Are We Doing Something “Fishy”?

Within waters Malaysia considers its own, Chinese coast guard vessels and maritime militia boats maintain a near-constant presence. For 10 years, Malaysia has done little to contest them. Malaysia also must venture farther out to sea, raising the likelihood of a direct confrontation with China.

As tensions rise, energy demands are drawing Malaysia deeper into the fray and testing the country’s long-standing reluctance to antagonize China.

Source: https://japan-forward.com

Some of Asia’s biggest oil and gas reserves lie under the seabed of these disputed waters, according to the U.S. Energy Information Administration. Since 2021, Malaysia’s state-owned energy company, Petronas, has awarded several dozen new permits for companies like Shell and TotalEnergies to explore new deposits within Malaysia’s Exclusive Economic Zone (EEZ).

Since 2020, China has been harassing Malaysian drilling rigs and survey vessels. For years, Malaysia’s response has been muted — a calculation shaped by reliance on Chinese investment and the relative weakness of the Malaysian military. Unlike the Philippines or Vietnam, Malaysia rarely publicizes Chinese intrusions into its EEZ, which extends 200 nautical miles off the coast.

Despite objections from countries in Southeast Asia, China has laid claim to almost the entire South China Sea, building artificial islands and deploying vessels to enforce what it calls the “10-dash line,” delimiting on maps the boundaries of what China says are its waters, which come within 25 nautical miles of the Malaysian coast.

Malaysia has for decades sought to “decouple” the South China Sea dispute from trade and investment with China. But the country’s need for offshore oil and gas is starting to upset this delicate balancing act.  Chinese coast guard vessels have repeatedly disrupted operations at the Kasawari gas field. This contains an estimated 3 trillion cubic feet of gas and where Malaysia has recently built its biggest offshore platform. 

Nearly 60 percent of Malaysia’s gas reserves are located off the state of Sarawak. Starting in 2020, Petronas ramped up exploration. Two years later, having reported a string of new discoveries, the company awarded 12 new licensing contracts to energy conglomerates looking to operate in Malaysia, the most since 2009.

In 2018, after harassment by Chinese vessels, Vietnam called off a major oil project midway through construction, leaving the companies involved with an estimated $200 million in losses. That incident was a “shock to the industry” and drove companies to reconsider investments in the South China Sea. Malaysia’s new discoveries are encouraging companies to return. But the risks now are arguably higher than ever.

Chinese officials, however, denied that its planes had ever entered foreign airspace. A Chinese state-run think tank, the National Institute for South China Sea Studies, said military aircraft were free to fly over the airspace of the South China Sea since its boundaries were “unclear.”

Since 2021, Malaysia has also been increasing defence spending and strengthening military cooperation with the United States. Malaysia has received drones, communication equipment and surveillance programs, including long-range radar systems, installed on Borneo, to monitor the sovereignty of airspace over the coastlines.

The problem lies in our balancing act – wanting Chinese investments and trade vs. economic rights in the EEZ. Where are those people who raised raced-based issues? If you are so against a retail operator or cannot compromise on Jewish products or influence, surely you must be vocal to mempertahankan kedaulatan Negara?

Reference:

Malaysia’ appetite for oil and gas puts it on collision course with China, Rebecca Tan, https://www.washingtonpost.com, 11 May 2024

Malaysia Does Not Acknowledge Sanctions?

Malaysia does not acknowledge sanctions imposed by individual countries, said our Home Minister. This is after a meeting with the US Treasury department’s top sanctions official. Malaysia will only recognise sanctions if they are imposed by the United Nations Security Council. 

The U.S. Undersecretary for terrorism and financial intelligence, said the sanctions are still in place for four Malaysian companies. The sanctions would see money in US accounts or accounts with a US correspondent blocked or frozen, thereby preventing these companies from accessing funds.

