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Showing posts with label Transparency. Show all posts
Showing posts with label Transparency. Show all posts

Wednesday 3 January 2024

Happy New Year 2024 – It is all about reforms

 


The planned subsidy rationalisation for fuel and the introduction of the Progressive Wage Model are two key elements for reforms.— Reuters

LAST week, this column explored what the year 2024 will bring to investors as expectations of cuts in global interest rates and lower inflation prints will likely be the main theme for global markets amid heightened geopolitical risk. This week, the focus is on Malaysia and what lies ahead.

Just over a year since the unity government was formed, the government remains strongly in place with additional support from even some opposition members of Parliament that has given Prime Minister Datuk Seri Anwar Ibrahim an upper hand in initiating change for the betterment of the country in terms of new legislations, amendments to existing laws as well as the much-talked about reform agenda.

The cabinet reshuffle and appointment to key posts such as the choice of Datuk Seri Amir Hamzah Azizan as the new second Finance Minister and Datuk Seri Johari Abdul Ghani as the new Plantations and Commodities Minister are welcome changes to the cabinet, although it would have been much better if the Prime Minister had relinquished the post of Finance Minister.

Political reforms


With more than three years to go before the next general election is called, it is time for this government to introduce some political bills that will make governance stronger irrespective of who is in power.

Key among them is limiting the terms of the Prime Minister to two terms, limiting the Prime Minister in office from holding any other portfolio, especially that of Finance Ministry, and introducing the political funding bill, which has been long-delayed.

Other key reforms include providing greater enforcement powers to agencies like the Securities Commission to ensure that capital market wrongdoers are severely punished and not subjected to the whims and fancies of an individual’s political affiliation or power.

Even the recent reprimand and action of several directors in relation to the Serba Dinamik Holdings Bhd fiasco was seen as a mere slap on the wrist, while minority shareholders and debt holders were completely wiped-out.

Separating the roles and power of the Attorney General and the Public Prosecutor will instill confidence in the judiciary process while the introduction of a race-relation bill too will certainly help issues related to 3R (race, religion, and royalty).

In the pipeline, the Freedom of Information Bill and Government Procurement Bill are the other two key reform agendas that are expected to be tabled, which will provide greater transparency and accountability.

These key reforms must be carried out, without fear.

Economic and social reforms


The planned subsidy rationalisation for fuel and the introduction of the Progressive Wage Model (PWM) are two key elements for reforms.

While this column does not agree that targeted subsidies are the right approach towards removing fuel subsidies and prefers a gradual and mannered approach to raising pump prices, it is hoped that the targeted subsidy mechanism will be implemented smoothly.

Failure is not an option as the political backlash can be severe for the sitting government.

As for PWM, the government’s incentive is welcome but it would be better if the government does not intervene in the labour market by providing wage subsidies to participating organisations.

The government will be better off by implementing a progressive increase in minimum wages by increasing the current minimum wage by RM200 to RM300 gradually every couple of years to reach at least RM2,500 by 2030.

Enforcement is also key as we are seeing how certain corporations are still paying wages below the current threshold level.

The government should also provide a wage guide for certain jobs to ensure compliance while jobs that no Malaysians want to be engaged in such as the 3D (dirty, dangerous and demeaning) jobs should be categorised separately.

In this category, the government should also step up the levies imposed on foreign workers to the extent it makes no sense to employ foreigners as our over-dependence on foreign labour has caused us to become a low-wage economy and being surpassed by countries like Vietnam, Indonesia, and Thailand.

Other economic reforms relate to Malaysia’s low tax to revenue, which is almost seven percentage points lower than the Organisation for Economic Cooperation and Development average of 19%.

Malaysia must make efforts to raise taxes via the introduction of not only new taxes (low-value goods tax, higher sales and service tax, and capital gains tax, are welcome moves to raise tax collection) but also the removal of the abundance of tax reliefs that are given to both individuals and corporations.

Malaysia needs to widen the tax net to have a greater number of taxpayers.

The introduction of e-invoicing beginning in August 2024 is a welcome incentive to capture the shadow economy as undeclared taxes will now be under greater scrutiny.

It is hoped that with e-invoicing, the government’s tax revenue will increase substantially to address some of the shortfalls that we presently experience in terms of tax collection. 

