“Brain Drain”: Malaysians in Singapore!

Amid concerns of a "brain drain" of skilled workers leaving Malaysia, an official study into Malaysians living in Singapore has found that two-thirds of those living and working in Singapore earn a gross salary of S$1,500 (US$1,116) to S$3,599 a month. It also found that almost one in five Malaysian workers living in Singapore, or 18.5 per cent, earn S$3,600 to S$9,999 a month while the highest gross monthly salary is S$18,000 a month. About 1.2 per cent earn S$10,000 to S$17,999

The study, conducted in 2022, also said that 38 per cent of Malaysians here are employed. The rest are engaged in activities such as business, research and education, or are married to a Singaporean. Of those in a job, nearly three in four, or 74 per cent, are skilled or semi-skilled. A majority, or 62 per cent, of Malaysians living here are male.

Malaysians working in Singapore and Brunei were attracted by good job prospects, favourable working conditions, attractive salaries and an advantageous exchange rate. Key findings include:

A separate study released at the same time profiled Malaysians living in Brunei. That study was conducted in 2023. The trends identified in the Brunei study were broadly like those in the Singapore one. The study on the nation bordering the East Malaysian state of Sarawak showed that 92 per cent of Malaysians who live and work there are skilled or semi-skilled, and with 50 per cent of the Malaysian diaspora in Brunei being there for work. 

So, in Singapore its brawn drain not brain drain!

Reference:

Malaysian government study warns of 'brain drain', finds 3 in 4 Malaysians living, working in Singapore skilled or semi-skilled, Justin Ong Guang-Xi, CAN, 22 Feb 2024

Are Rental Rates on an uptrend?

Rental rates over the next 12 months are expected to climb moderately from the first quarter of 2024 (1Q24) level of RM1,920 per month. The average monthly rental price in Malaysia over the past two years was RM1,895, slightly lower than the 1Q24 average. While rents are higher today than in seven out of the 10 recent quarters, the annual rate of increase has been declining, according to IQI in its “Malaysia home rental index report 1Q24.”

The Malaysia home rental index shift is based on the balance between the supply of rental properties and the number of people looking to rent, seasonal trends, number of international students in the country, and changes in the activity of investors who buy properties to rent out. The report is based on over 67,000 residential rental transactions since 2018.

Source: https://ms.wikipedia.org

In Kuala Lumpur, rents are up 7.6% compared with a year ago but the rate of increase has been declining. In Selangor, the average rent is RM1,879, up 10% annually and it has fully recovered to the pre-pandemic levels.

Nationwide gross rental yield remained stable at 5.16%, with Johor Baru offering the highest yield at 6.25%. Malaysia’s gross rental yield of 5.16% is lower than comparable numbers in Thailand, Indonesia and the Philippines, while Singapore offers a gross yield of 4.63%.

The vacation rental market is growing rapidly with 2024 revenue projected at RM5.3bil. It is expected to hit RM6.9bil by 2028, according to the report.

Many low to medium income earners may not welcome this news. The market is getting a little “tight” for a particular segment. This may not be so on the upper end of the scale, where supply seems high compared to current demand. If prospective foreign investment and investors become “real”, then the overall property market (whether sale or for rent) will move upward in value/cost. Developers will be happy with such an outcome.

Reference:

Rental rate uptrend, B.K. Sidhu, The Star, 20 July 2024

Scenarios with a Trump or Harris Presidency?

With the US presidential election just four months away, global markets are on an edge. RHB Research penned five scenarios that might unfold if Trump is re-elected. We have adapted it for this article and suggested two more if Harris wins! The potential scenarios; the actual outcomes could differ and may offer opportunities for change and adaptation.

Scenario 1: China tensions and negative spill over to Asean

Central to Trump’s approach is a robust stance on US-China relations, marked by escalating tariffs that have significant implications for global investors. Historical data indicates that tariffs implemented during Trump’s tenure shaved off 0.1% of global growth in 2018, escalating to 1.4% by 2020.

Source: https://en.wikipedia.org

His latest proposal includes a blanket 10% import tariff, coupled with intensified rates targeting China specifically. This move is expected to drive US headline inflation to 4% by 2025, up from the current 3%.

Such measures could disrupt global trade flows and industrial progress over the long term.

On the other hand, a Democrat victory might temper tensions, offering hope for the future of US-China relations.

Trump’s proposed tariff hikes on Chinese imports, particularly in sectors like new-energy vehicles and semiconductors, underscore a persistent strain in US-China relations. This geopolitical friction is poised to sway investor sentiment, favouring developed market equities at the expense of emerging markets.

Scenario 2: Rate cuts in deference to political pressures

If Trump wins, the US’ real rates could sharply decline as he may influence the Federal Reserve for substantial rate cuts. He cites competitive disadvantages and favourable inflation conditions.

Market expectations are strong for Federal Funds Rate cuts in 2024 and 2025, with implications including a rally in US-centric equities, potentially 15% to 20% gains in 2025, and a bull-steepening bias in the US Treasury’s two to 10-year spread.

Global central banks, particularly the European Central Bank, will likely align with Federal Open Market Committee (FOMC) cuts, while Asean-centric rates face downward pressure.

The US Dollar Index is anticipated to soften below 100 by the first half of 2025, influenced by reduced carry advantages and yield-chasing behaviour favouring higher-yield assets.

Scenario 3: Stronger global drive to de-dollarize

In the context of a potential Trump presidency, his proposed tariffs to curb global economic growth could significantly hasten the global trend towards de-dollarization.

This shift might expedite the emergence of a new trade currency by 2025, with BRICS nations (Brazil, Russia, India and China) actively exploring the creation of a reserve currency backed by their own currencies.

This potential shift towards a new trade currency could open up new opportunities for growth and development, particularly in Asia and Asean.

Scenario 4: Increased geopolitically driven sentiments

Increased geopolitical noise appears to be driven more by geopolitical factors rather than purely economic ones, focusing on two critical issues:

• The US potentially demanding payment from Taiwan for military protection.

• The risk of halting military aid to Ukraine.

Both could heighten global uncertainties and dampen investor risk appetite in a Trump presidency.

Scenario 5: Division of world order

Trump’s foreign policy rhetoric is stirring concerns about strained US alliances and potential economic isolationism, prompting trading partners to seek alternatives to traditional US economic ties.

Establishing trade and economic zones like the Regional Comprehensive Economic Partnership, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the European Union, and North Atlantic Treaty Organisation (Nato) reflects global efforts toward bifurcation into distinct orders amid geopolitical tensions and the pursuit of economic resilience.

