My Merdeka Wishlist

Many Malaysians will be celebrating Merdeka this year satisfied that justice has finally been served on the biggest scandal in Malaysian history. This is after former prime minister Datuk Seri Najib Razak was finally sent to jail after he lost his final appeal at the Federal Court over the SRC International RM42 mil case.

Malaysians can also celebrate the passing of the historic anti-party hopping constitutional amendment earlier this month. However, there remains lots of “unfinished business”.

1. Merdeka from Discrimination

After more than 65 years of independence it is time for Malaysia to move from race-based affirmative action to a needs-based one. In addition, we should subscribe to meritocracy and equal opportunities for all.

Our civil service and branches of Government should reflect the racial composition of the nation and not “skewed” in its present form.

Race-based parties and raced-based policies/politics are to be discouraged. An independent Anti-Discrimination Commission (like Suhakam) will try to reduce the unwarranted tensions created by narrow bigoted politics. The Department of National Unity should be disbanded with the formation of the independent Commission.

2. Merdeka from “Shackled” Education

The National Education Policy has succeeded in “churning-out” graduates who are not tuned to current or future-market conditions. If we want to implement IR 4.0, then we are willing to bespoke of our education system to the needs of the future.

We will not be narrow in our thinking but practical as the countries of Scandinavia, especially Finland (or closer to home – Singapore).

3. Merdeka from Corruption

If we value integrity and honesty, then we have no problems on declaring “war” on corruption. We have no problems for MACC to report to Parliament (and especially the Public Accounts Committee). We have no problems on bringing alleged corrupt people to a special Court on Corruption to fast-track all the cases. We have no problems with educating the public on the ills of corruption. We have no problems on awarding “whistleblowers” with a reward mechanism. We have no problems on a legal framework for political funding.

4.  Merdeka from Poverty

If we believe  that every child, parent has the right to a decent life, then we are concerned about our Gini coefficient.

We will look for ways to reduce inequalities between racial groups, within racial groups and between regions. Lawas and Limbang are as important as Kuala Lumpur or JB.

5. Merdeka from “ Narrow-mindedness”

If we believe in freedom of expression, then we will allow the creativity of our people, without constraints of officialdom. We will be tolerant of each other and not “overly” sensitive as we want ideas to flourish.

There are many ways other “narrow-mindedness” in a psyche but pray we will mature from those.

You may have many more “merdeka” points in your wishlist but the above five are key, in my perspective, to our progress in the years ahead. Despite the above, we must be grateful to God for His blessings:

• We enjoy relative peace and stability;

• People are compassionate and loving even though many leaders try to divide them;

• We have resources to tide-over difficult periods;

• Many do work hard to provide for their children’s education;

• Relative religious harmony even though it could be better;

• Opportunities in business to develop the nation from manufacturing to services; and

• Many still hold to integrity and honesty in their work.

So, let us develop this nation within the principles of Rukun Negara.

Will China’s Property Sales Plunge by One-Third?

Property sales in China could fall by one-third in 2022, spelling trouble for the country’s giant housing sector. People may lose faith in the market and pressure will increase on struggling developers to complete presold apartments.

Amid reports that the government is preparing a bailout of the sector that could cost 300bn yuan ($44bn), experts at S&P have concluded that the fall in sales will be twice as bad as they had originally forecast for this year. S&P Global Ratings now expects national property sales will fall 28%-33% in 2022.

Source: https://www.dailysabah.com

Disgruntled buyers of apartments at housing projects in more than 100 cities had banded together to withhold payments on unfinished homes. 

The strike has ratcheted up the pressure on developers, who are already facing acute liquidity problems. Many depend on customers paying upfront for homes off the plan to keep cash flowing through the business. The proceeds can be used to pay debts.

Some high-profile developers have already fallen into default, causing waves of panic in the global financial system – most notably Evergrande, the country’s second-biggest property firm. 

Separate research by the agency puts the estimated value of the loans in question at almost 1tn yuan ($144bn) and could threaten financial stability if there was a sharp drop in prices, as now seems likely amid plunging sales. A slowing economy and rising unemployment are adding to the downward pressure on sales and prices.

Local land sales are also affected as a result of the property downturn and the country’s zero Covid policy. In the first half of the year, local land sales revenue declined sharply by 31% year-on-year. The decline may be narrowed in the second half of the year, but may still stay weak at -10%, due to subdued developers’ financing.

And while S&P economists estimate about a quarter of China's GDP is affected directly and indirectly by real estate, only part of that 25% is at a risk level.

China's real estate sector has been intertwined with local governments and land use policy, making the industry's problems difficult to resolve quickly. A new bidding process for land fully took effect, he said. The new bidding process tightened the supply of land and real estate, pushing up housing prices more than speculation did

Authorities in Beijing are beginning to respond to the crisis with reports that the government has set up a multi-billion yuan fund to help bail out the stricken sector. The fund would initially be set at 80bn yuan. The state-owned China Construction Bank would contribute 50bn yuan, but the money would come from PBOC’s relending facility. If it was successful, other banks would follow suit with a target to raise up to 200-300bn yuan.

The above troubles in China will have ramification on economies like Malaysia. We need China to overcome its issues for our exports to remain robust. Meanwhile, we need to look at our property overhang and the continued development of condominiums and high-end properties. We cannot afford to have a “bailout” of our property sector.

References:

China property sales could plunge by one-third, analyst say, as crisis deepens, Martin Farrer with agencies, The Guardian, 26 July 2022-08-08

China’s property sales are set to plunge 30% - worse than 2008, S&P says, Evelyn Cheng, CNBC, 27 July 2022

Intergroup Conflicts: Who is Responsible?

PAS and UMNO are the “biggest perpetrators” of intergroup conflicts, responsible for “instigating fear and anger” among Malay-Muslims, a recent study found.

According to the Initiative to Promote Tolerance and Prevent Violence (INITIATE.MY), PAS was to blame for at least seven intergroup conflicts from 2004 to 2021, including protests, violent clashes and acts of vigilantism.

Tied in second place were three groups – the Sungai Petani Skuad Bakar vigilante group, the “Red Shirts” movement and the Malaysian Volunteers Corps Department (RELA), each recording six instances.

In third place was UMNO with five instances, followed by Red Shirts leader and UMNO man Datuk Seri Jamal Md Yunos, and the Hindu Rights Action Force (HINDRAF), both recording four instances.

Other groups in the list include the Islam Defenders’ Associations (PEMBELA), Pertubuhan Pribumi Perkasa (PERKASA), Gabungan Mahasiswa Islam Se-Malaysia (GAMIS), Muslim Consumers Association of Malaysia (PPIM), Federation of Peninsular Malay Students (GPMS) and Dong Zong.

