Malaysia Unveils Strategy to Safeguard Economy!

The government has unveiled a policy response aimed at buffering near-term downside risks while supporting medium-term economic resilience. Although the impact of Trump’s tariff on the economy remains uncertain, Kenanga Research (Kenanga) expects Malaysia to benefit from trade and investment diversion as the US and China decouple.  

Malaysia may face weaker external demand in the second half of 2025 (2H25), particularly from the US if the reciprocal tariff or higher tariff is set to be implemented after the 90-day pause. Measures proposed include: 

Export-Oriented Measures: Assisting businesses impacted by the tariffs, especially small and medium enterprises (SMEs). This includes RM1 bil in government guarantees to help SMEs access bank financing, RM500 mil in soft loans via development financial institutions (DFI) and continued targeted aid for directly impacted exporters.

 

Source: https://en.wikipedia.org

Promoting Regional Cooperation and New Markets: Emphasis on diversifying exports to new markets like Europe, the Middle East, Central Asia and South America, while strengthening ASEAN trade via ASEAN Power Grid and cross-border trade activities.

An additional budget worth RM50 mil has been allocated to MATRADE. Previously the government has allocated RM40 mil under the Market Development Grant (MDG) to help exporters expand to new markets. 

Leveraging existing partnerships with ATIGA, DEFA, RCEP and CPTPP, as well as strengthening ties with BRICS, should help Malaysia. 

Besides measures focusing on exporters, the government is also accelerating infrastructure projects, including flood mitigation, the repair of dilapidated schools, and the construction of clinics, with expedited approval processes and implementation, particularly for small contractors in the G1-G4 categories. 

Stimulating Domestic Demand: To support private spending, government may increase the cash assistance or e-wallet transfers for targeted groups, with conditions to encourage spending in sectors like food, retail, and tourism. Sector-specific incentives, such as tourism vouchers or domestic travel subsidies via e-wallets, could boost the services sector and digital economy. 

Boosting Services Exports: There is potential for the government to intensify efforts in promoting services exports like tourism, education, and healthcare, in line with Visit Malaysia 2026 and taking opportunity from the potential diversion of large tourists and students from China. Expanding visa facilitation, particularly for countries like China and India, will also support the tourism sector going forward. 

Redirecting Export Surplus to Domestic: This includes electronics and processed food products which can be partially redirected to the domestic market. While the domestic market may not fully absorb the exports, it could provide some relief to exporters. 

For now, Bank Negara Malaysia is likely to keep the Overnight Policy Rate on hold. Inflation remains benign, growth steady, and financial conditions manageable. However, if global trade tensions intensify and domestic growth slips below 3.5% in 2H25, the case for a rate cut could gain traction. 

In the interim, BNM is expected to prioritise targeted support instruments and preserve monetary flexibility, keeping its policy initiatives open. There are other steps which must be included:

·     Defer widening of SST further to a later date, perhaps mid-2026.

·     RON95 subsidy to continue to 2027.

·     Electricity tariff increase be frozen for now. 

These actions will alleviate costs and keep inflation checked.

  

Reference:

Malaysia unveils robust strategy to safeguard economy from global headwinds, CS Ming, Focus Malaysia, 6 May 2025

AI Market Size and Trends!

The global cloud AI market size was estimated at USD 87.27 billion in 2024 and is expected to witness a CAGR of 39.7% from 2025 to 2030. The increasing demand for Cloud AI integrates cloud computing capabilities with artificial intelligence algorithms to deliver various benefits, including faster processing, enhanced efficiency, and business cost savings. 

One of the primary factors driving the expansion of the cloud AI industry is the growing adoption of artificial intelligence and machine learning technologies across multiple industries. As these technologies become more widely used, organizations are exploring ways to harness their potential for gaining a competitive edge. Cloud AI offers a scalable and accessible platform, making it a practical choice for implementing these advanced solutions effectively.

 

Deep learning dominates the market and is anticipated to hold 34.6% in 2024. Deep learning is a dominant force in AI, driving advancements across industries with its ability to efficiently process and analyse large volumes of data. Its applications, ranging from image recognition to autonomous systems, have revolutionized traditional processes. Developing advanced neural network architectures has further expanded its capabilities, enabling breakthroughs in complex problem-solving. Major technology companies and research institutions continue to invest heavily in deep learning, ensuring its dominance in AI innovation. This widespread adoption has made deep learning integral to the healthcare, finance, and entertainment industries. 