Trump’s emphasis on economic isolationism and scepticism towards alliances such as Nato risks widening political divisions with US allies and could drive the formation of separate trade blocs globally.

Overall, Trump’s key trade ideas for a win are to:

• Long developed market-equities, especially US-centric

• Short on US dollar index

• Buy US Treasury on dips.

Expect higher market volatility over the next four months, with the US FOMC likely to refrain from cutting rates until year end.

Scenario 6: Harris victory and more of the same?

A Harris victory on the other hand will mean a higher tension in Ukraine, Taiwan and the Middle East. The military industrial complex will most certainly want wars! U.S. will try to assert itself as the unipolar power in the world and cast Russia, China, North Korea and Iran as the axis of evil.

Higher inflation, increase in interest rates, higher unemployment and lower U.S. growth rate will be the key features. Equities will tank and domestic U.S. economy may go into stagflation or tailspin/downward.

Scenario 7: Enlightened Harris

A more enlightened Harris scenario is a pragmatic end to wars and a peaceful resolution to conflicts. A focused growth in green projects (in the U.S.), higher budget for space ventures, continued spending on infrastructure and a more equitable and egalitarian economy.

Interest rates are cut progressively with receding inflation and more activity will arise in the equities market. All that will satisfy the middle class but not the top 1% wealth holders.

For us in Malaysia, we need some sound macroeconomic policies from the U.S., not more war-mongering! Anything in this regard will benefit us with higher semiconductor output and better services growth.

Reference:

Five scenarios that may happen from Trump 2.0, Barnabas Gan, The Star, 24 July 2024

Did Sabah Development Bank Hide Bad Loans?

Decades of creative accounting at state-owned Sabah Development Bank (SDBank) hid losses through non-performing loans (NPLs) amounting to over RM5bil. This was stated by Sabah’s Finance Minister. In a detailed and stunning disclosure at the state assembly on July 10, Masidi said the NPLs made up 75% of the total RM6.6bil loans issued by the bank as of May 2024. Apart from creative accounting by providing fresh loans to borrowers to cover up their NPLs, there had been a total management meltdown in checks and balances for approving loans to unqualified companies. SDBank has been giving out loans to borrowers, and when the borrowers were unable to pay, creative accounting was applied. New loans are created to pay for the overdue repayments so that these loans would not go into the non-performing category.

The new loan principal and interest overdue from borrowers on paper made it appear as though the original amount had been repaid and "collection" was done with the interest owed showing as "income earned" in the bank's books. The NPL numbers are reduced as these loans are now seen to be performing.

Loans dated back to 2003 and the previous management of the bank were able to report profits to the tune of RM580mil over the past six years through this "creative accounting". SDBank has raised funds by borrowing from the bond market. Actual cash collection by SDBank has not been sufficient to cover the bond repayment due and the bank then borrowed more to meet the bond repayment that resulted in ballooning its debt.

The new SDB board and management that took over in July 2023 are now carrying out a rigorous review of security assets. The Sabah Finance Ministry (MOF) however, has expressed strong support for the SDBank, emphasising that the bank’s RM5 bil in non-performing loans (NPLs) are secure and recoverable.

The state government plans to bolster the bank by encouraging government-linked companies (GLCs) to repay loans and deposit excess funds as fixed deposits. Another important financial support is the conversion of the state’s deposits of RM660 million to redeemable preference shares over the next few years to strengthen the bank’s capitalisation. Since the new board took over in 2023, GLC loan exposure has decreased from RM2.2 bil in July 2023 to RM0.7 bil, and bond obligations have reduced from RM5.0 bil to RM3.9 bil.

The bank has adopted industry practices and Bank Negara Malaysia (BNM) guidelines and has set an aggressive target to recover RM1 bil in NPLs annually over the next three years. The development bank plans to exit the Peninsular Malaysia market by then, where it approved approximately RM8 bil in loans between 2003 and 2018, primarily for property development in Kuala Lumpur, Selangor, and Johor. The bank will now focus exclusively on projects within Sabah that are economically, socially, and environmentally responsible. 

Integrity at the top is key in any organisation, especially for a bank. The “creative accounting” strategy could be a good case study for a business school!

References:

SDBank hid RM5bil in bad loans through creative accounting, says Masidi, Muguntan Vanar and Sandra Sokial, The Star, 10 July 2024

Sabah MOF backs development bank amid RM5b NPLs, Eynez Syazmeena, Focus Malaysia, 12 July 2024

Was River of Life Project Doomed to Fail?

The RM4.4 billion River of Life (RoL) project to rejuvenate the confluence of the Klang and Gombak Rivers was doomed to fail from the beginning, said an NGO. The Save Kuala Lumpur (Save KL) chairman said the project’s scope was too myopic, focusing on a small portion of the river system, which made it counterproductive to its main objectives. The rivers start uphill in Gombak, flow through KL, and then to Klang. If you only address the KL portion of the system, how successful can you be?

According to the 2024 auditor-general’s (A-G) report, the RoL project, which has faced more than eight years of delays, is unlikely to be completed in 2024. The report said that as of July 2023, eight out of 159 RoL-related projects were still ongoing, with completion progress ranging from 21% to 97.3%.

Source: https://en.wikipedia.org

The RoL comprises three components: river cleaning, river beautification and commercialisation and tourism, none of which has been fully achieved, according to the report. The audit found that only 79.4% of river beautification works have been completed, and only 50 out of 296 sewage treatment plants rationalised or upgraded. The project focussed on making attractions on the riverbanks but did not address the core issue of flood elimination, which would benefit the rakyat, was the view of the NGO.

So, was it doomed to fail? Yes, if the focus was just the confluence of the Gombak and Sg. Kelang. Is this to help some select people? In Europe, rivers are useful for transport, recreation or even living – river boats are anchored on the Thames (London). Can we try to copy others? No shame in that, if it is good for all!

Reference:

River of Life project doomed to fail from day one, says NGO, Danish Raja Reza, FMT, 11 July 2024

Why is Chinese Median Household Income 29pct More Than Bumiputera?

Our Economy Minister disclosed that the median monthly income for households between the Bumiputera and Chinese in 2022 was at 0.71 at 1 while the ratio of Bumiputera to Indian households in 2022 was 0.87 to 1. The ratio of Bumiputera median household income to Chinese households is targeted to increase to 0.88 to 1 by 2025, according to the Minister. He did not disclose the ratio target for Bumiputera-Indian household income or the ratio between Indian and Chinese households.

