Understanding Wage Theft!

Wage theft is when an employer withholds benefits, including breaks or compensation. It goes unreported either because employees are not aware of what they're owed or because they fear retaliation.

Wage theft occurs when an employer doesn't pay an employee the benefits they've earned, be it wages or other benefits such as a lunch break. It's one of the most costly crimes in America. From 2017 to 2020, a total of $3 billion dollars was recovered in stolen wages, which is a fraction of the overall cost of wage theft. 

Source: https://texassignal.com

Wage theft most commonly comes in the form of minimum wage violations and overtime violations, which are often the first things you may think of when you hear wage theft. That said, wage theft can come in many forms, some of which you may have experienced without you knowing, i.e:

 

• Paying less than minimum wage

• Not paying appropriate overtime

• Withholding your final pay-check after you quit your job

• Withholding tips 

• Asking for unpaid work

• Cutting your lunch breaks short

• Asking you to make work-related purchases without reimbursement

In 2021, the U.S. Department of Labor reported a total of $230 million recovered in back pay for employees. The most frequent filers were food service workers, followed closely by construction workers. The two industries together made up a total of over $70 million in back wage recovery. Retail, agriculture, and healthcare were also common industries where wage theft occurred.

Unfortunately, combating wage theft comes down to employees standing up for their rights against their employers, which can be interrupted by the employee-employer power dynamics. While wage theft often goes unreported because employees fear repercussions from their employers for filing complaints, it's actually illegal for employers to retaliate against their employees for exercising their rights as workers.

Talk to your employer: It's best not to jump directly to wage theft when there's a discrepancy in your paycheck. This could be the result of an error, either human or technical. If your boss is asking you to do work before you clock in or after you clock out, you can start a conversation about setting work boundaries. 

Keep records of these conversations and paycheck discrepancies: While you shouldn't assume the worst, it's best to prepare for the worst. You should keep a track of any errors in your paychecks and how much money you're short. 

File a complaint and be aware of labour laws: You can file wage theft complaints with the authorities. They will ask for some information about you, your employer, and your wages. 

Employers usually don’t go to jail for this theft. That includes large corporations like Burger King or UPS. However, if employees fail to comply to internal SOP, they may be consequences, with an internal inquiry to termination. Investigation and enforcement are weaknesses identified in the U.S. That also seems to be the case for us in Malaysia.

Reference:

Understanding wage theft and what to do if it happens to you, Paul Kim, www.businessinsider.com

 

This is the last article for the year!

We will resume on Tuesday, 3 January 2023!

Are Malaysians on the Brink of Financial Disaster?

Many Malaysians are still struggling from the financial impact of the pandemic. That’s based on the data from the RinggitPlus Malaysian Financial Literacy Survey (RMFLS) 2022. About 70% of respondents indicated that they save less than RM500/month or do not manage to save at all. This is the worst-ever result tracked by the RMFLS in 5 years.  

At the other end of the spectrum, the number of Malaysians who managed to save more than RM1,500 per month has also dropped significantly. From 20% in 2020, the figure has dropped to just 5% in 2022.

Source: https://bankunderground.co.uk

The RMFLS 2022 results also indicate that more Malaysians are struggling with less savings in hand, as 63% of respondents stated that they can survive for 3 months or less with only their savings (52% last year). A similar pattern is also seen where 55% of Malaysians spent exactly or more than what they earned each month (44% last year), essentially living paycheck-to-paycheck.

With depleted savings and higher cost of goods, the survey also highlighted a worrying trend where more credit cardholders are not paying off their bills in full – just 55% in 2022 compared to 70% last year.

With the challenges in cashflow and savings, the survey results show that Malaysians are choosing short-term monetary relief over long-term financial stability. A staggering 65% of respondents above 21 stated that they will consider applying for more Employees’ Provident Fund (EPF) withdrawals if the government allows it.

In addition, the survey also found that 52% of Malaysians above the age of 18 have not started investing. Meanwhile, a majority of those who are investing have low-risk appetites but medium-term investment horizons which is not optimal – though these may be influenced by current financial challenges and global economic outlook.

Financial literacy, higher wages, and an extended retirement age (to at least 65) are some of the points needed for better financial health of all Malaysians.

Reference:

RinggitPlus survey finds that Malaysians are on the brink of financial disaster, Alex Cheong Pui Yin, https://ringgitplus.com, 6 December 2022

Of Monorail Stations and LRTs

The new (but perhaps not so new) Transport Minister “turun padang” recently with inspection of KL’s trains and buses. This is a good development. But the key is follow-up and rectification. Otherwise, it is another good PR exercise.

All 16 KL monorail stations lifts were not working, 46 escalators were not operational and over 664 lights at LRT stations were not functioning. The paying public deserves better. And where was Prasarana’s management? Happy in their cocoons at UOA Bangsar? And with reserved car parks at Level 3 to boot? Surely, it is not the Minister’s job to inspect and report.

Is this the “chronic third world disease” of poor maintenance? So when we have “kissing” trains and “disappearing” trains (from the control room), it is a symptom of a disease.

Source: https://www.klsentral.info

The Rakyat has funded RM40 billion of Prasarana’s debt but they (the Management) live in Cuckooland! Isn’t it time we demanded better service? A change in the Board and Management? Please, no need for further studies and inquiries. There is currently a consultancy rumoured to examine restructuring of Prasarana? What’s the point? Isn’t it just pouring old wine into new wineskins!   

And for the Minister, please review the MRT3 costs and defer it; keep a close watch on ECRL; and, revive HSR by way of  phases from KLIA to Melaka Sentral (via Seremban 2 and Vision Valley) as the first phase of the whole project!                

Reference:

Of malfunctioning escalators, lifts, lights and LRT stations: Who should Anthony Loke reprimand? Focus Malaysia, 9 Dec 2022                                                                        

Redesign the Food Security System?