Decent growth


The Malaysian economy is poised to expand by 4.5% in 2024, thanks largely to an expected recovery in the manufacturing and external demand while large infrastructure projects could propel the construction sector too to register above-average growth.

The multiple economic blueprints and Budget 2024 announced this year – the Madani Economy framework, National Energy Transformation Roadmap, New Industrial Master Plan 2030, and the 12th Malaysia Plan Mid-term Review are key catalysts to take Malaysia to the next level and must be executed well to ensure the targets set are met based on pre-determined timeline.

OPR on hold


While the consensus view is that Bank Negara will likely hold the overnight policy rate (OPR) at 3% in 2024, there is an even chance for the central bank to cut the rate by at least 25 or 50 basis points if economic growth doesn’t match the expected moderate pace or if inflation remains subdued.

After all, with most central banks turning dovish and ready to cut rates, the

spread between the OPR and other benchmark rates will narrow.

This will provide the central bank the monetary space to cut rates, especially if the ringgit recovers strongly in 2024.

Whither the ringgit?


Almost everyone who is asked their opinion on the ringgit has the same response – that the ringgit is undervalued.

Ironically, that opinion has been held for the longest time and yet the ringgit continued to weaken for one reason or another.

The key to the ringgit’s performance is not just about the investment and portfolio flows, but also the large element of errors and omission, which is a reflection of the level of illicit outflows that the country has been facing for a long time.

Until and unless the general view is that the government is doing the right thing to build market confidence with strong political stability, these outflows are not going to reverse anytime soon.

Hence, the government needs to instill this confidence not only among foreign investors (both foreign direct investments and non-resident portfolios inflows) but also among resident investors.

Having said that, with the ringgit last seen at about RM4.60.90 to the US dollar, down by approximately 5% in 2023, it is expected that the ringgit will regain ground in 2024 with RM4.46 being its fair value using the Bank of International Settlement’s effective exchange rate index.

Since the end of 2019, except for 13.1% and 1.3% gain against the Japanese yen and the Thai baht respectively, the ringgit has weakened 1.5% against the Indonesian rupiah and between 9.9% and 15.2% against other major currencies such as the British pound (minus 9.9%); Australia dollar (minus 9.9%); China yuan (minus 10.5%); euro (minus 11.8%); US dollar (minus 12.6%); and a deficit of 15.2% against the Singapore dollar.

2024 game changers


On Jan 11, 2024, the memorandum of understanding (MOU) between Malaysia and Singapore to establish the Special Economic Zone in Johor is expected to be inked and this will pave the way for both Malaysia and Singapore to capitalise on each other’s strength for the economic benefit of both nations, and in particular, for Johor.

The most important element of this MOU will be the scope, depth, and breadth of the agreement that could lift the demand for the Johor property market, in particular the industrial, commercial, and residential segments.

The other game changer would be the Request for Proposal process for the long-delayed Kuala Lumpur-singapore High-speed Rail (HSR), which is expected to kickstart from mid-january.

The HSR will be expensive and may not be economically feasible based on the cost involved, but Malaysia cannot afford not to build on large-scale infrastructure that will change the landscape of transportation in Malaysia as the next step would be to connect Kuala Lumpur to the Thai border as part of the Asean railway integrated line.

Looking at HSR models across the world, there are only a handful of profitable lines, yet new lines are still being built purely for socio-economic reasons.

Right stocks


While broking firms are largely fixated on the FBM KLCI index with the consensus view that the index may even hit 1,600 points based on a relatively inexpensive 12-month forward price-to-earnings ratio, the real outperformance will come from stocks that will benefit from the government’s reform agenda and infrastructure projects.

Recovery theme from a stronger external demand should benefit Malaysian exporters while selected property names too are expected to ride on the Johor theme that has already seen a strong momentum this year.

Plantation stocks too are expected to do better with higher crude palm oil prices in 2024 while building material companies should benefit from higher construction activities next year.

A word of caution – while 2024 looks promising, it will not be smooth sailing as the market is still concerned on the pace of rate reductions and by what quantum while domestically, the expected recovery in external demand, a benign inflation environment and sustained consumer demand are key to Malaysia’s economy in 2024.

