Reboot Langkawi?

 The “Jewel of Kedah” is losing its shine – the number of visitors to Langkawi has been shrinking since September 2023. It will miss its targeted visitor arrivals for 2023 by at least half a million. Since September, it had on a month-on-month drop of almost 20% compared to 2022 (this is according to the Langkawi Development Authority). These monthly tabulations comprised arrivals at the jetty, marinas, airport and sea port in Langkawi. There is a “great need” to rebuild Langkawi’s image as a global island hideaway.

The first thing foreign guests ask upon checking in is whether they can wear bikinis or short pants at beaches. Many are worried about being publicly castigated for it.

In September, Tourism, Arts, and Culture Minister told the Dewan Rakyat that his ministry had received reports about non-Muslim travellers to Langkawi being stopped from buying alcohol and wearing shorts in public, besides other complaints about high food prices there. However, Kedah Mentri Besar dismissed these complaints as baseless.

An even bigger fiscal barrier is the cost of flights. If you bring your whole family from Kuala Lumpur to Langkawi, the flight tickets alone can cost over RM3,000, almost twice the cost during pre-pandemic times. The declining number of visitors to Langkawi is a stark contrast to 2022 scenario when the island saw a buoyant recovery after Covid-19 pandemic restrictions were lifted with 2,581,605 arrivals recorded.

Many are angry with the negative publicity. But the state government is in a quandary – to impose strict Islamic regulations like Kelantan or be more progressive like Qatar or Dubai. Unless they get this picture clear and promote accordingly, Langkawi will be a forgotten island! There is always Phuket or Bali for foreigners. So, what’s so special about Langkawi?

Reference:

Reboot Langkawi as island paradise, Arnold Loh, The Star, 18 November 2023

Growth in 2023 Moderates to 3.7%

Slower global trade, the global tech downcycle, geopolitical tensions and tighter monetary policies globally had weighed down Malaysia’s gross domestic product (GDP) growth for the fourth quarter of 2023. The quarter’s GDP growth at 3% came in lower than the 3.4% advance projection released last month, and compared with the 3.3% expansion in the preceding quarter, according to Bank Negara.

The quarter’s slower-than-expected growth had also weighed on the whole year’s GDP growth figure, coming in at 3.7% compared to 8.7% in 2022.

The economy was supported by resilient domestic demand that rose 5.2% in the fourth quarter which helped cushion the 3.2% decline in Malaysia’s trade, as exports softened on the back of cooling global demand. Stronger growth of between 4% and 5% in 2024 is expected.  The government is also determined to narrow the fiscal deficit to 4.3% in 2024.

Economists are expecting that GDP growth might pick up and improve in 2024, premised upon any change in the above external factors – such as the normalising of demand from a global tech recovery. They also note the resiliency of the local economy in the fourth quarter amid these external weaknesses, namely, the support from domestic demand. However, there are some others warning that external demand will continue to be weak this year and that trading nations should brace for a prolonged slowdown.

The Socio-Economic Research Centre expects a 3.5% to 4% economic growth in the first quarter of 2024, supported by festive spending and stronger tourist arrivals amid preparations for the fasting month of Ramadan. GDP to grow by 4.5% in 2024, aided by a gradual recovery in exports and continued growth in domestic demand. Both fiscal and monetary policies would remain supportive of the economy. Private consumption to grow by 4.3% to 4.6% in 2024 compared with these historical figures of 4.7% in 2023, 11.2% in 2022 and 7.1% per annum from 2011-2019.

The US economy will moderate due to the lag impact of higher interest rates. China’s economy is expected to remain lacklustre in the first half of the year, mainly due to weak property market conditions. Renewed inflation risks and the adverse climate change would weaken the global economic momentum.

The electrical and electronics exports (which account for around 38% of Malaysia’s total exports) would be buoyed by higher demand. The global semiconductor sales are projected to rebound strongly by 13.1% this year versus an estimated decline of 9.4% in 2023 (according to RHB Research). Overall, RHB Research keeps its GDP forecast at 4.6% for 2024.

The Statistics Department notes that Malaysia’s slower GDP growth in 2023 is in tandem with other Asean countries which also reported moderate growth. Singapore’s economic growth slowed to 1.1% in 2023 from 3.8% in 2022, while Indonesia’s growth moderated to 5.1% from 5.3% and the Philippines expanded 5.6% as compared with 7.6% previously.

China expanded further at 5.2% from 3% in 2022 while the United States increased to 2.5% from 1.9% in 2022.

The government agency notes that Malaysia registered a current account surplus of RM253.4mil in the fourth quarter of 2023, supported by the travel component. For 2023, the country’s current account surplus stood at RM22.8bil, as compared to RM55.1bil a year ago, a 40% decline while the financial account recorded a net outflow of RM18.9bil against a net inflow of RM12.4bil in 2022. That’s a negative outflow of about RM6.5 billion. And with negative real interest rate against the US, the Ringgit will be under pressure. So, if we improve our fundamentals---growth rate, inflation, trade balance, positive net inflow of funds, then we will have a positive outlook and a brighter future for the Ringgit. 

