With this Mamak in charge of our Treasury who needs a bigger apple polisher
Malaysia’s Blue Ocean Strategist and Chief of the Ampuists–Hamsa Ali
I read that our economy is being affected by “noise” fed by the alternative media. As a result, the wrong perception that is created is weighing down our economy at present.
The word “noise”, in one of its most basic definitions means “unexplained or unexpected information that is not useful or that can be ignored”. The word “perception” means “a belief or opinion held by many people based on how things seem” (Cambridge dictionary).
I believe this is how the treasury secretary-general looks at the “state” of the Malaysian economy today – it is the “noise” which gives rise to a wrong perception that is not based on reality. The economy is doing fine, but persistent noise gives the impression that the economy is doing badly. To turnaround this situation, we have to get rid of the noise so perceptions can change.
Will Najib Razak con Donald Trump as he did with Barack Obama?
To begin, we have to look at what this so-called noise is made up of. I leave it to you to decide whether the following is “noise” or “verifiable information”.
1MDB and its plethora of problems;
The court cases in the US and Singapore and investigations in other jurisdictions;
The escalation in the cost of living that far outstrips the GST rate;
The falling value of the ringgit that far surpasses those of other regional currencies;
The continued fiscal deficit and the added burden of public debts. Just what is the percentage of debt servicing to operating expenditure now?
Questionable and burdensome public infrastructure investment programmes;
The problems in Felda, FGV and other GLCs;
Unemployment of graduates and their inability to service study loans;
Serious differences over policies on race, religion, education and economic management;
Political parties hardly being able to compromise on any issue.
If the above is considered verifiable information, how do we expect people to perceive differently or wrongly?
There is a saying: “Perception is reality”. What we perceive is based on what we experience or observe. Occasionally we may draw wrong inferences from our experience or observation but it is difficult to fathom we are wrong all the time. More often than not, experience and observation are our best teachers.
In Malaysia, we tend to blame everything on wrong perceptions. We blame noise that gives rise to the wrong perceptions as if perceptions are something that can be orchestrated, managed or manipulated.
Here is my question to the authorities: If a few netizens can create a “wrong” perception, why can’t the authorities create the “right” perception? I am sure the government has more resources at its disposal to dispel any wrong perception and to put in place the right perception.
Malaysia’s Big Spender
We cannot run away from the truth, can we? We may choose to manipulate the present situation, but truth shall prevail. Why argue about the pump price of petrol being more than one pound per litre in the UK when the people there are earning in pounds the way we are earning in ringgit? It is a choice of whether we want to talk like an economist or a layperson at the coffee shop.
From the moment Malaysian Prime Minister Najib Razak took over 1Malaysia Development Bhd. in 2009 the fund has remained controversial. Plagued by heavy debt and questions about its management, 1MDB grew into a scandal that moved closer and closer to the heart of the Malaysian government and has resulted in numerous foreign probes.
Najib Razak drags Singapore’s reputation as a Regional Centre into the Selut (MUD)
From the 1Malaysia Development Bhd.-linked scandal to a 333-count front-running case and the largest market-manipulation prosecution in Singapore’s history, this year’s allegations of moneymen behaving badly have put the city-state’s image as a squeaky-clean financial hub to the test.
Regulators have responded with their busiest year of enforcement actions, shutting the local units of two Swiss banks, fining some of the world’s biggest lenders and seizing S$240 million ($166 million) of assets. Ravi Menon, the head of Singapore’s central bank, summed up the city’s mood as the 1MDB-related cases escalated in July: “We can do better.”
2016 was the year of significant crackdown in Singapore,” said Hamidul Haq, a lawyer at Rajah & Tann LLP and author of ‘Financial Crimes in Singapore.’ “Companies, financial traders and bankers are being kept on their toes.”
The stakes could hardly be higher for a city that relies on finance for 13 percent of its economy and has 200,000 jobs tied to the industry. With exports sliding and the local oil services industries in a slump, Singapore needs to protect the reputation of its financial sector as it grapples with the weakest economic growth since 2009.