A key strategy integrated into initial policies is to enhance capital mobilisation through increased private sector involvement. This approach aims to lessen reliance on government funds by leveraging them to attract private investments to advance Bumiputera businesses. This includes empowering Bumiputera entrepreneurs to participate in international supply chains through enhanced collaborations with multinational corporations.

Source: https://en.wikipedia.org

On March 1, the BEC Wealth Creation and Corporate Dominance chairperson, reiterated calls for the government to consider introducing the Equitable Opportunity Act on a needs-based basis to ensure all citizens get fair employment and business opportunities. It was highlighted the importance of such an act as the wealth creation and corporate dominance among Bumiputera is still low compared to the non-Bumiputera community.

Before going into legal and other Government measures, can the Minister please explain the failure of the NEP? Was it leakages? Corruption? Mismanagement? Poor controls? This median income disparities are useful indicators of wealth but our Gini coefficient is firmly stuck at 0.4 over 40 years, surely we don’t understand income and wealth distribution! Can the Minister look at intra-racial disparities instead of inter-racial ones? Otherwise, we will never end this NEP mindset!

Reference:

Chinese median household income 29pct more than bumiputera? Ili Aqilah, Isabelle Leong & B Nantha Kumar, Malaysiakini, 11 July 2024

SMEs Fear e-Invoicing!

The Small and Medium Enterprises Association says larger businesses are telling vendors to comply with the new system or risk being delisted. Small and medium enterprises are concerned that the electronic invoicing (e-invoicing) system, the first phase of which will be implemented on Aug 1, will have a negative impact on them.

The chairman of the Small and Medium Enterprises Association (Samenta), said the government should bear in mind that the supply chain is interconnected. Larger businesses will expect SMEs to issue e-invoices to complete the continuous transaction control (CTC) loop. The CTC is a set of processes that enables law enforcement agencies to view in real time or near real time the financial data relating to business activities in their respective countries.

Source: https://en.wikipedia.org

Small traders with revenue under RM500,000 per year should be exempted from the e-invoicing regime. The elderly or less literate Malaysians who will not be able to cope

 with the process. The Government’s decision is to exempt SMEs with annual revenue of RM150,000 and below from the requirement.

 The blanket requirement is a burden to small traders even if they have the option to not issue e-invoices given that some customers may still want such invoices for various reasons. The preparedness of SMEs for the new regime is also a matter of concern.

A spokesman for a food and beverage company also expressed fears that vendors may be forced to cease operations. The government wants to improve the taxation system, but they need to consider that many entrepreneurs are ill-prepared.

 Putrajaya should implement e-invoicing in stages as many online entrepreneurs currently depend on e-commerce platforms to increase their income. For some, it is an added cost. The e-invoicing system is being rolled out gradually, starting with businesses with an annual turnover or revenue of more than RM100 million on Aug 1, 2024, and eventually extending to all businesses by July 1, 2025. This is another way of broadening the tax base and eliminating the “shadow” economy. But there are genuine concerns and costs. The Government should listen and phase-in its implementation over three years and focus on those with revenue of above RM500,000!

Reference:

SMEs fear e-invoicing will be painful for them, FMT Reporters, 12 July 2024

Who Is Responsible For The Climate Crisis

And the hypocrisy of it all? The West and those who dominate the world economy want the global south to reduce carbon emissions. Can you beat that?

Tax these companies 100% on their emissions and fund the global south for keeping forests and making efforts to reduce their own fossil fuel use.

Reference:

Who is responsible for the climate crisis? @THE.COMMONSEARTH

Vehicles Repossessed Every Month!

Far too often, people get caught up in the excitement of owning a new car and make impulsive decisions without properly assessing their financial capacity. According to revelations by the Malaysian Consumer and Borrower Dispute Resolution Association, an estimated 1,200 vehicles, both cars and motorcycles, are being repossessed monthly, with the vast majority of those affected being young adults.

This repo epidemic, as it has come to be known, has left many questioning the financial stability of Malaysia’s future generations and the potential for a broader economic decline. Of the staggering number of repossessions, a mere 40 borrowers managed to reclaim their vehicles. At the same time, the rest are left to navigate the treacherous waters of financial uncertainty, unable to convince banks to extend their payment periods.

Source: https://majoriti.com.my

The reasons behind these repossessions paint a picture of a generation grappling with the harsh realities of seemingly attractive offers, the desire to keep up with their peers, an unforgiving job market and unexpected hardships. Unemployment, job terminations, and personal misfortunes, including illness, have also contributed to the growing number of individuals unable to meet their monthly payments for a depreciating asset.

However, the problem extends beyond external factors. Financial mismanagement, particularly among younger Malaysians, has also played a significant role in this crisis. Many young Malaysians have taken out loans to finance lavish holidays and lifestyles they can ill afford, only to find themselves drowning in debt when reality catches up. They are learning this lesson the hard way as they watch their prized possessions—the very symbols of their perceived success—being towed away.

As the nation grapples with this crisis, questions arise about the role of banks and repossession companies in exacerbating the problem. Reports of unethical and gangster-like behaviour by repossession agents have been the norm rather than the exception. Some going as far as threatening to post red letters and to make false police reports, claiming fraud on the part of the vehicle owners. This problem is further compounded by the fact that many car owners are unaware of the standard operating procedures (SOP) for repossession.

This lack of knowledge makes them vulnerable to intimidation and manipulation by unscrupulous agents exploiting their ignorance for personal gain. The government and financial institutions must swiftly address this repo epidemic and the underlying issues that have led to its emergence. Even BNM may not be fully aware or understand what individuals face! Don’t talk about AKPK – they are in their own world!

The nation’s youth must not be left to bear the burden of economic uncertainty alone. In some other instances, retired people also face dire consequences for borrowing too much or having unpaid credit card bills from their previous jobs or failed business ventures. If we are Madani, then please exhibit some compassion and kindness.

Reference:

1,200 vehicles repossessed every month across Malaysia, Fernando Fong, The Rakyat Post, 20 June 2024

HRD Corp Failed Its Audit: ‘Tutup Mata” Culture?

Fresh from the recent Prolintas scandal, Malaysians were again greeted with allegations of corruption involving another high profile GLC (government-linked company). In the latest financial scandal, the Auditor-General’s Department urged the government to investigate the top management of the Human Resource Development Corp (HRD Corp) for its audit failure. The company falls under the purview of the Human Resources (HR) Ministry.

In its report released on July 4, Auditor-General recommended that the HR Ministry refers HRD Corp’s management to the appropriate authorities due to instances of mismanagement.

