, plantations, food production etc. Currently, almost all leases are automatically renewed on the payment of a premium. 

The result of this ill-considered move to surrender 20 percent of larger tracts of land upon lease renewal or extension is a huge business disruption and the abuse of allocation of land to the privileged elite. That’s going to impact both domestic and foreign direct investments. In five cycles of lease renewal, I may have nothing! Of course I may not be around to see that but what an insidious idea!


Reference:

Comment: Zahid’s land corporation proposal is insidious, unfeasible, P Gunasegaram, Malaysiakini, 7 March 2024



Friday 15 March 2024

Interest Rates for 2024

The 2024 Global Forecast Report by the Visual Capitalist Team has projected the following interest rate scenario for 2024:


Although the Fed Funds rate may drop to 4.6% or below, it is not a significant fall but sets the stage for further cuts in 2025 and 2026. That will be helpful for Malaysia’s exchange rate. Hopefully, it will strengthen to RM4.40 (or better) to the dollar.



Although most institutions are expecting rate cut by June 2024, it could be earlier in March. The likelihood of a 100 basis point cut will mean Fed Funds rate will be 4-4.25% by end 2024.

Thursday 14 March 2024

Will Khazanah, EPF and GIP form a Consortium to run MAHB?

Khazanah Nasional Bhd, the Employees Provident Fund (EPF) and New York-headquartered private equity (PE) firm Global Infrastructure Partners (GIP) are understood to be forming a consortium to own and operate Malaysia Airports Holdings Bhd, according to a press report. An agreement could be signed in two to three weeks with equity participation on the part of GIP.

Khazanah is currently the largest shareholder of MAHB with a 32.67% stake, while EPF has 7.06% equity interest in the airport operator. MAHB manages a total of 39 airports across Malaysia and wholly owns and manages Istanbul Sabiha Gokcen International Airport in Turkey. It also has an 11% stake in Rajiv Gandhi International Airport in Hyderabad, Telangana, India.

Source: https://en.wikipedia.org


GIP, the PE firm is in the midst of being taken over by BlackRock in a US$12.5 billion (RM59.8 billion) cash and share deal. The acquisition is slated for completion by the third quarter of this year. GIP, which was founded in 2006, has US$60 billion in assets under management in diverse parts of the world, including ports, liquefied natural gas and container terminals, renewable energy assets, water treatment plants, rail transport assets and ammonia-urea plants, among others. GIP is well known for running airports. MAHB has been having issues with the Kuala Lumpur International Airport, its main asset, problems with the aerotrain, and ageing baggage handling systems and others. 

The PE firm has under its belt Sydney Airport in Australia, two airports in London — Gatwick and London City — and Edinburgh Airport in Scotland. Gatwick is one of the largest airports in Europe and serves more than 46 million passengers a year, while Sydney Airport is Australia’s largest airport and primary international gateway serving over 44 million passengers. Edinburgh Airport is Scotland’s busiest airport, serving more than 14 million passengers. From January to September 2023, MAHB’s airports saw 60.7 million passengers, while its Turkish operations at Istanbul Sabiha Gokcen International Airport catered to 28.1 million passengers. On the local front, MAHB’s passenger traffic significantly came from its largest airports — KLIA (which has two terminals, one of which is a low-cost facility), Kota Kinabalu International Airport, Kuching International Airport, Langkawi International Airport and Penang International Airport.

For the nine months ended Sept 30, 2023, MAHB chalked up a net profit of RM255.47 million on the back of RM3.54 billion in revenue. In the previous corresponding period, the airport operator suffered a net loss of RM171.94 million from RM2.12 billion in revenue.

MAHB’s net cash generated from operating activities during the nine-month period was RM1 billion. It had cash and cash equivalents of RM1.64 billion as at end-September 2023. On the other side of the balance sheet, it had long-term debt commitments of RM4.07 billion and current liabilities of RM640.6 million. Its finance costs for the nine-month period stood at RM500.35 million, even though it had almost RM1.4 billion in retained earnings.

While its financials have picked up, MAHB has been in the spotlight because of the breakdown in March 2023 of its aerotrain that connects the main building to the satellite terminal, leading to much passenger discomfort and inconvenience.

MAHB had awarded a RM742.95 million contract to Pestech International Bhd and its partner Alstom Transport Systems (Malaysia) Sdn Bhd for the design, supply, installation, testing and commissioning of an automated people mover and associated works at KLIA, including financing, operation and maintenance. The contract was to run until Feb 11, 2034.

However, MAHB terminated Pestech’s contract in mid-August 2023, citing issues of non-performance and delay risks to delivering the project by the deadline. 

In January 2024, Pestech was reappointed as contractor of the aerotrain replacement project with Alstom and construction giant IJM Corp Bhd, which is acquiring a controlling block of 44.83% equity interest in Pestech via a share issuance.