In addition, the expected earnings growth pencilled in by broking firms is relatively high at 13.6%, which is likely to be met with disappointment along the way. The key will be the first and second quarter 2024 earnings momentum, which will set the stage for the market’s performance next yea

 Wishing all readers a Happy New Year, may 2024 bring joy, happiness, and good fortune.

The Star - StarBiz

Pankaj c. kumar

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Sunday 14 July 2019

Housing woes: death spiral or virtuous cycle?


THE World Economic Forum estimates that the global cost of corruption annually is at least US$2.6 trillion (RM10.9 trillion) or 5% of global gross domestic product (GDP).

According to the World Bank, businesses and individuals pay over US$1 trillion (RM4.2 trillion) in bribes each year.

Corruption adds up to 10% of the total cost of doing business globally and up to 25% of the cost of procurement contracts in developing countries.

I gathered these shocking facts at a conference. There are other alarming statistics that shed light on the damage brought about by corruption and its dreadful impact on the economy.

Corruption leads to further impoverishment of the poor and other issues in many countries. The average income in countries with a high level of corruption is about one-third of those countries with a low level of corruption. In addition, corrupt countries have a literacy rate that is 25% lower.

The Corruption Perception Index 2018 released by Transparency International shows that on the scale of 0 to 100, where 0 is highly corrupt and 100 is very clean, over two-thirds of 180 countries score below 50, with the average score of 43.

In the index, Denmark ranked first in the world followed by New Zealand second. Finland and Singapore were tied for third with a score of 85. Malaysia was ranked 61st in the world, scoring only 47.

We were ranked the third highest in the Asean region, after Singapore and Brunei. Our country is doing better now with the ongoing investigation of the 1Malaysia Development Bhd scandal and other prominent cases.

In TI’s report, Malaysia is one of the countries on the watch with promising political developments against corruption. However, more solid action is needed in combatting all elusive forms of corruption.

According to Transparency International Malaysia, corruption had cost our country about 4% of its GDP value each year since 2013. Added together, this amounts to a high figure of some RM212.3bil since 2013. For 2017 alone, that figure was a whopping RM46.9bil!

As a comparison, our development expenditure in 2017 was RM48bil. If the value of corruption above was accurate, our development fund was almost “wiped out” because of corruption.

Transparency International Malaysia president Datuk Akhbar Satar said: “This is our estimate. It is likely to be higher in reality (on the value of corruption).”

No country can eliminate corruption completely. However, we can learn from good practices shown in some developed countries, such as the Scandinavian countries which all scored high on the Corruption Perception Index.

Corruption leads to poverty as money collected is not used for the welfare of the nation. As a result, the people end up suffering and paying for the leakage in the system.

If a country is corrupt-free, it will reduce the need for non-governmental organisations (NGOs). NGOs advocate for the rights of marginalised groups. The government can take care of those group when it has a surplus in the budget.

A clean government and system will have a positive impact on many aspects including affordable housing, one of the prominent needs of the people.

Whenever there is corruption, there is a compromise in the delivery of goods and services. The same situation applies to affordable housing.

Someone mentioned to me in the past that “the government isn’t interested in affordable housing as there is literally ‘no money’ to be made in it”!

Things have made a dramatic change for the better since May last year. Our new government is working on a platform of clean government and improving transparency. It plans to build one million affordable homes within two terms of its administration. To make this a reality, the government needs to put in real money to make it happen.

Corruption causes a death spiral that leads to various problems. Without it, a virtuous cycle grows that ensures every part runs smoothly and the marginalised in society are looked after.

With a promise of a cleaner government, we hope we will soon see a virtuous cycle that makes the one million affordable homes an achievable target.

By Datuk Alan Tong, who has over 50 years of experience in property development. He is group chairman of Bukit Kiara Properties. For feedback, please email bkp@bukitkiara.com. The views expressed here are solely that of his own.

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Monday 1 July 2019

Declining performance of Malaysia's civil service, World Bank report



KUALA LUMPUR: The performance of Malaysia’s civil service has been declining since 2014, according to a World Bank report, which also expressed concerns about the sustainability of the country’s public sector wage bill.