Strengthening enforcement functions under a new department is a strong signal of its commitment to uphold Singapore’s reputation, the Monetary Authority of Singapore said in an e-mailed response to questions. The regulator said it will continue to boost its enforcement and surveillance capabilities to deter criminal behavior and poor controls.
“This will ensure that any wrongdoing is swiftly detected, thoroughly investigated and firmly dealt with,” the MAS said.
Singapore, which prides itself on having a clean and trusted system, is rated by Transparency International as the least corrupt nation in Asia and consistently ranksamong the top 10 globally. That reputation was forged 51 years ago when Lee Kuan Yew, the founder of modern Singapore, and politicians from his People’s Action Party dressed in white to show they couldn’t be corrupted. That image helped to lure foreign investment to the city, where more than 200 banks have since set up shop.
The island republic emerged unscathed from the Bank of Credit and Commerce International global money laundering scandal in 1991 after MAS refused to grant it a license, though it isn’t immune to financial wrongdoing. In 1995, Nick Leeson’s $1.5 billion loss from unauthorized trades brought down Barings Plc, the U.K.’s oldest merchant bank. In 2004, China Aviation Oil (Singapore) Corp. revealed a $550 million derivatives fraud.
While Singapore has undergone significant change in tackling money laundering since 2008, “moderate gaps” remain in the city, Paris-based Financial Action Task Force said in September.
MAS Chief Menon vowed to take stern action after the city’s reputation took a hit following revelations that money linked to 1MDB went through Singapore. The fund, at the center of global money-laundering and corruption probes, has consistently denied wrongdoing.
The city is the only jurisdiction to charge and convict bankers in connection with 1MDB. Yak Yew Chee, an ex-banker at Swiss firm BSI SA, pleaded guilty in November to charges including forging documents and failing to disclose suspicious transactions, while Yvonne Seah Yew Foong, who reported to Yak, was sentenced to two weeks in jail for aiding in forging documents. A former wealth planner at BSI, Yeo Jiawei, was found guilty of perverting the course of justice and faces further charges of money laundering and forgery, among others. Yak and Seah didn’t appeal their convictions and sentences. Yeo is considering an appeal, according to his lawyer.
“There’s no doubt about the tone that we take,” Singapore Law Minister K Shanmugam said at a media lunch earlier this month, adding that the rule of law is the city’s life blood. “It’s got to be understood that the MAS will be very tough if you don’t follow the rules.”
The MAS was given a bigger stick to wield in 2015 after a penny-stock crash in 2013 mysteriously wiped out S$8 billion over three trading days, an event seen contributing to lower subsequent trading volumes. Lawmakers granted the regulator enhanced powers including being able to search premises, seize items and order financial firms to monitor customer accounts.
The alleged “masterminds” in the penny-stock case were charged in November after MAS investigators and white-collar crime police sifted through two million e-mails, thousands of phone records and financial statements and 180 trading accounts to solve the largest securities fraud in the city’s history. Previously, the regulator had to refer criminal probes to the Commercial Affairs Department and could only fine culprits.
“Hopefully, the MAS will continue to focus on catching the bigger fish like they have done in 2016,” said Lan Luh Luh, a professor at the National University of Singapore Business School. “It’s always a dilemma between tightening the reins too much, going after the very little guys and staying open for business.”
Crowdfunding and financial technology may come under scrutiny in 2017, according to Lan. The two areas aren’t heavily regulated and may be open to abuse, she said.
Singapore’s enforcement actions this year have made it one of the most active financial regulators in Asia. In rival Hong Kong, the Securities and Futures Commission has been settling probes and creating specialized teams under new enforcement chief Thomas Atkinson.
Other countries have also seen heightened supervisory focus. Indonesia started a tax amnesty plan aimed at repatriating cash stashed overseas while giving evaders a way to come clean. China has placed regulatory curbs to rein in shadow banking and contain debt risk.