The contract awarded to Pestech at end-2021 required the new aerotrains to commence operations by July 2024, but this has been extended to March 2025. Until then, passengers will be ferried to their respective aircraft in buses.

It is time we had better management of our airports, especially KLIA – the gateway for tourists. It certainly leaves a poor impression on visitors if the aerotrain is not functioning. Several reasons could be advanced but it is essentially a case of maintenance and management. Both we seem to lack!


Reference:

Khazanah, EPF and GIP forming consortium to run MAHB, Jose Barrock / theedgemalaysia.com, 4 March 2024




Wednesday 13 March 2024

Inflation Projections by Country in 2024

 Visual Capitalist has developed infographics on inflation globally with projections made by the IMF.



While inflation looks to be easing, there remains the risk of a second wave of price pressures driven by geopolitical conflicts and supply disruptions in the Red Sea. Adding to this, a stronger than expected labour market could drive consumer demand, pushing up higher prices.

This graphic shows 2024 inflation projections around the world, based on forecasts from the International Monetary Fund (IMF).

In 2024, global inflation is projected to decline to 5.8%, down from a 6.8% estimated annual average in 2023. Tighter monetary policy and falling energy prices are forecast to dampen price pressures alongside a cooling labour market.

 Below are inflation projections of countries that suffer from hyperinflation or are close to it:



While inflation shocks driven from the pandemic appear to be over, key risks could drive up inflation:

Geopolitical Pressures: Rising shipping costs due to the conflict in the Middle East and Red Sea could continue to escalate and energy prices could increase amid disrupted supply, driving inflation higher.

Strong Consumer Demand: Accumulated excess savings could continue to fuel economies, leading central banks to remain hawkish. Persistently high wage growth—which increased about double the pre-pandemic average across advanced nations in 2023—could boost consumption and higher prices.

Rising Housing Costs: Shelter makes up about a third of the Consumer Price Index, the biggest component overall. If prices accelerate, it presents key inflationary risks. As of January 2024, U.S. shelter costs increased 6% annually.

So far, the global economy has been resilient. While risk factors remain, inflation projections suggest that the path towards a 2% target is slow but going in the right direction.

For Malaysia, inflation is likely to move up from 1.8% in 2023 to over 3% in 2024, due to tariff increases in electricity, water, SST (6% to 8%), and eventually petrol and other transport items. So, brace for cost of living issues becoming central for this Madani Government.


Reference:

Mapped: Inflation projections by country, in 2024, Dorothy Neufeld, Visual Capitalist, 28 February 2024



Tuesday 12 March 2024

Singapore Moves Swiftly on Taylor Swift!

As Malaysia seems plagued with religious extremism, Singapore saw a huge potential in concert tourism. 

Under pressure from conservative Muslims, Malaysia banned British “The 1975” while Islamist party PAS called for a ban on Black Pink concert. Likewise, Indonesia also faced similar problems when Lady Gaga and Coldplay both cancelled their concerts. The Philippines’ poor infrastructure leaves Singapore and Thailand fighting to become the hub for international concerts.

However, if Taylor Swift’s exclusive concert in Singapore was any indicator, Thailand still has a lot to learn. More than 300,000 fans from across the Southeast Asia made their way to Singapore. The island also attracted the likes of Ed Sheeran, Bruno Mars and Blackpink.

Taylor’s social media of 534 million followers is another reason why Singapore wanted the billionaire singer exclusively. With millions of fans crowding into sold out stadiums across the United States and South America, not to mention record-smashing tour in Europe, Singapore’s strategy was for her to skip Malaysia, Thailand, Indonesia and the Philippines.

As early as Feb 2023, Singapore already sent a powerful team, which included Culture, Community and Youth Minister Edwin Tong to Los Angeles to meet up with Swift’s promoters and agents.

The exclusivity clause in the agreement was kept secret till Thai Prime Minister, who was obviously upset with the backroom deal, exposed it on Feb 16. The Singapore Government had offered subsidies of up to US$3 million for each concert – in exchange for the exclusivity right. The Singapore Tourism Board has acknowledged the “grant”, but refused to unveil the amount.

The US$3 million bonus for each show, apparently revealed by concert promoter Anschutz Entertainment Group (AEG) to “deliver Asia” to Swift has also angered another ASEAN country – the Philippines. Lawmaker Joey Salceda demanded the Philippines Government to protest against Singapore Government, claiming that the method used to snatch the girl could hurt both countries’ friendship.

For a prime minister to be personally involved in a tussle for a singer-songwriter to perform in a concert speaks volumes about the economic impact – both directly and indirectly – that the 34-year-old American superstar could deliver. The “Swiftonomics” or “Taylornomics” would benefit tourism sectors of cities that she toured such as hospitality, retail, travel and dining – even hotdog vendors.