Reference:

Growth in 2023 to moderate to 3.7%, Daniel Khoo, The Star, 17 February 2024

Will CPO Hit Above RM4,200 Per Tonne Soon?

Crude palm oil (CPO) stockpiles are likely to fall below two million tonnes by the end of February, potentially pushing the commodity’s prices higher in the near term. Maybank Investment Bank (Maybank IB) Research has projected that CPO prices would briefly rise above RM4,200 per tonne within February and March before settling at lower levels in the second half (2H) of 2024.

The Malaysian Palm Oil Board (MPOB) showed January stockpile hit a six-month low at 2.02 million tonnes, down 12% month-on-month and 11% year-on-year (y-o-y), on seasonal decline in output, while exports remained resilient ahead of Ramadhan demand.

Source: https://en.wikipedia.org

Meanwhile, Hong Leong Investment Bank (HLIB) Research maintained its CPO price forecast at RM4,000 per tonne for 2024 and RM3,800 per tonne for 2025. It said it expected El Nino’s impact on palm production and prices to kick in around mid-2024.

HLIB Research kept its “neutral” stance on the sector, given the absence of notable demand catalyst.  Kenanga Research was also “neutral” on the plantation sector, noting its valuation at 1.2 times price-to-book should be supportive against further substantial downside. But it added that there was no strong upside lift either. Kenanga Research maintained its forecast for average CPO price at RM3,800 per tonnes for 2024-2025. The growth in palm oil supply had moderated on falling yields, largely on ageing trees as well as slower new planting.

This is not sustainable. We need to focus on productivity and automate processes while understanding current markets and developing new ones. The EU will be biased against palm oil for various reasons. We could engage and neutralise sentiments or find other solutions. The initiative lies with private and government sectors and also other major suppliers like Indonesia working together with us.

Reference:

CPO likely to hit above RM4,200 per tonne soon, The Star, 15 February 2024

Should it be a Bumi or National Economic Agenda?

When the Malay Economic Action Council (MTEM) was asked why multiethnic Malaysia should pay for another bumiputra-only development agenda, two stories were suggested:

First was of an honest, accomplished expert in his field, who was leading the Malaysian operations of a multinational corporation. He then ventured to build, what he had hoped would be, a successful bumiputra firm in that field. But after sinking RM30mil into a factory and even selling his products in overseas markets, he could not get enough government contracts even though he offered competitive prices. But because he did not get enough government contracts, he had to shut down the factory, which he had built in his hometown to give the local youth jobs.

Source: https://mtem.my/

The second story is of a bumiputra entrepreneur who invented a form of lithium technology that could be used in electric vehicles. But after filling out countless application forms, the entrepreneur just could not get enough funding from Malaysian agencies or state corporations to turn his invention into something commercially viable. This is despite the slew of government programmes and initiatives designed to help budding bumiputra entrepreneurs.

As they illustrate, they (MTEM) say Malaysia needs another bumi-focused economic policy because the previous ones had failed to achieve their aims despite the fact that they were overseen by governments that were Malay and bumiputra-centric.

Some 3,000 participants are expected to attend the three-day congress on 29 February, which will focus on, among other things, new technologies that are expected to be developed over the next decade as well as the performance of agencies that were set up and entrusted to champion the bumiputra agenda since the first congress in 1965.

However, since initiatives to help uplift bumiputras economically have been around for more than 50 years with the introduction of the New Economic Policy (NEP) in 1971 – and given that other sectors such as schools and hospitals are also in dire need of funds – rumblings remain as to whether Malaysia still needs more of these policies.

In 2022, the median household monthly income for a bumiputra household was RM 5,793 while for an Indian family it was RM 6,627 and RM 8,167 for Chinese families. According to the 12th Malaysia Plan (12MP) while bumiputras made up 65.1% of all households in 2019, 71.4% of them were in the B40 (lower) income group. Although Chinese households accounted for 25.9% of total national households, 39.2% of them were in the T20 (top income) group and 19.5% were in the B40 group.

The longest and most familiar bumiputra economic agenda is the second prong of the NEP after its primary objective of wiping out poverty regardless of ethnic group, gender or creed. The NEP’s second aim was “to restructure society by eliminating the identification of race with economic function”.

This would be done through quotas, reservations and other forms of special treatment for the community. According to the 12MP, 39.1% of medium, small, and micro enterprises are bumiputra. But of that number, 82.8% are at the micro level with low value-added products and services earning less than RM300,000 a year.

The attaining of 30% of all corporate equity has been an obsession. 

It then became a distribution of rents – IPOs, shares, licenses, permits, APs, contracts. These are pure rents. Not even the means to create rents. And rents are not sustainable and their preservation is distortionary. Most of these rents went to a small, well-connected group of people who were unable to use these to make more profits.

Another big reason why past policies have failed genuine entrepreneurs are factors like corruption, patronage, cronyism and the Ali Baba culture.