The new Minister of Agriculture and Food Security has been tasked to ensure food availability and reduce cost of living on food items. His priority should be to devise strategies to counter the rising cost of living, including:

1. Persuading State governments to identify suitable land available for vegetable and fruit cultivation, poultry farms and aquaculture;

2. Establish comprehensive proposals to develop the food sector, taking into consideration local and national needs;

3. Reintroduce the Green Book Plan (2.0)  to make Malaysia self-sufficient in food production through subsidies;

4. Encourage a community-based approach towards planting vegetables and fruit in residential areas. Identify the areas, especially under high-tension grid lines, and request Tenaga Nasional to give approval for residential farming;

5. Encourage residents with landed property to grow vegetables and fruit in any small space inside and outside their respective dwellings

6. Encourage residents’ associations to initiate projects for residents to plant vegetables and fruit in vacant spaces;

7. Provide expert advice to people engaged in food cultivation and in developing poultry farms;

8. Offer attractive financial incentives to farmers through BNM and Agro Bank;

9. Develop vertical farming or urban farming (examine how Singapore does it); and

10. Learn from the Danish experience (in the food sector).

We have neglected the food sector for too long. It has taken a “pause” because of our quest for industrialisation and the development of the services sector. Now we must return to the food sector.

https://www.thesundaily.my

Denmark, with almost six million people, produces enough food for five times its population! The Danish food ecosystem incorporates R&D, integrated farming, manufacturing and the development of food cooperatives. We can learn valuable lessons from Denmark’s universities and research institutes involved in innovation in food production and technology.

Malaysia should reduce its food import bill of RM60bn and take immediate action to boost the local food sector.

We must aim to be a major exporter and global player in food products. Why? Because food production is a recession-proof sector. As the global population increases, the demand for food products will rise and the nation will earn much-needed foreign exchange. We could do this if we take a professional approach and place emphasis on R&D, logistics, marketing and distribution. Then we don’t have to depend on Thailand or Indonesia.

Reference:

10 ways Anwar can boost Malaysia’s food security, Benedict Lopez, ALIRAN, 4 Dec 

Saudi Arabia Includes Chinese Language

The Kingdom of Saudi Arabia has implemented the Chinese language in the curriculum at all stages of education in Saudi schools and universities.

As part of Saudi crown Prince Mohammed bin Salman’s new vision for the education sector. The Ministry of Education included Mandarin (Chinese) from this academic year 2021-2022.

Source: https://dragonsteaching.com

The agreement was finalised during the Saudi crown prince’s visit to Beijing in February 2019, between the two countries to enhance bilateral relationship and cooperation.

Several initiatives have been launched with different organisations in the education and training sectors to introduce the language to the public. After Arabic, English serves as the second language and Chinese serves as an optional third language in the Kingdom.

It is reported that companies prefer to hire people who speak more than one language, so the University of Jeddah has made it mandatory for preparatory year students.

In Malaysia, we are still blinkered with race and religion. Pragmatic leaders see beyond, and implement realistic policies and strategies. Saudi kingdom has gone beyond our tahfiz and national schools. We have a great advantage with vernacular schools and teachers but are we open to new thinking? Have a partnership with vernacular schools to introduce a third language. This is optional. Language or learning cannot be forced upon someone. If you do, it will be with a huge grudge and no desire to really learn.

Those who complete an adequate understanding of conversational Mandarin or Tamil are given a certificate, which is useful in private/public sector employment. Just look at those Malay students who went to Chinese schools. They have at least two language skills – Bahasa Malaysia and Mandarin. Hopefully they may have some level of English as well. And with maths, they are employable readily.

We need to be open and welcome new ways of reaching consensus. Hopefully, the Minister has a more positive view of developments in the world.

Reference:

Saudi Arabia include Chinese language in its educational system, Sakina Fatima, www.siasat.com, 7 October 2021

Who Stole My Pension?

 “Who Stole My Pension? How You Can Stop the Looting” – is the title of a book by Robert Kiyosaki and Edward Siedle. It provides an action plan for pension stakeholders, including taxpayers, workers and retirees seeking to enhance pension protection. 

State and local government pensions in the United States hold almost $4 trillion in assets and provide retirement benefits for roughly 21 million current and former state and local employees. These are teachers, fire-fighters, and police officers who serve their communities. 

Source: https://www.thestar.com.my

Workers in government pensions around the world can count on politicians and taxpayers running to legislatures and courts to cut benefits workers have been “promised” when these already struggling government pensions start to run out of money. 

To fix or protect pensions, it is critical to understand how they work and why pensions fail.

Fortunately, the fundamentals of pensions are easy to understand.

There are three components to the health of a pension:

1.   Money In: How much money goes into the pension “pot” (contributions);

2.   Money Invested: How the money in the pot is managed or invested over, say, a worker’s 30-years of employment; and

3.   Money Out: How much money is paid out of the pot (benefits).

If any one of the above three drivers of pension health is amiss, then the pension may falter or fail.

Likewise, simply put, there are three ways to fix a failing pension.

1.   Put more money in the pot;

2.   Invest the money in the pot better; or

3.   Pay less out of the pot.

If the money in the pot is prudently managed, the pension would not fail. That is, enough money had been put into the pot to pay out all the benefits promised—had the money been managed properly. Management of pension investments globally today can most aptly be described as “gross malpractice generally practiced.”

Other disturbing “pension realities” discussed in the book include:

• The people watching over pensions (boards of directors/trustees) almost universally lack investment experience;

• Pensions are becoming increasingly less transparent;

• Pensions are gambling on high-cost, high-risk investments more than ever;

• Pensions routinely lie about the investment fees they pay, their investment performance and funding levels.

• Pensions, particularly those for state and local government workers, are not adequately protected under law or by law enforcement;

• Many pensions are not fully audited by independent accounting firms.  

Now maybe the time for immediate action to stop the “looting” and protect pensions by ensuring promises made are kept. An internet crowd-funded forensic investigation will provide a second opinion for pensioners, so argue both authors. Doing nothing is not an option.

Reference:

Who stole my pension? Book provides action plan to stop pension looting, Edward Siedle,

20 January 2020, www.forbes.com

How Many People Can Planet Earth Support?

There are nearly 8 billion people living on Earth today, but our planet wasn't always so crowded. Around 300,000 years ago, our total population was small, between 100 and 10,000 people. There were so few people at the start, that it took approximately 35,000 years for the human population to double in size, according to Joel E. Cohen, head of the Laboratory of Populations at the Rockefeller University and Columbia University in New York City. 

After the invention of agriculture between 15,000 and 10,000 years ago, when there were between 1 million and 10 million individuals on Earth, it took 1,500 years for the human population to double. By the 16th century, the time needed for the population to double dropped to 300 years. And by the turn of the 19th century, it took a mere 130 years.