Natural Language Processing is experiencing significant growth as businesses seek advanced tools for understanding and generating human language. The increasing demand for chatbots, virtual assistants, and sentiment analysis solutions has accelerated the adoption of NLP technologies. Continuous algorithm advancements and pre-trained language models have made NLP more accessible and effective for real-world applications. Industries such as customer nature language processing, e-commerce, and education leverage NLP to enhance user experiences and streamline operations. As organizations prioritize AI-driven communication tools, NLP's role in transforming interactions continues to expand rapidly. 

North America leads the global Cloud AI market, accounting for a leading share of 33.9% in 2024. The market in North America is highly advanced, driven by the presence of major technology companies and the early adoption of AI solutions. 

The cloud AI market in the U.S. dominates with leading companies such as Microsoft and Google LLC driving innovation. The country’s diverse industries, including healthcare, finance, and retail, are rapidly adopting AI to gain a competitive edge. Government initiatives and private sector investments in AI research further accelerate Cloud AI industry growth. The robust digital infrastructure and talent pool make the U.S. a global leader in cloud AI adoption. The increasing demand for scalable AI solutions positions the U.S. as a cornerstone of the global market. 

The following are the leading companies in the cloud AI market. These companies collectively hold the largest market share and dictate industry trends.

 

·                  Apple Inc.

·                  Google, Inc.

·                  IBM Corporation

·                  Intel Corporation

·                  Microsoft

·                  MicroStrategy, Inc.

·                  NVIDIA Corporation

·                  Oracle Corporation

·                  Qlik Technologies, Inc.

·                  Salesforce.com Inc.

·                  ZTE Corp.

The implication of the above is tremendous in terms of future job scope, employment opportunities, business enhancements and government initiatives to develop services. These are areas that Trump and his dear “clowns” have not understood. US dominance in services is apparent and real not coal production, or textile manufacturing. These poor souls with Trump are lost in time like some aircraft with passengers on board that disappeared in the Bermuda Triangle in 1980 and returned in 2025. 

Reference:

Cloud AI Market Size & Trends, Grand View Research

Trump’s Perfect Storm to Sink the U.S.S. Titanic!

Donald Trump has steered the American economy into a perfect storm. This storm could break the U.S. economy. Trump’s tariffs are the most destructive force. Their first-order damages begin by arbitrarily driving up the prices of every product and input. This is followed by price hikes on most competing products and inputs made in the US. This will leave less money for everything else, depressing growth and jobs even as inflation accelerates—a textbook definition of stagflation. And these first-order costs are compounded by retaliatory tariffs by the primary targets of Trump’s levies, further slowing jobs, wages, and growth.  

In 2024, the US economy grew at a healthy 2.8 percent rate. Inflation had eased. Now, Trump’s policies have brought in rising prices and the first stage of a recession 

Source: https://en.wikipedia.org

The second-order costs follow from the unprecedentedly high tariffs on goods and inputs from the three largest trading partners. The 145 percent tariffs (on pause) on all Chinese imports and China’s 125 percent retaliatory tariffs have established for now a mutual embargo between the world’s two most important economies. 

If these policies remain in place (after the pause), they will not only raise prices and slow the economy. By mid-summer, supply chains will be disrupted, and Americans should expect the shortages like in World War II. Trump and his apprentice dealmakers have only begun negotiations recently with China, Mexico, or Canada—in large part because the president’s personal economic delusions.   

It gets worse. Most U.S. imports from its major trading partners are inputs for U.S. manufacturers, products made by their foreign subsidiaries, or energy US needs, and truncating access to those imports will damage a broad array of separate economic activities related to them.  

Investors are losing confidence in Trump, his presidency, and perhaps the United States. It’s especially true for foreign investors who reinforced the message by moving away from the dollar. The stability of US financial system depends on trillions of dollars in foreign capital. In 2024, foreign investors and governments held $18.4 trillion in U.S. stocks and $8.5 trillion in U.S. Treasury securities, about 30 percent of all US stock and 30 percent of all US bonds. While most American investors will likely wait out the coming storm, foreign investors with $27 trillion in American financial assets have plenty of alternatives. In a word, the United States could face destabilizing capital flight.  To stave off this grim prospect, the Treasury Department and American corporations will have to offer foreign and domestic investors higher returns. So, regardless of what the Fed does, market interest rates may rise even as the economy declines.   

Trump and his economic clowns count on tax cuts and higher spending to ward off recession. In normal times, they might have been right. But their hopes are delusions under the new conditions.  