We are in the cycle of renew, re-set and repeat. It takes courage to make so-called bumi agenda, a national economic agenda. We need to have an “Oversight Group” from Parliament to monitor corruption, collusion or cronyism for any policy initiative and to review progress of specific goals. Otherwise, we will continue to do more talking with little or no positive outcome!

Reference:

Why another bumi economic agenda? Sheridan Mahavera, The Star, 18 February 2024

Water Recreation Park “Strictly for Muslims”?

A water park near Sungai Petani has generated ripples of interest not only for its recreational attractions but due to an odd feature – it limits the use of its pools to Muslims only. The Vibes reported that a staff member of the Park reasoned that the facility is small and the management caters to local villagers in the nearby Kuala Muda area who are predominantly Muslims. Non-Muslims are welcome but are not to use the pools. 

The Berangan Aqua Park is located at Kampung Kelang Makau, which is surrounded by tranquil padi fields and cottage homes. It is classified as a tourism product on the Internet. Netizens have also apparently branded it as "Muslim only".  A video posted on YouTube to promote the park describes it as 'Taman Tema Air Muslim Pertama di Utara Semenanjung Malaysia' (first Muslim water theme park in northern Peninsular Malaysia). 

The water park was launched in 2021. It was reported in September that year that the facility was designed to handle up to 50,000 visitors annually. The owner is a diversified local company called the Berangan Group. The chairperson reportedly told Sinar Harian that the daily capacity was about 100 to 130 persons whereas during the Covid-19 pandemic it was restricted to 30 and 50 persons daily. The theme park is nestled in a semi-rural village setting.

Source: https://en.wikipedia.org

Instead of opposing the move of a water theme park restricting entry of non-Muslims to its pool facility by branding it racist, lawyer and social activists Siti Kasim has welcomed the move. The outspoken social critic justified that this would allow others to enjoy public facilities unfettered by what the conservative elements think. After all, she contended that having a Muslim-only facility was great for those who wish to only mix with people of their own kind and more specifically, those who shared the same ideology of what is permissible and prohibited.

If it is restricted to Muslims only, does it go against the spirit of the formation of Malaysia as a multi-ethnic nation with strong tolerance and understanding? It may also go against the spirit of 'Madani' espoused by the Malaysian government which promotes understanding and goodwill. And do we stop here?

References:

Water recreation park raises eyebrows with ‘strictly Muslims’ policy, Ian McIntyre, The Vibes, 2 February 2024

Siti Kassim gives thumb-up for a Muslim-only water park? R. Bala, Focus Malaysia, 

5 February 2024

Hubby Storage Concept at a Mall

Bored and disinterested husband trailing behind an eager shopaholic wife at a mall is common sight in many parts of the world. The blank, vacant look across a husband or boyfriend’s face is really a sad sight. But there might be a solution, as seen in China.

A shopping mall unveiled a novel concept, which was shared on numerous social media platforms and had garnered plenty of responses. The Global Harbour mall in Shanghai has erected several glass pods for wives to leave any disgruntled husband that don't want to be dragged around shops. The picture shows a man comfortably cocooned within a glass cubicle with the essentials – TV screen, computer joystick and a very comfy-looking recliner. 

Many netizens have clamoured for this to be introduced here. Some are from the bored male fraternity. Currently, the service is free, but in future, users will be able to scan a QR code and pay a small sum for the service using their mobile phones.

Source: https://focusmalaysia.my

Some comments posted on Entrepreneur and Start Ups in Malaysia Facebook forum include:

• it was more important that the husband provides the credit card than brute strength as bag-carriers;

• what chance do marriages have if the couple cannot even spend some time together shopping; 

• a gathering spot for lost males is already in place, the Mamak shop or Kopitiam; and

• some additional features to make the contraption the perfect mini man cave could be included.

Given the enthusiasm for this from both sides of the gender divide, this little man-cubicle concept looks ripe for a start-up business. I am all for it! Just give a lock and key to the wife (or girlfriend) to collect him after a marathon shopping spree. But be prepared, the husband or boyfriend could end up fully drunk!

References:

Hubby storage concept at China mall gets netizens’ thumbs up, R. Bala, Focus Malaysia, 13 February 2024-02-14

China mall introduces ‘husband storage’ pods for shopping wives, BBC, 14 July 2017

Weakening Ringgit, No Reason to Sweat? Really?

 The ringgit’s historical low against the Singapore dollar is due to the latter tracking the movement of the US dollar. The ringgit hit a historical low at RM3.55 against the Singapore dollar on 7 February after closing at RM3.54, while also hitting RM4.76 against the greenback. Singapore manages its monetary policies via the foreign exchange, which means when the US dollar strengthens, so does the Singapore dollar. This is to prevent implications of inflationary pressure, bearing in mind that a majority of its basic necessities are imported.

Singapore also has a huge reserve (USD336.8b) and fiscal surplus, unlike Malaysia which has foreign reserves of USD110b and has been in fiscal deficit since the 1998 Asian Financial Crisis.