The data was revealed in INITIATE.MY’s latest policy brief, Mainstream Mediation as an Alternative Form of Conflict Resolution in Malaysia, published Thursday, July 28, 2022 (and reported by Focus Malaysia on August 1, 2022)

The groups usually “weaponised far-right ideologies” like predominant ethno-religious nationalism, pro-Malay-Muslim hegemony and anti-racial equality, and “instigated fear and anger” among Malay-Muslims.

These groups did this by claiming that the special position of the Malays and Islam would be “threatened” by the ratification of the International Convention on the Elimination of All Forms of Racial Discrimination (ICERD) and the Rome Statute.

Other notable instances include protests to defend controversial Indian televangelist Dr Zakir Naik and oppose the introduction of Jawi khat calligraphy in vernacular schools, as well as the Sri Maha Mariamman Seafield temple riots.

The report suggests that while top-down and punitive resolutions are needed in conflicts, especially when it involves violence, approaches like mediation can be effective. This is especially so during the earlier stages of a conflict as community-centric and non-punitive resolutions can better resolve disagreements.

The National Unity and Integration Department is “hamstrung’ in resolving issues or in identifying them. There is no real will to back the work of this Department. Why? The politics of “divide and rule” is directly opposite of the Department’s objectives. Unless we have a Government that seeks the betterment of all and not pander to the narrow political discourse of a few, more issues will surface – from Bon Odori to Oktoberfest.

Selamat Hari Merdeka!

Reference:

Study: PAS, UMNO “biggest perpetrators” of intergroup conflicts, Vinodh Pillai, Focus Malaysia, 1 August 2022

U.S. Sanctions: Why It Is An Optical Illusion?

The United States frequently reacts to adverse foreign events by imposing economic sanctions. Sanctions are attractive because they are easy to impose, tend to have little budgetary impact, and, do not subject U.S. military personnel to death or injury. But the historical record shows that sanctions are usually ineffective. And the accumulated weight of economic sanctions, which are readily imposed but rarely repealed, could eventually jeopardize the U.S. dollar’s role as the world’s reserve currency, making it harder for the federal government to finance the country’s growing debt.

https://www.acamstoday.org

The first high-profile use of economic sanctions in the modern world occurred in 1935. The League of Nations, the interwar predecessor of the United Nations, voted to sanction Italy for invading Ethiopia. But Italy was undeterred, and its fascist regime was only ejected from Ethiopia by military action during World War II. Trade restrictions on Cuba date back to the Eisenhower years and have been in force continuously since 1962. But 60 years later, Cuba’s communist regime remains in power.

Similarly, various U.S. and international sanctions have been imposed on North Korea since 1950. And while economic sanctions may have helped bring Iran to the negotiating table over its nuclear weapons program, the Islamic regime has remained in place since the U.S. first imposed restrictions in 1979.

There is little reason to believe that economic sanctions being imposed on Russia by the United States and Europe will break Vladimir Putin’s regime or bring an early end to its military invasion of Ukraine. Higher energy prices arising partly from the economic sanctions are filling Russian government coffers, helping it continue its aggression. 

The Russian Ruble declined sharply after sanctions were imposed but rebounded. The currency is now stronger than it was in February, and the Russian Central Bank has been able to lower its key interest rate back to pre-war levels.

Long-term, if banks, companies, and countries find the U.S. sanctions regime too onerous, they might seek alternatives to the U.S. dollar-based international payments system. As a 2021 Congressional Research Service report explained, Russia and China were actively searching for alternatives to U.S. dollar-based trade before Russia invaded Ukraine. Similarly, during the Trump era, France and Germany tried to create a special purpose vehicle that would allow them to trade with Iran while avoiding secondary sanctions.

Fortunately for the United States, alternatives to the dollar have significant drawbacks. Because the European Union often employs sanctions as well, the Euro provides limited benefits in terms of flexibility. China might welcome the opportunity to replace the dollar with its Renminbi. Still, banks, businesses, and other countries would worry about China’s capital controls and the government’s penchant for manipulating and changing rules. China is also currently experiencing severe economic headwinds.

The United States benefits from the dollar being the world’s reserve currency. Foreign central banks and other international players demand U.S. dollar-denominated assets, such as Treasury securities, even if they provide negative real returns. But if more countries see a need to circumvent the dollar-based system and can find reasonable alternatives (such as barter), Americans could face even higher interest rates. And, with over $30 trillion in national debt to service, the federal budget would become more strained as interest rates rise.

Sanctions are an attractive way to state U.S. principles and imply something is being done. Unfortunately, sanctions are rarely effective and have substantial costs. The U.S. Treasury’s Office of Foreign Asset Control has a list of over 10,000 sanctioned individuals and organizations, so rather than continuing to layer more and more sanctions onto those put in place over the last 70 years, the U.S. should prune restrictions that have outlived their usefulness and fight the temptation to impose more.

In essence, it is better to find other means from dialogue to military blockade (instead of economic sanctions) to deal with an “unlawful” action by a “rogue” state. So long as the U.N. (with its veto) remains powerless, the resolution to several crises remains an illusion. And America’s sanctions only mollify its local vote base for now.

Reference:

Sanctions are ineffective and could jeopardize US fiscal health, Marc Joffe, The Hill, 21 June 2022

Is EPF Savings Low and Worrying?

The impact of the Covid-19-related withdrawal programmes on the Employees Provident Fund (EPF) members' savings is estimated at RM155 billion. This was told by the Deputy Finance Minister 1 to the Dewan Negara recently. Of this, RM145 billion was withdrawn by members under the four withdrawal programmes and almost RM10 billion was from the impact of the reduction of the employees’ share statutory contribution rate.

As of June 30, a total of 6.62 million members or 52 percent of the total of 12.78 million EPF members aged under 55 had savings of less than RM10,000. Of that total, 4.99 million members or 75 percent were bumiputera. About 3.2 million members under the age of 55, have a very critical savings level of less than RM1,000, and 2.58 million members or 81 percent of them are bumiputera. Bumiputera members make up 64 percent or 8.22 million of the total 12.78 million members of the retirement fund aged below 55.  Then there is PNB which is largely for Bumiputera. So the savings position of Bumiputera is not reflected fully.

BNM could give a better picture of savings held by Malaysians after gathering information from EPF and PNB. Then it may not be that critical! Nevertheless, “bailout” of Bumiputera savings may be popular politically but not feasible for other reasons. Wage review, productivity, retirement age extension are some other measures that may need some serious focus.

