Archive for category Finance

Time to just let MAS crash

– Koon Yew Yin
The Malaysian Insider
February 20, 2014

MAS has just reported a fourth consecutive quarter of losses with a net loss of RM343 million for this last quarter.

For the full financial year 2013, the net loss amounted to RM1.2 billion, compared with a net loss of RM433 in FY12.

The question is whether this eye-popping loss will be the straw that breaks the camel’s back.

In the past, there have been incorrigible cheerleaders for the airline, regularly claiming that the company is in recovery mode and will soon return to profitability.

This time, even the most optimistic experts have given up. Read the rest of this entry »

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Support for Barisan will drop further if it ignores rising cost, says varsity survey

The Malaysian Insider
December 24, 2013

Support for the Barisan Nasional administration will drop further if it fails to deal with the rising cost of living experienced by Malaysians, another study has found today.

At the same time, the study by the Universiti Malaya’s Centre for Democracy and Elections (UMCEDEL) showed that 61% of respondents disagreed with the Government’s plan to introduce a goods and services tax in 2015.

The study showed that only 20% of those polled agreed with the initiative.

UMCEDEL director Prof Datuk Dr Mohammad Redzuan Othman said that the rise in electricty and petrol prices had a severe impact on those polled and that 52% of them felt that the Government’s BR1M (1Malaysia People’s Aid) handouts were inadequate to deal with rising prices. Read the rest of this entry »

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Moody’s has given us a good mood… but is it sustainable?

– Ramon Navaratnam
The Malaysian Insider
November 21, 2013

After the earlier cautious Fitch Rating Report on Malaysia’s sovereign credit outlook, the Moody’s Investors Service’s upgrading of our credit outlook from “stable to positive”, uplifts our mood on our country’s economic prospects.

Yes Moody’s has given us a good mood on our economic prospects. But unfortunately the question lingers as to whether this feel good mood, about our sovereign credit and economic outlook, can be sustained and for how long?

The upgrading had been due to the positive and bold promises made in Budget 2014 Speech by Dato Seri Najib Tun Razak. His speech has obviously made an impact on Moody’s. Read the rest of this entry »

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Business confidence in local economy dropping, survey shows

The Malaysian Insider
November 07, 2013

Business confidence in Malaysia plummeted in the third quarter of this year as the post-election boost has vanished, according to the Global Economic Condition Survey.

In a statement issued today, the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA) said the survey revealed that 65% of the respondents believed conditions in the Malaysian economy were stagnating in the third quarter of this year.

This is an increase from the 55% of respondents who felt business conditions in Malaysia were deteriorating or stagnating in the second quarter of the year. Only 13% of businesses reported confidence gains in the third quarter, down from 28% in the second quarter. Read the rest of this entry »

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A critique of the 2014 Budget Speech

by Budget analyst

A careful analysis of the 2014 Budget Speech by the Prime Minister-cum-Finance Minister, Datuk Seri Najib Razak is most revealing and disappointing as there is little by way of an exposition of the challenges the economy faces.

The customary presentation of data on the performance, in the current year and prospects in the year ahead, are matters that are dismissed in a few perfunctory sentences.

The speech gives little information on basic macro-economic assumptions used in basing the revenue and expenditure forecasts that make up the Budget.

The speech gives no hint of how the Government proposes to deal with the less than robust external environment in which the key Malaysian export markets – China, US, the EURO zone – will continue to record sluggish demand.

The price for Malaysian oil and gas are likely to be weaker because of increasing supply from US shale oil and the re-entry of Iranian oil into global markets. With greater supply and lower demand, prices are likely to be lower. Malaysian oil and gas exports will undoubtedly feel the impact. Read the rest of this entry »

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GST: killing the golden goose

– Liew Chin Tong
MP for Kluang
The Malaysian Insider
October 25, 2013

The proposed goods and services tax (GST) will tax those who can’t afford to be taxed, i.e. 60% of Malaysians who are eligible for BR1M. These are the people who will soon be taxed by the regressive tax, together with the rest of us who live and stay in this country.

I would like to drop the Orwellian double speak so prevalently employed by many GST apologists who are trying to mask the real issue. I will share my views plainly here.

Flawed arguments

Some argue that the government has to be cruel to be kind. Hence, BN would have us believe that the fuel hike subsidy rationalisation is needed to balance the government’s expenditure and ensure its good financial standing.

In theory, this sounds legit. However, look closer and you will find many flaws in the argument. For one, this argument does not take into account the adverse effects on the man on the street. It also demonstrates an incomplete understanding of how the economy grows or declines.