“That’s the global trend — it’s going to become harder to hide illicit money,” said Andre Jumabhoy, a Singapore-based lawyer who advises on government enforcement at K&L Gates LLP. “There’s a real emphasis in making sure that if you want to be a serious global financial center like Singapore wants to be, you’ve got to abide by the rules.”
Here’s what the Monetary Authority of Singapore was busy with in 2016:
Banks and bankers
* Fined Standard Chartered Plc, Coutts & Co., UBS Group AG and DBS Group Holdings Ltd. over breaches related to 1MDB. The banks have said they cooperated with authorities.
* Said it plans to bar former Goldman Sachs Group Inc. star banker Tim Leissner from the securities industry for 10 years. Leissner’s lawyer had said he intends to respond to allegations raised by MAS.
* Falcon Private Bank Ltd. was fined and ordered to shut over weak controls; local branch manager arrested by police. The bank had said it welcomed the completion of investigations.
* BSI SA was fined and directed to close after “serious” money laundering breaches; six senior executives referred to prosecutors. BSI said it cooperated fully with investigations.
Alleged errant traders
* Three people were charged for orchestrating largest market manipulation case in Singapore’s history.
* Three former traders were charged with 333 counts in Singapore’s first front-running case.
* Man charged in the city’s first spoofing case, which was also the first case that the regulator and Commercial Affairs Department jointly brought to court.
* Fined a former chief financial officer of Sinomem Technology Ltd. and asset manager Triumpus Assets Management Pte for insider trading. Both had admitted to the contravention.
Barred a former trader for two years and fined him S$110,000 for insider trading.
Other enforcement efforts
* Joint announcement with Attorney-General’s Chambers and police that S$240 million in assets have been seized, including from Malaysian financier Low Taek Jho. Two calls to Low’s Jynwel Capital Ltd. in Hong Kong weren’t answered
* Set up units to centralize and further boost enforcement as well as target money-laundering activities
The Ringgit screwed by Fed’s Decision to raise interest rates–Wake Up Finance Minister Najib Razak
The ringgit opened lower for the last trading day of the week, dampened by external sentiment, a dealer said.
At 9am, the ringgit was traded at 4.4660/4690 versus the US dollar from 4.4440/4480 at yesterday’s closing.
The strengthening of the US dollar due to the recent announcement by the Federal Reserve on interest rates has affected Asian currencies as well as emerging market currencies, and Malaysia is not excluded.
FXTM Research Analyst Lukman Otunuga said from a technical standpoint, the dollar is heavily bullish on the daily timeframe with yesterday’s hawkish surprise sending the US Dollar Index to fresh 14-year highs above 102.50.
“The dollar’s strength could become a key theme in 2017 as the improving sentiment towards the US entices bullish investors to propel the greenback higher,” he said in a statement.
Against a basket of major currencies, the ringgit traded higher. Vis-a-vis the Singapore dollar, the ringgit rose to 3.0945/0983 from 3.1049/1096 and versus the yen, it improved to 3.7758/7796 from 3.7846/7894 yesterday.
Against the British pound, the local currency appreciated to 5.5320/5380 from 5.5873/5949, while against the euro it rose to 4.6518/6563 from 4.6851/6921.
Confidence in Asia toward business conditions over the coming six months dropped in the final quarter of 2016 to its lowest level in a year as firms fretted about sluggish demand in a persistently low-growth economic environment, a Thomson Reuters/INSEAD survey found.
Malaysia’s No. 1 Problem–The Source of Political Uncertainty
Firms also flagged political uncertainty as a key near-term risk, including that brought by the election of Donald Trump to the US presidency – an outcome some cited as a key risk in the same survey three months prior.
The Thomson Reuters/INSEAD Asian Business Sentiment Index, representing the half-year outlook of 118 firms, fell to 63 from 68 in the September quarter, although it remained above the 50 mark separating optimism from pessimism.