References:

EPF savings low and worrying, MOF says after withdrawal schemes, Malaysiakini, 8 August 2022

EPF members’ savings worrying after RM145 bil withdrawals – MOF, Shazni Ong, TheEdge CEO Morning Brief, 9 August 2022

Is The Ringgit In Freefall?

The ringgit has begun weakening against more currencies over past weeks. The trend is worrying, considering that some of these currencies belong to Malaysia’s biggest import destinations.

Malaysia’s food import bill for 2021 was at RM63.6bil. Meanwhile, food inflation in June, was recorded at 6.1% compared with the headline inflation of 3.4%. While it is impossible to predict the movement of the ringgit, there are expectations that the ringgit may face downward pressure as more countries experience a pick-up in economic growth.

Between July 15 and Aug 15, the ringgit has weakened against almost all major regional and global currencies. Based on Bloomberg data, the ringgit declined by 4.16% against the Japanese yen, Thai baht (3.34%), South Korean won (2.05%) and Indonesian rupiah (1.92%).

After weakening significantly since March, the ringgit fell further by 1.74% against the Singapore dollar in the July 15 to Aug 15 period. Against the Philippine peso, it fell by 1.24%, while it weakened marginally by 0.37% and 0.07% against the Hong Kong dollar and the Taiwanese dollar respectively. The ringgit was flattish against the Chinese yuan, slipping by 0.02% in the one-month period. The ringgit dropped by 1.91% against the British pound sterling, the euro (1.01%) and the Australian dollar (3.61%). Against the US dollar, the ringgit fell further by 0.22% after weakening significantly since March.

Some of the currencies that have strengthened against the ringgit belong to Malaysia’s major import sources. They include Singapore, the United States, Taiwan, Japan and Europe.

The ringgit’s strength would depend on how the domestic economy performs to a large extent and also factors like interest rate differential, inflation hikes and speculative forces (“hot money”).

The aggressive interest rate hikes in the United States have triggered an outflow of funds from developing economies, including Malaysia, back into the world’s largest economy. This in turn has strengthened the greenback, resulting in many weaker currencies against the US dollar, including the ringgit. Unless BNM re-focuses on OPR and hikes it to 3%, the ringgit is doomed to fall further. Why should they increase it? Just look at imported inflation (net imports on food is over RM60 billion annually) and curtail it.

Reference:

Ringgit settles flat vs US dollar as inflation fears cloud sentiment, Ganeshwaran Kana, The Star, 17 August 2022

Why Has The Singdollar Strengthened?

The Singapore dollar has been growing in strength and trading at record levels against several currencies. Against the Japanese yen at the beginning of the year, one Singapore dollar was about 85 yen. This rose to an all-time high of 99.71 yen on 21 July – marking an increase of about 17 per cent.

The Singapore dollar also broke its record against the Malaysian ringgit on 21 July as it touched 3.2062, up 4 per cent from about 3.08 at the start of January 2022. The currency has been strengthening against the euro and the pound as well.

Source: https://www.livemint.com

Meanwhile, the Singdollar is trading at multi-year highs against regional peers such as the South Korean won and the Thai baht.

What’s behind the Singdollar’s outperformance against these currencies? A stronger currency is obviously good news for those looking to travel, but are there implications for businesses and the broader Singapore economy?

A divergence in global central bank actions and country-specific factors has swayed the performances of various currencies.

It all starts with a more hawkish US Federal Reserve whose aggressive rate hikes have boosted the US dollar. Investors seeking a haven from global economic uncertainties have also flocked to the greenback, further fuelling the dollar’s ascent against other currencies.

The euro for example, fell below parity against the greenback on Jul 13 for the first time in nearly 20 years. Europe’s single currency has recovered to 1.0176 on Thursday afternoon but remains down against the US currency by more than 10 per cent down year to date.

This monetary policy divergence is perhaps most stark in Japan, where an accommodative policy stance remains firmly in place due to economic concerns. The Bank of Japan (BOJ) has left its rock-bottom interest rates unchanged. This suggests that the recovery in its economy still needs support. With the BOJ remaining an outlier among its peers, the yen will likely continue to underperform. 

In Europe, a precarious growth outlook had kept central bankers dovish until 21 July when the European Central Bank took the first step to raise interest rates for the first time in 11 years. The euro has also been pressured by Europe’s front-line exposure to the Russia-Ukraine war. The war has sparked an energy crisis, alongside fears of a potentially long and deep recession in the region. Some global banks are forecasting a recession for the euro area as soon as the third quarter.

Likewise in the United Kingdom, inflation at a 40-year high and a recession risk have added to the downward trend in the pound. The recent resignation of Prime Minister Boris Johnson has deepened the uncertainty hanging over Britain’s economy.

For other countries such as India and the Philippines, currency weakness can also be attributed to their own widening trade deficits amid elevated commodity prices.

Then again, the Monetary Authority of Singapore (MAS) has tightened monetary policy four times in about nine months, with the latest on 14 Jul 2022 being an off-cycle surprise to re-centre the mid-point of the Singapore dollar nominal effective exchange rate policy band “up to its prevailing level”. The Singdollar has appreciated about 4.4 per cent against a basket of currencies since the MAS’s first move in October 2021.

Most economists believe that further tightening is in store if inflation in Singapore continues to heat up. Meanwhile, continued growth in the Singapore economy has given the local currency some additional upward momentum against regional peers.

An appreciation in the Singdollar against most currencies means that for those Singaporeans drawing up travel plans to destinations such as Europe or Japan, the exchange rates will be in their favour. Theoretically, importers or businesses with operations overseas may also reap some benefits while exporters, on the flip side, could be in for some pain. 

Singapore's non-oil domestic exports (NODX) expanded for the 19th straight month, increasing by 9% year on year in June, though it was down from 12% in May, according to official data from Enterprise Singapore.

The largest contributors to the growth in the NODX were from Malaysia, Indonesia, and the United States. Electronic shipments increased by 4.1% in June, a sharp drop from the 12.9% growth in May, while non-electronic NODX rose by 10.6% in June, following the 11.7% rise in the previous month, according to the government agency.

Strong manufacturing and exports will be good for the economy, but Singapore does not have enough workers to fulfill the rising demand. Inflation in Singapore is the "key to watch" for the second half of the year. Inflation will likely remain "quite sustained" in the second half, and may start to cool by end 2022.

What can we learn?

MAS operates on an exchange rate centered monetary framework – that shields imported inflation to a large extent.  Exports are not severely impacted as there is value-add and productivity to offset exchange translation. Singapore is a very open economy with total trade exceeding 300% of GDP. Key variables for MAS in its policy has been inflation, real GDP and unemployment.