Source: https://en.wikipedia.org

The US Treasury imposed sanctions on the four Malaysia-based companies in December. It was reported that these companies were providing components for Iran’s weapons programme. Washington recently imposed further sanctions targeting Iran, including over

Iranian drones used by Russia in the war in Ukraine, as the US seeks to increase pressure on Tehran after its attack on Israel.

Reuters previously reported that there had been an uptick in money moving to Iran and its proxies, including Hamas, through the Malaysian financial system.

Who exactly are we? The second largest economy in the world? Our GDP is only 1.5% of the GDP of the U.S. And we pretend to behave as if we have clout. Please, we can’t go to war with the U.S. and destroy our economy.

References:

We don’t recognise by individual nations, says home minister, Ameera Huda, FreeMalaysiaToday, 9 May 2024

Sanctions on Malaysia-based companies impactful, says to US Treasury official, Sean Augustin, FreeMalaysiaToday, 9 May 2024, 

Investments and FDIs: Are These Real?

Source: BNM Annual Report 2023

FDI inflows...

Source: BNM Annual Report 2023

In slide 1 above on investments, total approved investments improved to RM330 billion. But of this amount, only about 30% gets implemented in a two-year time frame. The bulk is in E&E and ICT. The figure of 74% “are in various stages of implementation” is just confusing, not a factual evidence based on results. Other investments public/private sectors are long-term in nature (2026/31). 

In slide 2 about FDI inflows by type of investments, there is almost a 50% decline in 2023 (from the previous year). The source countries are Singapore, Hong Kong, Japan and China. The services sector (financial, ICT and healthcare) was the primary beneficiary.

We can’t depend on FDIs and investments, the economic engine has to shape consumption, without creating inflationary pressures; more policies to improve the ringgit; and, enhance exports of goods and services (which declined in 2023).

Reference:

BNM Annual Report 2023

Indonesia’s Central Bank Hikes Rate!

Indonesia's central bank delivered a surprise rate hike on 24 April 2024, stepping up efforts to support the rupiah against selling linked to global risk aversion and a delay in US policy easing. Bank Indonesia (BI) raised the seven-day reverse repurchase rate by 25 basis points to 6.25%, its highest since the bank made the instrument its main policy rate in 2016.

Six of 35 economists polled by Reuters had predicted the hike, which was BI's first since October.  BI also increased the overnight deposit facility and lending facility rates by the same amount to 5.50% and 7.00%, respectively.

Source: https://en.wikipedia.org

The rupiah extended gains after the announcement and was up 0.45% against the dollar at 0736 GMT at 16,140. The central bank has been intervening to defend the currency, which had fallen to around 16,200 per dollar — the weakest since 2020. 

Indonesia's annual inflation rate climbed to a seven-month high in March, though it remained close to the midpoint of BI's 1.5% to 3.5% target range. BI kept its outlook for growth in Southeast Asia's biggest economy at a range of 4.7% to 5.5% this year, compared to last year's 5.05% growth.

Malaysia is unlikely to change its OPR (overnight policy rate) of 3% anytime soon. This is because BNM is biased to growth rather than exchange rate. As it stands, we have 2.25-2.5% negative interest differential against the U.S. Further, inflation is likely to climb above 3% with targeted subsidies being implemented progressively. That’s a negative real interest rate. Savers are punished rather than borrowers! Trade improvements and net FDIs are the bright spots for 2024. These will not outweigh the interest rate and inflation factors. So, the chances of exchange rate strengthening to 4.40 to the U.S. dollar are now diminished!

Reference:

Indonesia’s central bank delivers surprise rate rise to support rupiah, Gayatri Suroyo, theedgemalaysia.com, 25 April 2024

Rebound in Global Trade and Malaysia’s Export Growth!

 

                                                                                                               Source: BNM Annual Report 2023

Current account surplus to improve?

Source: BNM Annual Report 2023

Six growth outlook remains subject to downside risks.