Auditors discovered mismanagement involving hundreds of millions of ringgit related to training grants, investments and property acquisitions. 

The audit also revealed poor governance in HRD Corp’s investments amounting to RM3.73 billion which resulted in unrealised losses of RM49.38 mil. These funds originated from the Human Resources Development Fund (HRDF), which pools employer levy contributions. Additionally, more than RM50 mil in training grants were repeatedly disbursed to the same individuals while over 200 grants were flagged as “suspicious” by the auditors.

From 2020 to 2023, 234 grantees under the Skim Gerak Insan Gemilang were considered suspicious due to inconsistencies such as the same identity card number being used under different names or the same name appearing under different identity card numbers.

The Minister has to lodge a police report; ‘suspend the employers’ levy for six months; remove the CEO and Board;  reconstitute the Management and Board; produce a white paper on all the abuses after an internal investigation; and, invite MACC to act immediately.

This is “reformasi”. Immediate action on wrong doings not “tutup mata”. It is usually tutup satu mata but these days both eyes should be closed.

Reference:

HRD Corp failed audit is symptomatic of Malaysia’s prevailing culture of corruption, R. Bala, Focus Malaysia, 5 July 2024

Does the New Health Insurance Co-Payments Expose Households to Financial Disaster?

The Galen Centre for Health and Social Policy today warned Bank Negara Malaysia (BNM) that its new requirement of a co-payment option in health insurance could expose households to financial catastrophe.

The Deputy Finance Minister told the Dewan Rakyat special chambers on July 1 that BNM would require insurance and takaful operators (ITOs) to begin providing a co-payment option for their medical and health insurance and takaful (MHIT) products by September 2024.

Source: https://www.insurancebusinessmag.com

Co-payments are additional out-of-pocket payments that insured patients have to pay when they get treatment of covered illnesses – on top of their regular premiums paid before they encounter illness. According to BNM’s February 29 policy document on MHIT business, as cited by the Galen Centre, ITOs will be required by September 1 to have at least one individual medical product with co-payment features, with a minimum co-payment amount of no less than 5 per cent co-insurance and/ or RM500 deductible per policy or certificate year. This co-payment feature also applies to renewal of existing MHIT policies or certificates. So, for example, if an insured patient receives an RM50,000 hospital bill, a 5 per cent co-payment means that the patient has to pay RM2,500 in cash out of pocket – even though they have been regularly paying monthly or annual premiums. What is noteworthy in BNM’s new policy is the absence of a cap on co-payments.

Beginning 2025, ITOs are no longer permitted to design new medical reimbursement insurance or takaful products without the minimum co-payment feature. Household out-of-pocket payments on health expenditures currently approaching 35 per cent, would and will jump.

According to BNM’s policy document, co-payments will not apply for emergency treatment (including in accident cases), outpatient treatment for follow-up treatments arising from critical illnesses such as for cancer or kidney dialysis, or treatment sought at a government health care facility. The new co-payment policy as aimed at incentivising “more responsible usage of health care services” to reduce costs on insurance providers, citing medical inflation and the “buffet table syndrome” as the main drivers of a rise in health insurance premiums.

This action will also be able to reduce false claims and subsequently reduce overall costs, besides increasing the long-term sustainability of MHIT products, according to the Deputy Finance Minister. 

The “buffet table syndrome” describes policyholders with zero co-payment coverage or full riders, who are unwell and sick availing themselves of medical treatments and medication in the belief that they should maximise their insurance policy coverage. This increases the average claims per insured and subsequently leads to higher insurance premiums. No one wants to get a chronic illness such as kidney failure, cardiovascular disease or cancer just to utilise their insurance coverage. No one chooses to get unwell, seriously ill or incapacitated due to a catastrophic condition. Not all doctors prescribe expensive treatments and not all full rider policyholders submit large claims, said the Galen Centre.

The real cause of Malaysia’s 12 per cent health care inflation rate that is approximately five to six times higher than the general inflation rate (and is among the highest in the Asia-Pacific region) is that demand is higher and medical bills imposed by private hospitals are unregulated.

The Galen Centre expects people to cancel their health insurance policies with the introduction of co-payments and go to the public health care system instead, thus increasing demand on already overloaded government hospitals and health care clinics.

There is also the issue of quantum. Will these co-payments be capped? Will there be a maximum annual co-payment amount for policyholders? Bank Negara’s February 2024 policy document leaves that critical decision to insurers. Will patients be forced to tap into their Employees Provident Fund savings to pay their co-payments if they lack the money? What if they cannot pay? What happens then? Is Bank Negara’s new policy requirement ultimately going to be of more benefit to insurers and private hospitals, rather than patients and their families?

According to BNM, this strategy will help to reduce fraudulent medical claims and contain medical cost inflation that has risen by 36.3 per cent cumulatively from 2020 to 2022. In the longer term, it aims to ensure that the cost of medical insurance and takaful remains affordable. But couldn’t BNM have had a stakeholder’s discussion and sought views and measures that will help consumers and the industry? It is best to postpone this idea till we have everyone on board – the consumers, insurers, think tanks and hospitals!

Reference:

Galen: New health insurance co-payments expose households to financial catastrophe, Codeblue, 5 July 2024

Navy Ship Parts Gone to Waste!

Attributed to changes in equipment or brands, and the decommissioning of several ships, over RM384 million in navy ship parts have gone to waste. That’s according to the latest AG’s report. The report also said that in some cases, equipment on ships had been swapped and changed with other brands, rendering the spare parts unusable. Another reason was that several patrol ships were decommissioned and assigned to other agencies.

It added that these parts were produced from 1969 to as recently as 2021. The A-G’s report also said that the navy’s ships were not being maintained according to schedule, and that six of 10 sample ships had not been refitted. This was because of the navy’s high operational requirements and a backlog at dockyards with the maintenance of other ships still pending. It warned that failure to follow the maintenance schedule could lead to issues going unidentified and even pose a safety risk.

Source: https://en.wikipedia.org

The A-G’s report mentioned that the navy needs to ensure that the maintenance of assets goes according to schedule, and come up with an action plan for the unused spare parts. 

Personally, I find this ridiculous to say the least. We maintain our cars regularly with scheduled service and change parts according to the car manual. So, how is it that we can’t do the same for our ships? Apparently, this problem is also prevalent in the British Navy. That doesn’t mitigate our issue. Can’t we do better?