Source: https://www.imoney.my

If the government puts its mind to achieving fiscal discipline, will we be back on the right track? Really? The other argument is a weaker ringgit is good for exports.

What we have is negative real interest differential with the U.S. The U.S. has its Fed Fund rate at 5.25% to 5.5%. U.S. inflation rate is at 3.1%. The real interest rate is around 2.2%. For Malaysia, our OPR is at 3.0%, while annual inflation rate is at 2.5%.  The real interest rate is therefore 0.5%. So, where do you think the money will flow? From a low real interest rate environment to a higher real interest rate country, financial centres like New York or London will thrive.

And what must we do? OPR must be at 4.75% or inflation drops to 0.75%, which unlikely in the immediate term. Why? With electricity and water tariffs going up and net food imports higher, our inflation rate is likely to be at 3-4% soon. Madani Government waffles when real issues are not addressed. That’s our tragedy!

Reference:

Weakening ringgit, no reason to sweat, say experts, Lydia Nathan, The Star, 8 February 2024

Growth Forecast for 2024

The 2024 Global Forecast Report by the Visual Capitalist Team has suggested the following growth forecast for global and major nations:

There is a sense of optimism and a brighter 2024, barring any Black Swans. However, both the U.S. and China are expected to show lower real GDP growth, compared to 2023. That will have an impact on Malaysia.

From the Emerging Markets growth forecast, Vietnam and the Philippines show around 6% real GDP growth. Meanwhile, Indonesia, the largest ASEAN economy will grow by 5% while Malaysia may record a growth of 4.4%, slightly better than the 2013-2022 average. We need a new “game-changer” to record a higher growth rate.

The “Macam Mana Mau Settle” Syndrome

Mariam Mokhtar in her article in Free Malaysia Today on 24 January 2024 highlighted the above syndrome. I have based this article on what was expressed by her.

Malaysians are aware of the depressing feeling when a policeman waves them to stop their car by the roadside. Many pretend to be calm as they wind down the window, only to be told they have just broken the law. The policeman will allege they were speeding (or some other infringement). But many could have sworn they were driving well within the speed limit. Some panic, because they know they will be late for an appointment or cannot think how they are going to get out of this predicament. 

The policeman will avoid all eye contact as he removes the little notebook from his breast pocket and flips it open. Many of us will try to explain that we could not have   possibly been speeding. Sometimes, it was recorded on a laser gun. However, in a confused state we may forget to ask him at what speed were we driving.

Source: https://en.m.wikipedia.org

This thrust and parry will continue until we are at our wits’ end and we are resigned to receiving a summons. Nothing said had made any difference. The policeman may pretend to scribble into his notebook but writes nothing down. Then he utters the magic words: “Macam mana mahu settle?” This is his opening gambit to a quick resolution. The whole exchange may take a few minutes, but it seemed like eternity.

The question, “Macam mana mahu settle?” had broken the ice. A whole new set of possibilities opens and the future is not as bleak as before. Most of us will breathe a sigh of relief.

This is presumably what happened to the British couple on a world tour driving their campervan. On Jan 28, the couple posted a 51-second video clip on X, about a policeman allegedly suggesting an alternative method to quickly settle their purported speeding fine. They could pay an on-the-spot charge of RM100 instead of receiving a summons for RM300 for speeding, with a trip to the police station to settle the fine.

Who would not be pleased to settle the fine at a third of the cost of the original RM300 summons? The couple agreed and paid the policeman RM100.

As the British tourists attracted a lot of negative publicity, Bukit Aman was prompted to warn the Malaysian public against speculating about the incident. They asked anyone with information about the incident to contact them.

The “macam mana mau settle?” syndrome has been around for decades. When will Bukit Aman take the Malaysian rakyat seriously? Will they appreciate that few, if anyone, will come forward, because they fear repercussions from rogue policemen? This activity intensifies before or during festivities! And has become too much of an accepted norm. Then there is the 50% discount for those who have not paid the RM 300 fine. So, isn’t it better from a financial perspective to delay payment and wait for the discount announcement and then pay the reduced fine?  

 Can’t the authorities take some initiative and find ways to stop it? 

Reference:

Will we be rid of the ‘macan mana mau settle’ syndrome? Mariam Mokhtar, Free Malaysia Today, 30 January 2024

Malaysians are Struggling to Stretch the Ringgit!

A little over a decade ago, RM100 was all that was needed for groceries, with change to spare. These days, the purple bill – Malaysia’s highest denomination banknote – is nowhere enough to cover the cost of what one needs.

Five years ago, prawns cost around RM15 per kg. Today, it is RM40 per kg, while kangkong prices have increased from RM1 to RM5 per bunch.

The national currency closed at RM4.75 against the US dollar on Feb 6. As the ringgit weakens, imported goods get more expensive, including items used to manufacture products. Our annual net import bill for food items is RM70-75 billion.