The gathering economic storm includes another feature that could drive the economy onto the rocks. Trump and his administration could unilaterally abrogate contracts, withhold appropriated funds, dismiss court decisions, attack judges for enforcing their rulings, deport people without charges or hearings, provide special treatment for large contributors and favour companies, and threaten law firms and universities without any legal basis and these just prompt capital flight from the US.  

Trump and his apprentices risk not only devastating capital flight but could leave many US financial institutions insolvent. In addition to his deeply destructive tariffs, Trump’s sweeping campaign against the rule of law in the United States has raised the economic stakes from a rocky business cycle to a potential financial and economic meltdown with terrible consequences. May God help us all! 

Reference:

Trump’s Perfect Storm that Could Sink the American Economy, by Robert J. Shapiro, Washington Monthly,  5 May, 2025

 

Buffett Indicator and Its Use!

According to the Buffett Indicator, the US Stock Market is Significantly Overvalued. The recent Market Cap to GDP Ratio is 189.2%. The Total Market Index is at $56,727 billion, which is about 189.2% of the last reported GDP. For Malaysia it is 98% (on current prices), or modestly unvervalued.

Ratio = Total Market Cap / GDP	Valuation
Ratio ≤ 85%	Significantly Undervalued
85% < Ratio ≤ 110%	Modestly Undervalued
110% < Ratio ≤ 134%	Fair Valued
134% < Ratio ≤ 159%	Modestly Overvalued
Ratio > 159%	Significantly Overvalued

Meanwhile, based on the historical ratio of newly introduced total market cap over GDP plus Total Asset of Federal Reserve Banks, the Stock Market is Significantly Overvalued. Based on recent data, the Market Cap to GDP Ratio with Fed Assets is 154.6%.

The recent Total Market Index with Fed Assets is about 154.6% of the summation of the last reported GDP and Total Assets of Fed.

Ratio = Total Market Cap / (GDP + Total Assets of Fed)	Valuation
Ratio ≤ 70%	Significantly Undervalued
70% < Ratio ≤ 90%	Modestly Undervalued
90% < Ratio ≤ 110%	Fair Valued
110% < Ratio ≤ 131%	Modestly Overvalued
Ratio > 131%	Significantly Overvalued

The US nominal GDP is currently at $29.98 trillion of which total assets held by all Federal Reserve Banks is $6.709 trillion.

The Buffett Indicator is a crucial tool for investors, analysts, and policymakers, offering valuable insights into market valuation:

1. Valuation Benchmark: The Buffett Indicator helps gauge whether the stock market is overvalued or undervalued compared to the overall economy. A high ratio might indicate that the market is overpriced relative to the economic output, while a low ratio could suggest undervaluation.
2. Investment Guidance: Investors use the Buffett Indicator to make informed decisions about their investments. A high ratio might signal caution, suggesting that the market may be due for a correction. Conversely, a low ratio could present buying opportunities, indicating potential undervaluation.
3. Economic Indicator: The ratio also provides a broad measure of economic health. Significant deviations between market capitalization and GDP can reflect shifts in investor sentiment or economic conditions, offering a macroeconomic perspective.
4. Historical Comparison: By comparing the current Buffett Indicator ratio with historical data, investors can identify long-term market trends and assess whether current valuations are in line with historical norms.

Reference:

Buffett Indicator, https://buffettindicator.net/

Greatness

As Pr. Chuck Swindoll relates on “Greatness”, it is no surprise to most of us that we act out precisely what we take in. In other words, we become what we think. Long before that familiar line found its way into Psychology 101 and hyped-up sales meetings, the Bible included it in one of its ancient scrolls. It just said it in a little different way: "For as he thinks within himself, so he is" (Prov. 23:7). 

Source: https://en.wikipedia.org

The secret of living a life of excellence is merely a matter of thinking thoughts of excellence. It's a matter of programming our minds with the kind of information that will set us free. Free to be all God meant us to be. Free to soar!

Since the mind holds the secrets of soaring, the enemy of our souls has made the human mind the bull's-eye of his target. His most insidious and strategic moves are made upon the mind. By affecting the way we think, he can keep our lives on a mediocre level. Our minds were originally enemy-held territories. We were blinded by the power of the enemy. The mind was his "base of operations" until the light shone within. At that time, we were no longer blinded. It was a supernatural event in which new life was given, and the enemy was relieved of his command. But Satan doesn't want to give up his territory. He is a defeated foe who knows his future. Yet he fights to the last degree to maintain the hold he has had on us. God is interested in our breaking free from such bondage.

And what is God's goal? To take "every thought captive." When He invades those lofty areas, His plan is to transform the old thoughts that defeat us into new thoughts that encourage us. He has to repattern our whole way of thinking. And He is engaged in doing that continually because old habits are so hard to break.

