Don-Elon: A Bromance with an Explosive End?

A no-holds-barred and very public blow-up between the world’s richest man and the President of the United States has had social media stunned in recent days. Elon Musk appears to have cooled the spat somewhat – deleting some of his more incendiary social media posts but dear Donald appears to be in no mood to make up. 

Tensions erupted over Trump’s “One Big Beautiful Bill” (OBBB). The OBBB proposes extensive tax cuts which could add roughly US$3 trillion (A$4.62 trillion) to the US national debt. Musk criticised the OBBB as “disgusting abomination” that would “burden American citizens with unsustainable debt”. Trump returned fire, suggesting “Elon was ‘wearing thin’.

In a dramatic escalation, Musk responded by calling for Trump’s impeachment. Musk also tweeted allegations that Trump was implicated in the Epstein files related to child sex offender Jeffrey Epstein.

 

Source: https://en.wikipedia.org

Why has the much-hyped “bromance” between Musk and Trump suddenly ended? And what was the basis of their alliance in the first place? 

Like many billionaires, Musk had previously been hesitant to get involved in frontline politics. Across 2020-2024, Musk engaged with accounts sharing MAGA and far-right conspiracy theories. These include the antisemitic Great Replacement Theory, and the related South African white genocide conspiracy. Musk’s posts also show the obsession with opposing diversity, equity and inclusion (DEI) policies characteristic of the MAGA movement. After endorsing Trump, Musk spent US$288 million (A$444 million) supporting Trump’s election and appeared at campaign events around the country. 

There were also clear practical benefits for both men. Trump gained the financial backing of the world’s wealthiest man. Musk gained not only unparalleled access to the US president, but also a role leading the new Department of Government Efficiency (DOGE). 

In the early months of the Trump administration, Musk cut government programs and employees at a remarkable rate. The USAID program was particularly hard hit, as were the Department of Education and the Consumer Financial Protection Bureau.

As the spending cuts picked up pace, Musk began to attract more controversy. Critics questioned the apparent power wielded by the unelected billionaire. Musk’s ties to the far right were also in the spotlight after he appeared to perform two “Roman salutes”, which many observers believed to be a Nazi salute. 

Musk’s apparent rampage through government did not last long. As Trump’s executive appointees assumed control of their departments, Musk and DOGE experienced increasing resistance. After a series of fractious cabinet meetings, Trump reportedly reduced the power of DOGE in March. 

Political attention was also clearly affecting Musk’s businesses. The negative publicity has significantly damaged the Tesla brand, leading to declining sales around the world and repeated falls in Telsa’s share price. 

On May 1, Musk announced he would be leaving DOGE, claiming the department had saved the government US$180 billion (A$277 billion) in spending. This number is likely an exaggeration. Musk departed his role in a muted White House ceremony, where Trump thanked him for his service and presented him with a ceremonial “golden key” to the White House. 

Trump and Musk had originally claimed that the US$2 trillion (A$3.02 trillion) in DOGE savings could be used to fund a substantial tax cut. With the efficiency savings not eventuating, Musk worried the OBBB would significantly increase US public debt. Unable to convince Trump or other Republican legislators, Musk took to X, launching a “Kill the Bill” campaign that ultimately led to his incendiary showdown with Trump. For his part, Trump has belittled Musk, suggesting Musk only opposed the OBBB because it cut subsidies for electric vehicles.

Trump has used and discarded many other powerful figures in his chaotic political career. Musk has more power than most and might be able to strike back at Trump. Yet, with his public reputation and brands already tarnished, Musk would be ill-advised to pick further fights with Trump and his adoring MAGA movement. 

More concerning are the prospects for democracy. With wealth and power continuing to concentrate in a handful of billionaires, voters appear reduced to the role of viewers forced to watch the reality TV drama unfold. If only this would be a TV series, we could have a couple of seasons up to 2028!

 

Reference:

The blow-up between Elon Musk and Donald Trump has been entertaining, but how did things go so bad, so fast? Henry Maher, The Conversation, 8 June 2025

Why are Streets of India Dirty?