From 1930 to 1974, the Earth's population doubled again, in just 44 years. But will the human population continue growing at this rate? And is there an upper limit as to how many humans our planet can support?

Source: https://www.worlddata.info

In 1679, Antoni van Leeuwenhoek, a scientist and inventor of the microscope, predicted that Earth could support 13.4 billion people. He calculated that Holland occupied 1 part in 13,400 of Earth’s habitable land, and so multiplied Holland’s population of 1 million people by 13,400. Over 40 years of research Cohen has collected 65 estimates, ranging from 1 billion to over 1 trillion people. 

Engineers initially used the term "carrying capacity" to describe how much cargo a ship could hold. In the 19th century, wildlife managers then used the term in herd management, before scientists later applied the concept to ecology to describe the maximum population of a species that a given habitat could support. Within a habitat, a population will remain stable if birth and death rates are equal. But environmental changes, such as pollution or disease, can increase or decrease a habitat's carrying capacity. For instance, natural constraints include food scarcity and inhospitable environments. Human choices include interactions between economics, and culture, such as how we produce and consume goods, as well as birth rates, average lifespans and migrations.

Many low-income countries around the world have high birth rates and large family sizes, but also a high rate of infant mortality and shorter lifespans.  Global population growth peaked in the 1960s and has slowed since then. In 1950, the average birth rate was 5.05 children per woman, according to the UN Population Division. In 2020, it had fallen to 2.44 children per woman. 

The scientific consensus is that the population of the world will reach a peak some time later this century. The world population is projected to reach 10.4 billion people in the 2080s and remain there until 2100, according to the United Nations Population Division. 

The number of people Earth can support is not a fixed figure. The way humans produce and consume natural resources affects how our environment will be able to sustain future populations. 

One study published in the journal the Proceedings of the National Academy of Sciences found that if the population of the United States switched to a vegetarian diet, the land used to grow crops for humans rather than animal feed for meat production would feed an additional 350 million Americans. High-income countries, where females have increased access to education and family planning, tend to have lower birth rates and smaller family sizes than middle- and low-income countries.

So, what is the upper limit? Technology, climate, education, income and many other related factors all play a part in what could be an upper limit. From now to 2080, let us strive to improve quality of life on the planet rather than quantity!

Reference:

How many people can Earth support? Martin Mcguigan, www.livescience.com, July 11, 2022

Total Trade Expanded by 21%!

 Malaysia’s total trade expanded by 21.1% to RM245.2bil in October, marking the 21st consecutive month of double-digit growth. This is according to the International Trade and Industry Ministry (Miti).

Exports rose by 15% to RM131.63bil – the 15th consecutive month of year-on-year (y-o-y) growth -- and imports were higher by 29.2% y-o-y at RM113.54bil, while trade surplus decreased by 32% y-o-y to RM18.09bil. Export growth was mainly boosted by higher shipments of petroleum products, electrical and electronics (E&E) products, liquefied natural gas (LNG), as well as crude petroleum.

Source: The Star, 15 May 2021

Miti also said that exports to major trading partners, notably Asean, China, the United States, the European Union and Japan recorded growth. Trade expanded by 31.6% y-o-y to RM2.37 trillion and exports increased by 28.5% y-o-y to RM1.29 trillion, while imports exceeded the RM1 trillion mark for the first time, rising by 35.4% y-o-y to RM1.085 trillion, and trade surplus grew by 1.3% y-o-y to RM205.61bil.

On export performance by sector, exports of manufactured goods in October 2022 – which accounted for 84.5% of total exports – rose by 12.6% y-o-y to RM111.18bil, with petroleum products and E&E products posting more than RM1bil increase in exports, respectively. Exports of mining goods surged by 85.9% y-o-y to RM11.22bil, marking the 19th straight month of double-digit expansion, mainly due to higher exports of LNG and crude petroleum.

Exports of manufactured goods breached the overall value registered in 2021, expanding by 25.3% y-o-y to RM1.087 trillion, due to higher exports of E&E products, petroleum products, machinery, equipment and parts, palm oil-based manufactured products as well as chemicals and chemical products.

On trade with major markets, the ministry said in October, trade with Asean accounted for 25.8% of Malaysia’s total trade, after expanding by 20.5% y-o-y to RM63.35bil. Trade with China, which accounted for 16.9% of Malaysia’s total trade, grew by 13.1% y-o-y to RM41.54bil – the 23rd consecutive month of double-digit growth. Exports to China recorded a growth of 4.3% to RM18.42bil on the back of robust exports of E&E products, while imports rose by 21.2% to RM23.13bil. Trade with the United States rose by 20.3% y-o-y to RM23.98bil, marking the 14th straight month of double-digit expansion. Exports grew by 8.8% to RM13.73bil on account of strong exports of E&E products while imports expanded by 40.4% to RM10.24bil.

2023 will be a more difficult year. Trade performance will taper because of perceived impending recession in the U.S., China and Europe. The greatest hit will be on the E&E sector. We may need to brace for impact!

Reference:

Total trade expands 21% to RM245.2 bil in October, The Star, November 18, 2022

Petronas and Its Windfall Profits!

Petroliam Nasional Bhd (Petronas)’s net profit for the third quarter ended Sept 30, 2022 (3QFY2022) jumped 88% year-on-year to RM30.8 billion, on favourable price impact on major products and favourable exchange rate impact.

The strong crude oil prices and weak ringgit helped push revenue up 60.5% to RM99.2 billion, from RM61.8 billion the year before, Petronas said in a statement. Both quarterly revenue and net profit are at the record high.  

In the corresponding quarter ended Sept 30, 2021 (3QFY2021), Petronas booked a net profit of RM16.3 billion.  

For the nine-month period ended Sept 30, 2022 (9MFY2022), the national energy firm’s net profit more than doubled to RM77.2 billion from RM35.1 billion, mainly due to favourable price impact for major products aligned with higher benchmark prices.

Revenue in 9MFY2022 soared 58.3% to RM271.3 billion from RM171.4 billion, again mainly due to favourable price impact for major products, aligned with higher benchmark prices.

Petronas said cumulative capital expenditure for 9MFY2022 amounted to RM27.4 billion. It recorded capex spending of RM18.9 billion in the first half of the year.