What is the real reason for the Barisan Nasional government to implement the GST? This tax has hung like a sword of Damocles over our heads since Tun Abdullah Ahmad Badawi’s era in 2005. Read the rest of this entry »

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Malaysia: High Income Nation, but Low Income Rakyat

By Anas Alam Faizli
Oct. 22, 2013

Malaysia’s current socio economic structure can be summed up in four words, “Rich Malaysia, Poor Malaysians.” Malaysia is blessed with abundant natural resources with petroleum being the most precious. Add the land, other commodity resources, large youthful population and the country has all the essential ingredients to flourish. How then did this small nation of 30 million manage to end up with the unsolicited title of among the region’s most unequal nation between the rich and poor. What happened? Read the rest of this entry »

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Defence budget to come under Pakatan scrutiny

G Vinod | October 21, 2013
Free Malaysia Today

Pakatan Rakyat will only reveal details of its alternative budget later on fear that their ideas will be copied by Barisan Nasional

KUALA LUMPUR: A parliamentary select committee will scrutinise the Defence Ministry procurement to curb graft, said Opposition leader Anwar Ibrahim in announcing the Pakatan Rakyat alternative budget 2014 today.

“We will also look into postponing the National Service programme for next year until a review is done by a select committee.

“The programme costs us RM800 million annually. On top of that, 22 trainees have died undergoing the programme and we have cases of female trainees giving birth during their three-month stint,” Anwar said at a press conference at the Parliament lobby.

Also present were DAP secretary-general Lim Guan Eng, PAS’ Kamaruddin Jaafar and several Pakatan parliamentarians. Read the rest of this entry »

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Why this year’s budget would be less interesting

- Muhammad Nazreen
The Malaysian Insider
October 20, 2013

In the next few weeks, everybody is anticipating the key issues that may be highlighted in the 2014 budget. Malaysia’s mounting public debt is at an alarming rate. Recurring deficits over years due to government’s overspending would be a primary reason why is this year’s budget would be less populist. The BN government managed to secure its win during the 13th general election. So, we could expect less windfall subsidies and pay-offs to be distributed. However, the deteriorating condition of Malaysia’s economy might prompt the fact that it is timely for the government to introduce stern fiscal consolidation. Austerity measures are likely the main ingredients of the upcoming budget.

Here are some of the concerns. Read the rest of this entry »

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Najib should present White Paper to Dewan Rakyat when it reconvenes in a fortnight on the initial decisions and actions taken by Special Committee on Auditor-General’s 2012 Report

The Prime Minister and Finance Minister Datuk Seri Najib Razak should present a White Paper to the Dewan Rakyat when it reconvenes in a fortnight’s time on Oct. 21 on the initial actions and decisions taken by the Special Committee set up to scrutinize the 2012 Auditor-General’s Report.

The Special Committee was announced yesterday by the Chief Secretary Tan Sri Dr. Ali Hamsa, who will chair the special committee which will comprise the director-general of the Public Service, the Attorney-General as well as representatives from the Malaysian Anti-Corruption Commission, Finance Ministry and Royal Malaysian Police.

There is widespread skepticism that the Special Committee will be able to make any difference to end the annual tale of horrors in the Auditor-General’s Reports about rampant corruption, wastage of public funds and abuses of power in the public service.

If the government is serious about wanting to stamp out corruption, waste, extravagance and abuses of power running into billions of ringgit of public funds every year, such a high-level government committee should have been formed immediately after the Auditor-General, Tan Sri Ambrin Buang submitted the 2012 Report to the government in July, and not now – only after the spate of adverse publicity in the past week following the tabling of the 2012 Auditor-General’s Report in Parliament on Oct. 1. Read the rest of this entry »

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Why MAS Share Is On Cheap Sale?

by Koon Yew Yin
16th Aug 2013

As a long term serious investor, I have a closer look at the cheap share price of MAS. Why is it selling at 33 sen. about one third of its par value?

Many market analysts have already covered MAS and Idris Jallal has said that the company should be sold off as soon as possible. My intention of writing this piece is to help the BN Government decide to put in the final nail to bury MAS to save tax payers’ money. Obviously the Government did not see my previous article “Why MAS Is Still Flying” which I published about a year ago. It is important and worthwhile to include some of the points I mentioned earlier in my previous article.

The latest 1st quarter 2013 ending March shows that MAS lost Rm 279 million. In 2012, 2011 and 2010 the company lost Rm 433 million, Rm 2.424 billion and Rm 234 million respectively.

As usual, there are the incorrigibly optimistic cheerleaders for the airline who are unable to see the writing on the wall. These ‘experts’ are still touting that the company is in recovery mode and will soon be returning to profitability.