Usually what happens in India is a politician wakes up and launches a cleanliness “drive” with fanfare. They ostentatiously start sweeping a street and speak solemnly about civic duty while the media takes photos. The next day it’s over and things go back to how they were before. I was in India recently and the streets of Bangalore were dirty, and traffic was truly unruly. 

But not in Indore in Madhya Pradesh. From 2017, when it won the prize for being the cleanest city in the country, it kept winning for eight straight years, until 2024. “When you come out of the airport, it feels as though you aren’t in India, it’s so clean,” said a corporate executive who travels to Indore frequently for work.

 

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

Before 2017, Indore was ranked 25th of 471 towns and cities in the government’s cleanliness rankings. And AI attributes that cleanliness disparity is because of population density, waste management malpractices, cultural issues, public awareness (or the lack of it), economic factors and urbanisation. 

The transformation for Indore has covered many aspects of public life, from the way waste is removed and treated to the army of about 850 sweepers and the thousands of differently coloured bins that line even the smallest alley. In many cities, families will keep their home scrupulously clean, but a few feet from their front door rubbish is left lying around. That’s someone else’s responsibility. 

Indore was once dotted with fetid garbage dumps where stray cows, pigs and dogs rootled around and added their excrement to the pile, attracting swarms of flies. But now in the early morning, pavements and road dividers are hosed down with recycled water. The garbage vans roll out playing a jingle called Indore Has Become Number One. As the sound approaches, people emerge from their homes with their rubbish. Using GPS tracking, a team of workers monitor the vans’ movements to make sure they are doing their job and not cutting corners. The local government says 100% of household waste is segregated into wet, electronics, plastics, non-plastic, biomedical and hazardous materials. 

Residents have taken up cleanliness as their own personal responsibility, according to a petrol pump owner. “I’ve seen people stopping someone who littered. I’ve seen drivers stop their car when they see rubbish on the street to remove it. It’s become a kind of mission that inspires everyone,” he said. 

It took intensive public awareness campaigns to bring about the new behaviour. Schoolchildren were asked to take oaths to keep the city clean. CCTV cameras were installed and anyone who was identified as having dropped rubbish was fined. Cleanliness competitions were launched. Religious leaders were roped in to invoke religious texts to back up the need for hygiene. During the Hindu festival of Holi, when streets and buildings become stained with bright colours, extra vehicles and water tankers come out to hose the city down. 

Indore’s success could be replicated elsewhere in India if local governments dedicate themselves to it. In Singapore, litterbugs do community service and carry placard to shame them. And it has worked. So, we need reward-penalty mechanism to change behaviour of ordinary folks in Malaysia. And it can be done. 

Reference:

I’ve seen people stop their cars to pick up litter’: how one city cleaned up its streets, Amrit Dhillon, The Guardian, 4 April 2025

Singapore Focuses on AI with 500 Projects

About 800 new training opportunities and 500 new projects will benefit 1,000 enterprises as Singapore doubles down on artificial intelligence (AI). Both mid-career AI novices as well as seasoned practitioners could have a stab at 400 training places at national programme, AI Singapore (AISG) over the next three years. Another 400 training places will be made available by companies ranging from Amazon Web Services (AWS) and Oracle to Microsoft and Singtel. The new places will add to Singapore’s current pool of more than 6,000 AI professionals, said the Infocomm Media Development Authority (IMDA).

To date, at least 26 AI Centres of Excellence have been set up by organisations to drive AI innovation activities. These centres are often hubs for experimentation, training and sandboxing.

Source: https://en.wikiversity.org

About 300 of the new 800 training places will be offered over the next two years through an enhanced AI Apprenticeship Programme (AIAP) under AISG. The six-month curriculum will focus on practical industry needs. Since the programme started in 2018 to groom local AI talent, more than 410 graduates over 16 cohorts have been trained. More than 90% of its trainees were hired after graduation.