Meanwhile in the renewable energy segment, clean energy solutions provider Gentari Sdn Bhd achieved 1.12 gigawatt (gw) of renewable energy capacity in operations and under development as at end-September. To-date, Gentari has installed a total of 89 electric vehicle charging points nationwide.

Petronas may have to dividend-up 50% of its profit for the year, say RM50 billion to the Government – that’s 50% of the development budget (of RM100b) in the last Budget. It is good news for the Government. Meanwhile, companies in the energy, primary commodities and banking sectors should pay a windfall tax or a higher prosperity tax to meet Government’s plans for 2023.

Reference:

Petronas net profit swells to record high of RM30.8 bil, revenue hits RM99.2 bil in 3Q, Adam Aziz, TheEdge CEO Morning Brief, 1 December 2022

The “To Do” List for Ministers

Malaysia has been through a period of slow growth and with global recession looming in 2023, the situation may not improve much. Again, competition is now intense for being the preferred investment destination in ASEAN. 

Here are some “to do” list for newly-minted Ministers in order to improve things:

1. Minister of Finance - Datuk Seri Anwar Ibrahim

-Address both cost of living and fiscal position

Anwar, who is also the prime minister, has committed to address the rising cost of living. One way to do so, is through subsidy intervention. The subsidy bill should be allowed to rise further in 2023 as a temporary measure. That may impact fiscal position, but addressing cost of living is more important.

Targeted subsidies or other implementation methods are urgent to better manage spending and undertake fiscal consolidation. But these mechanisms may take time to fix.

Debt service charges have exceeded 10% of federal government revenue since 2014. By 2023, about 17 sen of every ringgit earned by the Federal Government will be spent on repaying debt. Malaysia is truly blessed. The surge in oil prices in 2021-2022 followed the Covid pandemic. This helped cushion additional spending sourced from Petronas.

Meanwhile, there are three huge debts that need resolution – Prasarana (RM40b); DanaInfra (RM80b) and PTPTN (RM40b) – together they exceed the development expenditure in a year.

But expanding the government’s revenue base is key – tax reforms and enforcement are essential, such as through the overdue broader tax reform. The Goods and Services Tax (GST) may need some changes. It is time to expand (or introduce) windfall, remittance and forex transaction taxes.

Source: The New Straits Times

2. Minister of International Trade and Industry -  Tengku Datuk Seri Zafrul Aziz

-Rebranding Malaysia to retain and attract investments

In 2021, Malaysia booked a total of US$11.6 billion in foreign direct investments, or FDI, behind that of Vietnam (US$15.7 billion), Indonesia (US$20 billion) and Singapore (US$99 billion), according to the Asean Investment Report 2022.

Zafrul’s task in his new role is to capture and retain not just FDI but to retain DDI (domestic direct investments), and to continue existing efforts to reduce bureaucracy restrictions, as well as action plans to channel FDI into local SMEs (small and medium enterprises).

Malaysia must be branded correctly, and should no longer be associated with just cheap labour and low costs (such as energy). He may “review and renew” MITI’s incentive packages for new investors.

3. Minister of Natural Resources, Environment and Climate Change - Nik Nazmi Nik Ahmad

-Provide clarity on RE pathway, industry liberalisation

In 2022, Malaysia banned any export of renewable energy (RE), at a time when there was heightened demand for green energy in countries like Singapore. The reason cited was low RE supply locally. But on the other hand, the country has a high electricity reserve margin that is expected to rise to 40%, more than double the recommended 15%.

Instead of giving way to fast-growing countries like Vietnam and Laos, how can Malaysia grow its RE sector and capitalise on the industry’s demand while balancing local industry dynamics? Nik Nazmi’s policy on the country’s RE pathway — as well as the disrupted power sector liberalisation under MESI 2.0 — will be closely watched.

4. Minister of Digital Communications - Fahmi Fadzil

-Ensure 5G roll-out continues one way or the other

Malaysia’s journey to 5G follows several years of delays. There has been multiple reviews of the implementation method, from a telco consortium, to individual licensees, and now under the single wholesale network (SWN) provided by government-owned Digital Nasional Bhd (DNB).

The PM said his administration will review the 5G roll-out as it “was not done in a transparent manner”. Arguments about the implementation method aside, the Minister must ensure that 5G roll-out to the targeted 80% by 2024 proceeds smoothly. Otherwise, Malaysia will not be able to catch up with Thailand,  the Philippines, Taiwan, South Korea and Japan, who are all already 5G-ready.

5. Minister of Human Resource - V Sivakumar

Minister of Education - Fadhlina Sidek

Minister of Higher Education - Datuk Seri Mohamed Khaled Nordin

-Match labour demand and supply

Demand for foreign workers rose to 2.1 million from 1.8 million pre-pandemic. In the longer term, automation is the way forward. Meanwhile, the Government needs to resolve the shortage of foreign labour, which is currently indispensable for three key sectors — plantation, construction and manufacturing.

The ministers must work with industry players to identify and help establish what they need, as well as to provide the right employment, reskilling and upskilling programmes in order to address skilled labour shortage and youth unemployment.

Education needs a major reset. We need English, Bahasa Malaysia and Maths as the key to a new Malaysia. Enough of narrow-minded thinking! In fact, a third or fourth language will be an added advantage. If we are for STEM then please help create the environment and employment opportunities for that to happen. Otherwise, we will educate many and they leave for greener pastures. An Education Commission may help streamline vernacular, tahfiz, national, international and home schools.

Higher education has to shape-up with meritocracy at all levels – from entry to promotions. There are several other issues which the present Higher Education Minister is well aware of.

6. Minister of Home Affairs - Saifuddin Nasution Ismail

-Transparency and Conduct

This Minister has to tackle the IPCMC, deaths in lock-ups, missing persons like Pastor Raymond Koh, Altantuya’s case etc.

There is a need to be transparent with what has taken place and what needs to be done on conduct of the police and other agencies.

7. Minister of Transport - Anthony Loke

-Connection and Costs

There are several projects that need cost optimisation or review – e.g. the MRT3, ECRL and HSR. Maintenance of systems is of concern especially the recent breakdown of the Kelana Jaya Line. The debt  burden of Prasarana needs to be examined. The “ballooning” support of MAS is another area for the Minister’s remit. Should MAS be privatised again? Then there are new airlines “cannibalising” markets of the more established ones.