BNM focuses on interest rate, real GDP and inflation, the latter to a lesser extent. Exchange rate is left to find its own level – hence, a more laissez faire attitude on this. Malaysian exporters glee on exchange rate depreciation while importers fear its repercussions. With net food bill of RM60 billion annually, it makes the B40 group fear inflation and the rising cost of living. Shouldn’t we raise OPR to fend off (or at least ameliorate) inflation?

References:

CNA explains: Singdollar up against most major currencies – why and what that means for you, Channel News Asia

A stronger Singapore dollar may be exactly what the country needs to battle inflation, says Barclay, Charmaine Jacob, CNBC, 19 July 2022

“In Liz We Truss”?

In Britain, a tale of two leaders is emerging. Facing a choice between Liz Truss – somebody who incited Russia – or Rishi Sunak, the richest person in the House of Commons.  Truss has tweeted that she was ready to “hit the ground” from day one - a tweet which was later clarified as her desire to “hit the ground running”. It would be more comedic, if the former wasn’t so likely. 

Tory members, who will vote on the next leader by September, seem to prefer Truss. And while it seems counterintuitive to endorse a continuation of Boris Johnson  or somebody who responds to an accusation of endorsing fairytale economics, Tory members are doing… exactly that. In fact, for Truss, it’s more about replicating Margaret Thatcher.

Source: https://www.thesentral.my

Some say it’s all one big, bad joke. But who is this person who has a sizeable chance of becoming Britain’s next prime minister? You might know Truss for her party conference speech a few years back. In a speech in which she repeatedly paused for applause that never came, she praised apples as being part of British identity since they first fell on Isaac Newton’s head. She claimed that the UK imports two-thirds of its cheese as “a disgrace”. Staying on the cheese theme, that same year, Truss achieved a ‘groundbreaking’ post-Brexit deal to sell cheese to Japan – a country where 73% of the people are lactose intolerant.

Truss prefers to avoid scrutiny and typically leans into her self-constructed mythology about her past. She does everything to ignore her past as a member of the Liberal Democrats, where she advocated for abolishing the monarchy. So, the Queen may not be her fan.

Truss’ rise to power has been based entirely on reinvention. Posing as a staunch Brexiteer and part of the ‘Britannia Unchained’ group, a group of Tory MPs who wrote a book denouncing British workers as the “worst idlers in the world”, Truss is popular with the base of the Tory party. In 2016, however, Truss described how she voted Remain to safeguard her daughters’ futures and argued against a country “where they are hampered from growing a business because of extortionate call costs and barriers to trade”.

Her rise to power rivals that of Sunak.  Combining the job of foreign secretary with being minister for women and equalities, Truss has previously been shown to have the highest satisfaction ratings among party members for her love of capitalism, appeal to grassroots and her reputation as a staunch loyalist.

As much as she tries to distance herself from her rival, Truss too likes to splash other people’s cash, spending £500,000 of taxpayers’ money on private flights in three months this year. This is according to the Mirror.

At the beginning of the Russia-Ukraine war in March, Truss’ statements as foreign secretary were said to be behind Russia’s announcement to put their nuclear forces on ‘high alert’. In a leadership debate in mid-July, when asked how to respond to Russia, Truss said: “I would go there and call Putin out”. Yes Liz, you go! After all, this is somebody who literally once said: “I don’t think anyone would describe me as diplomatic”.

Truss’ enthusiastic passion for accidentally selling arms to war criminals is something to behold. Under her stint as international trade secretary in 2019, Truss claimed she “inadvertently” sold weapons to Saudi Arabia not once or twice, but thrice, in a clear breach of a court order banning the sale of weapons to the country. Over the last five years, the leading arms maker, BAE systems, sold £15bn-worth of arms to the Gulf’s kingdom, killing thousands of civilians in Yemen.

And as a minister who also appoints members to the Equalities and Human Rights Commission’s board, Truss’ record of both human rights and foreign policy is concerning. After resuming arms sales to Saudi Arabia in July 2020, days later, seven children and two women were killed in a Saudi-led air strike. Truss was subsequently branded “deeply cynical” by human rights groups Amnesty International for arguing that apparent war crimes by Saudi forces in Yemen had been “isolated incidents”. In 2016, as justice secretary, Truss released the “Prison Safety and Reform White Paper”, which described her commitment to expanding the prison system by 10,000 places.

As a committed warrior for the ‘war on woke’, Truss has been rewarded for her loyalty to Johnson – so much so that she may now represent Britain on the world stage. Through appealing to the Conservative base with populist soundbites and meaningless phrases, Truss has cemented her position as a person of power, while ignoring the chaos she has been complicit in crafting. She is seen as the “Johnson continuity candidate”.

Sunak for all his background (Oxford, Stanford, billionaire) is the underdog. And he acknowledges that. But for sound economics and ability to resolve issues, Sunak is the man. The Conservative members are more likely to go with “Least Trust” (or Liz Truss) for more chaos and confusion. And come 2024 Labour has a good chance to win.

Reference:

Liz Truss is just a bad joke, Kimi Chadd (https://gal-dem.com/liz-truss-bad-politicians/)

Is Crackhouse All Cracked-up?

Crackhouse Comedy Club’s owner Rizal Van Geyzel has been permanently blacklisted from registering a business license for any premises in the capital. Deputy Federal Territories Minister said Kuala Lumpur City Hall’s (DBKL) licensing committee decided to revoke the comedy club’s licence effective July 30. The owner is blacklisted for life from registering business licenses in Kuala Lumpur.  He cannot register any businesses in the city even if he is using another name and company.

Crackhouse came under heavy scrutiny recently over controversial performances that touched on Islam, which saw a woman and her boyfriend arrested.  

Rizal later landed in hot water too when several old videos of controversial comedy performances resurfaced.

Source: https://www.freemalaysiatoday.com (Facebook pic)

He was arrested by Bukit Aman Criminal Investigation Department’s Classified Investigation Unit on July 14 and remanded. He is currently facing three charges under Section 233 of the Communications and Multimedia Act (CMA).

Is this too much? The action itself (by DBKL) is comic relief! How can the owner ensure a performance will not affect the sensitivities of some people? In a multi-racial society, there are some idiosyncrasies which are laughable and in good spirit we accept as very Malaysian! 

Many may have heard the joke that there were two Chinese shops selling cooking gas right opposite each other – “Wee Kien Fatt” and the other “Soh Kien Wee”. So, does that make me an anti-national social element? Or, how about why Indians cannot win the World Cup? Because every time they get a corner they set up a mamak shop!

As long as we are open-minded and little tolerant of each other we can enjoy names/culture/language of each other. Let’s have a “Merdeka of Jokes” and laugh at each other’s peculiarities and temperament. No malice was intended nor taken, otherwise we will only have serious jokes on LCS and 1MDB!