Reference;

RM384mil in navy ship parts gone to waster, says A-G’s report, FMT Reports, 4 July 2024

The Irony of Prolintas Bribery Scandal

THE great irony of the Projek Lintasan Kota Holdings Sdn Bhd (Prolintas) bribery scandal is that the organisation was hailed as a pioneer in its efforts to work closely with Malaysian Anti-Corruption Agency (MACC) to stamp out illicit dealings.

In September 2023, the highway concessionaire was lauded for the publication of the Malaysian Anti-Corruption Commission (MACC) Core Function Implementation Procedures Guidebook. This was designed specifically for the guidance of the integrity and governance unit of government investment companies (GIC).

The launch of the book organised by Prolintas was officiated by the MACC chief commissioner on Integrity Day 2023. As reported by the New Straits Times, the initiative is symbolic of the on-going joint venture mission between Prolintas and the MACC to promote transparency, integrity and effective governance within the scope of GIC.

Fast forward several months, news of Prolintas CEO and associated personnel being detained by the MACC have become front page material. This is for alleged bribes reportedly given as a “reward” for the awarding of contracts for two expressways in the Klang Valley with one project valued at over RM1 bil and the other at over RM650 mil.

To put these alleged wrongdoings into context, they were committed with a highly-touted ISO certified anti-bribery management system in place at Prolintas. The highway concessionaire crowed this on its website:

Prolintas Group of companies has successfully maintained its certification of ISO 37001 Anti-Bribery Management System (ABMS) with Zero Non-Conformance Report (NFC) following a rigorous assessment in 2023.

The recent recertification is valid from 2023 to 2026, further solidifying Prolintas’ commitment to maintaining high standards of integrity and corporate governance through this period.

The comprehensive anti-bribery evaluation conducted by SIRIM QAS International underscores PROLINTAS’ dedication to integrity and commitment to combating corruption in all aspects of our business interactions and daily operations with stakeholders.

We continue to implement ongoing anti-corruption efforts and robust control measures to identify and prevent potential instances of bribery misconduct.

The above statement was updated recently on its website.

It seems farcical that such “rigorous” application of ISO-certified measures failed to detect the alleged abuses and seemingly systemic corruption. Or did the accused use their close working relationship with MACC to their benefit? By publishing the guidebook, they are privy to “insider knowledge” or at least on the inner workings of the MACC. Whatever the case maybe, this latest scandal will surely undermine the MACC and ISO standings in the eyes of the public. The previous measures just smack of lip-service if these latest allegations of corruption are true.

Reference:

The irony of Prolintas bribery scandal: company was hailed as “pioneer” in graft fight 9 months earlier, R. Bala, Focus Malaysia, 27 June 2024

 

 

Is There a 90 Percent Drop in MM2H Applicants?

Industry experts and economists are voicing concerns about the latest guidelines, which mandate property purchases and require holding them for at least 10 years. The revised MM2H scheme mandates higher bank deposits ranging from US$150,000 (RM700,000) to US$1 million (RM4.7 million), alongside property investments between RM600,000 and RM2 million.

While the introduction of mandatory property investments can be seen as a positive step to boost the real estate sector, the requirement to hold these properties for at least 10 years is proving to be a significant deterrent. The Kepong MP reported a 90 percent drop based on information from agencies processing MM2H applications.

Source: https://mm2h.co

The previous MM2H scheme, required bank deposits of RM300,000 for those below 50 and RM150,000 for those above, without a mandatory property purchase. This approach attracted a diverse group of retirees and expatriates, contributing RM58 billion to the local economy over 17 years.

The MM2H scheme needs to strike a balance between attracting high-net-worth individuals and providing flexibility to make Malaysia a desirable retirement destination. Reassessing the 10-year holding requirement could be a crucial step in revitalising interest. Others include purchasing properties in the first place. Many just want to rent a place. What’s wrong with that?

Reference:

MP sounds alarm over 90pct drop in MM2H applicants, Malaysiakini, 30 June 2024

Malaysia Ranked Second Worst on Work-Life Balance!

Malaysia was ranked the second worst country for work-life balance out of 60 countries in the Global Life-Work Balance Index. Compiled by a human resources solutions company known as Remote, the index reviewed the 60 highest GDP nations with data collected and analysed in March 2023. Malaysia was ranked 59 out of 60 with a meagre score of 27.51 out of 100, placing us right above Nigeria which scored 17.03.

The study recorded an average workweek of 40.8 hours along with an annual leave of 19 days, and a minimum wage of only USD1.07 per hour. Malaysia’s score was 5.71 out of 10 in regards to the happiness index along with a score of 9 out of 100 for the LGBTQ+ inclusivity index.

Source: https://www.wikiimpact.com

Malaysia ranked the lowest amongst the Asian countries, when compared to Singapore who placed 19 and Taiwan at 16. The country that took the crown for having the best work-life balance unsurprisingly went to New Zealand with a score of 79.35. The second position was Spain with a score of 75.55 and the third was France with 75.34. 

According to the study, the index was put together based on workplace-related factors such as statutory annual leave, sick pay, maternity leave, healthcare, and overall happiness.

The government is committed to ensuring that Malaysians have a healthy, safe and more humane workplace and working conditions, said Human Resources Minister when confronted with the data. The government has been making various improvements towards that goal including ratifying the Convention C155 of the International Labor Organization (ILO).

Our position, so low in the index, is not surprising but I am mortified that we are second worst. This is primarily the private sector. The public sector balance is incredibly good! In the private sector, there are companies that exploit young workers with low wages, extended hours and limited benefits for annual leave, sick pay and others. The MEF and the Human Resources Ministry must map-out how conditions could be improved that we are not too far behind other ASEAN nations like Singapore.

References:

Malaysia ranked second worst country for work-life balance out of 60 countries, The Sun, 

26 June 2024

After Malaysia ranked worst among 60 countries for work-life balance, HR minister says govt committed to ensuring humane workplace, Malay Mail, 27 June 2024

“Forwards” – Is This BNM’s Favoured Tool?

BNM has been increasingly using currency forwards to support the ringgit, easing pressure on its foreign-exchange reserves. Bank Negara Malaysia’s net forward FX position widened to negative US$27.7 billion (S$37.5 billion) in April – reflecting a record net short position in its the forward books – showing a preference for using that avenue to bolster its currency. At the same time, its foreign exchange reserves are little changed this year (2024).

The central bank has been busy propping up the ringgit in recent months after the currency tumbled to the weakest since the 1997-98 Asian Financial Crisis in February on concern over a worsening export outlook. The ringgit pared losses in March after Bank Negara appealed for state-linked firms to repatriate and convert their foreign investment income.