The role of MAVCOM has to be addressed when customer complaints are not met.

8. Minister of Economic Affairs - Rafizi Ramli

-Growth, Inequality, Disparity

The economy has been “chugging” along, but impacted by Covid. Less bureaucracy and more action is needed to implement projects. It is the planning “gap”, from plan to execution, that needs to be narrowed.

Then there is income inequalities, wealth distribution and regional disparities which all require the Minister’s focus.

The list goes on for many of the other Ministers as well – the objective is to seek early wins, medium-term results and good long-term outcomes for a dynamic and vibrant Malaysia.

Best of luck!

FTX: What a Crypto Disaster!

FTX filed for bankruptcy on 11 November 2022, one of the highest-profile crypto blowups. Traders rushed to withdraw US$6 billion from the platform in just 72 hours and rival exchange Binance abandoned a proposed rescue deal.

The US Justice Department, the Securities and Exchange Commission and the Commodity Futures Trading Commission are all now investigating how FTX handled customer funds. The founder and former Chief Executive of  FTX, Sam Bankman-Fried said his business expanded too fast and failed to notice signs of trouble at the exchange.  It was reported Bankman-Fried secretly transferred US$10 billion of customer funds from FTX to Alameda, the trading arm.

Source: https://www.freemalaysiatoday.com

Temasek Holdings had US$205 million invested into cryptocurrency platform FTX. The Singapore sovereign wealth fund (SWF) is said to be the second-largest outside investor on the capitalization table, with 7 million shares for its estimated investment sum. 

FTX had more than five million users worldwide and traded more than 700 billion dollars’ worth of crypto last year. The key issue was bad governance. FTX had been secretly syphoning funds to Alameda Research, co-founded by FTX founder, Sam Bankman-Fried. FTX was reinvesting in much higher product categories, thus the collapse of FTX was a combination of multiple errors, including very little and unreliable documentation.

Crypto companies are deeply intertwined — they invest in one another, buy one another’s tokens and lend tokens and capital to one another — which means the collapse of FTX could topple others, and even banks. 

Crypto lender BlockFi, which signed a deal to be rescued by FTX when crypto prices nose-dived over the summer, paused withdrawals last week and is preparing for a possible bankruptcy. BlockFi said it had “significant exposure” to the failed exchange and FTX’s trading arm, Alameda Research.

Genesis Global Capital, one of the largest lenders in the crypto space, suspended withdrawals and new loans Wednesday. Genesis, which may have lost as much as $175 million in the FTX collapse, is struggling to pay back creditors who have asked for their money back. A spokesperson for Genesis said that its nonlending businesses were operating without problems and that it was “shoring up the necessary liquidity” it needed to operate.

Genesis is connected to many other firms. Its parent, Digital Currency Group, owns the publication CoinDesk and the investment firm Grayscale, a substantial crypto holder, among other entities.

Regardless of politics, the collapse of FTX is likely to create new legislation. This could push cryptocurrencies to be pegged to the value of the dollar and hence oversight by current regulators. It then throws out the whole idea of being free from control of governments and central banks!

References:

FTX’s founder Bankman-Fried says he failed to see warning signs: Report, Channel News Asia, 15 November 2022

Where next for cryptocurrency after FTX collapse? www.birmingham.ac.uk

Forbes reports Temasek having invested USD205M into bankrupted crytocurrency exchange, www.theonlinecitizen.com

What is next for the FTX fallout? Erika P Rodriguez, New York Times

How Inclusive is Corporate Malaysia?

The above title is from Shireen Muhiudeen (“Shireen”) in an FMT article, which focused on Corporate Malaysia.

The Parker Review Report released early 2022, marked five years since the publication of the first “Report into the Ethnic Diversity of UK Boards” in 2017 by Sir John Parker and the Parker Review Steering Committee.

The update in 2022 reviewed the metrics and the results of the target set in 2017 – that each FTSE 100 board should have at least one director from a minority ethnic group by the end of 2021.

Source: The Star, 10/9/22

A review of the FBM 100 in Malaysia, as well as the KLCI was done by Shireen to see how Corporate Malaysia is getting on in achieving our diversity targets, especially in the area of gender diversity.

Women on boards did improve the performance of companies. Ten years later, the subject is on whether Corporate Malaysia is indeed serious about gender diversity, as well as inclusivity.

The results are interesting. For FBM 100 companies:

• There were 903 directors in the top 100. This gives you an indication of the size per board.

• 73.5% of the directors are men and 26.5% are women, which still puts us shy of the 30% goal.

• Of the 100 chairs, 97% are men, which means only 3% are women.

• 58 out of the 100 companies do not meet the 30% target of women directors on their board; while 42 met the target.

If, we examine at the FBM KLCI companies:

• There were 304 directors in the FBM KLCI companies. This gives you an indication of size per board in these 30 companies.

• 70.7% of the total directors are men, while 29.3% are women. This means they have reached the 30% target for the FBM KLCI companies in terms of gender diversity.

• Of the 30 chairs, 96.7% are men and 3.3% women.

• 18 out of the 30 companies met the 30% target of gender diversity, while 12 companies did not.

As the world is moving from gender diversity to Diversity, Equity and Inclusion (DEI), a review the FBM 100 and the FBM KLCI 30 in terms of inclusivity was also done.

With the FBM 100 companies, it was found:

• Ethnic minorities in the community comprised 46.9% of the boards, while other ethnic groups made up 4.6%.

• The small representation of women chairs was from the ethnic majority.

• Women independent directors represented 74.5%, with the balance as non-independent directors.

With the FBM KLCI 30 companies, it was noted that:

• Ethnic minorities in the community comprised 43.8% of the boards, while other ethnic groups made up 9.0%.

• The single woman chair was from the ethnic majority.

• Women independent directors represented 84%, while 15.7% were non-independent directors.

There are some companies that need to reconsider their board composition when they embark on their next exercise to refresh board members. There is also a clear absence of women leading Corporate Malaysia boards.

However, the research does not examine management and employees inclusivity in these companies. And if you review GLCs and GLICs it is probably very skewed. That goes for the civil service and most areas of the government. This is where the new government has to address as much as the private sector. It is when the public sector action and policies are inclusive, will others try to follow. We can incentivise that with tax breaks or exemptions but we must desire to have diversity and inclusivity!