Source: https://theedgemalaysia.com

Issues like India’s ban on rice imports have reduced supply, pushing up the price of imported rice. Last September, Padiberas Nasional Bhd raised the price of imported white rice from RM2,350 per metric tonne to RM3,200 per metric tonne. More recently, it was reported that Pakistan might impose similar restrictions on its exports of onions, even as food business owners in the Klang Valley complained about increasing onion prices.

The rising food prices also come amid plans for a hike in taxes such as the sales and service tax from 6% to 8%, an average surge of 22 sen per cubic metre for water tariffs from Feb 1, and the introduction of a 10% sales tax on imported low-value goods.

The government has so far pledged to increase its Rahmah cash aid for 2024, raising the maximum rate from RM3,100 to RM3,700. The cash aid is set to benefit nine million people or 60% of the country’s adult population.

Is this enough? No, we need to tackle the issues of rising food costs – strengthen the currency (by raising OPR?), have short and long-term goals on food security and improve productivity in the agriculture sector, amongst others.

Reference:

Economist sees ‘sustained price hike’ as Malaysians struggle to stretch the ringgit, Annabelle Lawrence, Free Malaysia Today, 20 January 2024

Citi to Cut 20,000 Jobs?

Citigroup would cut 20,000 jobs over the next two years, acknowledging the last quarter of 2023 was  marred by one-off charges that resulted in a $1.8 billion loss. The loss was driven by $3.8 billion in charges which included reorganization expenses, a reserve related to currency devaluations and instability in Argentina and Russia and a $1.7 billion payment to replenish a government deposit insurance fund.

The lender will reduce its global workforce of 239,000 by 20,000 - or roughly 8% of staff - through 2026, including layoffs from the sweeping reorganization. Citi will also no longer count 40,000 jobs when it spins off and lists its Mexican consumer unit Banamex in an eventual initial public offering. It is eventually aiming to reach a staffing level of 180,000 employees.

Source: https://en.wikipedia.org

Citi’s original plan was to exit 14 consumer franchises in Asia, Europe, the Middle East, Africa, and Mexico, and the bank has since closed nine of these franchises, including Australia, Malaysia, India, and Taiwan.

It recently announced the closing of the sale of its consumer operations in Indonesia. Singaporean bank UOB, which has purchased four of Citigroup's Asian franchises, said that those acquisitions have added 5,000 people to its ranks.

It is surprising Citi is not doing well in consumer banking. That was its core business in the initial years. After the 2008 debacle and USD45 billion injection by the Fed, Citi has lost its oomph! Imagine if this was a Malaysian bank like the defunct Bank Bumiputra, there would have been a huge outcry. And injections into Bank Bumiputra totalled only RM3-4 billion or less than USD1 billion. So, what was the big deal to merge Bank Bumiputra with Bank of Commerce and now morphed into CIMB Bank? All that was a ruse for some politicians to make extraordinary gains?

References:

Citi to cut 20,000 jobs, posts $1.8 billion loss in “disappointing” quarter, Tatiana Bautzer and Manya Saini, Reuters, 12 January 2024

Citigroup begins layoffs as Wall Street braces for rough end to 2023, David Hollerith, 20 November 2023

Is Sentence Reduction Justified?

Perhaps the most positive thing about the Federal Territories Pardons Board’s decision is that it held the convictions for the offences committed by former Prime Minister Najib Razak in the RM42m SRC case. Najib, however, was granted a reduced term of imprisonment from 12 years to six years and a 76% ‘discount’ on the fine imposed on him – from RM210m to RM50m. Najib was tried and convicted for deriving advantage from RM42m, not for the entire RM4bn KWAP loan.

The irony is that Najib was one of the prime architects of our anti-corruption institutions and laws. He had vast and unmatched power as PM. But even before he assumed the prime minister’s post, he was a powerful man. To show he was serious about good governance, Najib saw to the passing of the Whistleblower Protection Act in May 2010 and the establishment of the Razak School of Government a few months later.

Source:https://focusmalaysia.my

Some of Najib’s sympathisers appeared troubled by the sentence meted out to him. When other criminals are convicted and given long sentences, people generally feel they deserve it because they have committed serious crimes. But, it would seem, an objectionable exception has been made for Najib.

The speculation about a pardon for Najib rose to astonishing levels on 30 January, the day the previous king relinquished his position. The rumour mill was fuelled by a foreign news report in the afternoon that predicted – accurately as it turned out – that the prison term would be halved.

The implications of the Pardons Board decision are far-reaching to Malaysia’s standing in the community of nations. Tragically, the outcome could result in irreparable damage from a national perspective. It impinges on a fundamental principle in any political entity – that there has to be utmost respect for the rule of law.

What does it say about the current government’s commitment to combat corruption or abuse of office, especially when it involves highly placed officials? The current PM and his government must realise that, with a few more cases involving Najib are coming up, a pardon at this stage would only confuse the people.

It also undermines the efforts of investigators and prosecutors and demoralises the system of administration of justice. For foreigners in the banking, business, financial and investor community, it suggests that while Malaysia has its laws and penalties, these may be side-stepped to suit particular members of the political elite.

