New Prime Minister Datuk Seri Anwar Ibrahim has been welcomed by many like a breath of fresh air. But can he cleanse the nation of the many ills it now suffers? It remains to be seen.
MY retired brother called from Penang the other day. He had yet to get his pension and needed some cash. Why? I asked. “Anwar has won and I want to celebrate with my friends,” he cheered. He is just one of many who are anamoured of our new Prime Minister.
There is also this man in Bukit Mertajam, Datuk Seri Anwar Ibrahim’s hometown, who is buying everyone meals at restaurants around town.
Elsewhere, a large non-Muslim crowd gathered outside a mosque as Anwar prayed inside. And they mobbed him when he came out. Everywhere he goes, the PM is being cheered.
He’s probably the most welcomed Malaysian chief executive in living memory. It’s all quite exciting, but I think the celebrations are also a bit premature.
Yes, it has been a long wait for him, his supporters and those who have been rooting for him all these years. He has been the underdog, facing failure after failure, falling every time he believed he had reached the pinnacle.
It’s the kind of story that would touch any heart.
But it’s only the beginning. Now is not the time to put him on a pedestal. He has much to prove, and he could fall off that high horse any time, just as the last three prime ministers did.
The plotting is going on. Those who do not like the idea of him being PM will do their best to bring about his downfall.
It happened before in 2020 with the Sheraton Move; and even days after Anwar’s appointment, there was talk of a Tropicana Move.
That has been denied, but his performance will be under intense scrutiny. There will be little room for relaxation.
His first task just got done. He has named his full Cabinet, obviously done with much juggling, putting together a unity government that will keep everyone happy and yet meet his promise of a small Cabinet.
If that was hard, the really herculean task awaits now.
There is so much wrong with our country now – an economy in the doldrums, a ringgit that’s floundering, an education system that’s well off the mark, and a population that’s deeply divided.
There’s so much to do – or undo.
I say undo because Anwar himself may be responsible for some of those maladies. He was once Education Minister – way back in 1986 – and started a revolution in the system.
He is the man credited with Islamisation of our schools, and the growth of religious schools, while working with then Prime Minister Tun Dr Mahathir Mohamad.
Those actions have come back to bite him, say analysts. Two weeks ago, his daughter lost the Permatang Pauh seat, held by members of his family since 1980, to a tahfiz teacher.
Anwar, and his Angkatan Belia Islam Malaysia (Abim), were the driving force behind such schools.
The children in many of these schools are being taught to only vote for a certain party, and with Undi18 now law, there was a flood of such voters, the analysts say.
With the mushrooming of religious schools, the days when children of all races laughed, played and mixed in schools seem to be long gone.
Now, schools are divisive. Even the syllabus has been questioned with Malays themselves asking why there are so many religious classes and too few teaching modern-day living skills like English, science and technology, computer know-how and things like that.
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The Chinese and Indians are flocking to vernacular schools, leaving the national school system largely to the majority Malays. So many Malays are also migrating to these vernacular schools.
Already, there is a call for one stream of education for all. I think it’s too early for that too. We first need to make the national school system the one of choice. For that, a good Education Minister is needed, as is a revamp of the school syllabus. Fadhlina Sidek and Datuk Seri Khaled Noordin have a lot to do.
We have heard the perennial complaints – discrimination in matriculation places, the closure of canteens during Ramadan, children forced to eat in the toilet and odd corners, non-Muslim children being left to their own devices during agama classes ... the list is long.
Public universities too need to be places where a Malaysian identity can be forged, not where differences are reinforced.
A National Unity Minister who sincerely believes in his job could be a big help. Aaron Ago Dagang, a man from Sarawak, could be the right choice.
There is a lot we can learn from the Borneo states, which have retained much of the old-world charm that places like George Town, Klang, Johor and even Kuala Lumpur once had; the days when Chinese coffee shops housed nasi kandar stalls and people of all races sat together at the same table, eating and drinking together.
Even my mee jawa man had prawn and beef broth for his different clientele, each with a different wok.
Then there’s the minister for Religion. We have all heard about the one from Indonesia; his mantra is that he is a minister for all religions – Islam, Christianity, Hinduism or Buddhism.
It was not so the last time for the minister in Malaysia. He believed his job was only to cater to the religion of the federation.
What we need is a minister who looks at the similarities among religions, all of which preach peace and unity, not one who considers his religion superior and therefore untenable with the others.The Rulers have got it right. They have called for an end to all extremism, religious or racist, and for unity to be the main consideration. It is important that the government works towards bringing the bitterness to an end.
“I hope there are no more leaders who will raise racial or religious issues to provoke the people,” said Negri Sembilan’s Tuanku Muhriz ibni Almarhum Tuanku Munawir.
They also want the Rukun Negara, whose first tenet is “Belief in God”. It does not say which religion. The supremacy of the Constitution and the rule of law are also important.
Now, it is up to the new PM. He has his job cut out for him. The honeymoon with the voters and adulation of the supporters will be over real soon.
The work – and it’s a lot of hard work – will have to begin. The pitfalls and booby traps are many. His supporters have faith that he will make it.
Five years from now – if Anwar succeeds as a unifying PM – we can celebrate as a nation. For now, though, I am holding that champagne, or non-alcoholic beer as the case may be.
Anwar says he took Finance Ministry to bring new policies
PUTRAJAYA: Prime Minister Datuk Seri Anwar Ibrahim, who appointed himself Finance Minister in his new Cabinet, is hoping to
restore economic confidence through new policy approaches.
“I was not inclined (to take on the post), but I want to embark on new policy approaches and restore economic confidence among local traders as well as foreign investors.
“I
will be assisted by a strong team that isn’t only civil servants, but also a group of advisers who will not burden the government’s coffers,”
he said in announcing his Cabinet at Perdana Putra here yesterday.
In the follow-up press conference, Anwar said the Finance Ministry will be
assisted by several advisers led by former PETRONAS president and chief executive officer Tan Sri Mohd Hassan Marican.
Meanwhile, Anwar said the new Cabinet members will be sworn in at 3pm today.