Source: https://en.wikipedia.org

While Bank Negara’s net forward FX position has been becoming more negative, the nation’s gross foreign reserves were US$113.6 billion at the end of May, almost unchanged from the end of 2023. The ringgit is currently trading at 4.7095 per dollar, having strengthened from a 26-year low of 4.8053 set in February. The currency has gained 0.3% in the first quarter. 

The central bank’s net short position in its forward book may make the ringgit more vulnerable to a selloff if there’s a sudden bearish shift in global sentiment. The central bank’s net foreign reserves excluding gold are estimated to be around US$67 billion, well below its short-term external debt of around US$112 billion. 

What is a currency forward?

Currency forwards are OTC contracts traded in forex markets that lock in an exchange rate for a currency pair. They are generally used for hedging, and can have customized terms, such as a particular notional amount or delivery period. Unlike listed currency futures and options contracts, currency forwards do not require up-front payments when used by large corporations and banks. Determining a currency forward rate depends on interest rate differentials for the currency pair in question.

Malaysia’s central bank isn’t alone in utilising its forward book to support its currency. The Reserve Bank of India had a net short position in forwards of US$16 billion in April as it sought to support the rupee. 

Bank Negara’s net forward FX positions at a historical low “will mean USD/MYR will remain more volatile than some of its ASEAN peers as the capacity to intervene is more limited” according to Bank of America in Singapore. However, it doesn’t mean the Malaysian ringgit is vulnerable to a currency crisis. The ringgit is not overvalued, if anything it is undervalued, and the current account is in surplus soon.

The key in all this still remains our OPR is 2.25-2.50% below the Fed Fund rate, which is not likely to be cut in the immediate future. Meanwhile, inflation is moving up with diesel subsidy reduced and RON95 facing the same prospect.

References:

Forwards become Malaysia’s favoured toll for boosting ringgit, Bloomberg, 20 June 2024

What a currency forward is, how it works, example, use in hedging, Marshall Hargrave, Investopedia, updated 24 May 2022

STEM Graduates: Which Countries Lead the Way?

Throughout most of the 20th century, the United States and Europe—particularly Russia, Germany, the UK, and France—were considered the global centers of scientific and technological education. In the last few decades, however, new players have emerged. In Asia, countries like China, India, South Korea, and Japan rapidly expanded their STEM education programs and today produce significant numbers of graduates in STEM fields. 

Figure 1 below shows the top eleven countries by number of STEM graduates in 2020. 

Figure 1 reveals a new shift in the global distribution of STEM graduates compared to the 2016 World Economic Forum report. The WEF report identified China, India, the United States, Russia, Iran, Indonesia, and Japan as the top seven STEM graduate-producing countries in the world. As of 2020, however, we find that Brazil and Mexico surpassed Iran and Japan in the number of graduates in STEM fields.

Figure 2 depicts the increase in STEM graduates in Brazil, Mexico, and Japan from 2015 to 2020. While Japan’s output of STEM graduates is relatively constant over the time period, Brazil’s number of graduates grew by ~26% and Mexico’s grew by ~30%. As higher numbers of STEM graduates have historically been an indicator of future economic growth, these strides in advancing STEM education suggest that Brazil and Mexico may be positioned for future success.

While the number of STEM graduates may serve as an indicator of future scientific and technological capacity, it fails to account for other differences in the STEM ecosystems of different countries. In Figure 3, the number of STEM graduates as a percentage of total graduates for each country to provide another perspective through which to understand the differences between countries’ STEM education ecosystems.

As shown in Figure 3, China leads in the percentage of students in STEM fields, with over 40 percent of college graduates obtaining a STEM degree. Not far behind, Russia, Germany, Iran, and India all produced more than 30 percent of graduates in STEM fields, with Germany closely rivaling Russia. Moreover, just 20 percent of graduates in the United States obtain a STEM degree, behind both Mexico and France.

In 2021, Malaysia said it wanted to raise its proportion of STEM students to 60%. In 2020, it was reported the percentage of students in STEM was 47.2%. But salaries are low for STEM graduates (RM5,000 or thereabouts) and opportunities are limited. In Singapore it is $4,000 for a fresh graduate. So, it is opportunities, salaries, an ecosystem that is supportive and a cohesive STEM education system.

Reference:

The global distribution of STEM graduates: which countries lead the way? Brendan Oliss, Cole McFaul and Jaret C. Riddick, CSET, 27 November 2023

Eliminate The Income Tax with Tariffs?

The idea of eliminating the income tax is far from practical. Recently, former President Donald Trump suggested replacing the federal income tax with tariffs on imports. In a private meeting with GOP lawmakers, Trump floated the idea of a so-called “all-tariff policy.” Broadly, the concept aligns with Trump’s long-standing protectionist trade agenda.

Tariffs can be thought of as taxes imposed on imported goods. They are ostensibly paid by importers. But the costs are typically passed down to consumers through higher prices. When tariffs are applied broadly, as Trump appears to be suggesting, the price increase affects a similarly broad set of goods. Retailers and wholesalers will pass on those added expenses to consumers, leading directly to higher prices.

Source: https://www.financialexpress.com

Such price hikes in everyday goods disproportionately impact low and middle-income households. This converts a progressive income tax into a regressive tax, akin to a sales tax. As such, in the near term, the only groups benefiting from the elimination of a broad-based income tax and the ratcheting up of tariffs are those folks at the higher end of the socioeconomic spectrum.

Everyday necessities, like clothing, food, and household goods, as well as significant purchases like electronics, vehicles, and equipment, will immediately increase in price. Even goods entirely produced domestically, and thus not directly subject to tariffs, may see price hikes—as demand outstrips supply.

For example, if a broad 25% tariff on all imported goods is placed, the cost of every imported good will go up by at least 25%. Retailers and manufacturers will have passed that added expense on to consumers. This will cause consumers to choose domestically-produced lower cost goods, to the extent they are available. As demand shifts to American made goods, in the absence of a matching level of increased production in every sector of the economy all at once, there will be more demand for domestic goods than supply. Prices will increase just as they did during past supply chain crunches.

In essence, tariffs act as a regressive tax. They were broadly eliminated in favour of an income tax in the late 19th century for just that reason. Their regressive nature means that lower and middle-income consumers would bear the brunt of the cost of financing the public services.

In 2024, the U.S. federal government has collected $3.29 trillion. In 2023, imports totaled approximately $3.9 trillion. A back of the envelope math will quickly illustrate that replacing the former with a tax on the latter is infeasible. An average tariff rate of nearly 85% on all imports would be required to replace income tax revenue with tariffs.