Reference:

“Sad day for stand-up comedy”: Netizens question logic behind DBKL blacklist, Bernie Yeo, Focus Malaysia, 17 August 2022

Is There a Case for Job Hopping?

Traditional thinking is that employees should stay at a company for the long term – or at least for three years. But many workers switch swiftly for greater career rewards.

In the past 18 months, Debra, 29, has had three jobs. In that time, the digital marketer has fast-tracked her career. With each move, she’s worked with higher-profile clients, gained greater experience and acquired deeper skills. There has also been another significant pay-off: Debra’s job moves have meant her salary has grown by 30%.

Workers like Debra who forego the traditional career-ladder climb, and instead jump from role to role, have often been stigmatised. In the 1970s, job hopping was likened to vagrancy and branded ‘Hobo Syndrome’ by industrial psychologists. As such, the practice received a bad rap in many quarters.

In a tight labour market and an environment where companies show less and less loyalty to workers, many of those who job hop are reaping the rewards, gaining sizable pay rises and greatly accelerating their career progression. Is this approach to employment sustainable?

Source: https://www.coburgbanks.co.uk

For past generations, the tacit contract of work implied that companies would reward loyalty with progression and pay. This arrangement, however, began to break down in the 1980s. Many companies downsized and reduced overheads. By the 1990s, a new mentality had developed: job hopping.

Recently, job hopping – is seen as switching roles once a year. US Bureau of Labor Statistics data shows that not only do employees aged under 34 change jobs most frequently (an average of 1.3 years for employees aged 20 to 24 in January 2020, versus 4.9 years for those aged 35 to 44), but they’re doing so more often. The median tenure has been shrinking since 2010.

Following the Great Resignation and subsequent hiring crisis, job hopping seems to have swelled even further. In a February 2022 LinkedIn study of more than 20,000 US workers, 25% of Gen Zers and 23% of millennials said they hoped or planned to leave their current employers within the next six months.

In many cases, when workers job hop, they effectively take bigger strides down their career Path. Experience, skills and interaction are assets they collect. Other reasons for job hop include slow internal processes in current company and lack of meaningful work.

Employees are often financially rewarded for switching roles, too. In the UK, Office for National Statistics (ONS) data shows workers who change jobs within a year of beginning a role have consistently higher hourly wage growth over those who stay. Workers aged 16 to 24 make the biggest salary gains. In the US, an analysis of 18 million worker salaries showed the wages of job switchers in 2021 outpaced those who stayed in a role. In some industries, workers received nearly a 12% pay rise.

However, job hopping often comes with a stigma attached – one that’s enshrined by older and more senior hiring managers. The stigma may also come from a generational divide: those who have spent decades at a company, and reached the top of the career ladder, are often its key decision makers.

Over the longer term, workers with a long track record of job hopping may eventually risk hitting a wall, dramatically limiting career options. The constant churn of leaving a job and beginning a new one can also form a potentially problematic behavioural pattern. Employees facing problems at work can be tempted to quit rather than grind it out, impacting their long-term career prospects.

While ONS research shows job hoppers typically experience greater hourly wage growth, the same data shows they’re still generally paid less overall per hour than workers who remain in longer-term employment. Rather than gradually accumulating expertise and social capital at a company, job hoppers can find themselves stuck in a loop of quitting and starting over, forever in a transitory state between new and old roles.

On a longer term, job hopping for a marginal increase in pay will be looked down upon. It also may mean employers cannot rely on these “transient” people who only want to boost their personal remuneration at the expense of loyalty, experience and improvement in skill set. It seems to be a Gen Z and millenials phenomenon!

Reference:

The case for job hopping, Worklife, BBC

Malaysia’s Growth Prospects: Divergent Views

Opinions between economists at the International Monetary Fund (“IMF”) are divided over Malaysia’s growth prospects for this year. The IMF has cut its year-on-year gross domestic product (GDP) growth forecast for Malaysia to 5.1% in 2022 — down from 5.6% previously — as it warns of further downside risks for the global economy. The IMF’s latest forecast is lower than Bank Negara Malaysia (BNM)’s projected GDP growth range of 5.3%-6.3% for 2022.

In a contrast, S&P Global Market Intelligence is projecting a strong pick up in the country’s economic growth of 7% this year — an upward revision from 6.1% previously.

S&P Global Market Intelligence’s bullish view on the local economy is mainly due to the strengthening domestic demand, strong exports, as well as the reopening of international borders.

https://www.thesundaily.my

Nevertheless, in its latest World Economic Outlook Update published on Tuesday (July 26), the IMF insisted that the risks to global economic outlook are “overwhelmingly tilted to the downside. This has taken into consideration risks arising from the Russia-Ukraine war, inflation globally, the tight labour market and monetary policies, potential debt distress in emerging markets, the property sector crisis in China and geopolitical fragmentation, which could impede global trade and cooperation.

With increasing prices continuing to squeeze living standards worldwide, the IMF said taming inflation should be the first priority for policymakers.

The IMF opined that targeted fiscal support can help cushion the impact on the most vulnerable, but with government budgets stretched by the Covid-19 pandemic and the need for a disinflationary overall macroeconomic policy stance, such policies will need to be offset by increased taxes or lower government spending.

Meanwhile, S&P Global Market Intelligence chief economist for Asia-Pacific Rajiv Biswas highlighted that the Malaysian economy had staged a recovery in the first half of the year, after a significant economic disruption due to the Covid-19 waves.

Although global economic growth is expected to moderate, a global recession is not currently projected in the baseline scenario for 2022, Rajiv said. Global real GDP growth is expected to slow to 2.7% in 2022 and 2.6% in 2023, the economist noted.

Rajiv further said that BNM is expected to embark on a gradual path to normalise its monetary policy settings by further withdrawing the degree of monetary accommodation as the economic recovery continues.

In all of the above, many (economists) have not accounted for the lack of labour in manufacturing, construction and plantation. It is estimated that the shortage is 1.2 million workers. That is the crux for production and hence GDP. Then the inflationary effects are on us – BNM refuses to be aggressive on rate hike, because we want to balance growth. Hang growth! Fix inflation and don’t start on “demand-pull” and “cost-push” issues. We did massive stimulus packages (because of Covid) and it is a monetary phenomenon. So, please increase OPR by 1% and keep a differential with the Fed Fund rate or we will end-up with RM5 to the dollar! That will further spike imported inflation – net food bill is RM55-60 billion a year. That’s why consumers and the B40 (or B60) will feel the pain more than the elite!

Reference:

Contrasting view on Malaysia’s growth prospects, Chester Tay and Syafiqah Salim, TheEdge CEO Morning Brief, July 28, 2022

Is Big Oil Set for Record Profit?