“I
will have a special meeting with the ministers so I can convey several matters to them, such as new rules, direction, and new methods,” he
said.
Anwar said ministers should begin their duties soon and he advised them to avoid wastage, bribes and power abuse.
“I have made it clear to the Cabinet that the unity government prioritises good governance and the need to reduce the people’s burden, as well as stimulating the economy,” he said.
The Prime Minister said his Cabinet, which comprises 28 ministers, is a clear signal to the people that the unity government, together with the civil service, will ensure its promises to the people are fulfilled.
The last prime minister who also served as a finance minister was Datuk Seri Najib Razak.
Anwar had served as finance minister and deputy prime minister to then
premier Tun Dr Mahathir Mohamad before being sacked in 1998.
Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz announced on Friday (Oct 7) that RM372.3 billion will be set aside for Budget 2023 versus last year’s RM332.1 billion allocated in the previous budget.
In tabling Budget 2023, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said the government has allocated RM15.bil for the Higher Education Ministry and RM6.7bil for various Technical and Vocational Education and Training (TVET) activities.
Budget 2023: Income tax cut by 2% for RM50,000-RM100,000 taxable range
The personal taxation rate will be reduced by 2% on taxable income ranging from RM50,000 to RM100,000 for domiciled individuals.
In tabling Budget 2023 in Parliament on Friday (Oct 7), Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said for the taxable income range RM50,001 to RM70,000, the rate will be reduced from 13% to 11%.
[LIVE] Tabling of 2023 Budget in Parliament
[LIVE] Special programme on 2023 Budget with former finance minister II Datuk Seri Johari Abdul Ghani and PKR deputy president Rafizi Ramli.
PETALING JAYA: Finance Minister Tengku Zafrul Aziz has tabled Budget 2023, announcing an allocation of RM372.3 billion.
This represents a RM40.2 billion increase compared to the RM332.1 billion allocated for 2022.
Around RM272.3 billion has been allocated for operational expenditure and RM95 billion for development.
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Here are the highlights of Budget 2023:
Education
RM55.6 billion allocated for education, the biggest in the budget for a ministry.
RM825 million in early school aid for students, with students receiving RM150 regardless of their parents’ incomes.
RM777 million for supplementary food programme (RMT), benefiting 800,000 students and 7,300 canteen operators.
RM2.3 billion to ensure students have a conducive and safe learning environment.
RM1.1 billion to repair and maintain all schools, including vernacular and religious schools.
RM430 million to construct five new schools in Sabah, Sarawak, Terengganu, Cyberjaya and Selangor.
RM20 million to improve facilities in special needs schools.
RM188 million to set up 10 Kemas daycare centres.
Development
RM1.5 billion for sustainable development.
RM562 million to implement the Sabo dam project.
RM510 million to improve road infrastructure to Pengerang.
Pan Borneo Highway to be completed by 2024.
RM11.4 billion for maintenance and repair of existing government buildings.
RM5.2 billion for maintenance of state roads.
RM150 million for the development of border towns near Thailand and Kalimantan.
RM3.7 billion for small and medium projects across the nation.
RM500 million on G1-G4 infrastructure projects.
Social Welfare
In total, Putrajaya will spend RM10 billion in welfare and Bantuan Keluarga Malaysia (BKM) aid.
RM2.5 billion in welfare aid benefiting 450,000 households.
RM2,500 in BKM aid for households earning less than RM2,500 monthly.
Up to RM1,250 BKM aid for singles and RM3,000 for single parents.
One-off RM500 incentive for female BKM recipients who give birth in 2023.
RM7.8 billion for BKM which will benefit 8.7 million people.
RM1 billion in welfare aid for the elderly.
RM1.2 billion to support disabled people to be financially independent.
RM10 million in e-hailing vouchers for the disabled.
RM8 million for social support centres.
RM734 million for MySalam programme. This will benefit 1.5 million people from the B40 group.
Voluntary Employees Provident Fund (EPF) contributions raised from RM60,000 to RM100,000 a year.
RM21 million in grants for operators of welfare homes.
Limits for Amanah Saham Bumiputera (ASB) and ASB2 savings to increase to RM300,000.
Government to provide incentives to establish more daycare centres for the disabled.
RM120 million for Kasih Suri Keluarga Malaysia programme, benefiting 200,000 housewives.
Security
RM431 million to procure new assets for the police.
RM42 million to upgrade police quarters.
RM118 million for the maintenance of armed forces homes.
RM28 million to upgrade prison staff quarters.
RM73 million to enhance cybersecurity.
The government will set up a national scam response centre.
Health
Total of RM36.1 billion allocated for the health ministry.
RM11 million for subsidies for mammograms and cervical cancer screening.
RM20 million to promote Malaysia as a medical tourism destination.
RM4.9 billion for public healthcare.
RM420 million to repair dilapidated hospitals and clinics.
RM1.8 billion to purchase new equipment for hospitals and clinics.
The government to set up a mental health centre of excellence.
RM10 million to purchase 3D printing machines for dental health services.
Allocations to treat rare diseases increased to RM25 million.
RM80 million for Socso health screening programme.
RM15 million for Agenda Nasional Malaysia Sihat programme to encourage healthier lifestyles.
RM80 million for the PEKA B40 programme.
Import duty and sales tax exemptions for nicotine replacement therapy products.
Economy
RM235 million to support the development of female entrepreneurs.
RM50 million for young trader scheme under Bank Simpanan Nasional.
2% reduction in income tax of micro SME operators.
One-off RM1 billion grant to all registered MSMEs and taxi drivers. To benefit one million recipients.
RM45 billion Semarak Niaga funds for entrepreneurs.
RM10 billion in funds from Bank Negara Malaysia (BNM) to automate and digitise SMEs.
RM200 million to boost income and productivity of smallholders.
GLCs and GLICs to invest up to RM50 billion in 2023.
Government-linked companies (GLCs) and government-linked investment companies (GLICs) to invest RM50 billion in 2023, including RM45 billion in direct domestic investments.
The government will provide incentives for multinational companies to establish operations in Malaysia.