Export countries would unquestionably retaliate with their own tariffs, potentially leading a worldwide trade wars that further increase the costs of goods and further damaging the global economy. The fluctuation in import volumes based on economic conditions would make tariff revenue unreliable compared to the comparatively more stable income tax system—potentially leaving the federal government unable to fund basic services.

The U.S. has been there before. The Smoot-Hawley Tariff Act of 1930 raised U.S. import duties with the goal of protecting American farmers and other industries from foreign competition. The Smoot-Hawley Tariff Act is now widely blamed for worsening the severity of the Great Depression in the U.S. and around the world. The law is commonly referred to as the Smoot-Hawley Tariff or the Hawley-Smoot Tariff. It was sponsored by Sen. Reed Owen Smoot (R-Utah) and Rep. Willis Chatman Hawley (R-Ore.).

• The Smoot-Hawley Act was created to protect U.S. farmers and other industries from foreign competitors.

• The Smoot-Hawley Act increased tariffs on foreign imports to the U.S. by about 20%; at least 25 countries responded by increasing their own tariffs on American goods.

• Global trade plummeted, contributing to the ill effects of the Great Depression.

• Prior to signing the Act, more than 1,000 economists urged President Hoover to veto it.

• Hoover's successor, President Franklin D. Roosevelt worked to reduce tariffs and was given more authority to negotiate with heads of state under the Reciprocal Trade Agreements Act of 1934.

So, the dumb and demented Trump is at it again. And the Democrats have a “ghostly” Joe Biden who couldn’t finish sentences at the last debate. When will America wake-up, two silly clowns to choose from? It impacts the world not just America!

References:

Can Trump eliminate the income tax? Maybe with an 85% tariff, Andrew Leahey, Forbes, 14 June 2024

What is the Smoot-Hawley Tariff Act? History, Effect and Reaction, Will Kenton, Investopedia, updated 23 May 2024-07-02

Is Obesity a Serious National Disease?

A recent survey by the Health Ministry found that over 50% of Malaysians are overweight. Most of them are living unhealthy lifestyles. The survey found that the percentage of overweight or obese adults rose alarmingly from 9.1% in 2011 to 54.5% in 2023.

The Small and Medium Enterprises Association of Malaysia (Samenta) and the Malaysian Employers Federation (MEF) have raised the alarm. A nation may not progress if half its people are obese. No work will get done.

The MEF, which saw an exponential increase in its membership with “over 5,000 organisations from various industries and sizes and 22 industry groups’ associations” under its wing believes in the role employers can play to rid the Malaysian workforce of this ‘disease’. Employers could help encourage their employees to reach the health ministry’s recommended goal of walking 10,000 steps a day.

Source: https://en.wikipedia.org/wiki/Obesity

We are plagued by heart disease, cancer, diabetes and hypertension. We see overcrowded health facilities despite building more hospitals and clinics throughout the country. The drug companies are having a field day. Half the people are suffering from obesity – which is the root cause of many diseases, illnesses and health complications. In 2024, the (projected) revenue of the pharmaceuticals sector in Malaysia is expected to reach $1,618m. 

Meanwhile, people of all races and religions in Malaysia are clearly overindulging in unhealthy food and drinks. This is true, even during Ramadan.

In some government departments, employees are said to take several meal breaks: breakfast, a 10am break, lunch, teatime and even a bite over teh tarik after work at 5pm.

In Thailand, for example, each police personnel are given a uniform. If the uniform does not fit you, you cannot exchange it for a larger-size replacement. Instead, you are given one to two weeks leave to go exercise, eat right and get back into shape to fit the uniform. Many of our defence and security uniformed personnel are clearly obese. They may not be fit to defend the nation, let alone curb the increasing crime rate.

Some blame the fast-food chains. Others will say they do not have much choice as both working parents are left with no time to cook healthy meals at home. The high obesity rate may also be an indicator of the rising cost of living or high poverty. Obesity leads to ill health and under-performance and directly affects the nation’s productivity. 

We need a ‘revolution’ to reset our poor habits and change the landscape of work, play and eating. The Health Ministry needs to work-out a campaign and incentivise people to eat, work and play right. There must also be penalties for high BMIs. How do we finance it? We will get pharmaceutical companies to contribute 2% of their revenues to an Obese Fund!

Reference:

Obesity a serious national disease in Malaysia! JD Lovrenciear, ALIRAN, 30 May 2024

Why Did Rishi Sunak Call for an Election?

After 14 years in power, the Conservative Party faces a likely wipeout unless there is an unprecedented reversal in its dismal opinion polling. The Conservatives are blamed by many for a Britain widely seen as being in decline.

Real wages have stagnated for well over a decade; health care waiting lists and house prices are soaring; sewage is being pumped into the rivers and sea; dysfunction blights everything from the country’s railways to its prisons; and Brexit — once the Conservatives’ cause célèbre — is now widely deemed such a failure that most politicians prefer not to discuss it at all.

Source: https://en.wikipedia.org

Because of election law, Sunak had to call the vote at some point this year. Even so, his decision to act immediately — while his party languishes a colossal 20 points behind the opposition Labour Party — has deeply angered many of his own lawmakers. Many observers are wondering: why now?

Rishi Sunak has deployed the only weapon left in his arsenal: the element of surprise. At the very least, he fired the starting pistol on his own terms, and showed that he has the backbone to go for it proactively. But even the prime minister’s traditional allies seemed to share a sense that Sunak may also have sounded the final bell on 14 years of Conservative rule.

The right-wing newspaper The Daily Telegraph went with: “Things Can Only Get Wetter,” a reference to a  1990s British dance classic. That was the song played by demonstrators at the gates of No. 10 Downing St., which threatened to drown out Sunak’s address. 

Electoral history is full of shocks, of course, but no party in the history of British politics has reversed anything close to the current polling chasm this close to a vote. The current landscape is bleak for the Conservatives. But recent slivers of good news may mean this actually is as good as it might get.

Inflation has fallen to 2.3% — down from a 40-year high of 11% in late 2022, the worst in the developed world. (Inflation in the United States was 3.4% in April 2024.)

The prime minister may also be hoping for a polling boost from the launch of his flagship immigration policy, a plan to deport asylum-seekers to Rwanda. Amnesty International called it “a stain on this country’s moral reputation” and a “national disgrace.” But 42% of voters — and 58% of Conservative voters — think immigration here is too high, according to Redfield & Wilton Strategies, a London pollster and consultancy. Net migration to the United Kingdom has risen sharply, despite Conservative promises that Brexit would do the opposite.