Reference:

How inclusive is corporate Malaysia? Shireen Muhiudeen, FMT, June 14, 2022

EPF: Investment Income Falls!

The Employees Provident Fund's (EPF) total gross investment income for the nine months ended Sept 30, 2022 (9M2022) fell 18% year-on-year or RM8.71 billion to RM39.31 billion.

In a statement on Dec 5, the retirement fund said total gross investment income for the third quarter ended Sept 30, 2022 (3Q2022) amounted to RM12.32 billion, down RM1.65 billion or 12%, compared with RM13.97 billion for the corresponding period in 2021. However, it said this also represents an 11% improvement over 2Q2022.

EPF chief executive officer (Datuk Seri Amir Hamzah Azizan) said due to the stabilised market conditions for both equity and fixed income investments, the EPF’s 3Q2022 performance bettered the previous quarter’s gross investment income of RM11.14 billion.

Source: https://ms.wikipedia.org

The EPF said that during the quarter under review, equities contributed RM5.49 billion, accounting for 45% of total gross investment income. It said despite the heightened market volatility, the EPF managed to register a healthy quarter-on-quarter growth of 13% in gross investment income from its equities portfolio. Private equity, which is part of this asset class, managed to deliver favourable realised returns of RM1.09 billion or 20% of total equities income recorded during the quarter. This portfolio is gradually becoming more important for the EPF’s diversification efforts, as the volatility in listed equity markets remains high.

Meanwhile, the EPF said it continued to record strong growth of new member registrations at 510,354 in the period from January to September 2022, adding to the total number of EPF members as at Sept 30 of 15.61 million. Of this, a total of 8.26 million were active members, representing 50% of Malaysia’s 16.44 million labour force as at September 2022.

EPF’s key problem remains withdrawals it faced during Covid – a total of RM145 billion. That’s substantial! There seems no strategy yet on how to address this issue. It matters to EPF and that of its members on what steps could preserve one’s “egg-nest”.

Reference:

EPF’s 9M investment income falls 18% to RM39.31b, Surin Murugiah, TheEdge CEO Morning Brief, 6 December 2022

Is Our New Cabinet Cut-out for “Reformasi”?

Malaysia needs a stable government that can bring about reforms. Can Prime Minister (PM) Datuk Seri Anwar Ibrahim’s first Cabinet line-up do that? Generally there seems to be a sense of disappointment after all the inspiring and hard hitting speeches about reforms. Cabinet appointments were not to be made in exchange for support. But his first call has reached 28 ministers. Did Pakatan Harapan (PH) chairman accept what was demanded by his unity government partners?

The key question moving forward as Anwar rolls out his promised reforms is whether his unity government and Cabinet will stick by him, and provide stability, innovation and much needed changes.

Source: https://www.thestar.com.my

The most critiqued appointment was that of Datuk Seri Ahmad Zahid Hamidi and Tengku Zafrul. The new DPM is to forge unity even though he faces several corruption cases. The surprise dark horse is Tengku Zafrul who lost his contest but made his way into the Cabinet. Why? Stellar record? Connections? Only the PM can answer that! MITI needs someone who gets things done, not some PR man!

On Saturday, after the swearing-in ceremony, a crowd waited for him (Zaful) to do what Bernama described in a video clip as: “menyumpurnakan majlis simbolik ‘clock-in’ sempena hari pertama beliau bertugas” (Officiating a symbolic clock-in ceremony to mark his first day in office). Was this ceremony necessary? Even if it was, couldn’t it have waited till Monday? Or was it a carry-forward of the campaigning period when candidates moved around with a train of supporters?

Was this all done at his request by some senior official who is used to taking orders from politicians and is someone who wanted to curry favour and show his ability to marshal his

subordinates at short notice?

However, there are some good appointments. Datuk Dr Mohd Na’im Mokhtar is named as a Minister in the PM’s Department in-charge of religious affairs. He is a distinguished scholar, jurist, has an impressive CV, and has done stints at Harvard and Oxford. He is best placed to moderate the race and religious rhetoric used by the opposition.

Minister in the PM’s Department in-charge of economy Rafizi Ramli would oversee the Economic Planning Unit (EPU), and the huge development budget for projects and contracts.

Datuk Seri Saifuddin Nasution Ismail who is named minister for the powerful Home Affairs Ministry is calm and measured. 

There are others who would be useful for reform and innovation – Yeo Bee Yin, Gobind Singh Deo and Dr Dzulkefly Ahmad. But alas they are going to be missed for now! DAP has been magnanimous in their victory, an example for others to follow.

Whatever and whoever is appointed, the ultimate result is what matters – reformasi! Will we have that?

References:

It’s a Cabinet of uninspiring compromise! Dr Raman Letchumanan, Focus Malaysia, 

3 December 2022

Comment: Anwar’s Cabinet starting on the wrong foot? R. Nadeswaran, Malaysiakini, 

4 December 2022

Reset, Reconcile and Restore

We now have a reset button. For many years we were on “pause”. That’s because we had PMs worried about the “Moves” that others may make, since they came to power on “Moves”. A reset can only work if we are reconciled and restored.

Reconciliation will progress if we address racial and religious bigotry. If you are unable to form the government, then that doesn’t give you the right to destabilise the other side. That’s not how democracy works! This (destabilisation) is pure, unbridled power play. But that’s politics, one may say! No, it is not in a mature democracy. If the present PM fails to secure the vote of confidence in Parliament on 19 December 2022, he has to resign and suggest the Opposition form the next government, or call for fresh elections. The mandate is with the people, not the MPs who represent us.

Source: https://www.freemalaysiatoday.com

We have enough laws to address the issue of bigotry. But that’s not the route we must take, it should be a self-realisation that the nation comes first not power play and divisiveness. The Council of Rulers has spoken. It is better to heed their call and move on.

For the record, of the 148 MPs supporting Anwar as PM, Malays make up the most with 50. This is followed by Chinese MPs at 43, Muslim bumiputera from East Malaysia (27), non-Muslim bumiputera from East Malaysia (16), and Indian or others (12). So, bumiputeras make up 93 MPs or 63% of the total MPs in the government, which is more than sufficient to protect their interests. And that should be the base to restore the country to its former dynamism.

A growing economy can do better distribution and allocation of resources. If we tackle growth, then the B40s will be better off and so will others. The alternative is to be a failed state like Afghanistan or Pakistan with no hope for anyone except the bigots!