RM100 million to support development of local technology companies.
RM10 million in matching grants allocated to help SMEs.
RM800 million to provide RM100 e-wallet credit for 8 million people in the M40.
Petronas will contribute RM2 billion to the National Trust Fund (KWAN).
RM1.4 billion to boost connectivity in the five main economic corridors.
Civil service
RM100 subsidy for civil servants for insurance coverage.
RM1.5 billion for RM100 increment for all civil servants between Grade 11 to Grade 56.
RM1.3 billion for one-off RM700 special aid for 1.3 million civil servants under Grade 56.
RM350 one-off aid for one million retired civil servants.
Aidilfitri aid for civil servants increased to RM600.
Special leave for over 500,000 teachers.
Higher education
RM15.1 billion allocated for the higher education ministry.
RM3.8 billion for scholarships and education loans.
RM6.6 billion for Bumiputera education loans.
RM6.7 billion for TVET training and education.
RM180 million to fund TVET training, benefitting 13,000 trainees.
Up to 20% discounts for PTPTN repayments from Nov 1 to April 30, 2023.
Environment
RM15 billion for flood mitigation initiatives.
RM2 billion to build retention ponds.
RM500 million to widen rivers in Kelantan.
RM3 billion for Green Technology Financing Scheme (GTFS).
RM150 million from Khazanah Nasional Berhad to support development of green projects.
RM165 million for Tenaga Nasional Berhad (TNB) to set up solar rooftops and EV charging stations.
Carbon tax to be introduced.
100 million trees to be planted by 2025.
The government will step up forest restoration projects.
RM100 million for ecological fiscal transfer (EFT).
RM36 million to support conservation of elephants and other endangered species.
RM216 million to clean rivers nationwide.
Job creation and community support
The MyStep programme will provide 50,000 jobs including 15,000 in the public sector and 35,000 in government-linked companies (GLCs).
RM750 million to upskill 800,000 workers.
RM100 million for Mitra to develop entrepreneurs.
Socso to provide incentives for employers to hire the disabled, Orang Asli, ex-convicts and women returning to work. The incentive worth up to RM750 a month will be given for three months per employee.
Socso will provide incentives for employers to hire jobless youths.
RM50 million to boost Bumiputera commercial property ownership.
RM20 million to set up new urban transformation centres (UTC).
RM11 million on mobile bank initiatives.
RM63 million for development of human capital.
RM50 million to support development of female contractors.
RM100 million for Khazanah’s Yayasan Hasanah to conduct various community initiatives.
Sabah and Sarawak
Total RM11.7 billion allocated for Sabah and Sarawak.
RM1.2 billion to improve the infrastructure in dilapidated schools in Sabah and Sarawak.
RM209 million to subsidise air travel to rural areas in Sabah and Sarawak.
RM1.5 billion to improve transport infrastructure in Sabah and Sarawak.
RM100 million to improve the water supply system in Sarawak.
RM250 million for expansion of the Sapangar Bay Container Port (SBCP).
Taxes
Personal income tax reduced by 2% for those earning between RM50,001 to RM100,000.
This will benefit over one million people in the M40.
Income tax exemptions of up to RM3,000 for Tadika and daycare fees.
Tax incentives to attract investors.
Government reiterates implementation of Tax Identification Number to widen tax base.
Tax incentives for local pharmaceutical companies will be extended.
Tax incentives and RM50 million to support development of aerospace components.
The government will provide special incentives for investors in the chemical and petrol chemical industry.
Import duties and sales tax exemptions for the purchase of film equipment.
Tax incentives for NGOs involved in sports at the grassroots level.
Tax incentives for green initiatives extended to Dec 31, 2025.
100% income tax exemption for manufacturers of EV charging parts.
Additional tax deductions for employers who hire former residents of juvenile institutions.
Government to introduce qualified domestic minimum top-up tax.
Tourism
RM200 million to promote tourism recovery.
RM90 million in grants to promote tourism activities.
New chartered flights to and from East Asia and the Middle East.
RM10 million to promote eco-tourism.
RM25 million in incentives to promote domestic tourism.
RM500 million in tourism financing from BNM.
RM10 million for the ThinkCity initiative in Kuala Lumpur.
Arts and Culture
RM50 million to support the local film industry.
RM102 million to support local artists.
RM5 million to strengthen national language programmes.
RM10 million to support preservation of local languages and cultures.
Commodities
RM200 million to subsidise the logistic cost for the distribution of essential goods.
The government will hold Keluarga Malaysia sales offering essential items at more affordable prices.
The government will continue measures to combat the illicit cigarette trade.
RM20 million in matching grants to support development of local products.
RM10 million to support the made in Malaysia campaign.
RM92 million for development of the halal industry.
Approved permit fees for import of EVs extended to Dec 31 next year.
RM256 million in monsoon aid for rubber smallholders.
Agriculture
RM1.8 billion in subsidies for farmers and fishermen.
RM228 million in aid for padi farmers. This will benefit 240,000 people.
The government will introduce an agriculture protection scheme.
RM1 billion to fund agrofood programmes.
RM56 million to support sustainable farming.
RM315 million for rubber planting programmes.
RM40 million to encourage smallholders to diversify their crops.
RM70 million to support the Malaysian Sustainable Palm Oil (MSPO) certification programme.
The government will support automation initiatives in the plantation sector.
Defence
RM17.4 billion for the defence ministry, including RM4 billion for the purchase of new military assets.
RM485 million for the maintenance of all MMEA ships and boats.
RM330 million for EV infrastructure.
Transport
RM180 million to improve bus services in Melaka, Kedah, Kota Kinabalu and Kuching.
Continuation of My50 RapidKL monthly pass to benefit 180,000 users.
RM16.5 billion for major transport infrastructure projects.
RM50.2 billion for the MRT3 project.
RM1 billion for the maritime and logistics industry.
Housing
Stamp duty discounts of up to 75% for houses worth between RM500,000 to RM1 million.
RM10 stamp duty for properties transferred between family members.