“The fall in the business sentiment index confirms what we have seen over the past few years. The world economy is growing but in a way that looks suboptimal,” said Singapore-based economics professor Antonio Fatas at global business school INSEAD. “It seems very difficult to regain a high state of confidence.”
Asian companies are particularly reliant on demand from China where slowing economic performance has been the main cause for concern over the past few years. But in recent weeks, political worries have come to the fore.
Mr. Trump has advocated more US-centric trade relations and the cancellation of the Trans-Pacific Partnership trade pact. He has also vowed to repatriate jobs such as in the outsourcing industry which flourishes in the Philippines, where new president Rodrigo Duterte is known for anti-American rhetoric.
In South Korea, lawmakers have voted to impeach President Park Geun-hye over an influence-peddling scandal after weeks of protests, while in India, Prime Minister Narendra Modi abolished 86 percent of the country’s cash overnight to tackle corruption.
Firms have to navigate such events “with the possibility of either ‘muddling through’ as we have managed to do over the last two years or hitting a wall because one of these uncertain events turns negative,” said Mr. Fatas.
Thomson Reuters and INSEAD polled firms across Asia from November 28 through December 9. Of 118 respondents, just over 42 percent were positive toward business prospects over the next six months, 41 percent were neutral and 16 percent were negative.
Respondents included Australia’s Transurban Group, India’s Reliance Industries Ltd., PT Telekomunikasi Indonesia (Persero) Tbk., Japan’s Asahi Group Holdings Ltd., Korea Aerospace Industries Ltd. and the Philippine National Bank.
Firms in Australia were the most positive with their subindex of 86 although that was still two points lower than three months prior. Only Singaporean firms were negative with a subindex of 46, albeit an improvement from the 38 of September.
Sentiment tumbled the most in the usually upbeat Philippines, to 70 from 94. Though optimistic, the subindex compared with that economy’s average of 91 over the survey’s seven-year life.
Sentiment fell in China, to 80 from 90, in India to 70 from 75 and in Thailand to 60 from 72. But in South Korea it rose to 57 from 50 despite the political turmoil.
“Outside of Thailand, we expect to see a slower pace of economic growth in our main markets in Asia-Pacific, including Australia, China and Singapore in the near term,” said chairman and chief executive William Heinecke of Thai hotelier and retail distributor Minor International PCL.
Mr. Heinecke also said his company expected global tourism to be resilient in the current climate, and that the retail food service industry would be stable in its key markets.
By sector, the retail and leisure subindex fell to 56 in the fourth quarter from 68 in the third. Household, food and beverage firms were the most optimistic at 79, up from 72, whereas those in the autos sector were the most pessimistic at 40 from 60.
As an “economics minister”, we expect more comprehensive and professional answers from Rahman. Many can become politicians, but only very few can be economics ministers.–TK Chua
I was not a fan of Dr Mahathir Mohamad when he was Prime Minister. But a major part of my working life was under his premiership. I was resentful of Mahathir when I saw that many of the things he did was in favour of big time business people. He had his blue-eyed boys who often turned out to be disastrous. He too embarked on projects that did not turn out well. But hindsight is always perfect. Everything is relative.
When we assess the performance of a government or its leadership, rarely do we do so based on a single factor. More often than not, it is a combination of failures from which a tipping point is reached.
When Mahathir criticised the “China deal” and the East Coast Rail Line (ECRL) project, it was just one of the many issues confronting Malaysia today. How the people look at the government is not solely determined by this single criticism alone. Hence, even if Minister Abdul Rahman Dahlan has successfully rebutted Mahathir’s criticism, the view of the people may not have altered much. There are still numerous other unanswered issues that have remained protracted and controversial.
But even within the confines of the China deal and the ECRL project, there are numerous other questions that we could have asked. First, when Rahman claimed China’s “soft” loan was favourable to Malaysia, he must have assumed China was a simpleton we could take advantage of. It is nice to eat something soft, but be careful of the bones embedded in it. It is almost a cliché when I say there is no free lunch in this world.