Source: BNM Annual Report 2023

Rebound in global trade and Malaysia’s export growth is primarily led by recovery in the technology and tourism sectors. A strong recovery in semiconductor sales is forecasted for 2024. Inbound tourism is expected to be 27.3 million persons. Higher commodity prices are another supporting factor. None of which are in our control. So, the recent “threat” of sanctions by the U.S. on our covert activity in financing Hamas and others will certainly change this scenario. PMX cannot be the PM for both Gaza and Malaysia!

Reference:

BNM Annual Report 2023

How Will EPF Account Restructuring Address Members’ Needs?

The Employees Provident Fund (EPF) has unveiled a significant restructuring of its members’ accounts aimed at bolstering their income security post-retirement while catering to their life cycle needs.

Effective May 11, 2024, the restructuring will transition from the existing two-account system to three distinct accounts: Akaun Persaraan, Akaun Sejahtera, and Akaun Fleksibel. EPF members under the age of 55 will witness their accounts transformed into the new structure. Balances from the existing Account 1 and Account 2 will be transferred to Akaun Persaraan and Akaun Sejahtera, respectively. Akaun Fleksibel will be initialised with a zero balance.

All subsequent contributions after May 11, 2024, will be allocated as follows: 75% into Akaun Persaraan, 15% into Akaun Sejahtera, and 10% into Akaun Fleksibel. Between May 11, 2024, and Aug 31, 2024, members will be provided with a one-time option to transfer a portion of their savings from Akaun Sejahtera to Akaun Fleksibel as an initial amount. The transfer will be based on a predetermined formula, allowing members flexibility in managing their financial resources.

Akaun Fleksibel will commence with fresh contributions credited to members’ accounts after the implementation date. Those opting for the initial transfer will have the amount determined based on the balance in their Akaun Sejahtera at the time of application.

Members will enjoy flexibility in withdrawing funds from Akaun Fleksibel, subject to a minimum withdrawal amount of RM50. Withdrawal applications can be conveniently made online through KWSP i-Akaun or at any EPF branch nationwide. Upon reaching the age of 55, members’ savings across Akaun Persaraan, Akaun Sejahtera and Akaun Fleksibel will be consolidated into Akaun 55. Subsequent contributions will be channeled into Akaun Emas.

For those who do not touch their EPF savings, nothing changes and his/her AP balance will be growing at a faster rate.

Second, for those who withdraw from AF and leave zero or no balances, overall, they will lose out when it comes to retirement as their effective savings, based on employer and employee contribution of 23% or 24% will be reduced to 20.7% and 21.6%, respectively, per month, and this will reduce the compounding effect of their EPF savings and a lot less at retirement age.

It is unlikely that most of the EPF members will have sufficient savings at the point of retirement to enable them to live over the next 20 years after the age of 55 based on Malaysia’s current life expectancy. Over the last decade, the EPF has adjusted the benchmark for basic savings, targeted at 55-year-old individuals, on three occasions. Initially set at RM196,800 in 2014, it was raised to RM228,000 in 2017, and then increased to RM250,000 in 2019.

The creation of AF may be a boon to some members but also a bane to others who do not wish to be tempted to use their retirement savings like an Automated Teller Machine (ATM). Tapping into AF will result in lower retirement savings and perhaps cause a retirement crisis too due to insufficient income post-retirement.

Over the years, especially during the pandemic, the EPF has been a source of funds to many to the extent we do not have enough retirement savings. Based on statistics as at the end of 2023 and as provided by the EPF, the current median savings of all members and members in the 50-54 age group of RM10,898 and RM38,731 respectively. For some, the EPF is not the only retirement savings that they have, they may have other assets or investments that could tie them over as well as the age of 55 is no longer a retirement age. Some will continue to work for a good five years at least or even more if under contract, which can help them build up their savings. 