The market however sees the prospects for the airline differently. During the past few days the airline share has been trading around 35 sen level. This is about the lowest share price that the airline share has recorded during the past many years. Without the support of government-linked funds and left to market forces alone, it is possible that the share price of MAS will drop even more. Read the rest of this entry »

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1MDB’s Japan move raises more eyebrows

Jonathan Rogers, IFR Chief Analyst
IFR 1995 3 August to 9 August 2013
IFR Asia

MALAYSIA’S 1MDB CERTAINLY knows how to pull off a surprise. The strategic development company has no shortage of critics, from Asia’s DCM bankers who have so far missed out on a share of its no-doubt lucrative debt market mandates, to ordinary Malaysians who bought into the opposition’s argument prior to May’s general election that 1MDB lacks transparency.

Previous surprises for the DCM community came in the form of two gargantuan private placements of US dollar bonds totalling US$4.75bn, a combined size that could normally only be achieved through the depth of liquidity available in the offshore public markets.

The size and the private placement approach raised eyebrows, but the fact that all of the business went to Goldman Sachs simply added to the bitterness quotient. Ignoring the fact that few international investment banks can deliver private placements in that size and – I believe it’s fair to say – no Malaysian investment bank can, it just didn’t seem fair play. Not to mention the hundreds of millions of dollars in revenue the US house is rumoured to have walked away with thanks to winning the business.
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Fitch pushes Malaysia’s credit rating outlook to negative

The Malaysian Insider
July 31, 2013

Global ratings agency Fitch Ratings has revised Malaysia’s sovereign credit rating outlook from stable to negative as the possibility of addressing public finance weaknesses has deteriorated after Election 2013.

The news comes as the Malaysian ringgit slid to three-year lows against the US dollar and 15-year lows against the Singapore dollar, making imports more expensive while exports would be cheaper although exports have slipped.

But it affirmed the country’s long-term foreign and local currency issuer default ratings at A- and A, respectively.

“Malaysia’s public finances are its key rating weakness. Federal government debt rose to 53.3% of gross domestic product (GDP) at end-2012, up from 51.6 percent at end-2011 and 39.8 percent at end-2008.

“The general government budget deficit (Fitch basis) widened to 4.7 percent of GDP in 2012 from 3.8 percent in 2011, led by a 19 percent rise in spending on public wages in a pre-election year,” it said.

But Fitch believed that it would be difficult for Putrajaya to achieve its interim 3 percent federal government deficit target for 2015 without additional consolidation measures. Read the rest of this entry »

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Malaysian premier shrugs off looming threats to economy

By Stefan Wagstyl in London
Financial Times
July 3, 2013

A slowdown in the Chinese economy, plunging commodity prices and the looming end of US “QE3” quantitative easing might appear to be a perfect economic storm for Malaysia.

The commodity producer exports to China and has benefited handsomely from the cash that washed through emerging markets as a result of the US Federal Reserve’s aggressive bond-buying programme.

In an interview with the Financial Times on Wednesday, however, Najib Razak, Malaysia’s prime minister, played down the likely effects of the threats to growth coming from the world economy. As a leader fresh from an election victory, his confidence is understandable. But some might see it as misplaced.

Mr Najib insisted Malaysia remained on course to grow at 5 to 6 per cent annually and achieve the government’s target of joining the ranks of the world’s high-income countries by 2020.

Mr Najib was speaking during a visit to London, made as his government is settling back into office after the ruling United Malays National Organisation overcame the biggest-ever challenge to its power in May’s parliamentary elections. The opposition won 51 per cent of the vote, but Umno and its partners in the ruling coalition secured 60 per cent of the seats under Malaysia’s constituency-based voting system. Read the rest of this entry »

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Arms deals inked by ‘expired PM’ may not be valid

by Koh Jun Lin
Malaysiakini
Mar 30, 2013

Pakatan Rakyat would review all contracts signed by the federal government after March 8 and possibly cancel them if they are found to be unfair or involved abuse of power, if the coalition takes over Putrajaya, said DAP parliamentary leader Lim Kit Siang.

He said in his speech at Seputeh today that the government has no business signing these deals five years after the last general election; they should be considered interim agreements subject to confirmation by the succeeding government.

Highlighting the RM4.2 billion arms deal signed in Langkawi two days ago, he said: “We will not be bound by these agreements because these are done after March 8, when the prime minister has lost legitimacy and credibility, and is only an ‘expired’ prime minister.

“He cannot sign these agreements,” he said, adding that the federal government should declare every deal it inked since that date because it should not have endorsed them.

Lim was speaking at the official launching of DAP’s Seputeh election operations centre, which occupies a shoplot that local MP Teresa Kok said was let out to the party for free by a supporter. Read the rest of this entry »

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Najib throws more election goodies

Anisah Shukri| March 25, 2013
Free Malaysia Today

The prime minister announces four changes to the 40,000 staff of seven statutory bodies ahead of the polls.