AISG will also start the Pinnacle AI Industry Programme, which will train 100 local AI practitioners into “expert model builders” over the next three years. Companies may nominate their AI-functional employees for the six-month programme. These AI professionals will get hands-on training in various stages of a large language model development life cycle, including data management, model training and development, and work on AISG’s regional-focused model, Sea-Lion.

Singapore is on track to triple its pool of tech talent over five years to 15,000 by 2028, boosted by a 25% jump in the past year through various initiatives. More than 20,000 locals have been helped into tech jobs and 320,000 individuals have picked up technology skills.

Enterprises, however, are wishing for a quicker pace. Only 12% of small and medium-sized enterprises (SMEs) are in the intermediate stage of using AI. About 47% of its respondents in a survey say the local AI talent pool is insufficient to meet business needs. Among the recruitment hurdles, 51% noted high salary expectations, and 47% cited skills mismatch. To plug their immediate needs, 62% of the firms were open to hiring talent from abroad.

Will Malaysia be focused? Not likely. Why? We are in the “3R” era, which just raises costs and reduces revenues! 3R here is “retro, rhetoric and reset”. Is running on a treadmill our forte?

 

Reference:

Singapore doubles down on AI with 500 projects, Economy, The Star, 29 May 2025

Progressive SST Framework by 1st July!

The Ministry of Finance (MOF) has announced that the implementation of the expanded Sales and Service Tax (SST) will take effect on 1 July 2025. Under the revised framework, a sales tax of 5% to 10% will be applied to selected non-essential items. 

Concurrently, the service tax (6% or 8%) will be broadened to cover additional service categories, including rental or leasing, construction, financial services, private healthcare, private education and beauty services. The government has expanded the scope of SST to strengthen the fiscal position by increasing and broadening the revenue base. A portion of the additional revenue will be redirected towards enhancing public services, while also creating fiscal space.

 

Source: https://en.wikipedia.org

To support a progressive and targeted approach, the government has structured the SST into two tiers (5%, 10%) based on the nature of necessity. Essential goods such as bread, cooking oil, milk, and medicine will remain exempted from tax. Instead, high value or premium products such as imported seafood (salmon, cod fish) and industrial machinery will be subject to SST. The expansion also targets specific services predominantly consumed by higher-income groups or non-residents. These include selected banking services, private healthcare for foreigners and private education where annual fees exceed RM60k. 

To minimise the impact, the government has introduced several reliefs and facilitative measures. Notably, key exemptions have been granted to business-to-business (B2B) transactions and group relief arrangements. Additionally, construction services, leasing and rental of residential buildings are also exempted. It is still not clear on the exemptions, especially on construction services with 6% SST. It (exemption) is probably on residential buildings. 

The government aims to increase fiscal revenue by RM5 bil, at 0.24% of gross domestic product (GDP), with an annual target of RM10 bil per year (0.48% of GDP). Rather than reintroducing the GST at 6% with an uplift of RM20 bil in revenue, the government has opted to enhance the SST, as it can be implemented quicker. 

The impact on inflation according to MOF is expected to be limited. According to MOF, the consumer price index is projected to remain within the forecast range of 2.0-3.5%. That must be wishful thinking! Once you raise the price for selected items, prices rise for all items! 

With the SST, 2025 fiscal deficit target is maintained at 3.8% of GDP (2024: -4.3% of GDP). 

The real issue will be inflation. While the Government seeks to increase revenue, there is no corresponding reduction in expenditure. Why can’t we have a DOGE or MAMPU or UKAS to review all operating expenditure and pare it down by 10% per annum or at least for one year?

 

References:

MOF rolls out progressive SST framework, aiming to raise RM10 bil annually, CS Ming, Focus Malaysia, 10 June 2025

Sales Tax Revision and Service Tax Expansion 2025, Crowe Malaysia, 10 June 2025

Larger Table or Big Umbrella?