But the key point missing in all of this is that EPF is a retirement fund. Period. Not a convenient financial house. Do we want another bank or a retirement scheme? The original purpose of EPF was to meet expenses in our retirement years. As we amend this, akaun fleksibel which is 10% now, may increase to 80% later when a crisis like Covid hits us?

References:

How will EPF account restructuring address members’ life style needs? Eynez Syazmeena, Focus Malaysia, 25 April 2024

EPF’s third account, both a boon and a bane, Pankaj C. Kumar, The Star, 27 April 2024

Malaysia’s retirement savings crisis exposes deeper problems, Por Heong Hong, Aliran, 

23 April 2024

Who is to Blame for the Decline of British Universities?

It is not a great time to be a university in the UK. First came Brexit, with its impact on European students who now prefer destinations like the Netherlands, which are much cheaper and still provide top-notch education. Then came the pandemic, with remote lectures and enraged students asking for their money back. 

Now, the U.K. government has decided that the education sector drives up migration numbers, and wants none of that. So overseas students are no longer allowed to bring family members with them through the dependants’ route. There’s an exception only for PhD students or those in research-led masters courses.

The U.K. government has claimed that some were abusing the system. But it’s hard to see how someone would enrol and pay for a master’s programme in the UK just so they can bring their partner. The countries with the highest number of dependants coming with enrolled students were from Nigeria, India, Pakistan, Bangladesh and Sri Lanka. 

In addition, overseas students won’t be able to switch from the student visa route to work routes until they’re done with their studies. This was a useful avenue enabling many students to stay in the UK and keep their knowledge and skills within the country. Predictably, universities have come out denouncing these moves and the impact they will have on the universities’ finances. Overseas students, pay the highest fees, and represent a consistent form of income for British institutions.

Universities have always been the crown jewel of the UK, a symbol of diversity and innovation. Short-sighted policies, useful only to gain a couple of political nods, risk making a mess of a valuable resource.

In 2021–22, there were 285 higher education providers in the UK that returned data to the Higher Education Statistics Agency (HESA).

During the period, there were 2,182,560 students studying at UK higher education providers.

• Undergraduate: 1,734,805

• Postgraduate: 444,760

• Full time: 1,630,505

• Part time: 552,060

• Students from the UK:2,182,560

• Students from the EU: 120,140

• Students from non-EU countries: 559,825

In 2021–22, there were 233,930 staff (excluding atypical staff) employed at UK higher education institutions.

• Staff employed on academic contracts made up 43% of the population.

• 16% of academic staff with a known nationality had an EU nationality, while 16% had a non-EU nationality.

• 8% of non-academic staff with a known nationality had an EU nationality, while 4% had a non-EU nationality.

In May 2023, analysis by London Economics estimated first-year international students enrolled in the 2021/22 academic year brought total net economic benefits to the UK of £37.4 billion. Estimated total economic benefits were approximately £41.9 billion, while estimated total costs were £4.4 billion, suggesting a benefit-to-cost ratio of 9.4:1. The economic impact was spread across the entire UK, with international students making a £58 million net economic contribution to the UK economy per parliamentary constituency across the duration of their studies. This is equivalent to £560 per UK resident.

Alongside these economic benefits, surveys have shown international students benefit the UK higher education experience by bringing an outward-looking culture to campuses and preparing students for working in a global environment. In 2023, over one-quarter of the world’s countries (58) was headed by someone educated in the UK, which is second only to the USA (65).

Sometimes, politicians like to do the “hara-kiri”. The U.K. used to have an excellent tertiary and healthcare system. Sadly, these are now under-funded and monies go to the war in the Ukraine or some other obscure conflict. Britain with no empire is trying to find relevance in the world. Parading on the King’s birthday, sending arms (and even troops) to war-torn countries is a sheer waste. Its primary task is to re-build what used to be its strong areas – tertiary institutions and research, commercialisation of research, healthcare and pharmaceuticals and new fields like AI. It is a waste to build aircraft carriers and pretend – when care homes and others suffer to feed the war machine! (That also applies to Malaysia, we pretend to be a “regional” or “Gaza” power instead of getting our education and healthcare outcomes right).