Second, the Minister claimed that the soft loan was denominated in the ringgit and so it posed no foreign exchange risk. But what about repatriation of interest charges and profits by Chinese companies? The loan may be denominated in the ringgit, but repatriation of profits and interests may drain our reserves since the rail project has no forex earning capacity.
Third, why the urgency to embark on the ECRL project when government finances are less than conducive? When we borrow, more so from external sources, for an infrastructure project, the justification must be respectable. Does the east coast region suffer from transportation capacity problems right now? Even the existing highways are half empty there.
Fourth, the minister claimed “transfer of technology” when the ECRL project is implemented. I think herein lies our problem – when we are incapable of doing anything worthwhile, what we need is to go on talking about it. Seriously, if Malaysia needs transfer of technology to lay the rail track, we know that this term has been overused and abused.
As an “economics minister”, we expect more comprehensive and professional answers from Rahman. Many can become politicians, but only very few can be economics ministers.
“It is simple; the annual budget can’t instil discipline if there is no oversight. The annual budget can’t function as an instrument of control if borrowing and off-budget activities are allowed to roam free, unrestrained and unchecked.”–T K Chua
When I read “Why I didn’t watch the Budget speech” as written by Kensi from Sarawak, I found my feelings were the same. For the first time in a quarter century I did not sit through the whole Budget speech. I walked off after the first hour or so.
The Budget has long lost its aura. It is just an annual pomp for fund managers to get excited and for the government to announce some goodies. Whether or not the goodies are carried out as planned is as good as anyone’s guess.
Malaysia’s National Budget is Petty Cash for this First Couple. When the cash is finished, just borrow more or ask Bank Negara to print more money and then pass the burden to ordinary Malaysians by way of debt service or inflation. That is Najibonomics: Tax and Spend recklessly.–Din Merican
Why do I say our federal budget is meaningless?First, the annual budget has never capped the amount of borrowing that the federal government could incur each year. If the federal government may borrow without restraint, who bothers whether our projected revenues and expenses are adhered to? If revenues fall short, the government could borrow more to fill the gap. If expenses burst the budget, again the government could borrow more.
Where are the restraints and control that the annual budget is supposed to provide? In fact, the annual supplementary budgets are clear indications that the budget has failed to keep government financial indiscipline in check. The government will borrow and spend as it wishes, regardless of the revenue performance or actual expenditure incurred.
Second, the annual budget is just a mechanism to dish out allocations, but never to accomplish its intended outcomes. We mistakenly look at the allocation earmarked for each programme as if it is a fait accompli.
But this is far from true. For example, just look at the allocation for subsidies which the government has always bragged about. It is time for the government to list out how much of the allocation has reached the intended target groups and how much of it was siphoned off by corrupt officials, businessmen and those who could indulge in arbitrage.
Seriously, if budget spending has been constantly effective over the years, I believe there would be no more poor people in this country.
Third, the annual federal budget is no longer the true representation of government financial commitment and responsibility. Off-budget agencies and activities have now overwhelmed traditional government ministries and departments.
Parliamentary oversight of government taxation and expenditure through the annual budget is at best only half correct.
When non-financial public enterprises and GLCs set up ventures, incur debt and impose contingent liabilities on the government, did they get the approval of Parliament to begin with? When government decides on privatisation projects, including guaranteeing revenues and profits of privatised entities, did it seek the approval of Parliament?
This guy is excited about the Budget–He is the Minister of Defense: Commissions
I thought the Federal Constitution, (through Part VII – Financial Provisions), is very clear on financial oversights by Parliament – no taxation shall be levied or expenditures incurred unless with expressed authority of federal law. How then did the government spend and borrow so massively through off-budget agencies such as GLCs and Non-financial public enterprises?
It is simple; the annual budget can’t instil discipline if there is no oversight. The annual budget can’t function as an instrument of control if borrowing and off-budget activities are allowed to roam free, unrestrained and unchecked.