Former premier Dr Mahathir Mohamad (“MM”), has reminded us that Malays must unite under a “big umbrella.” That they are weak, their future hangs on the hinges of political protection and communal shelter. It’s a familiar script. Repeated by this man for decades. People have changed and moved on. On the ground, people are reasonable to each other whether they are Malays or otherwise. Many have no problem to share meals together. 

The Malays don’t need to be told they are weak. They need to be reminded that they are already strong and getting even better. They don’t need protection from others. They need protection with others - from the real threats of corruption, rising costs, broken institutions, and educational inequality.

 

Source: https://en.wikipedia.org

They don’t need to be frightened into a corner by leaders who insist that unless they huddle under a (racial) umbrella, they will perish. They are a confident race and could conquer the world if you let them. So, sell hope not despair. Sell courage instead of fear. Sell achievements not disasters! 

MM’s “big umbrella” narrative is not protection but more like a cage. Under that umbrella, there’s no room for unity, only fear of the rain. But Malaysia has changed. The people are learning to walk in the rain, together. Are Malays weak when they control all levers of power – legislative, executive and judiciary. Not to mention the police, army and the civil service. 

We are not blind to the reality of race in this country. We know there are wounds. We know there is history. But what good is history if it becomes a prison? Malaysia is now a nation where a Malay woman can lead a multiracial NGO, a Chinese boy can learn silat, an Indian girl can top the SPM charts and speak excellent Bahasa Malaysia, and a Bidayuh Christian can break fast with his Muslim neighbours. This is not a fantasy. It’s already happening - in schools, workplaces, food courts, and yes, even in Parliament on a good day. 

They (the Malays) need the same things as everyone else needs - education that liberates, healthcare that heals, leaders who lead, not lecture. They don’t need to be told who they are. They already know. Instead of building walls of division, let us build bigger tables. Let us teach our children to pass the sambal, not suspicion and maybe we adults can learn a thing or two from them (the children). 

Malaysia will not rise under a big umbrella. But it will rise when we sit together - Indian, Chinese, Malay, Iban, Kadazan, Orang Asli - and share the same plate, the same pain, the same hope. And when we finally learn to do that, Malaysian spirit will rise to overcome the challenge on a badminton court or in a football game. That’s how nations are built MM not by racial or religious division. If you don’t believe, go to Bangladesh, Pakistan, Afghanistan, or Northern Ireland and see for yourself the fissures of race and religion.

 

Reference:

COMMENT | Malays need larger table, not big umbrella, Joseph Masila many, Malaysiakini, 10 June 2025

Should World Bank Invest $40 billion in Pakistan?

The World Bank (WB) will invest $40 billion in Pakistan between 2026 and 2035 under its Country Partnership Framework (CPF). For the first time, the World Bank has adopted a 10-year framework instead of its usual five-year strategy, signalling a long-term commitment to Pakistan’s development. 

In the first phase, Pakistan will receive $20 billion in sovereign loans from the World Bank’s International Development Association (IDA) and International Bank for Reconstruction and Development (IBRD). These funds will be allocated to critical sectors, including education, health, climate change mitigation, clean energy, and air quality improvement. The International Finance Corporation (IFC) will facilitate an additional $20 billion in private investment to support economic growth and job creation. 

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

In April, the World Bank (WB) approved additional financing for Pakistan, amounting to $108 million to execute two projects supporting access to social services, markets and jobs in Khyber Pakhtunkhwa (KP). The international lender approved $78 million in additional financing to Khyber Pakhtunkhwa Rural Accessibility Project (KPRAP); and $30 million to Khyber Pakhtunkhwa Integrated Tourism Development Project (KITE), enabling both projects to achieve their objectives in improving access to health and education services, markets and jobs, in a way that strengthens resilience to natural disasters in the province. 

The problem is whether these funds reach the projects it is intended to be in the first place or be used by the military for more drones and ammunition. Or, even more insidious is to fund terrorism. Unless, Pakistan focuses on development rather than war (or violence) it will not progress very far and may face an eventual break-up of the nation! 