Ticket sales alone are expected to account for S$75.2 million for Swift’s shows, with about S$19.5 million going into Singapore’s pocket (75% goes to Swift). A Wall Street economist calculated that the ripple effect on Singapore’s economy as a result of the spending of one person – an average Taylor Swift concertgoer – is about S$1,385. That translates to S$415 million for the 300,000 Swifties attending the concerts.

Assuming 70% of the estimated 300,000 concertgoers are coming in from overseas and that there are two people per room over the six show nights, the direct impact on the hotel industry alone would be about S$35 million. Trip.com noted that the total volume of Singapore-related bookings surged 275% during Swift’s concert period.

Capitalizing on the Swift brand, Singapore’s iconic five-star hotel, the Marina Bay Sands,  offered “The Wildest Dreams Package” – a three-night stay, four VIP tickets and a round-trip limousine ride from the airport – at a cost of almost US$40,000. All its packages were sold out, and more than 90% of guests snapping the exclusive packages were coming from abroad.

Both the country’s flagship carrier Singapore Airlines and budget airline Scoot said the demand for flights to Singapore in March had jumped, particularly from Southeast Asia. Even Australian low-cost airline Jetstar Asia saw a demand surge of about 20% for routes connecting destinations like Bangkok, Manila, Jakarta to the Lion City.

Malaysia would probably be Swift’s last choice as her concert outfits would be “too sexy” for some Malay Muslim conservatives. Yes, as Singapore is busy making “concert economics” its new growth driver, Malaysia is struggling with a weak currency and a sagging economy Why can’t the conservatives not view the concert and/or stay away? Why do they need an outward show of piousness? Meanwhile, the former Malaysian Sports Minister called it a “missed opportunity”. This is the Deputy President of Bersatu who shares the same cabin with PAS. Can you believe this?



References:

Taylor Swift’s S$500 million economic impact – how Singapore cleverly got an exclusive deal for the pop star, Financewriter, 2 March 2024

Beyond a swift lift to Singapore’s Q1 economy, Taylor’s concerts can deliver long-term dividends, Angela Tan, The Straits Times,29 February 2024

Monday 11 March 2024

New Bumiputera Policy – Does It Benefit Everyone?

The concept and perception of bumiputera empowerment to one that is compatible with a multiracial society is now dubbed as the Bumiputera Economic Transformation (TEB). TEB has three goals, that is socio-economic justice; a sustainable nation-state; and prosperity for the country and well-being for the people.

TEB aims to close the gaps between Malaysians and ensure that bumiputeras are not left behind. The government wants to shift the bumiputera mentality towards skilled-based education from being a second option to being the first choice for industries.



This can lead to an increase in skilled bumiputera labour, which is at 29 percent compared to other races at the moment. The Government also seeks to continue to push for bumiputera equity ownership while ensuring the bumiputera agencies such as Permodalan Nasional Berhad (PNB) and Majlis Amanah Rakyat (Mara) continue to enhance bumiputera capability in all economic sectors.

TEB would not only focus on empowering corporations, but also individuals to encourage financial independence which will lead to improved quality of life for all.

Besides the TEB's three goals, it also has six resolutions.

The first is to defend the existing bumiputera agenda, including equity ownership, education, and land ownership among others. The New Economic Policy's 30 percent bumiputera equity ownership goal has not been met, with it currently only at 17.2 percent. 

The second resolution is to plug leakages when implementing bumiputera initiatives, including at the recipient stage.

The third resolution is to create equality between regions, races, and communities.

The fourth resolution is to identify new opportunities and keep up with trends and factors that influence the economy and industry needs such as the development and use of artificial intelligence.

The fifth resolution is to foster genuine relationships between the bumiputera and non-bumiputera economics.

The sixth resolution is to ensure that other races and their rights are not sidelined.

TEB also has three endeavours.

The first is to create a Bumiputera Land Corporation to enhance bumiputera land ownership and ensure balanced racial demographics, continuity for agricultural and industrial lands as well as new settlements. The third endeavour is to industrialise agriculture.

The second endeavour is on health and education. The third endeavour is to industrialise agriculture.

TEB (or NEP) now has three goals, 6 resolutions and 3 endeavours. Actually, we don’t learn enjoying being Sisyphus – roll the stone uphill and see it reel down again, and again!

If the new bumiputera policy actually benefits all, then why don’t you call it the National Economic Initiative! Actually, we do have many policies, blueprints and plans. Then why do we fail? Execution – we are poor at it, because of corruption, cronyism and compassion! Corruption was  PM’s pet topic while in the Opposition, cronyism was Mahathir’s  favourite subject and compassion is for the select elite group – those in jail awaiting pardon, those who are given DNAA, and others awaiting a decision by the AG.

Unless we change our mindset, there will be a feeling of not getting a fair “shake” or a fair “share”. Must  we wait for the next Congress?


Reference:

Govt launches new bumiputera policy painted as beneficial to all, Malaysiakini, 29 February 2024