References:

Explainer: Who is to blame for the decline of British universities? Elena Siniscalco, City A.M.

Higher education in numbers, www.universitiesuk.c.uk

Countries with the most international students in the UK, HESA

Overseas student number, House of Commons Library, 20 November 2023

Tax Reform on the Cards?

The Malaysian government should announce how much revenue it is targeting from its reforms according to the World Bank lead economist. A clear target would allow the government to undertake adequate, well-timed, and well-sequenced tax policy. Malaysia has been under-collecting taxes and the government needs to raise more revenue.

To soften the blow on cost of living, the government has pledged to extend cash and other aid. This year, the government is targeting to narrow its budget gap as a proportion of economic output to 4.3% from 5% last year.

The government’s recent efforts to widen the tax base — in the form of the capital gains tax and expanded services tax — is insufficient in addressing the revenue inadequacy. A defined target would also allow the government to better communicate its tax reform decisions with the public and the industry, as it provides perspective to how much additional revenue has to be raised.

Tax collection, as a percentage of gross domestic product (GDP), is projected to rise to 12.8% in 2024 from 12.6% in 2023, he noted. That compares to the regional average of 25%.

Setting revenue targets is a common practice among developed economies whereby they are set based on the country’s structural spending. In an ageing population that would mean related spending such as healthcare will rise as a percentage of GDP.

To “attack” revenue is important and there are several ways, only the political will remains in short supply. The other is to curb expenses especially the operating ones. Unless it is two-pronged, people can see through a government that is all talk but no action!

Reference:

Malaysian govt should announce clear revenue target in tax reform, says World Bank, Izzul Ikram and Luqman Amin, The Edge Malaysia, 23 April 2024

KFC Shutters Over 100 Restaurants!

KFC has reduced its operations in Malaysia. It has closed about 20 per cent of its restaurants temporarily. This is after months of persistent pro-Palestine boycott of US-linked businesses triggered by the ongoing war in Gaza.

QSR Brands, which owns and operates the KFC fast-food franchise in Malaysia, is suspending operations of 108 outlets nationwide. The firm sees the boycott as an opportunity to cease some of the KFC store operations that have weighed on its balance sheet.

Source: https://en.wikipedia.org

“KFC is not on the BDS list of targeted companies. But many Malaysians see any American fast-food operator to be related to Israel including KFC,” said Professor Mohd Nazari Ismail, chairman of pro-Palestinian group Boycott, Divestment, Sanctions Malaysia. Since the boycott began in October 2023, KFC has shifted its branding strategy, with signs on their menu boards and fliers emphasising that it is owned by Johor Corporation, which belongs to the Johor state government. To mitigate the impact of the boycott, QSR changed its branding strategy to become more Islamic on its website in the fourth quarter of 2023. The company’s website said its businesses provide “employment opportunities for over 30,000 employees, of whom 86 per cent are Muslims”.

There are more than 600 KFC restaurants in Malaysia, according to the QSR website. In the state of Kedah, 11 outlets have closed. Kelantan state is the worst-hit with nearly 80 per cent, or up to 21 outlets, halting their operations, followed by 15 outlets in Johor. Selangor, the most industrialised state in Malaysia, has 11 branches temporarily closed, 10 of which are located in Malay-majority Shah Alam.

KFC and a few other US-based brands such as Starbucks and McDonald’s have been facing boycotts because of their perceived link to Israel since the war in Gaza started on Oct 7, 2023. KL-listed Berjaya Food, which owns 400 Starbucks stores in Malaysia, reported a net loss of RM42.6 million from October to December 2023, with the owner Vincent Tan reportedly considering taking the company private.

QSR also operates KFC restaurants in Singapore, Brunei and Cambodia, as well as more than 480 Pizza Hut stores in Malaysia and Singapore.