The Trump administration is two-faced, court India and support Pakistan – which is incongruous with their rhetoric on China. World Bank approvals must have US’ blessings. Pakistan will never change – it’s military like most armies, love war! India and others have to be circumspect with these developments. 

Reference:

World Bank to invest $40 billion in Pakistan, by Web Desk/ARY News, 29 May 2025

Contentment

Let's take a brief look at greed. Practically speaking, greed is an inordinate desire for more. Like an untamed beast, greed grasps, claws, reaches, clutches, and clings—stubbornly refusing to surrender. The word enough is not in this beast's vocabulary. Akin to envy and jealousy, greed is nevertheless distinct. Envy wants to have what someone else possesses. Jealousy wants to possess what it already has. But greed is different. Greed is forever discontented and therefore insatiably craving, longing, wanting, striving for more and more. 

The Greeks had a curious word which means "a thirst for having more." To illustrate, it’s probably fanciful yet fairly descriptive to think of a fellow who is thirsty taking a drink of salt water, which only makes him thirstier. His thirst causes him to drink even more, which ultimately results in making him terribly sick. And if he continues to drink, he could die.

 

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

 

That's the whole point of greed. You'll want more and more of something that really isn't good for you. And in the getting of it, you'll suffer the painful consequences. That is why Jesus warns, in effect, "Beware. Be on your guard. This thing is like a cancer—an insatiable leech that will suck the life right out of you." Enough will never be enough. Life does not—cannot—revolve around things if one hopes to achieve true excellence.

 

There's nothing in the world wrong with making a nice living. Nor is there anything wrong with being eminently wealthy if you earn and handle it correctly. But there's something drastically wrong when you keep it all to yourself! God gave it to you so you could, in turn, give it back to Him, to others—yes, in abundance. The only reason for anyone to make more than one needs is to be able to give more. We certainly can't take it with us when we leave planet earth, that's for sure! But the Egyptian Pharaohs believed in an after-life with all provision provided in their pyramid when they died. Only the scavengers got the gold and treasures, not Pharoah!

 

Reference:

Contentment by Pastor Chuck Swindoll (Philippians 4:11-12)

Can a Dollar Slump Fix US Trade Deficit?

If the United States is to significantly reduce, eliminate its trade deficit, the dollar may have to  weaken significantly. How much is unclear, though, as history shows large dollar declines are rare and have unpredictable consequences for trade. 

Reducing the US trade deficit is the key goal of President Donald Trump’s economic agenda. This is because he believes it reflects decades of other countries “ripping off” America to the tune of hundreds of billions of dollars annually.

 

Source: https://en.wikipedia.org

 

If a weaker exchange rate is the Trump administration’s goal, it is on the right track, with the greenback down nearly 10% in 2025. This is because of growing concerns over Washington’s fiscal trajectory and policy credibility as well as the end of “US exceptionalism” and the “safe haven” status of Treasuries.

 

A 15% fall in the dollar during Trump’s first term had no impact on the trade deficit, which remained between 2.5% and 3% of gross domestic product (GDP) until the pandemic. Making a dent in the US deficit will therefore require a much bigger move.

 

The United States has run a persistent trade deficit for the past half-century, as insatiable consumer demand absorbs goods from around the world. This with a voracious appetite for US assets from overseas has kept capital flowing into the US. The only exception was in the third quarter of 1980, when the US posted a slender trade surplus of 0.2% of GDP, and trade with the rest of the world almost briefly balanced in 1982 and 1991-92. But these periods all coincided with – or were the result of – sharp slowdowns in US economic activity that ultimately ended in recession. As growth shrank, import demand slumped and the trade gap narrowed. The dollar only played a significant role in one of them. In 1987, the trade gap was a then-record 3.1% of GDP. But it had almost disappeared by the early 1990s, largely because of the dollar’s 50% devaluation from 1985-87, its biggest-ever depreciation.