RM367 million to build people’s housing projects (PPRs), to benefit 12,400 new residents.
RM3 billion for housing credit guarantees.
RM40 electric bill subsidy to be extended.
Digital connectivity
Phase 2 of the Jendela project to involve RM8 billion in investments, including from industry players.
RM700 million allocated for Jendela to expand digital connectivity in 47 industrial areas and 3,700 schools.
Digital Nasional Berhad (DNB) to spend RM1.3 billion in infrastructure development to widen 5G internet coverage nationwide.
Youth and sports
RM305 million in loans for youths to start businesses.
The government will introduce a special internet package for youths at RM30 for three months.
RM400 million to continue the e-Pemula scheme, which will benefit two million youths aged 18 to 20.
The government will bear the costs of e-hailing, taxi, and motorcycle licences for youths.
RM145 million to improve sporting infrastructure nationwide.
RM154 million to develop the local sporting ecosystem.
RM20 million to develop a drag race circuit.
RM13 million to develop e-sports.
RM12 million to support disabled athletes.
Rural communities
RM305 million for the Orang Asli community.
RM2.6 billion for Felda, Felcra and Risda.
RM472 million to improve rural electricity infrastructure.
RM54 million to build 85 new bridges in rural areas.
Disaster management
Additional RM400 million in allocation for the National Disaster Management Agency (Nadma) to prepare for year-end floods.
RM100 million allocated for the national disaster relief fund.
RM20 million in grants for community associations to assist in natural disasters.
Others
RM1.5 billion for Islamic development.
RM150 million for the maintenance and repairs for educational facilities under Jakim.
RM364 million for research and development for higher education as well as science, technology and innovation ministry.
RM30 million to improve I-Saraan programme that will benefit 100,000 people.
All self-employed people will be required to contribute to Socso from next year onwards.
The government will introduce e-invoice similar to initiatives in France and Brazil.
The government will table a consumer credit bill in the second quarter of 2023.
Building LONG TERM WEALTH with Stocks & Avoid FAKE GURUS | FIRL Podcast 36
Ng Zhu Hann of Tradeview.my shares his journey from London School of Economics, to becoming a long term stock investor and the author of Once Upon a Time Bursa. He passionately writes on his blog, Tradeview.my to educate retail investors on investing and to avoid fake gurus. He also mentions that retail investor participation is at all all time high in 2020. However, he makes the most wealth during the bear market and says dividend yields, earnings and cash flow are time tested theorem that generate wealth and not short term goals.
More effort needed to educate the young investing
With thousands of new and young retail investors participating in the local bourse in the last two years, more effort is needed from capital market regulators and the private sector to improve financial literacy, particularly among the youth, say market observers. `
Ng Zhu Hann, who is the CEO of Tradeview Capital and author of “Once Upon A Time In Bursa”, told StarBiz that brokerages and investment banks could not afford to neglect providing first-time retail investors with “the tools to understand the stock market”. `
“Once you lose money, or whatever savings that you have, you would never return to participate in the stock market because you may think the market is rigged against you. That is human nature,” he said. ` According to the Securities Commission’s (SC) annual report 2021, an investor survey focused on the youth found that only 3% of youths have a high-risk appetite regarding the level of risk they were willing to take for investments.
“This may suggest that risk aversion has set in due to the pandemic,” said the SC survey. `
The Nielsen Company (M) Sdn Bhd was commissioned by the SC to conduct the survey on its behalf. `
However, on capital market products and their associated risks, the survey showed that respondents viewed investments in Amanah Saham Bumiputera (ASB) as low-risk. `
“In comparison, 70% of the respondents perceived stocks and shares to be high-risk. Overall observations suggested that respondents perceived the capital market products as high-risk and this perception was consistent across the demographic profiles,” said the SC survey. `
Ng also noted that according to Bursa Malaysia, following a similar trend in 2020, 63% or about two-thirds of the new 223,249 individual central depository system accounts opened in 2021 were by millennial investors (aged 26 to 45 years of age). `
He pointed out that many of the new millennial investors had lost money when they got caught up in the penny stock or glove stock mania in the last two years. `
“They had no prior investing experience, and lost money, and that becomes a problem. That is why more should be done in terms of investor education,” said Ng. `
Meanwhile, Rakuten Trade head of equity sales Vincent Lau noted that the regulators of the Malaysian capital markets have made many efforts to educate retail investors, in an era where investing via new and innovative digital platforms is the norm. `
“Online resources like Bursa Marketplace have been very crucial in educating new retail investors, which increased tremendously in numbers during the pandemic-related lockdowns in the last two years,” he said. `
Lau also pointed out that with the younger generation pivoting towards buying, selling and storing crypto currencies, Malaysian regulators have been staying in tune with the demands of the digital era with the approval of crypto currency platforms like MX Global, Tokenize and Luno. `
“Digital banks are also coming, and new fintech will enable and attract the younger generation to explore various investment options,” he said. `
Lau pointed out that Rakuten Trade, as an online stock trading platform, has been actively holding corporate and investment webinars. `
Ng said it was not surprising that the youth would view investments in ASB and fixed deposits as low-risk, compared with equities.
“If you invest in equities by yourself, without the proper understanding and knowledge, it is just like gambling, right? But I think that equities in fact, is not the most high risk asset class.