Reference:

Fact-check: Most MPs in new govt are bumiputera Muslims, Andrew Ong/Adila Razak, Malaysiakini, 30 November 2022

Cost of World Cup Since 1994

The World Cup costs have varied with host nations building stadiums and other infrastructure. The costs since 1994 were as follows:

Costs of Qatar’s new stadiums range between USD6.5-10 billion (higher than USD4 billion proposed in the bid). Other costs include hotels, underground metro and airports.

About 1.5 million fans are expected, which will boost tourism and hospitality sectors. Qatar expects to reap USD9 billion in profits (with costs of stadiums at USD8 billion). Qatar’s economy will have a financial return of USD17 billion (that’s according to Qatari sources).

For FIFA, it is set to generate £3 billion from the World Cup in Qatar. From broadcasting rights about £1.9 billion and the balance from marketing rights and ticket sales. But for workers it is different.

More than 6,500 migrant workers from India, Pakistan, Nepal, Bangladesh, Sri Lanka have died since 2010 building the infrastructure. Over 1.7 million workers were involved but the expensive recruitment fees, appalling living conditions, salaries not paid according to recruitment, delayed salaries (over several months), restrictions on movements or changing jobs and threatened if any complaints are made.

So, was this all worth it for a beautiful game?

Reference:

FIFA will earn £3 billion from 2022 World Cup in Qatar while migrant workers building the stadiums make just £8.30-a-day in the richest country on earth – and thousands have died since the Middle Eastern state was awarded the tournament, Charlie Walker, MailOnline, 25 March 2021

Chinese Billionaires Flee to Singapore

The shift by some of Asia’s wealthiest families to Singapore is hardly new. The city-state’s reputation as a low-tax bastion of safety and stability has long made it a regional hub for the rich, from Thailand to Indonesia. Its attraction for wealthy Chinese has ramped up since the 2019 protests in Hong Kong made that city less appealing, and gathered steam following this year’s Covid lockdowns.

Singapore doesn’t provide detailed statistics about where its wealthy immigrants come from. But the explosive rise in family offices are symptomatic of the attraction for Chinese tycoons. The number of these offices almost doubled to about 700 at the end of 2021 from the previous year. 

Source: https://en.wikipedia.org

The number of inquiries from Chinese clients jumped about 25% to 50% just before and after the Party Congress. Xi’s push to consolidate his leadership by promoting allies who’ve taken a tough stance against the private sector — along with the prospect of new inheritance taxes — have pushed some people to completely sever ties with their country.

The list of entrepreneurs establishing themselves in Singapore reads like a Who’s Who of Chinese startups circa 2018. Zhang Yiming, founder of TikTok’s ByteDance Ltd, frequently travels to Singapore. Crypto mogul Jihan Wu bought a storage vault dubbed Asia’s Fort Knox near the Changi Airport in September. And VIPKid founder Cindy Mi, whose company was a venture capital darling until Beijing cracked down on online education, is also a regular visitor.

The recent arrivals add to the list of established Chinese executives who already call Singapore home. Sean Shi, co-founder of hotpot maker Haidilao International Holding Ltd, paid S$50 million for a so-called good class bungalow in September. Fosun International Ltd co-founder Liang Xinjun has set up a family office. 

The migration is not only from “push” factors but the “pull” factors of Singapore’s openness to rich entrepreneurs, political stability, ease of doing business and being a tax haven. Perhaps, we could learn something for our own MM2H program.

Reference:

Xi’s crackdowns drive Chinese billionaires to booming Singapore, The Edge CEO Morning Brief, November 16, 2022

Anwarnomics for Malaysia!

The new PM, Datuk Seri Anwar Ibrahim, has many things to tackle. But the good point is anything he does will be positive. You can’t get any lower than the previous PMs.

Besides Cabinet, he has to stamp his mark on cost of living, inflation and tepid growth. Others will include FDIs, DDIs, reforms of institutions, reset education, huge debts at Prasarana and DanaInfra, revise MM2H, transparency on missing persons, deaths in custody, steps to reduce corruption and affordable housing. It seems an awful lot to do. The malaise is really over the last 20 years or so. Some may like to take it over 40 years, but that’s not fair to Tun Mahathir.

Source: https://majoriti.com.my

On cost of living, he has asked the civil service to devise a mechanism for targeted subsidies. This is not easy and perhaps difficult to implement. It is better to transfer under BR1M to the B40s that truly need support. Inflation seems to be on a downward trend and it is best for BNM to address with measured OPR increase that may reduce imported inflation. Electricity tariffs could be reduced to bring cost to businesses lower and also for households. TNB need not have over RM3 billion or more in net profit a year. It just doesn’t make sense, unless you are an analyst or an investor in TNB. Petronas could reduce its retail pump price for RON95 – that will help lower transport costs. Forget about Shell and the rest, leave them to devise their own prices.

On the supply side, look at “pinch points” for disruptions. Food items will be prioritised for exemptions, APs, or availability of land. If we could increase basic necessities and ensure food security, we will weather any storm in 2023.

A stable political climate is sine quo non for investments. Dialogue/engagement with the private sector especially SMEs will be helpful. FDIs will follow if there is local vibrancy and tempo. Get the infrastructure agenda on track and “level-up” the economy so that growth and distribution is widespread and not focused on the Klang Valley. To do so, find new revenue sources from windfall tax to transaction (forex) tax.

There are several other initiatives. But set a tempo that (many) others want to follow. A winning team will certainly gather more followers, just ask Liverpool or Manchester City!

Is China’s Economy Losing Steam?

China's factory output was slower than expected and retail sales unexpectedly dropped in October. The world's second-largest economy is losing momentum as it struggles with protracted Covid-19 curbs and a property downturn. Property investment also fell at its fastest pace in 32 months, pointing to further weakness in a sector that accounts for a quarter of the economy.

China's economy is facing a series of headwinds including its zero-Covid policy, a property slump and global recession risks. Recent moves to ease some Covid curbs and provide financial support to the property market have underpinned market sentiment, but analysts expect Beijing's strict Covid policy to continue to weigh on economic activity.

Source: https://www.omfif.org

Industrial output rose 5.0% in October from a year earlier, missing expectations for a 5.2% gain in a Reuters poll and slowing from the 6.3% growth seen in September, data from the National Bureau of Statistics.