Can ordinary people be blamed for now seeing the tough anti-corruption penalties as only applicable to lower-grade civil servants or those on the lower rungs of the banking and business community? Did the political elite who formulated these laws have the belief and confidence that these laws would never apply to them?

Has Malaysia defaulted on its debt of accountability? Could other prisoners expect 50% reduction of their sentences? Should enforcers be trained to expect 50% reduction in sentences? Is this unique to Malaysia? No, in the U.S. the President could pardon members of his administration (or others) during his term of office. But this doesn’t justify our current case against Najib.

Reference:

Slashed sentence for a pathetic, plundering predator? M Santhananaban, ALIRAN, 3 February 2024

Affordability is a Key Issue!

Affordability continues to remain a key issue among home buyers. The residential market has become more polarised, i.e. not to assume affordable properties will sell. It is still quality and location. (This article is based on research by Sulaiman Akhmady Mohd Saheh, Rahim & Co International Property Consultants Sdn Bhd).

For the first nine months of 2023 (9M23), the total transaction volume in the local property market was unchanged at 0% year-on-year (y-o-y). On the other hand, the total transaction value in the local property market increased by almost 9% y-o-y.

The residential sector continues to dominate the local property market, especially in areas bolstered by existing infrastructure, strategic locations and areas with sufficient population and amenities such as schools and workplaces.

Source: https://www.facebook.com

For residential launches below RM300,000, new supply share averaged at 42% between 2019 to 2022. However, for the first half of 2023 (1H23), launches below RM300,000 posted a much smaller share at 21%. Meanwhile, newly launched residential units between RM300,000 and RM500,000 and above RM500,000 showed an upward trajectory.

Residential units priced between RM300,000 and RM500,000 rose 37.3% in 1H23 from 30.9% in 2022, and those priced above RM500,000 went up to 42% in 1H23 from 24.7% in 2022.

In 2023, there was a slight increase where prices in Kuala Lumpur, Petaling Jaya, Penang and Johor Bahru improved by about 2% to 5%, on average.

Looking at the median price multiple index (an index of affordability comparing median household income against the median house prices), the median terraced house price to annual household median income in Kuala Lumpur is at a multiple of 7.1, whereas in Selangor and Johor, the figure is 4.7, and in Penang it is 6.4. Bearing in mind, less than 3.0 is classified as affordable, from 3.1 to 4.0 is moderately unaffordable, 4.1 to 5.0 is seriously unaffordable, and more than 5.0 is severely unaffordable.

In Singapore, the median multiple for the housing development board category stands at 5.3, while the median multiple for Singapore’s general market for privately owned properties is at 13.7. Jakarta stands at 9.4, Bangkok at 10.2, London at 8.7, Sydney at 13.3, and Hong Kong at 18.8.

There is room for improving transaction value and volume. Overhang could be tackled with incentives and promoting sales to MM2H holders. In new developments, planners and developers need to work-out pricing and location that meets market demand. Median price multiples are a gauge and we need to find ways of raising income levels, so that young people could afford to purchase TOD units. Government agencies involved in the property sector are far less agile or nimble to develop affordable units. It is the private sector that can deliver volume and value.

Reference:

Affordability still a thorny issue, Elim Poon, The Star, 31 January 2024

Happy Chinese New Year

 

A Movie for All Seasons?

 “Man on the Run” director Cassius Michael Kim is surprised by the petition to ban the film. According to him, no one from former Prime Minister Najib Abdul Razak’s camp had contacted him since the interview was conducted in April 2022.

Najib himself was aware of any potential for subjudice and warned at the start of their interview that he might have to shut it down should such a situation occur. No one had protested or made these claims of subjudice when the film was released in Malaysian cinemas in October 2023. During the interview, the former PM was accompanied by both an adviser and attorney. 

The movie was approved by the Film Censorship Board, and there were no issues raised when it was screened to the public in October.

Recently, I had the opportunity of viewing this movie on Netflix. It did not carry anything controversial or new – more of the same but from perspectives of the FBI/DOJ and others. What was missing was interviews with the former Governor of Bank Negara Malaysia (Tan Sri Zeti Akhtar Aziz), Shahrul Halmi, Mohd Irwan Serigar Abdullah (former Treasury Secretary General) and the other bankers involved including UBS and BSI.

A sequel would be good or do 12-episode series on how a Malaysian like Jho Low could be the infamous “Man on the Run”!

Reference:

Najib, lawyers huddled together for “Man on the Run” interview – director, Martin Vengadesan, Malaysiakini, 25 Jan 2024

Want to Live Longer? Get an Education!

The title may sound like a surprising advice, but that’s exactly what researchers have found when they looked at the impact of education on life expectancy. Their findings reveal that each additional year spent in education could reduce mortality by around 2 per cent.

Many studies have demonstrated that higher levels of education are associated with longer life expectancy, but none has been able to determine the extent to which education can reduce mortality. A team of researchers from the Norwegian University of Science and Technology has now investigated this question, and their findings suggest that every year spent in school or university has a significant influence on life expectancy.