Big Oil is poised for a record-breaking US$50 billion profit in the second quarter of 2022. The soaring earnings are direct result of the high energy prices that have stoked inflation, piled pressure on consumers, raised the risk of recession and prompted calls for windfall taxes. Amid this political and economic turbulence, shareholders may have to temper their expectations for rising returns. 

Exxon Mobil Corp, Chevron Corp, Shell Plc, TotalEnergies SE and BP Plc — collectively known as the supermajors — are set to make even more money than they did in 2008, when international oil prices jumped as high as US$147 a barrel. That’s because it’s not just crude that has soared during the crisis created by Russia’s invasion of Ukraine, natural gas prices and refining margins have also broken records.

Many major markets have found themselves critically short of refining capacity due to a combination of shutdowns, investments that were stalled by the pandemic, sanctions on Russia and a decision by China to limit petroleum exports.

The US Gulf Coast’s 3-2-1 crack spread, a rough measure of profit margins from refining a barrel of crude, exploded to average US$48.84 in the second quarter, more than double the level a year-earlier. A similar measure for Europe — TotalEnergies’ variable cost margin — rose threefold to US$145.70.

Refining now makes up 26% of the cost of a gallon of gasoline in the US, up from an average of 14% in the previous decade, according to the Energy Information Administration.

Shell is expecting to post a US$1 billion gain in refining results. Exxon, which has the largest downstream footprint of the supermajors, is expected to make more in the second quarter than the previous nine combined, according to estimates collected by Bloomberg.

Exxon will probably use its excess cash to lower debt, according to Citigroup Inc.. Chevron may increase the bottom end of its buyback range to US$10 billion for the year.

Sky-high profits aren’t solely the result of the broad-based upswing in commodity prices. The supermajors are also spending much less than they did the last time oil was above US$100 a barrel. Capital expenditures is creeping to a forecast of US$80 billion in 2022, but that’s half the level of 2013.

The supermajors may not be able to keep capital expenditure this low for long, due to their need to ramp up spending in an inflationary cost environment. Schlumberger NV, the world’s biggest oilfield service company, last week said sales increased nearly 20% from a year earlier, and sees a “multiyear upcycle” in demand for its services.

This situation risks a political backlash. The UK imposed a windfall tax on oil and gas profits earlier this month. Italy has passed a levy on the energy industry, while in France some lawmakers are backing the idea of a special tax of as much as 3 billion euros (US$3.1 billion) a year. President Emmanuel Macron has so far resisted such calls, instead urging companies including TotalEnergies to extend rebates on fuel purchases.

In the US, Biden has criticized Exxon for making “more money than God” and accused other oil firms of exploiting high gasoline prices, but so far there has been no serious political pressure for a windfall tax.

Against this turbulent backdrop, the most profitable quarter in the supermajors’ history may not be cause for overt celebration.

For Malaysia, a windfall tax will help reduce the so-called subsidy cost of RON95 and diesel. It is time for oil companies to share the burden consumers/Government face. Anyway what is the point of super-profits other than to meet analysts’ expectations, reward shareholders or buyback shares?

Reference:

Big Oil set for record profit as world reels from high fuel cost, The Edge CEO Morning Brief, July 27, 2022[Kevin Crowley, Laura Hurst and Francois De Beaupuy, Bloomberg]

Money, Money, Money!

ABBA’s hit on the above will always be a topic that rocks Malaysia. And ABBA is not Muhyiddin Yassin (that’s “Abah”).

It’s all about money – illicit, fraudulent, unethically secured, deployed and even stashed away money that is rocking this nation. 

As you scan the news, millions of ringgit in cash paid out to so many individuals within the political circles (or circus), it is easy to understand why the people are suffering today. Some senior civil servants and politicians have been found to have gold bars, currencies, jewellery and branded bags stashed away in their homes.

Then you have invisible ships worth RM6 billion and no-one has as has been charged for the ships not appearing! (Pardon me if they are invisible and cannot appear – stealth technology?). The first ship (visible) will only delivered in two years time. That is according to the Minister of Defence (MoD). He was also the MoD in 2017 when he welcomed the first LCS into the Navy. This vessel was not fully completed, hence not operational to this day.

The NST in its report on 10 August 2022 reported that these things happen because:

• “We have leaders who lack integrity”

• “Malaysian voters are also at fault for electing ‘shady characters’”

• Political parties keeping court clusters in leadership positions; and

• Procurement process is far from being transparent

Source: Malaysiakini, 8 August 2022

Then we have MRT3 with RM1 billion per kilometre. How do we justify this RM50 billion project?

What is mind-boggling is that in Malaysia, you can return the stolen money and be absolved or have a reduced sentence.

How long more will we be dragged through the mud and slime of corrupt conduct?  How long more will we be able to cushion all the robberies, bearing in mind it is the people’s money that is being taken? The billions of ringgit now needed but unavailable to subsidise essential goods and fuel and to create meaningful jobs for the people have been stolen by corrupt politicians, political appointees, their kith and kin, and some civil servants. And there is no end in sight unless there is a drastic reset.

We have decades of stolen money, not just those cases languishing within the Palace of Justice or at the attorney general’s office or being investigated by the authorities, as is often claimed.  We are talking of the several decades-old culture of ‘What’s is in it for me?’ that has robbed this nation of a glorious past and future.  We are a rich, blessed nation that is impoverished today. 

But we continue to allow ourselves to fall prey to the mantras of religious divisiveness and intolerance, along with deepening racial animosity, that have proven to be the most effective political weapon of power. 

If we want to survive on daun ubi kayu (cassava leaves) and sambal belacan in the not-too-distant future, then let us, in our self-inflicted blindness, happily live with such blatant theft at all levels. 

How long more, oh Malaysia? How long more can we allow this nation, its resources and its people to be exploited? 

References:

Money, money and more money rocks Malaysia, JD Lovrenciear, ALIRAN, 1 August 2022

MPs remind Hisham he welcomed non-existent LCS into fleet in 2017, Malaysiakini, 

9 August 2022

NST Leader: Another 1MDB? New Straits Times, 10 August 2022

U.S. : Workers Wages Have Stagnated!

U.S. unemployment is low in nearly two decades (3.9% as of July) and the nation’s private-sector employers have been adding jobs for 101 straight months – 19.5 million since the Great Recession.

But despite the strong labor market, wage growth has lagged economists’ expectations. In fact, despite some ups and downs over the past several decades, today’s real average wage (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago. And what wage gains there have been have mostly flowed to the highest-paid tier of workers.

The disconnect between the job market and workers’ paychecks has fuelled much of the recent activism in states and cities around raising minimum wages, and it also has become a factor in at least some of this year’s congressional campaigns.