Retail sales, a gauge of consumption, fell for the first time since May, when Shanghai was under a city-wide lockdown. Sales dropped 0.5%, against expectations for a 1.0% rise and compared with a 2.5% gain in September.

Covid outbreaks widened across the country in October, disrupting pandemic-sensitive service businesses, such as the restaurant industry. China's catering revenue slumped 8.1%, down sharply from a 1.7% drop in September, NBS data showed. November is shaping up to be even worse. 

Property investment fell 16.0% year-on-year in October — its biggest drop since January-February 2020, according to Reuters calculations based on NBS data. It slumped 12.1% in September. Property sales measured by floor area dropped 23.2% year-year in October, falling for a 15th straight month, with buyers reluctant to take on more debt as the economy slows amid protracted Covid restrictions.

China's property sector has slowed sharply as the government has sought to restrict excessive borrowing. A plan to shore up liquidity outlined by Chinese regulators on Sunday sent Chinese property stocks and bonds soaring on Monday.

However, China's financial regulator said in a notice published that it will allow property developers to access some pre-sale housing funds, as a means to relieve the liquidity crunch.

Fixed asset investment expanded 5.8% in the first 10 month of the year, versus expectations for a 5.9% rise and growth of 5.9% in January-September.

Hiring remained low among companies growing increasingly wary about their finances. The nationwide survey-based jobless rate stayed at 5.5% in October, unchanged from September. Youth unemployment stood at 17.9%, also the same level as September.

The country is on track to miss its annual growth target of around 5.5%, say some analysts. What does that mean for Malaysia? It will be a dampener for our trade and investment numbers. China-Malaysia trade was USD131.2 billion in the first eight months of 2022. The growth was 21.1% on y-o-y basis. In 2021, a total of 43 manufacturing projects were approved from China worth USD3.98 billion and generated nearly 14,000 employment opportunities. A slowdown will therefore impact us in 2023.

Reference:

China’s economy loses steam as factory output, retail sales miss forecast, The Edge CEO Morning Brief, November 16, 2022

Is Malaysia’s Democracy Getting Better?

Amidst the post-election chaos, Malaysian democracy has matured to move forward. And unlike the Westminster convention, His Majesty and the Rulers were involved actively in the selection/confirmation of a leader and his acceptable coalition.

We may not all agree but we do have peaceful changes in Government. Changes in PMs, even with the Sheraton Move, was peaceful. This normality must be cherished, unlike some other countries. Even the U.S. faced unnecessary melodrama with Trump.

Source: https://theleaders-online.com

The integrity of the election process should not be taken for granted. Many volunteered and many others provided support for the whole process. Malaysians were aware of its (election) importance and went out to vote. We had the young people (above 18) voting for the first time – that was refreshing. Adequate security was present at all polling stations. So, thanks to the Election Commission and the police for their services. Of course, there were some hiccups, especially on closing times. This could be improved with better communication.

The political parties had manifestos that were reasonable and adequate. People could examine the content and decide for themselves. The hustings were lively and people could form an opinion as to who could serve them best. There were some disruptions and disgruntlement but that happens even in the U.K. and the U.S.

The result of a “hung” parliament was resolved by the King and his fellow rulers. That’s unique in the world. A government that serves everyone’s interests is the objective. The anti-hopping law also helped to keep the process from being too fluid and messy.

The rakyat are the real winners. They got to vote and decide the future of this nation. Many things can be said, but we all love Malaysia and we love each other  - no matter how different we look, worship or behave. I love Malaysia for its diversity... and unity on the essentials. So let us sow unity in essentials; liberty in non-essentials and charity (love) in all things (I have paraphrased St. Augustine).

Majulah Malaysia!

Has the Ringgit Regained Strength?

The ringgit is staging a strong rebound of 2.3% in recent days and more so with Anwar appointed as PM. The local currency strengthened past the 4.60 level, touching a high of 4.592 on Friday, Nov 11, driven by stronger-than-expected 3Q economic growth and a slight easing of the greenback after a milder expansion in the US Consumer Price Index (CPI) reading for October. Yesterday, (24 November) it hit 4.49, what a pleasant change!

The local currency also traded positively against a basket of other major currencies on Nov 14, with gains of 0.36%, 0.25% and 0.19% to 3.3405, 5.4187 and 4.7380 against the Singapore dollar, British pound and euro, respectively. It also strengthened 0.94% against 100 Japanese yen.  

Source: www.marketwatch.com

As the Fed is likely to pivot sooner than previously anticipated, MIDF Research expects the ringgit to end stronger by end-2022. The decline in oil prices has limited the ringgit’s appreciation, as Brent crude oil fell 1% to US$95.99 per barrel.

The greenback also depreciated against regional currencies on 14 November, including the Thai baht (-0.27%), the Chinese yuan (-0.21%) and the Taiwan dollar (-0.67%).

However, it appreciated against the Korean won (+0.58%), the Philippines peso (+0.02%), the Indonesian rupiah (+0.16%), the Indian rupee (+0.56%), as well as the Singapore dollar (+0.31%).

The easing of China’s stringent Zero-Covid-19 policy has sparked market optimism. 

• Beyond the Fed’s rate hikes, the factor which helped the ringgit rise in the past trading week had been the strengthening of the yuan following China’s support of the distressed property sector and signs of the country easing its zero-Covid rules.

• China has also rolled out some measures including the extension of repayment periods, facilitating finances for developers and lowering mortgage down-payments in support of its real estate market. The move by Beijing has helped the ringgit due to its strong correlation with the yuan.

• A stronger ringgit will help mitigate imported inflation if it is sustained.

• The ringgit may trade in a range of between RM4.40 and RM4.50 against the greenback over the next few weeks. The ringgit will see a sustained move to RM4.40 soon, and even RM4.16 over the next year if conditions continue to improve.

Hopefully, BNM will be mindful in raising OPR and assist in strengthening the ringgit to reduce imported inflation. But it is still far from RM3.80 to USD$1 under capital controls during Asian Financial Crisis. Although that (capital controls) is not something we should pursue!

References:

Ringgit regains strength days ahead of GE15 on positive macro factors, Priyatharisiny Vasu, The Edge CEO Morning Brief, November 15, 2022

Ringgit likely to retrace gains against the greenback, The Star, November 15, 2022