 

That three-year decline was accelerated by the Plaza Accord in September 1985, a coordinated response between the world’s economic powers to weaken the dollar following its parabolic rise in the first half of the 1980s. But that does not mean large depreciations always coincide with reductions in the trade deficit. The dollar’s second-largest decline was a 40% fall between 2002 and mid-2008, just before Lehman Brothers collapsed. But the US trade deficit actually widened throughout most of that period, peaking at a record 6% of GDP in 2005.

 

While it (deficit) had shrunk by more than three percentage points by 2009, that was due more to plunging imports during the Great Recession than the exchange rate. These two episodes of deep, protracted dollar depreciation stand out because over the past 50 years, the dollar index has only had two other declines exceeding 20%, in 1977-78 and the early 1990s, and a few other slides of 15% to 20%. None of these had any discernible impact on the US trade balance.

The US administration is correct that the dollar is historically strong today by several broad measures. But how much would the dollar have to fall to whittle away the yawning trade deficit, which last year totalled US$918bil, or 3.1% of GDP? Some believe a 20% to 25% depreciation over the next two years would see the deficit “vanish”.

 

History suggests this may be challenging without a severe economic slowdown. But that’s a risk the administration seems prepared to accept until the MAGA supporters turn against TACO (“Trump Always Chickens Out”) Trump! Meanwhile, we must live with volatility, uncertainty and sometimes plain stupidity!

 

Reference:

Only a dollar slump can fix US trade deficit, Jamie McGeever, Insight, The Star, 29 May 2025

 

Small Modular Reactors for Indonesia?

Coal accounts for around two-thirds of electricity generation in Indonesia, which targets net-zero by 2050. The government wants 40 to 54 gigawatts (GW) of the 400GW it projects will be generated nationwide by 2060 to come from nuclear sources. It hopes to kick-start capacity with a reactor in Kalimantan “by 2030 or 2032”, according to the energy minister. Currently, 29 potential locations have been identified for the construction of nuclear power plants.

 

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

 

Small Modular Reactors (SMRs) are nuclear fission reactors characterised by its compact, factory-built design and modular construction, making it smaller than traditional nuclear power plants and potentially easier to deploy. SMRs which have power output of up to 300 Megawatt electric (Mwe), are envisioned to vary in size according to configuration and can be used for various applications like electricity generation, process heat, and desalination. Many SMR designs incorporate advanced safety features and simplified designs, potentially make them safer to easier to operate. SMRs are explored for their potential to help decarbonize the energy mix, ensure grid stability with increasing renewables, and potentially offer more flexible and cost-effective energy solutions.

 

Environmentalists would like to see Indonesia focus more on meeting its clean energy targets with renewable sources. While hydroelectric accounts for over 7% of Indonesia’s electricity generation, solar and wind contribute tiny amounts and could be significantly ramped up, according to experts.

 

References:

Govt seeks to install small modular reactors, The Star, Energy, 29 May 2025

AI overview – small modular reactor

MAGA or MAPA?

The Trump Administration is pursuing the “Make America Great Again” or MAGA initiatives but in reality, it may reflect  “Make America Poor Again” or MAPA. Why? With the US having chosen to retreat from its global role, it will lose much of the power and influence it assumes.

America still is the world’s leading military and technological power, reserve-currency issuer, and anchor of the global financial system. But with the US now having chosen to retreat from its global role, it will gradually lose much of the power and influence that it now takes for granted. 

Source: https://no.wikipedia.org

For decades after World War II, the US could shape the global system to serve its own purposes; and during the brief “unipolar” moment that followed the collapse of the Soviet Union, its status was unrivalled. 

But other powers have since grown in stature and are pursuing global ambitions. While China is the most obvious example, Europe, too, is seeking the unity required to assert itself as a serious global player. Then there are many middle powers who want to raise their profiles as well. This is the context in which President Donald Trump has hastened America’s retreat. While no one is surprised to see an “America First” administration ditching global responsibilities, the sheer pace of the change has been remarkable. 