Reference:

KFC shutters over 100 restaurants in Malaysia amid pro-Palestine boycott, Zunaira Saieed and Hazlin Hassan, The Straits Times, 30 April 2024

Inflation Set To Increase in 2024!

While the rest of the world is trending downward (on inflation) in 2024, Malaysia is doing the opposite. Inflation for 2024 is self or government generated. Rise in SST, rise in water and electricity tariffs, decline in exchange rate, narrowing trade surplus, rise in oil prices, increase in other costs, will lead to a higher inflation scenario for 2024. Under current circumstances, the cost of living is barely “bearable” for some and yet we are bent on making things worse. The rich, elite have no concern. Why? They are hardly impacted by all the so-called targeted increases. Couldn’t we have delayed the self-generated increases by a year at least?

Reference:

BNM Annual Report, 2023

What is Spanco and What is the Brouhaha?

For decades, the vehicle fleet management company Spanco Sdn Bhd held a lucrative contract to be the exclusive provider of saloon vehicles for the Federal Government. On April 3, however, its executive director and chairperson Robert Tan Hua Choon was charged with allegedly cheating the government when the contract expired and a new concession was offered via open tender.

According to the Companies Commission’s records and as stated in press reports, Spanco’s shareholders are Jati Rata Sdn Bhd (46 percent), Tan (24.65 percent), his children Tan Han Chuan (14.67 percent) and Tan Ching Ching (9.68 percent) and Minhat Mion. 

Company Jati Rata is owned by Cayaria Sdn Bhd (45 percent), Mohtar Abdullah (27.5 percent) and Shahrin Osman (27.5 percent), based on documents filed in February 2024. (This was reported by Malaysiakini on 6 April 2024). Azman Idris, Peter Lim, Md Raus Sharif, Shahrin and Han Chuan are listed as Spanco’s directors. The record states that Spanco was incorporated on Aug 16, 1988. 

Since January 1994, Spanco held an exclusive 25-year concession agreement with the Government to provide vehicles ranging from official cars for cabinet members, cars for the motor pools of government departments, and police patrol cars.

Its website claims to have a fleet of over 13,000 concession vehicles and a network of more than 400 service centres. In 2015, it was reported that the Government - Spanco’s only customer - was paying RM221.66 million a year to rent 10,963 Proton cars. They comprise seven different models ranging from RM973.84 per month to RM3,288.84 per month. The first concession agreement came about amidst the government’s privatisation drive in the 1990s. This entailed the government selling its fleet of 40,000 vehicles to Spanco, which would maintain it and lease it back to the government.

In April 1994, the de facto law minister rportedly justified the move as being cheaper than the previous system for leasing vehicles. According to him, it would only cost the government RM5,000 a month to lease a Mercedes Benz that would be returned and replaced with a new one every four years, compared to RM17,000 to RM21,000 to lease it from another company.

The contract reportedly came with a clause stipulating that the government has to pay RM400 million if it terminates the contract before it expires.  The contract expired at the end of Dec 31, 2018, prompting competition to bid for a new contract. The new contract is for 15 years involving about 12,500 vehicles estimated to be worth RM300 million annually starting from the fifth year. Eight companies made submissions in response to the government’s request for proposals for the concession agreement, while Spanco’s first contract was pending the outcome of the open tender. 

Bidders for the new contract included Spanco, a partnership between DRB-Hicom Bhd and Sime Darby Bhd, a partnership between Berjaya Group and Naza Group, Samling Group, Comos, and Go Auto. Berjaya-Naza consortium Cekap Urus Sdn Bhd was initially awarded the contract and was issued a letter of intent (LOI) by the Finance Ministry in 2018, because it was the lowest bidder. However, after Muhyiddin Yassin became prime minister, the LOI was terminated and the tender was awarded to Spanco instead for RM700 million more.