Source: https://habitatbroward.org

The researchers drew on data from no fewer than 59 countries, including the USA, France, India, Australia and the UK, with over 10,000 data points collected from more than 600 published papers. Although this research is based on a vast array of data, the scientists point out that most of it comes from high-income countries — a limitation that the authors say highlights the need for further research in low- and middle-income countries.

Published in The Lancet Public Health, their findings highlight the fact that each additional year in education is associated with a 2 per cent lower mortality risk. They point out that this corresponds to an average 13 per cent lower risk of death for those who complete elementary school (around six years of schooling, depending on the region), compared to those who did not attend school. Graduation from secondary school (about 12 years of education) was associated with a 24.5 per cent reduction in mortality, and graduation from higher education (18 years of schooling) with a 34 per cent reduction in the risk of death.

Even more surprisingly, the researchers suggest that the life expectancy benefits of 18 years of schooling would be similar to those associated with ideal vegetable consumption. The study also reveals that not going to school could be as bad for health as drinking five or more glasses of alcohol a day, or smoking half a pack of cigarettes a day for ten years. Despite the limitations of this study, notably linked to the lesser inclusion of low-income countries, the scientists report they found “no significant difference in the effects of education between countries that have reached different stages of development.”

What this means for senior citizens is to continue learning new skills, new subjects yearly. It may mean working on a Masters or a PhD?

Reference:

Staying in education helps you live longer, scientists say, The Malay Mail, 25 January 2024

Is Our Education System a “Dismal Failure”?

In a scathing comment on the state of education in Malaysia, the Parent Action Group for Education (PAGE) said poor policy implementation, lack of accountability and the intrusion of politics into education should immediately stop. Its chairman Datin Noor Azimah Abdul Rahim said these are the contributing factors that have led to the failure of the Malaysian education system. She was commenting on Prime Minister Datuk Seri Anwar Ibrahim’s speech on Jan 22 at the Global Intellectual Discourse titled “The Next 100 Years: Vision 2100 for Malaysia”.

The country’s failure to move forward in many areas, including education, was partly due to the obsession of some quarters who failed to acknowledge existing faults. And Anwar cited Malaysia’s performance in the Programme for International Student Assessment (Pisa) 2022, on which the nation was ranked 51 out of 81 countries, specifically in Science, Mathematics and English. It was an example of how the failure to acknowledge faults in the education system had affected the country’s global ranking.

Source: https://breezway.com.my

Malaysia was also ranked fourth in the 10-member Asean region, with Malaysia’s scores recording the biggest drop compared with Indonesia, Thailand and Vietnam. Noor Azimah expressed disappointment over the fact that the recommendations of education-focused organisations had been ignored, highlighting the disregard for input from education stakeholders. She said the current education system focuses solely on exam-oriented reading, which has led to deterioration in the overall reading culture among students.

For many years, we have been struggling to improve English language proficiency and promote English for Science, Technology, Engineering and Mathematics subjects.

Noor Azimah said as PAGE champions improvements in education, including the English language, its call is now resonating across the country.

The decline in Pisa rankings indicates deep-rooted issues that need immediate attention. The allocation of RM58.7 billion for education is the largest in Budget 2024, a 6.3% increase from 2023’s allocation. On GDP basis, we spend 5.33% of GDP while the world average (2022)  was 3.8%. After all that spending, we are left with an education system that is below par! We need a new Education Minister. I will nominate Noor Azimah to put things right.

Reference:

National education system labelled a “dismal failure”, Sivanisvarry Morhan, The Sun, 

26 January 2024

EPF for New Govt Servants: Is it Windfall or Negative Impact?

An economist believes that the abolition of the pension scheme for new civil servants will impact government spending and the country’s socioeconomic landscape. The savings from the move may take decades to realise as the government will need to bear the 13% contribution to the Employees Provident Fund (EPF). The shift from the pension scheme to EPF contributions may result in the country experiencing a decline in the number of civil servants in various sectors.

Others believe civil servants may stand to unlock a bumper retirement windfall, with a back-of-the-envelope calculation - one may have a savings pool of RM1.36 million through the new Employees Provident Fund (EPF) scheme. The estimated RM1.36 million is a result of over a civil servant's 35-year career. 

Source: https://en.wikipedia.org

Key assumptions and calculations that underpin this financial windfall include EPF’s dividend remains at 5.0 per cent per year coupled with an annual salary increase of RM225 per year. Refraining from withdrawals throughout the entire 35-year service period and opting for the EPF annuity scheme without a lump sum withdrawal are other assumptions.

At the age of 60, a civil servant following these assumptions would accumulate a substantial savings pool of RM1.36 million. This significant sum enables the retiree to withdraw an annuity of RM10,000 per month for an impressive 15-year period. Remarkably, this financial achievement is realised even if the civil servant begins his or her career at the age of 25 with a modest monthly salary of RM2,700.