Average hourly earnings for non-management private-sector workers in July were $22.65, up 3 cents from June and 2.7% above the average wage from a year earlier, according to data from the Federal Bureau of Labour Statistics (“BLS”). Year-over-year growth has mostly ranged between 2% and 3% since the beginning of 2013. But in the years just before the 2007-08 financial collapse, average hourly earnings often increased by around 4% year-over-year. And during the high-inflation years of the 1970s and early 1980s, average wages commonly jumped 7%, 8% or even 9% year-over-year.

After adjusting for inflation, however, today’s average hourly wage has just about the same purchasing power it did in 1978. In fact, in real terms average hourly earnings peaked more than 45 years ago: The $4.03-an-hour rate recorded in January 1973 had the same purchasing power that $23.68 would today.

A similar measure – the “usual weekly earnings” of employed, full-time wage and salary workers – tells much the same story, albeit over a shorter time period. In seasonally adjusted current dollars, median usual weekly earnings rose from $232 in the first quarter of 1979 (when the data series began) to $879 in the second quarter of this year, which might sound like a lot. But in real, inflation-adjusted terms, the median has barely budged over that period: That $232 in 1979 had the same purchasing power as $840 in today’s dollars.

Meanwhile, wage gains have gone largely to the highest earners. Since 2000, usual weekly wages have risen 3% (in real terms) among workers in the lowest tenth of the earnings distribution and 4.3% among the lowest quarter. But among people in the top tenth of the distribution, real wages have risen a cumulative 15.7%, to $2,112 a week – nearly five times the usual weekly earnings of the bottom tenth ($426).

Wage stagnation has been a subject of much economic analysis and commentary, though perhaps predictably there’s little agreement about what’s causing it (or, indeed, whether the BLS data adequately capture what’s going on). One theory is that rising benefit costs – particularly employer-provided health insurance – may be constraining employers’ ability or willingness to raise cash wages. According to BLS-generated compensation cost indices, total benefit costs for all civilian workers have risen an inflation-adjusted 22.5% since 2001 (when the data series began), versus 5.3% for wage and salary costs.

Other factors that have been suggested include the continuing decline of labour unions; lagging educational attainment relative to other countries; non-compete clauses and other restrictions on job-switching; a large pool of potential workers who are outside the formally defined labor force, neither employed nor seeking work; and broad employment declines in manufacturing and production sectors and a consequent shift toward job growth in low-wage industries.

Remarkably, we are no better, wages for entry level graduates remain in the RM2,500-RM3,500 range over (perhaps) the last 10 years. A Bank Negara study shows that Malaysian workers are paid less than other benchmark economies. For a Malaysian worker who produces output worth USD1,000, he would be paid USD340. The corresponding wage in a benchmark economy is higher at USD510. This is applicable in most sectors in Malaysia. Why? Bargaining power, foreign workers and Government biasness to employers, amongst others. We need a productivity-linked wage structure that incentivises workers and provide “fairer” remuneration package to output.

Reference:

For most U.S. workers, real wages have barely budged in decades, Drew Desilver, Pew Research Center

The 7 Values of Servant Leadership

What do leaders like George Washington, Abraham Lincoln, and Martin Luther King Jr. have in common? It’s not one thing, but rather a commitment to the key values that constitute being not just an effective leader — but a servant leader committed to helping others and transforming the world for the better.

The results of servant leadership are exponential: by leading as a servant, you multiply success and satisfaction — personal and professional, for you and your colleagues — above and beyond the limits of traditional leadership outcomes. There are 7 key principles of Servant Leadership:

1. Honour Others

2. Inspire Vision

3. Choose Ethics

4. Empower Others

5. Prioritise People

6. Balance Focus With Flexibility

7. Serve With Humility

Source: https://chiefexecutive.net

1. Honour Others (Before Yourself)

Albert Einstein once said, “I speak to everyone the same way, whether he is a garbage man or the president of the university.” This simple statement perfectly encapsulates the concept of purposefully honouring others before yourself. By speaking to everyone as if they are genuinely important, no matter their position in life, Einstein is demonstrating genuine respect for all people. Respect defines the underlying attitude of a servant leader.

How to Honour Others

• Affirm dignity by recognizing and responding to the needs of your team

• Actively resolve issues; never wait for things to just get better

• Respect people of all positions through word and behaviour

2. Inspire Vision (Before Setting The Course)

In a humbling moment that will forever be preserved, Helen Keller wrote, “The only thing worse than being blind is having sight with no vision.”

Daily, leaders around the world are going 100 miles per hour in no specific direction and getting nowhere. But great leaders work to establish a vision that goes far beyond what they can see — and full buy-in from their team. Vision from leadership and buy-in from teams produce an inspiring atmosphere where nearly any goal becomes possible.

How to Inspire Vision

• Model the way for your team

• Help your team realize how each person’s role contributes to a larger picture

• Be sure to share not only the “what” and “how” of your vision, but also the “why”

3. Choose Ethics (Before Profit)

“A good name is to be chosen over great riches,” according to the book of Proverbs. Over the last 2,000+ years, millions of successful leaders have learned the practical truth of this proverb.

There is no price you can pay for integrity, but a lack of integrity can be costly. While Christian teachings emphasize this virtue, almost every other major religion also has a proverb or parable promoting this concept. This leads us to the conclusion that integrity counts.

So, what are the major and minor non-negotiables that you can hold onto as you lead your organization?

How to Make Ethical Choices

• Be clear on non-negotiables that define your integrity (especially with yourself)

• Identify how integrity will increase your long-term profitability or success

• Remember ethical business practices reduce long-term risk

4. Empower Others (Before Personal Gain)

“It’s amazing what you can achieve if you don’t care who gets the credit.” This quote by former President Harry S. Truman exemplifies how leaders achieve their greatest success — through the empowerment of the staff surrounding them.

Leaders who care about leveraging and empowering their teams create a safe environment that encourages confident decisions. This type of safety gives a team permission to take smart risks (with your guidance) and, more often than not, achieve greater outcomes.

Lincoln recognized the waste in having a team of “yes men,” instead choosing strong and insightful men who felt respected and safe to raise unpopular concerns. Because of this, he was able to form a powerful team that never got out of control, with strong and growing leaders in every department of his administration.

How to Empower Others

• Create a safe environment for employees to grow

• Allow for risks to be taken with growth and development of team members in mind

• Uncover and cultivate shared goals that inspire ownership of work responsibilities

5. Prioritise People (Before Tasks)

Simon Sinek, a visionary in the field of living out purpose, said, “When people are financially invested, they want a return. When people are emotionally invested, they want to contribute.”