The charges against Tan (of Spanco) pertain to a different aspect of the bidding process for the new contract. According to the charge sheet against him, he had cheated the government by claiming in the tender documents that at least 30 percent of Spanco shares are bumiputera-owned. This supposedly took place between Feb 27 and Feb 28, 2019, in the Finance Ministry’s tender room.

The move supposedly prompted the Finance Ministry to award a RM3.97 billion contract to Spanco where it otherwise wouldn’t have done so. The charge is framed under Section 420 of the Penal Code. It is punishable with between one and 10 years imprisonment, whipping, and a fine. Tan of Spanco has claimed trial. 

The process of awarding contracts is well documented. The problems arise when there is political “interference”. The Madani Government could have resolved this situation without court action if the aggrieved party could be parcelled a part of the contract or such similar arrangement. But to move forward, real questions remains, why is it so hefty?

Reference:

What is Spanco and what do they do? Koh Jun Jin, 6 April 2024, Malaysiakini

Malaysian Children Not Learning Enough in Schools?

Malaysian children are not getting adequate education despite spending more time in school and having a higher national education budget compared to similar countries, a World Bank report revealed.

According to the “Bending Bamboo Shoots: Strengthening Foundation Skills” report, 42 percent of Malaysian students failed to achieve proficiency in reading by the end of Standard 5.

Source: Malaysiakini

This is higher than other countries with similar gross national income (GNI) per capita, which have a failure rate of 34 percent.

The report emphasised that this problem is particularly acute among economically disadvantaged children, with 61 percent falling below proficient levels. In Vietnam, only 18 percent of children (and 41 percent among the poorest) fail to achieve proficiency in reading skills expected by the end of Standard 5.

While the average Malaysian child spends 12.5 years in school, the report said this is equivalent to only 8.9 years of learning. In comparison, despite being economically less affluent than Malaysia and allocating a smaller proportion of its GDP to education, Vietnam offers 10.7 years of learning within a 12.9-year schooling period.

The report attributed the poor learning outcomes to inadequate early childhood education, inconsistent teacher preparedness and dedication at the primary level, and a lack of adherence to policy-guided teacher performance management.

The report suggested improving the quality and access to preschool education alongside assessing student learning outcomes and teacher performance based on global benchmarks. It also recommended supporting and incentivising teacher performance improvements based on evidence. According to the report, teacher training programmes should incorporate data and evidence-based approaches to enhance student learning outcomes.

To make changes, you need a new Minister, a new DG and a whole host of changes. Why are Chinese schools and some international schools superior? They are disciplined, teacher/student outcomes are measured, there is no “ponteng” or “pergi kursus” teachers and children have clear benchmarks to achieve their grades. When you throw in religious courses (including civics) and some civilisation studies that have no relevance in their lives, outcomes in the job market is dismal. No private sector employer wants someone with a religious tilt and one language proficiency.

If Malaysia wants to move forward the bent (or focus) has to be “STEM” not “STEAM” and three languages – Malay, English and Mandarin (“MEM”). This is difficult in the Madani framework unless you have a leader who is strong and courageous to “ram” through. In addition, one must go back to meritocracy and promote more elite schools in urban and rural settings. And this under current circumstances will not happen!

Reference:

M’sian children not learning enough in schools: World Bank Report, Malaysiakini, 26 April 2024

Is Federal Government Debt Sustainable?

 

Malaysia’s overall external debt is RM1.2 trillion (2023). The bulk (67%) is foreign currency denominated. That’s a surprise! According to BNM, they are well managed and corporate/banks are resilient. Having said that, in a severe storm like 1997/98, we are at the mercy of foreign debt-holders.

In terms of reserves, it’s better than the days of the Asian Financial Crisis, but USD114.3 billion is not sufficient to meet a sustained “attack” on the currency. Singapore’s reserves are three times ours. And their monetary policy is focused on exchange rate not interest rate. That explains the Singapore dollar being 3.5x ours. We got to rethink in a dynamic economic landscape and produce more meaningful measures.