The government's liability for pension payments will reach RM120 billion in 2040 if the existing policy for the hiring of permanent positions in the civil service is continued. It is time for us to move away from pensions to an EPF system, just like what the private sector has been doing for decades. The country needs just one system and less allocation for payment of pensions in the future.

References:

EPF for new govt servants may have negative impact, says economist, Yasmin Abdul Latif, Free Malaysia Today, 26 January 2024

Million ringgit retirement windfall for civil servants under new scheme? Azanis Shahila Aman, New Straits Times, 25 January 2024

What is the Difference Between Race and Nationality?

Race is a people-based identity. It is tied to your ancestry. It is passed down from parents to children and connects you to not only your parents, but the parents of your parents. The Malay term for race, for example, is bangsa, which is derived from the Sanskrit term Vamsa, and literally means lineage or family. 

When you share the same race with someone, what you have in common is the same ancestors. Race is what connects every generation with the past and future generations. One of the main reasons that people have children is to pass a part of them to their children. When we identify with our race, we are essentially honouring and acknowledging our ancestors. We honour and acknowledge our ancestors, by embracing as much as possible the value systems, beliefs, culture, customs and traditions that our ancestors had embraced.

Source: https://theleaders-online.com

Nationality is a land-based identity. It is tied to our home. When we share the same nationality with someone, what we have in common is the nation that we call home. When we identify with our nationality, we are essentially honouring and acknowledging our home. We honour and acknowledge our home, by upholding and protecting its sanctity and sovereignty. The people who share the same nationality will determine the affairs of their homeland by themselves. They will not let those who have a different nationality dictate terms in their homeland.

Race and nationality are not conflicting identities. Just because you honour different ancestors, it doesn’t mean that you will be disloyal to your home. To uphold the sovereignty of your home you do not need to have the same ancestors. A home is the place where you can feel most like yourself. It is not uncommon for a person to feel at home in a place that is different from the place that one’s ancestors inhabited. It is not unheard of for people to defend the sovereignty of their home, even if they come from a different ancestry.

Poor Mahathir is confused with race and nationality. Just because one has a different ancestor, one cannot be loyal to one’s home, speaks more about Mahathir than it does about anyone else. Mahathir is likely telling himself that he had to sever his ties with his ancestors in order to be loyal to his nation, but the truth is, he did not have to do it. He could have easily honoured his ancestors while remaining loyal to his homeland. That he chooses to believe that he had to sever ties with his ancestors in order to be loyal to his nation, is something that he has to reflect in in his old age. To be fair, Indonesia had a time when the Chinese had to adopt local names, language and customs. But the country has moved on and now enjoys diversity in unity.

Was it really for the sake of being loyal to his nation that he chose to sever ties with his ancestors, or was it for the sake of fulfilling his ambition and desire? To be an UMNO President he had to be more Malay than the Malays?

As long as he believes that his decision to turn his back on his ancestors was due to his desire to be loyal to his homeland, and not because he wanted to fulfil his ambition to become the Prime Minister of Malaysia, he will forever insist that all of us have to turn our back on our ancestors, in order to be loyal to our homeland, but we do not have the same ambition as him nor are we confused by race and nationality.

Reference:

The difference between race and nationality that Mahathir doesn’t understand, Newswav.com, 27 January 2024

KL Records Highest Median Monthly Wage?

Kuala Lumpur recorded the highest median monthly wage in the third quarter of 2023 at RM3,800, says Malaysia’s chief statistician. Kuala Lumpur exceeded the national rate of RM2,600, together with Selangor at RM2,900 and Penang at RM2,645. Kelantan, Perlis and Sabah had the lowest median monthly wage during the same period, with each recording RM1,600, RM1,627 and RM1,800 respectively.

The overall number of local workers in the formal sector rose by 1.3% to 6.68 million in September 2023 compared with the same month the previous year. Of the total, he said 55.4% or 3.7 million were men, while 44.6% or 2.98 million were women. Median monthly salaries in the formal sector saw a 5.8% increase for men to RM2,645 while women received RM2,518, with growth across all sectors in the third quarter of 2023. In terms of wage distribution, 34.6% of formal workers in Malaysia received salaries below RM2,000 in September 2023.

Source: https://en.wikipedia.org

In terms of age groups, formal workers aged between 25 and 29 comprised one-fifth of all formal workers in September 2023, which is 19.9% or 1.33 million people. Those aged 65 and above recorded the lowest number of formal workers with 0.1 million people or 1.5%. The 45-49 age group received the highest median monthly wage in September 2023 at RM3,500. This age group also had the highest median monthly wage in July 2023 (RM3,482) and August 2023 (RM3,500). The group comprising those aged 20 and below received the lowest median monthly wage of RM1,500 in September 2023, remaining unchanged for three consecutive months throughout the third quarter of 2023.

Although median wage seems reasonable, the cost of living in KL is higher than other cities. It is disposable income that matters. And in KL that will be close to zero, with food, transport and rental rates moving up!

Reference:

KL records highest median monthly wage in Q3 2023, Free Malaysia Today, 24 January 2024