There is no greater value than a team that desires to carry out their responsibilities with passion. Such a team originates with leadership that understands and expresses the individual and collective value of their teams.

How to Put People First

• Show tangible appreciation for your team — through both word and deed

• Put people first (over money and time)

• Be proactively kind to your team, routinely finding ways to encourage them and support them

6. Balance Focus With Flexibility 

In business, the expression “out with the old, in with the new” has become a cliché. But how often do we use that phrase to justify the implementation of new programs that are already out of date or misaligned to the new organizational or industry reality? Leaders too often self-destruct when they are unwilling or unable to innovate and adapt to meet new circumstances. It is too easy for an organization to find itself “out with the old” because of a stubborn and inflexible attachment to “the old way.”

Very often, the education sector slides into this category when funding falls. Becoming technologically behind through inertia, a school’s students end up learning on outdated software or business models that can hold them back as they try to break into a high-tech workplace.

How to Keep a Flexible Focus

• Be willing to abandon a path when it proves futile (recognize when decisions are being shaped by path dependency)

• Maintain the essential “10,000-foot view,” but keep track of the “on-the-ground” work

• Pay attention to market trends and proactively respond before you are forced to react

7. Serve With Humility (Before All Else)

“Humility is not thinking less of yourself, it’s thinking of yourself less.” Pastor and author Rick Warren articulates a valuable lesson for influential leadership. Pride becomes a poison to a team and a repellent to those you would seek to influence. Humility is not mere self-deprecation or a focus on shortcomings, but rather purposeful care and concern for the world around you.

How to Serve with Humility

• Recognize that every leader has room for improvement, including yourself

• Always ask others how you are doing and never stop re-evaluating your performance

• Look for boring tasks you can do and opportunities to connect with others that demonstrate you are truly approachable

The above 7 traits for leadership is the route to success. There are others and perhaps you know them from your own experience or observance of others. When a nation or company does well it has got its “true north” right.

The world will suggest greed, self-importance and profit before other things. It is the conscious effort of a leader not to fall into this trap that differentiates a good leader from a poor one. So transform daily by the renewing of your mind!

Reference:

7 Values of Servant Leadership, Point Loma Nazarene University

Where is Malaysia’s Inflation Headed? Up?

Malaysia’s June 2022 Consumer Price Index (CPI) increased to 3.4% (on an annualised basis). The increase surpassed the average inflation in Malaysia for the period January 2011 to June 2022 (1.9%), according to the Department of Statistics Malaysia (DOSM). Malaysia’s inflation rate (3.4%) was higher than China (2.5%) but lower than Thailand (7.7%), the Philippines (6.1%), South Korea (6%) and Indonesia (4.4%).

Food index increased 6.1% and remained as the main contributor to the rise in inflation during June 2022, according to the Chief Statistician of DOSM.

Other groups except communications also recorded increases and led headline inflation to 3.4%. Transport rose 5.4% followed by restaurants & hotels (5%); furnishings, household equipment & routine household maintenance (3.4%); miscellaneous goods & services (2.2%) and recreation services & culture (2.2%).

Elaborating further on the food index, the DOSM’s Chief Sstatistician said all subgroups in food & non-alcoholic beverages recorded increases between 2.8% and 11.9%.

Meanwhile, food at home and food away from home inclined 6.1% and 6.65 respectively, contributing to the increase in food inflation. Among food away from home that showed increases were roti canai (10.5%), rice with side dishes (9.7%), cooked beef (7.8%) and noodles-based food (7%).

Meanwhile, chicken which is the largest weight in the subgroup of meat (46.1%) rose 17.2% after rising 13.4% in May 2022. The average price of processed chicken in June 2022 was RM10.02/kg as compared to RM8.55 in June 2021. The increase in chicken prices is in line with the increase in global food production inputs such as maize (14.8%), wheat (60.9%) and soybean (19.9%) which are the largest composition in the preparation of chicken feedstuff.

Additionally, pork also recorded an increase of 14.6% from 10.2% in the previous month. This was contributed by the rise in the price of animal feed. Moreover, the spread of African swine fever has also affected pork supply.

For July, inflation could exceed 4% and there are no signs it has peaked. Overall, for 2022 it may average 3.1% according to some analyst. This is a “tax” on the poor and savers who rely on interest from fixed deposits.

Reference:

Pricier roti canai, pork as Malaysia’s June 2022 inflation surges to 3.4%, Cheah Chor Sooi, Focus Malaysia, 22 July 2022

How Much Grain is Stuck in Ukraine?

About 20m tonnes of grain meant for export is trapped in Ukraine. Its president Volodymyr Zelensky has said this could rise to 75m tonnes after the 2022  harvest. The war also means that this year's harvest will be smaller. As much as 30% of the 86m tonnes of grain Ukraine normally produces will not be harvested, says Laura Wellesley, a food security specialist at think tank Chatham House.

Ukraine’s grain goes to Asian and African nations as shown below:

Ukraine is usually the world's fourth-largest grain exporter. It normally produces 42% of the world's sunflower oil, 16% of its maize and 9% of its wheat. In addition, wheat exports from Russia - the world's largest exporter - is down.

Western sanctions do not target Russian agriculture, but the Kremlin argues they have hindered exports by hiking insurance rates and affecting payments. Russian ships carrying agricultural products are not barred from EU ports.

Ukraine and Russia usually supply over 40% of Africa's wheat, according to the African Development Bank. But the war has led to a shortage of 30 million tonnes of food in Africa. This has contributed to a 40% rise in food prices across the continent.

In Nigeria, it has helped increase the price of staples such as pasta and bread by as much as 50%.

The EU is trying to help - setting up "solidarity lanes", so that Ukraine's grain can be shipped from ports on the Baltic Sea, and also from the Romanian port of Constanta. For part of the journey to Constanta, the grain can be transported by barge along the Danube.

However, one major problem is that Ukraine's train tracks are wider than those in the rest of Europe. That means grain be unloaded from one set of wagons at its border and reloaded onto others. It has been taking as much as three weeks for grain to cross Europe and reach ports on the Baltic. The Ukrainian Grain Association, a trade body, says only 1.5m tonnes of grain a month at most has been exported. Before the war, Ukraine had been exporting as much as 7m tonnes of grain a month

This war has brought untold misery for people of Ukraine, Russia and the world. There is no convincing reason for the war. If the U.N. is a functioning body, it has to embark on securing a ceasefire and then through dialogue find a solution that meets key issues of the conflicting parties. Otherwise, the world will face rising inflation and food shortages in the poorest parts of the world. Is that what the warring parties want?

Reference:

Why does the world need grain to be shipped from Ukraine? BBC News