I am seeing a very unhealthy trend of youngsters, who have never even invested in equities in their life, actually jumping into crypto currencies,” he said. ` The SC’s annual report also said RM21bil in investment in digital assets are across all registered digital asset exchanges (DAX) in 2021. ` Digital asset accounts jumped 300% to 760,000 in 2021 (from 190,000 in 2020). ` About 62% of investors in crypto currencies on the DAXs are below the age of 35, according to the SC as at end-2021. ` The regulator also observed that last year, non-fungible tokens (NFTs) became a hot trend among artists and collectors. `
Ng pointed out that unlike crypto currencies which are not regulated, there is a lot of regulation, oversight and transparency when it comes to investing in equities. `
“Compared with less developed markets, I believe Bursa ranked among the best, along with Singapore Exchange and the Hong Kong Stock Exchange, in terms of the regulators,” said Ng. `
In the SC’s annual report, the survey also showed that investment decisions of the youth were not based on fundamentals, but mainly driven by socio-economic status, family, friends, influencers as well their perceptions of the products and brands. `
It also revealed that there was also familiarity bias among the respondents, choosing to invest in products that they were already familiar with. `
Ng said while there was plenty of information available on company websites and annual reports, first-time investors may not know how to decipher or dissect the data. ` “They would go for financial investment talks and hope that the guru would teach them, which is very dangerous. The problem is there are many fake gurus today in the market, who just want to make money, and they are not even licenced,” he said. `
Ng suggested regulators could allocate more resources in disseminating financial information via social media, and also working with professional or non-profit organisations to improve financial literacy among the youth. `
“Under the Continuing Professional Development (CPD) framework, perhaps a revision can be done where CPD points can be earned by contributing pro bono, or helping society in terms of improving financial literacy,” he said.
Easing restrictions: A representation of the virtual cryptocurrency
bitcoin. The Monetary Authority of Singapore is against clamping down on
crypto. — Reuters
SINGAPORE: Singapore is seeking to cement itself as a key player for cryptocurrency-related businesses as financial centres around the world grapple with approaches to handle one of the fastest growing areas of finance.
“We think the best approach is not to clamp down or ban these things,” said Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), which regulates banks and financial firms.
Instead, MAS is putting in place “strong regulation”, so firms that meet its requirements and address the multitude of risks can operate, he said in an interview.
Nations differ vastly when it comes to how they handle crypto: China has cracked down on large amounts of activity in recent months, Japan only recently allowed dedicated crypto investment funds – though El Salvador has embraced bitcoin as legal tender.
In the United States, while there are an abundance of options for investing in the burgeoning asset class, regulators are concerned about everything from stablecoins to yield-generating products.
“With crypto-based activities, it is basically an investment in a prospective future, the shape of which is not clear at this point,” said Menon, who has helmed the MAS for about a decade.
“But not to get into this game, I think risks Singapore being left behind. Getting early into that game means we can have a head start, and better understand its potential benefits as well as its risks.”
The stakes are high for the small island nation, which has already earned a reputation as a global wealth hub. Singapore must raise its safeguards to counter risks including illicit flows, Menon said.
The city state is “interested in developing crypto technology, understanding blockchain, smart contracts and preparing ourselves for a Web 3.0 world,” he said, referring to the third generation of online services, which will be a key theme during the Singapore Fintech Festival that MAS will host next week.
Menon acknowledged that banks and other financial institutions will face certain challenges with the decentralisation of finance. Still, Singapore wants to be “well positioned” for 2030 when “an economy of tokenisation” may come, he said.
Singapore isn’t the only place with crypto ambitions. Locations as diverse as Dubai, Miami, El Salvador, Malta and Zug in Switzerland, are also making efforts.
It can be a fine line to tread, given the crypto industry grew up with few regulations, so many players balk at government officials’ attempts to impose guardrails.
Singapore’s approach has attracted crypto firms from Binance Holdings Ltd, which has had a series of run-ins with regulators around the world, to Gemini, a US operator targeting institutional investors, to set up base.
Some 170 companies applied for a MAS licence, taking the total number of firms seeking to operate under its Payment Services Act to about 400, after the law came into effect in January 2020.
Since then, only three crypto firms have received the much-coveted licences, while two were rejected. About 30 withdrew their application after engaging with the regulator.
Among those approved is the brokerage arm of DBS Group Holdings Ltd, Singapore’s largest bank, which is also a pioneer in setting up a platform for trading of digital tokens while offering tokenisation services.
The regulator is taking time to assess applicants to ensure that they meet its high requirements, Menon said. The MAS has also boosted resources to cope with high volumes of prospective services operators, he said.
“We don’t need 160 of them to set up shop here. Half of them can do so, but with very high standards, that I think is a better outcome,” he said.
Menon said the benefits of having a well-regulated local crypto industry could also extend beyond the financial sector.
“If and when a crypto economy takes off in a way, we want to be one of the leading players,” he said.
“It could help create jobs, create value-add, and I think more than the financial sector, the other sectors of the economy will potentially gain.” — Bloomberg
The theme for Budget 2022 is "Keluarga Malaysia, makmur sejahtera" (Malaysian family, prosperous and peaceful).
Finance Minister Tengku Zafrul Abdul Aziz said it is based on three core concepts "rakyat yang sejahtera" (people's wellbeing), resilient businesses and a prosperous economy.
Screengrab from the live broadcast of the Budget 2022 speech from Parliament on Oct 29, 2021.
PETALING JAYA: Tengku Datuk Seri Zafrul Abdul Aziz has started delivering his Budget 2022 speech in Parliament here on Friday (Oct 29).
The Finance Minister is expected to deliver a Budget in line with the Malaysian Family concept, which will concentrate on the country's recovery after the Covid-19 pandemic.
On Wednesday (Oct 27) Prime Minister Datuk Seri Ismail Sabri Yaakob said Budget 2022 was from the people, by the people, for the people and would be of high impact for all layers of society and businesses.
Ismail Sabri said Budget 2022 would also generate more jobs to tackle unemployment and enable the recovery process to return the country and its economy to the pre-Covid-19 pandemic with new norms in place.
He added that Budget 2022 was drawn up carefully and comprehensively, taking into account the views of all quarters,
including Opposition parties.
Here are the highlights of the Budget 2022 speech as they are delivered:
Budget 2022 allocation
Budget 2022 has a total allocation of RM332.1bil, the largest-ever for the country. This surpasses Budget 2021 allocation of of RM322.54bil.
Tengku
Zafrul said this involves RM233.5bil in administrative expenses, RM75.6bil in development, RM23bil for the Covid-19 fund and RM2bil for unexpected expenses.
Family focus
The Bantuan Keluarga Malaysia outlined in Budget 2022 will benefit over 9.6 million recipients with an allocation of RM8.2bil.