Sunak’s supporters also claim that, while the prime minister might be unpopular, the public doesn’t seem to have warmed to his chief opponent, former prosecutor Keir Starmer. Despite his party polling well, the Labour leader’s personal net favorability rating is minus 17 (vs. Sunak’s minus 51), according to YouGov.

So, could Sunak win on 4th July?

It is easy for me to outline but perhaps the following could have been his strategy when he first came into power:

(i) reduce or eliminate waiting times at hospitals. Fund NHS fully and build/re-build hospitals;

(ii) get a grip on cost of living by having subsidies on electricity/utility tariffs;

(iii) process all illegals on French soil and stop all boats from landing;

(iv) build/privatise land for new housing; 

(v) build the high-speed rail line to Manchester;

(vi) eliminate issue of homelessness with social services funding; 

(vii) refuse to support foreign military ventures of the U.S., like in the Ukraine; and

(viii) find new taxes to fund above costs, e.g. use the Tobin tax and “excess” profit tax on oil companies, pharmaceuticals and banks.

Was that really too hard to do? Actually not, if you are from Oxford and Stanford!

Reference:

His party is deeply unpopular so why did British PM Rishi Sunak just call an election? Alexander Smith, NBC News, 23 May 2024

Motac: 1Q2024 Tourism Earnings Top RM22b!

Malaysia welcomed over 7.56 million foreign tourists in the first four months of the year, marking a growth of 27.5% compared to the same period last year. Tourism, Arts and Culture Minister noted that this achievement places Malaysia as the second-highest recipient of foreign tourists in Asean, behind Thailand with 12 million tourists and ahead of Vietnam with 6.2 million, Singapore with 5.71 million, and Indonesia with 4.1 million during the same period.

During the first quarter, Malaysian tourism contributed RM22.23 billion to the national coffers, reflecting a 66% increase compared to the first quarter of 2023. In 2023, total tourism revenue amounted to RM71.31 billion, up from RM28.23 billion in 2022.

Motac has implemented a comprehensive strategy to further boost the tourism sector. This includes active participation in international tourism exhibitions, conducting roadshows in key markets such as Australia, China, Europe, India, Japan, Korea, the Gulf and Nordic countries.

The ministry is leveraging digital channels, such as social media to enhance visibility among tourists and travel agents in target markets, while also tailoring tourism products to specific segments and market demands, as well as improving accessibility with increased flight frequencies and seating capacity.

Discussions with the Ministry of Home Affairs and the Immigration Department is on-going to streamline entry processes for foreign tourists, potentially introducing visa-on-arrival (VOA), multiple-entry visas, eVisas and transit visas.

The number of Chinese tourists visiting Malaysia more than tripled to 1.12 million from December 2023 to April 2024, compared to 332,144 tourists during the same period the previous year. Meanwhile, Indian tourist arrivals also increased by 82.3% year-on-year to 380,737 for the same period, compared to 208,907 tourists previously.

This augurs well for the hospitality, transport, retail and other related sectors. Motac seems to have got its mojo back!

Reference:

Motac: 1Q2024 tourism earnings top RM22b, tourist arrivals up 27.5%, TheEdge / CEO Morning Brief, 25 Jun 2024

Did British Colonialism Kill 100 Million Indians in 40 Years?

Recent years have seen a resurgence in nostalgia for the British empire. High-profile books such as Niall Ferguson’s Empire: How Britain Made the Modern World, and Bruce Gilley’s The Last Imperialist, have claimed that British colonialism brought prosperity and development to India and other colonies. Two years ago, a YouGov poll found that 32 percent of people in Britain are actively proud of the nation’s colonial history.

This rosy picture of colonialism conflicts dramatically with the historical record. According to research by the economic historian Robert C Allen, extreme poverty in India increased under British rule, from 23 percent in 1810 to more than 50 percent in the mid-20th century. Real wages declined during the British colonial period, reaching a nadir in the 19th century, while famines became more frequent and more deadly. Far from benefitting the Indian people, colonialism was a human tragedy with few parallels in recorded history.

Source: https://en.wikipedia.org

Experts agree that the period from 1880 to 1920 – the height of Britain’s imperial power – was particularly devastating for India. Comprehensive population censuses carried out by the colonial regime beginning in the 1880s reveal that the death rate increased considerably during this period, from 37.2 deaths per 1,000 people in the 1880s to 44.2 in the 1910s. Life expectancy declined from 26.7 years to 21.9 years.

In a recent paper in the journal World Development the estimate of the number of people killed by British imperial policies during these four brutal decades show some 50 million excess deaths occurred under the aegis of British colonialism during the period from 1891 to 1920.

How did British rule cause this tremendous loss of life? There were several mechanisms. For one, Britain effectively destroyed India’s manufacturing sector. Prior to colonisation, India was one of the largest industrial producers in the world, exporting high-quality textiles to all corners of the globe. The tawdry cloth produced in England simply could not compete. This began to change, however, when the British East India Company assumed control of Bengal in 1757.

According to the historian Madhusree Mukerjee, the colonial regime practically eliminated Indian tariffs, allowing British goods to flood the domestic market, but created a system of exorbitant taxes and internal duties that prevented Indians from selling cloth within their own country, let alone exporting it.

This unequal trade regime crushed Indian manufacturers and effectively de-industrialised the country. As the chairman of East India and China Association boasted to the English parliament in 1840: “This company has succeeded in converting India from a manufacturing country into a country exporting raw produce.” English manufacturers gained a tremendous advantage, while India was reduced to poverty and its people were made vulnerable to hunger and disease.

To make matters worse, British colonisers established a system of legal plunder, known to contemporaries as the “drain of wealth.” Britain taxed the Indian population and then used the revenues to buy Indian products – indigo, grain, cotton, and opium – thus obtaining these goods for free. These goods were then either consumed within Britain or re-exported abroad, with the revenues pocketed by the British state and used to finance the industrial development of Britain and its settler colonies – the United States, Canada and Australia.

Britain nor any other imperial power of that period – France, Belgium, Russia, Netherlands, Germany or Japan – have acknowledged their misdeeds. It is also the same with the U.S. – the “beacon” of democracy. It is when they do that reconciliation and restoration could begin. When will that be? When more people in those countries learn of the inhumanity of their forefathers that some form of apology and reparations could begin! Until then, the former imperial powers will continue to behave badly.

Reference:

How British colonialism killed 100 million Indians in 40 years, Dylan Sullivan and Jason Hickel, Al Jazeera, 2 December 2022