Reference:

BNM Annual Report, 2023

Has Malaysia’s Billion –Dollar 5G Roll-Out Stumbling?

The government could be forced to reconsider allowing a second 5G operator, as a settlement between state-owned Digital Nasional Bhd and the private telcos has hit a stalemate. The government brought the warring factions together in a compromise that would potentially see the private telcos taking a stake in DNB. 

Source: https://www.telecomreviewasia.com

Government officials and industry executives have acknowledged that after more than four months, both sides have yet to agree on conditions precedent (CP). The CPs include the appointment of directors who would represent the private telcos in DNB, and the completion of three confidential audits on the state-owned entity by external experts. The audits would cover its financial standing, due diligence on large contracts the company has signed and a technical evaluation of its 5G systems.

The protracted impasse between DNB and the country's private telcos is presenting the Madani government with one of its most complex economic policy challenges.

Industry executives noted that the uncertainty surrounding Malaysia’s 5G roll-out is likely to sideline potential investors interested in leveraging on the benefits of a superfast wireless network.

Analysts also noted that there is a lack of visibility in the off-take of 5G and Malaysia’s relatively small market remains a serious issue.

It was just under a year ago that the government caved in to pressure from the country’s private telco lobby to break DNB’s monopoly in the 5G space as the country’s so-called single wholesale network operator (SWN) and allow competition with a second operator, comprising local mobile network operators (MNOs) and the possibility of China’s Huawei emerging as the new technology partner. Under the multi-tiered compromise settlement signed in December, the country’s five MNOs each paid DNB RM230 million (US$48.15 million), or a total of RM1.15 billion, as a pre-payment for access to the 5G network for a period of up to three years. 

DNB has already rolled out more than 80 per cent of its network to date and according to Malaysia’s Communications Minister, almost 10 million people have subscribed to the 5G service at end-January, marking an adoption rate of just under 30 per cent.

DNB’s roll-out, estimated to cost Malaysian taxpayers just over RM16.5 billion (US$3.44 billion), is now stirring debate if parties should push ahead with the SWN model. If so, the local players could acquire as much as a combined 70-per-cent interest in the state-owned concern, or simply dispose of a large stake in the company to an interested foreign entity.

Apart from transparency, and the nomination of MNO representatives to the board, DNB has insisted that only the board’s directors be allowed access to review the ongoing due diligence. The findings are to remain confidential and not be shared with the MNOs.

Industry executives noted that advisory firm PricewaterhouseCoopers is handling the financial review of DNB, while KPMG is overseeing the review of large contracts DNB has signed. United Kingdom-based Hardiman Telecommunications, a boutique telco consultancy, has been appointed to review DNB’s technology infrastructure. 

DNB has borrowed RM2 billion from the local banking system to fund the roll-out of 5G infrastructure, together with other financing arrangements. But the government guarantee for the company expires in December 2024.

Meanwhile, the MNOs have long griped that apart from being denied the rights to own spectrum under the 5G roll-out, they were victimised further by the decision of the former premier to appoint three local entities to be preferred partners for global cloud service providers such as Microsoft, Google and Amazon, which are expected to take a lead role in the building and managing of hyper-scale data centres. 

The appointments of public listed AwanBiru Technology, formerly known as Prestariang, and two other little-known entities, Enfrasys Solutions and Cloud Connect, were done without any open tender. The MNOs are privately demanding that the companies be stripped of their preferred partner status.

Madani Government cannot resolve issues because we dither in making difficult decisions. Hopefully, the new policy committee of the PM may help advise him. If not we will leave it to “takdir”.

Reference:

Malaysia’s billion-dollar 5G roll-out stumbles as deal breaks down between powerful telcos, state-owned operator,Leslie Lopez, Channel News Asia, 19 April 2024

Labour Day