Households with three children or more with household income less than RM2,500 will receive RM2,000 in aid. An extra RM500 will be given to for single mothers/fathers with dependents and monthly income of up to RM5,000. This means single mothers/fathers with three children and above are entitled to a maximum RM2,500 in aid.
An additional allocation of RM300 will be given to senior citizens.
Overall, RM2.4bil in welfare aid is allocated to benefit over 440,000 households.
Education first
Education gets the biggest slice of the pie in Budget 2022 with RM52.6bil for the Education Ministry and RM14.5bil for the Higher Education Ministry.
Tengku Zafrul said this includes RM450mil in aid to be provided to three million students.
Health matters
Health Ministry gets an allocation of 32.4bil, the second-largest after the Education Ministry.
From the allocation, RM2bil will be channeled to purchase of vaccines and RM2bil for additional Covid-19 expenses.
He added that the government would be purchasing another 88 million doses of vaccines, which includes the third dose for children between the ages of 12 and 17.
PTPTN repayment incentives
Government to give discounts to PTPTN borrowers for payments from Nov 1 to April 30.
Borrowers will get a 15% discount for full settlement; 12% for payments of at least 50% of the outstanding balance in a single payment. Those who make repayments through salary deduction or scheduled direct debit will get a 10% discount.
Just for jobs
Allocation of RM4.8bil to create 600,000 job opportunities under the JaminKerja initative.
With a target of 300,000 hires, the initiative will offer incentives to employers such as 20% of the first six months' pay, and 30% of the following six months pay for hired employees making above RM1,500.
Among others, RM1.1bil has been allocated for training and upskilling programmes for 220,000 trainees.
The Technical and Vocational Education and Training (TVET) sector will receive an allocation of RM6.6bil under Budget 2022.
Tengku Zafrul said the focus is on eeting industry needs and an additional allocation of RM200mil has been allocated for joint venture programmes with industries.
Boosting healthy lifestyles
There will be an excise duty imposed on nicotine-based gel or liquid products
for vaping and electronic cigarettes, says the Finance Minister.
"Towards a healthy lifestyle the government plans to broaden the scope of excise duty to include premix sugary drinks made from chocolate, malt, coffee and tea," said Tengku Zafrul.
Women matters
The goverment will make it mandatory for all publicly-listed companies to appoint at least one woman to its board of directors.
Tengku Zafrul said RM5mil would also be allocated for the Women Leadership
Foundation to encourage female participation in the economic sector.
Free self-hygiene kits will be given to young women in the B40 category monthly, which will benefit some 130,000 youths nationwide.
Tengku Zafrul added that RM11mil would be allocated for free mammogram and cervix examinations.
New villages
A total of RM200mil has been allocated for the Chinese community, among them for the purpose of upgrading Chinese new villages, as well as financing schemes for the small and medium enterprises (SMEs).
RM145mil has been set aside for the Indian community, among them for the implementation of programmes to strengthen the community's social economy through Tekun Nasional, the national Entrepreneurial Group Economic Fund, under the Indian Entrepreneurs Development Scheme.
Levelling up eSports
To push the eSports industry in the country, RM20mill will be allocated under Budget 2022.
This includes RM5mil to develop an excellence centre for drone sports in the country.
Housing for all
RM1.5bil has been allocated for continuing low-cost housing projects. Another RM2bil allocated for housing credit guarantee scheme to help those without a stable income to buy a house.
Tengku Zafrul also said the government would no longer impose the real property gains tax (RPGT)
on Malaysians, permanent residents and companies when they dispose of their real property assets from the sixth year onwards.
For sporting excellence
To further improve the national Paralympics team, the National Sports Council (NSC) will receive a RM10mil allocation. This is to enhance training programs and organise leagues for various sports to prepare for
the 2024 Paris Paralympics.
RM158mil will be allocated to renovate, enhance and build sporting facilities around the country.
RM50mil will be allocated to encourage people to continue leading an active lifestyle.
Cash in hand
Employees’ contribution rate to the Employees Provident Fund (EPF) that was reduced to 9% in 2020 will remain until June 2022.
Boost for youths
A RM300mil allocation to provide RM150 in credit into eWallets of youth
aged 18 to 20 who are students at institutions of higher learning.
Lower vehicular taxes continue
To
reduce the cost of vehicle ownership, the government will extend the 100% sales tax exemption on completely knocked down (CKD,
locally-assembled) passenger vehicles and 50% on completely built-up
(CBU, imported cars) including MPVs and SUVs for six months until June 30, 2022.
The exemption was introduced by the government in 2020 to drive sales in the automotive sector which was affected by the Covid-19 pandemic.
Defending the nation
The Defence Ministry will get an allocation of RM16bil, of which RM1.6bil is to upgrade the readiness of main assets of the Armed Forces. This allocation also involves RM14mil to replace main equipment of Naval Special Forces (Paskal) and Air Force Special Forces (Paskau) such as parachutes, closed-circuit diving equipment and boats.
e-vehicles to get a power up
Tengku Zafrul said the government sees the potential of electronic vehicles (EV) to minimise pollution, and therefore plans to give up to 100% exemption of import and excise duties as well as sales tax.
Road tax exemptions of up to 100% will also be given out for electronic cars.
Tax relief of up to RM2,500 will be given for the purchase, assembly, renting and leasing of EVs.
Tourism budget
A total of RM1.6bil has been allocated for the tourism industry. RM600mil will be allocated under the Penjana Tourism Financing dan BPMB Rehabilitation Scheme while RM85mil will be go towards a three-month special assistance for over 20,000 tourism operators.
Zafrul also announced matching grants for the purpose of the renovation of budget hotels and homestays, with an allocation of RM30mil.
To spur domestic tourism, the RM1,000 tax rebate will be extended until 2022.
Sabah and Sarawak
The two states will receive increased development allocations of RM5.2bil and RM4.6bil respectively under Budget 2022.
Fisheries and agriculture
RM1.7bil allocated for the various incentives and subsidies for the fisheries and agriculture industries.
Please folllow The Star's coverage of Budget 2022 here.