KUALA LUMPUR: Prime Minister Najib Tun Razak today announced sweeping benefits for the 40,000 staff of seven government statutory bodies, ahead of the general election which must be held within weeks.

The benefits to be given to LTAT (Lembaga Tabung Angkatan Tentera), LHDN (Lembaga Hasil Dalam Negeri), EPF (Employees Provident Fund), Tabung Haji, Perkeso, Perhebat (Armed Forces Veteran Affairs Corporation), and Bank Simpanan Nasional are:

*a pension fund set up for all personnel;

*fixed housing allowances equivalent to that of civil servants;

*gratituities for retirees; and

*streamlining employer contribution towards the EPF.

The benefits come in the wake of Najib’s announcement yesterday that the government would award 10,000 individual permits to taxi drivers, in what can be seen as a last-minute attempt to woo voters before polls are held.
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Is your pocket 41 percent deeper?

Aidila Razak
Malaysiakini
Mar 23, 2013

COMMENT

Whether 41 percent or 49 percent, the numbers in the Economic Transformation Programme 2012 annual report is essentially trying to tell us this – Malaysia will reach high income status by 2020.

That gives the impression that the average Malaysian will be bringing home about RM48,000 (or US$15,000) a year by that time.

But will they? Does the average Malaysian feel 41 percent – or even the more modest 24 percent in ringgit terms – richer today compared to 2009? Are their pockets deeper?

The simple answer is no.

So is the government lying to us? Not exactly. Read the rest of this entry »

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26-Day Countdown to 13GE – Federal Government Deficits and Debts

Unlike many developing countries, Malaysia had until the last 15 years, avoided deficit funding and the accumulation of high levels of external and internal debt that culminated in debt crises of the type that afflicted Argentina, Mexico and many countries in Sub-Saharan Africa.

The Federal Government followed prudent policies and followed fiscal policies that were viewed favorably. Both Foreign Direct Investment flows and the domestic private sector contributed to growth.

Thus, through the early 1970s and the decade of the 1980s small deficits were recorded, indeed in the early 1990s small surpluses were recorded. The size of the public debt was largely stable and did not exceed RM 100 billion.

However, the 1997 East Asia crisis, triggered by contagion effects of the crisis in Thailand, led to a radical change in fiscal policy. The Federal Government embarked on a pump priming effort to revive the economy.

Many large scale projects were mounted; many heavily indebted crony corporations were bailed out. The public sector surplus of RM 6.6 billion recorded in 1997 evaporated and became a deficit of RM 5 billion in 1998.

Since 1998, despite the recovery, the Barisan Nasional (BN) Government has continued to run deficits ever increasing deficits which peaked under the Prime Ministership of Datuk Seri Najib to RM 47 billion. Read the rest of this entry »

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27-Day Countdown to 13GE – IMF Report Card warns of an austerity scenario for Malaysian economy not too dissimilar to that of several EuroZone countries

The nation is just weeks away from choosing a Government to steer the ship of state.

The upcoming General Election will be momentous and will demand a choice between Barisan Nasional, a coalition that has ruled the nation for almost five and a half decades, and Pakatan Rakyat, an alternate group that offers change and a new direction.

Meaningful choices should ideally be based on full information about the current state of affairs and the alternative visions offered by the two coalitions.
The information on the state of the economy is less than transparent and that which is available is skewed in favour of the incumbent regime. The opposing coalition lacks full access to information.

Under these circumstances, it is necessary to look to alternative independent sources to arrive at objective assessments.

Such an objective and comprehensive assessment is indeed available. The International Monetary Fund (IMF) conducted its Annual Article IV Consultations in Nov –Dec 2012. A report based on the consultations was considered by the IMF’s Board of Executive Directors in late February 2013. The Fund has released the report and posted it on its website. Read the rest of this entry »

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28-Day Countdown to 13GE – Najib’s “Alice-in-Wonderland Statistics in his Transformational Malaysian Economy”

I have received an email from a retired international banker from the Malaysian Diaspora, who describes himself as a “Fact-Finder” monitoring the Malaysian economy, sharing his outrage on what he described as Prime Minister Datuk Seri Najib Razak’s “Alice-in-Wonderland Statistics in his Transformational Malaysian Economics” in his hour-long television interview on Tuesday.

I find this email so interesting, perceptive and pertinent that I am reproducing it in full, viz:

Misuse of Data

The Prime Minister cut a rather sorry figure in his appearance on TV3’s programme entitled ‘Conversation with the PM’ aired on March 12th.

His remarks were a disappointment as he indulged in delivering clichés and ‘feel good’ statements concerning the state of the economy. He missed an opportunity to present a clear a vision of what he stands for. Read the rest of this entry »

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