Clearly, trade is central to Trump’s thinking. Failing to understand that it can benefit all who engage in it, he sees only a zero-sum game that America has been losing. No one – not even Trump – knows what will come from the global trade war that America launched on “Liberation Day” (April 2). But one thing already seems certain: America’s role in the global economy will decline.

 

China is the top trading partner to around 120 countries, and the EU to around 80, whereas America is number one for only 20 or so countries. And now that Trump has imposed or threatened sweeping tariffs against friends and foes alike, the US position is bound to decline further. America’s absence will be even more obvious in the realm of multinational cooperation – both within and outside the United Nations. Now that Trump has withdrawn the US from the World Health Organization, China has stepped forward as WHO’s single-largest financial contributor. Others will also have to assume greater responsibility for international humanitarian efforts – which have long depended on US funding and are already rapidly receding. 

While Trump issues threats to take over the Panama Canal, Canada, and Greenland, US diplomacy is in retreat more broadly. Administration officials claim that Russia’s full-scale invasion of Ukraine is “Joe Biden’s war,” and they initially responded to the dangerous flare-up between India and Pakistan by declaring it none of America’s business. 

Trump’s recent trip to the Middle East was almost exclusively about securing business, investment, and arms deals. Beyond making bizarre statements about turning Gaza into a resort, he has basically ignored the Israeli Palestinian question, leaving Israeli prime minister Benjamin Netanyahu free to pursue whatever policy he wants. 

Trump’s proposal to build a “Golden Dome” of layered domestic defence systems is a perfect symbol of an isolationist America. Outside the dome, in the post-American world, the future is up for grabs. Meanwhile, we are watching a slow-motion movie on how America is going MAPA and not MAGA. And that too because of one man! 

 

Reference:

Farewell, America, Carl Bildt, FMT, 27 May 2025

Do We Need to Stamp Employment Contracts?

Employment contracts are a key document that sets out the terms of engagement between employer and employee. While many companies prepare and sign these contracts diligently, a frequent question that arises include: Do employment contracts need to be stamped in Malaysia? 

Stamping is the process of paying stamp duty to the Inland Revenue Board of Malaysia (LHDN) to officially validate certain legal documents, including contracts and agreements. Once stamped, the document is endorsed with a stamp (either physical or electronic), confirming that the appropriate duty has been paid.

In Malaysia, stamping is governed by the Stamp Act 1949.

Yes, under the Stamp Act 1949, an employment contract is classified as an instrument chargeable with stamp duty if it falls within the categories listed under Schedule 1. LHDN has recently clarified that:

·  The requirement applies to all contracts that fall under chargeable instruments, regardless of the nationality of the parties involved.

·        The duty is calculated based on the date of the contract, not the date of stamping.

·        The employer is responsible for stamping and any associated penalties, not the employee.

Even though the stamp duty is minimal, stamping offers significant benefits:

·        Legal Admissibility in Court
An unstamped contract may not be admitted as evidence in court until the proper stamp duty (plus penalty) is paid.

·        Proof of Execution Date
Stamping acts as official validation of when the contract was signed.

·        Good HR Governance
Stamping is a best practice for formalizing employment relationships and avoiding compliance issues later.

·        RM10 for each copy of the employment contract (usually applied to duplicate copies).

·        No additional duty applies unless the contract includes other chargeable elements such as loans or tenancy terms.

Stamping should be done within 30 days from the date the contract is signed. If you miss this window, penalties will apply based on the length of the delay.

Delay After Signing	Penalty
Within 30 days	No penalty, just pay RM10 stamp duty
31 days to 3 months	RM50 or 10% of the stamp duty, whichever is higher
More than 3 months	RM100 or 20% of the stamp duty, whichever is higher
These penalties are in accordance with Section 47A of the Stamp Act 1949.

But over decades IRB has hardly enforced this Act. Now, suddenly it has woken up to a new source of revenue! LHDN should only consider stamping of documents going forward and not retrospectively. If revenue is the issue, there are better ways of securing it.

 

Reference:

Stamping of Employment Contracts in Malaysia: Is It Required? CentralHR, 24 April 2025