According to Bank Negara’s Financial Stability Review report for the first half of 2021, Malaysia’s household debt to GDP has declined to 89.6% from 93.2% as at end of last year. Although a small achievement,the household debt level remains elevated.
With a current debt-to-gdp of about 125%, the US is not the only country with a huge mountain of debts.
IN recent weeks, global markets were roiled by the mere mention of a four-letter word, debt. From China’s Evergrande Group’s near collapse, as it sat on a mountain of liabilities, to the United States government’s need to raise its debt ceiling.
In Malaysia’s case, we too have not much choice either but to raise our debt ceiling as we look at ways to re-generate the economy with a higher debt room of 65% of gross domestic product (GDP) from 60% currently.
It seems like debt has become one dirty word for investors for the time being, as we all know there is a price to pay when it comes to debt as there is no such thing as a free lunch.
For the US, there is no doubt that they have constantly raised their debt ceiling over the years to ensure they do not default on their obligations.
According to the US Treasury website, since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the nation’s debt limit.
Currently suspended, the US debt ceiling was reset on Aug 1, 2021, to US$28.4 trillion (RM118.9 trillion). For the US, failure is not an option as it will lead to a catastrophic chain reaction to not only the financial market but to the economy as a whole.
According
to Treasury Secretary and the former Federal Reserve (Fed) chairperson,
Janet Yellen, (pic) the US has never defaulted on its debt before and
she was “confident” that the issue would be addressed, despite warning
the Congress that the deadline for the debt ceiling is “around Oct 18”.
According to Treasury Secretary and the former Federal Reserve (Fed) chairperson, Janet Yellen, the US has never defaulted on its debt before and she was “confident” that the issue would be addressed, despite warning the Congress that the deadline for the debt ceiling is “around Oct 18”.
For now, while a nine-week stopgap funding bill has been endorsed by the President on Thursday, which in all likelihood will avoid a government shutdown at least up to Dec 3, 2021, the threat of a US defaulting on its debts remains.
While the US is able to continue to print money by simply passing the law to keep borrowing, the US, just like any other country, cannot go on borrowing forever. With a greater supply of money, sooner or later, interest rates will have to rise as the increase in money supply will likely fuel inflation.
After all, the Fed too expects rates to start rising in 2022 and much more in 2023 onwards.
In the last Federal Open Market Committee just over a week ago, the 10-year and 30-year US benchmark rates have already moved 17 basis points (bps) and 21 bps to 1.50% and 2.06% respectively – as the market begins to price in expectations of the Fed’s tapering move as well as worries if there is going to be lengthy impasse between the Democrats and the Republican or grand old party (GOP) to raise the debt ceiling.
Having said that, as the US has been running budget deficits for the longest time, it would not be too far-fetched to assume that given time, the US will need to raise the debt ceiling yet again in the future.
Hence it was also of no surprise when Yellen commented on Thursday that the debt ceiling ought to be permanently abolished.
In any government’s financial management, it’s either shortfall or revenue, mainly due to inadequate tax collections or excessive spending, which are also a function of debt service charges, and to a certain extent, over-priced development spending or operating expenditures.
With a current debt-to-gdp of about 125%, the US is not the only country with a huge mountain of debts.
So is the rest of the world. In fact, according to the Institute of International Finance (IIF) in its Global Debt Monitor report published on Sept 14, 2021, global debt, which includes government, household and corporate, and bank debt increased by US$4.8 trillion (RM20 trillion) to reach a new alltime high of US$296 trillion (RM1.24 quadrillion).
In essence, over the past six quarters, as the pandemic has caused significant damage to the global economy and unprecedented response from governments, total global debt has expanded by US$36 trillion (RM150.7 trillion) or 13.6% from just about US$260 trillion (RM1.09 quadrillion) as at end of 2019.
Money has to go somewhere
When a debt is raised, be it by the government, a company, or a household, it has to go somewhere. For most governments, debts are mainly raised for development expenditure, and if it is allowed by the constitution, on operating expenditure too.
Debts raised due to the pandemic perhaps has become the norm globally as well, as the government has no choice but to raise the required funding to support the economy.
In the US, the Fed also buys US treasuries and agency mortgage-backed securities and this effectively makes its way into the financial markets.
So while the Fed has expanded its balance sheet by more than 100% since the pandemic, the liquidity it has provided has caused significant gain not only in traditional asset classes but into everything else. Home prices are rising, commodities have boomed and markets are buoyant and cryptos have soared.
In the case of Evergrande Group, many are left wondering if it was a case of a “too-big-to-fail” company. Evergrande became a property developer largely by borrowing.
As a group, they also ventured into other businesses, which among others include electric vehicles, Internet and media production, theme park, football club, and even into mineral water and food production.
Evergrande’s massive business empire, grown out of debt means, while it has substantial assets, it also had huge liabilities. As Beijing has been strong in putting its house in order in the form of new regulations and guidelines for many industries, Evergrande too was not spared.
As early as August last year, the Chinese government had introduced a “three red lines” test for developers to meet if they wanted to borrow more.
This was firstly, liability to asset ratio of not more than 70%; secondly, net debt to equity ratio of not more than 100%; and thirdly cash to short-term debt ratio of more than 1.0.
Hence, the writings were already on the wall on Chinese developers more than a year ago that the regulators were serious in addressing debt-driven growth pursued by these companies. In Evergrande’s case, the debt hit the ceiling.
Why do we go into debt?
Debts taken by individuals are rather straightforward. Of course, there are good debts and bad debts. For most of us, it is for the purchase of big-ticket items like a roof over the head, and for mobility purposes, where most of us own a car.
Of course, we also indulge ourselves with material stuff, either from our savings or credit cards that we will pay off when the time comes. Some of us, due to lack of income or due to financial mismanagement, take on bad debts and that’s where the trouble starts as we are unaware of the consequences of rising personal debts and high-interest cost.
Stories of debts owed to money lenders are common within our society while Bank Negara statistics also show that one of the fastest-growing debt profiles among individuals is personal loans.