If we do break free than we are able to soar like God intended us to be – to look after the marginalised, the downtrodden, the weak, the orphans, and do good in every situation. We will not think of how superior we are but how best to serve our neighbours – in the office, train, restaurant or home. Then we don’t need “3R” philosophy and the guardians of 3R, because we are all one family! 

Reference:

Greatness by Pastor Chuck Swindoll

US Economy Contracts!

The US economy unexpectedly contracted in the first three months of this year (2025) due largely to a surge in imports ahead of the introduction of sweeping tariffs. The gross domestic product (GDP) of the world’s largest economy decreased at an annual rate of 0.3% in the first quarter (Q1), after growing 2.4% in the final months of 2024. The introduction of tariffs sparked a selloff in financial markets, sending volatility surging to levels not seen since the Covid-19 pandemic and spooking investors.

Following April’s dramatic market movement, the Trump administration announced a 90-day pause to the higher tariffs for dozens of countries to allow for trade talks, while maintaining a baseline 10% rate for most countries. It also announced sector-specific measures on steel, aluminium and automobiles and parts not made in the US, and new sweeping tariffs totalling 145% on China.

 

Source: https://en.wikipedia.org

Since Trump’s return to office, and the introduction of new tariffs, many analysts have sharply cut their growth outlooks. Imports have a negative effect on growth and counteract the positive effects of exports in the GDP calculations.

Tariff money collected by the U.S. government from importers could be misused, beyond the effects on inflation and consumers. Jack Ma, one of the richest entrepreneurs has said, “In the past 30 years, America has had 13 wars at a cost of $14.2 trillion.” He also questioned America’s decision to bankroll Wall Street after the 2008 financial crash, arguing the money would have been better spent in other areas.

It’s not globalization – and everything that comes along with it, that’s to blame for America’s woes. It’s the way the country’s elite managed the process. “It’s not those other countries that stole American jobs; it was U.S. strategy – that you did not distribute the money in a proper way.” Outsourcing was a U.S. strategy not China stealing jobs and investments. But this is difficult for Trump to accept, because he likes to blame others for all his problems. That too, for a potential U.S. self-induced recession.

References:

US economy unexpectedly contracts in first 3 months of Trump presidency, AFP/FMT, April 2025

Jack Ma: America has wasted its wealth, Stephanie Thomson, World Economic Forum, 18 January 2017

Half of Malaysian Employers Want More Permanent Staff?

Close to half of Malaysian employers plan to grow their permanent staff size in the first half of the year (1H2025). This is based on a survey conducted by Jobstreet by SEEK in its latest Hiring, Compensation & Benefits Report. Jobstreet by SEEK reported that employers in Malaysia expressed confidence in the employability landscape, with 48% of surveyed companies planning to expand their permanent workforce in the first half of the year.

Some 39% of employers reduced their workforce in 2024, up from 2023 (18%) and 2022 (14%), according to the survey, which took input from 2,279 human resource (HR) professionals and employers.

In 2024, the three top permanent full-time jobs remained the same as in 2023, namely administration and HR (41% of companies that hired); accounting (33%); and sales or business development (21%). For performing staff, 2024 was a mixed year — average bonus rose to two months’ salary, up from 1.7 months in 2023. However, just 77% of employers gave employees a salary raise, down from 2023 levels (85%). Just 58% of them promoted staff, from 60% the year before.

In efforts to attract and retain talent, the report found that many employers enhanced employee benefits by introducing replacement leave and extended parental leave.

45% of employers have implemented flexible working hours and family-friendly amenities, such as nursing rooms and medical coverage, the report said.

Notably, 70% of businesses evaluated candidates’ artificial intelligence (AI) skills during hiring, with 36% considering it a critical skill. However, 47% of companies remained cautious about adopting AI due to concerns over the lack of personalisation. The report highlighted a growing emphasis on AI and digital readiness, coupled with significant progress in diversity, equity, and inclusion (DEI) initiatives, both of which are shaping the evolution of modern recruitment practices.

Looking ahead, Jobstreet by SEEK recommended businesses to diversify recruitment strategies, align salary adjustments with inflation, enhance employee benefits, prioritise AI literacy, and strengthen DEI initiatives. With tariffs coming, many companies will delay hiring or look to AI. The report does not mention concerns arising from tariffs and its repercussions.

Reference
Half of Malaysian employers want more permanent staff in 1H2025 — survey, Jazlin Zakri,

Theedgemalaysia.com, 29 April 2025