This has remained relatively high and has increased by 87.4% over the last five years alone to about Rm73.7bil as at end of August 2021, while its share of the banking system loans outstanding has increased from 2.7% to as much as 4.0% now.
According to Bank Negara’s Financial Stability Review report for the first half of 2021, Malaysia’s household debt to GDP has declined to 89.6% from 93.2% as at end of last year. Although a small achievement, the household debt level remains elevated.
For a company, debts should be part of capital management as companies need to not only sustain their business operations but look at opportunities to grow and expand their market share, either via acquisition or via borrowings. However, similar to what we have seen in Evergrande’s case, companies too must observe their own “three-red-lines” to ensure they have the right mix and remain vigilant of its exposure.
Does Malaysia have the room to borrow more?
For Malaysia, with a higher debt ceiling of 65%, the government is effectively allowing itself to have some headway to borrow an additional Rm75bil to support the recovery momentum that most economists now expect will be much stronger in this fourth quarter period and 2022 and as we prepare ourselves for the post-pandemic period.
While we have created this room to enable us to borrow more, we must be mindful to borrow responsibly as debts that are taken today will be borne by future generations.
We also need to chart our way out of this debt-dependency black hole that we have been in since the Asian Financial Crisis of 1998 and get out of this conundrum.
While debt-to-gdp is just a denominator that is divided by a numerator that is steadily growing, we must find ways to manage our overall federal government debt and plan to reduce them post-pandemic.
That is a whole new topic altogether, and next week, this column will explore strategies that Malaysia can deploy to reduce its debt dependency.
PANKAJ C. KUMAR Pankaj C Kumar is a long-time investment analyst. The views expressed here are his own. Source link
US federal debt crisis uglier than Evergrande trouble
There is much buzz amongst global investors recently about two possible debt defaults, though they are of different proportions in their would-be impact on global equity markets. One is the US federal government's rivers of borrowed money running dry and in urgent need of replenishing. The other is a major Chinese property developer which has run into financial trouble, because the company veered off the road by squandering too much on making electric cars and sponsoring a football club.
As US federal debt default looms, US Treasury Secretary Janet Yellen is facing her biggest test in her eight-month tenure to convince reluctant Republican lawmakers to agree to raise the US' national debt limit, which is currently set at $28.5 trillion. The stakes are high, because if Yellen's effort fails, the US financial system will collapse.
Yellen has called Republican leaders to convey the economic danger which lays ahead, bluntly warning that the Treasury Department's ability to stave off default is limited, and the failure to lift the debt cap by late October would be "catastrophic" for the country and the world.
Six former US treasury secretaries last week sent a letter to top US lawmakers, warning them a default would roil financial markets and blunt economic growth. According to US media reports, Yellen last week also warned the nation's largest banks and financial institutions about the very real risk of a default. She has spoken to chief executives of JPMorgan Chase, Bank of America, BlackRock and Goldman Sachs, briefing them the likely disastrous impact a federal default will produce.
To make things worse, both Democrats and Republicans in the US are at each other's throats now over US President Joe Biden's new $3.5 trillion spending bill, which proposes heavy tax raises on rich families and corporations, and has met fierce opposition from Republican lawmakers. Whether they will compromise on the debt limit, by making a last-minute deal with the White House to reduce Biden's giant spending plan remains to be seen.
Market analysts say if the US government defaults on its colossal debt, a financial system crisis of a magnitude larger than the 2008-09 debacle could occur, which is estimated to lead to an evaporation of $15 trillion in wealth and loss of 6 million jobs in the US. The capital market is now on tenterhooks facing a potential financial time bomb.
Last week, the US' major media outlets also focused their reportage on a possible default of a leading real estate developer in South China, but by all metrics, it is a risk of much smaller scale. The case is being closely watched by China's financial authorities and will never be allowed to develop into a systemic risk.
With regard to the privately-run property developer Evergrande, many fear the knock-on effects of the company's imminent difficulty to pay back principals and interests of borrowed money, including corporate bonds and bank loans. But, even if the city of Shenzhen with its deep pockets, where the company is headquartered, refuses to bail out Evergrande, one bankrupt company can hardly impact the stability of China's financial system, and the risks linked to this possibility have been widely overblown by a hyperventilating media.
Executives at Evergrande are launching a last-ditch rescue effort, trying to sell the company's electric car subsidiary and other assets in China and abroad, including the Guangzhou Evergrande Football Club. It is also selling its housing projects scattered in dozens of Chinese cities at a discount to speed up its cash flow. Whether the company is able to stave off a debt default remains unknown.
Evergrande said on Wednesday that it would make an interest payment on an onshore bonds due Thursday, but the company didn't say whether it had plans to make a $83 million coupon payment due on its US dollar bonds within a month.
The city government of Shenzhen, or the central government in Beijing, has not rushed to bail out Evergande most likely in the belief that the company itself is to blame for the predicament - too much leverage and squandering of borrowed funds ploughed into auto making and other fringe businesses and budgeting largesse. Authorities probably want the case to serve notice to investors at home and abroad, that they need to do their due diligence and enforce accountability on debtors.
However, the central government is almost certain not to tolerate a possible bankruptcy of Evergrande to spill over to draw down the broader Chinese economy, as the central bank has done numerous pressure tests since the 2008 global financial crisis, which was caused by the sub-prime housing debts in the US. Last year, the central bank required property developers to bring down their debt levels below certain thresholds before they are able to borrow more money from financial institutions. And, many Chinese commercial banks have ascertained their exposure to Evergrande is restricted.
So, debt-beleaguered Evergrande is unlikely to produce a firestorm and disrupt China's financial system. In addition, both the government and the central bank have plenty of policy tools, including easing overall monetary policy, to tide over Evergande if it goes under. But of course, the last resort is to bail it out and restructure the company, as China has done with other troubled corporations like HNA, Huarong and Baoshang Bank.
The author By Wen Sheng is an editor with the Global Times.
According to Bank Negara’s Financial Stability Review report for the first half of 2021, Malaysia’s household debt to GDP has declined to 89.6% from 93.2% as at end of last year. Although a small achievement,the household debt level remains elevated.