The report, which came about following the visit of World Bank vice-president for East Asia and Pacific Victoria Kwakwa to Malaysia last December during which she met the Prime Minister, also ranked Malaysia lowly in its indicators for accountability, impartiality as well as the transparency and openness of its public service.

The report – which is included in the World Bank’s six-monthly economic monitor on Malaysia – will be formally launched today.

World Bank lead public sector specialist Rajni Bajpai said that while Malaysia was doing better than others in South-East Asia, there was a very “big gap” in the performance of its civil servants with Organisation for Economic Co-operation and Development (OECD) countries.

She said the report decided to compare Malaysia with the OECD countries as it was hoping to move from a middle-income status country to that of high-income.

“When you compare Malaysia with others in the region, Malaysia has been doing pretty well but we see that the performance has stagnated.

“If you look at the indicator for government effectiveness, Malaysia is still above in the region but in 2018, the performance is below that of between 1991 and 2014.

“If you take the average of that period between 1991 and 2014, it was higher than that in 2018, which means the performance is declining,” she said in an interview.

There were also some indicators in which Malaysia ranked even below the region, said Rajni, adding that this included accountability, impartiality and the openness of its public sector.

“There is a strong perception ... that recruitment of the civil service is not fair and neutral (with) Malaysia scoring very poorly on the indicators for impartiality in the government.

“It’s the lowest ranked, even below the region and way below the OECD,” she said, adding that the government in its election manifesto had suggested setting up an Equal Opportunities Commis­sion meant to tackle discriminatory practices in both the public and private sector.

“Malaysia also scores very poorly on the openness indicators. Malaysia is not a very open economy in the sense that data sharing is a very big problem.

“The government does not share of a lot of data, even within its own departments or with the citizens. “And citizens’ feedback and voices are not factored by the government into the design of programmes,” she said, adding that the report would suggest the setting up of an institutional and legal framework for open data sharing.

Another indicator that Malaysia performed “not very well”, according to Rajni, was in digitisation and technological advances, which the government had not been able to integrate into its system to provide services.

The report, said Rajni, also focused on another critical element in Malaysia’s civil service, in that the recruitment, which was carried out by the Public Services Department, was overcentralised.

Describing Malaysia as one of the “most overcentralised”, she pointed out that in many countries, this function had been devolved to other departments and even state governments.

“Overcentralisation does not allow for the people who actually need the public servants to do certain jobs ... because they don’t have the right people or the recruitment takes a very long time,” she said.

OECD countries, said Rajni, had been using a competency framework for the recruitment of their civil service, which defined the kind of roles and skills needed in the public sector, rather than taking in people generally for everything.

Among the indicators that Malaysia performed very well were for the ease of doing business – for which Malaysia is ranked 15th – and the inclusion of women in its civil service.

“Women occupied almost 50% of the civil service although there are some issues with women in higher management,” said Rajni.

Other indicators that were highlighted in the report included political stability, regulatory quality, rule of law and control of corruption.

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Tuesday 29 October 2013

China unveils nuke submarine, moving towards military transparency



http://player.cntv.cn/standard/cntvOutSidePlayer.swf?videoCenterId=8a29d075828644918bbd615daa014703&tai=outSide.english&videoId=20131028102971
http://english.cntv.cn/program/newshour/20131028/102971.shtml

The world has been given a rare glimpse into China's nuclear-powered submarine fleet, with State-owned media carrying extensive coverage of the previously mysterious strategic deterrence force.

The unprecedented revealing of the underwater fleet is a demonstration of China's confidence in its sea-based nuclear strike capability and serves as a deterrent to any attempted provocation amid the changing geopolitical situation, said military observers.

Starting on Sunday, China Central Television carried serial coverage two days in a row on the submarine force of the People's Liberation Army (PLA) Navy's Beihai fleet in its flagship news program Xinwen Lianbo.

The People's Daily, the PLA Daily and the China Youth Daily on Monday all carried front-page stories, features and commentaries on the submarine force, applauding its achievements since the launch of China's first nuclear-powered submarine in December 1970.

According to the reports, the idea of building a nuclear submarine was initiated by Chairman Mao Zedong in the late 1950s to break the global military powers' "nuclear blackmailing and monopoly."

In September 1988, China launched a carrier rocket from a nuclear submarine, becoming the fifth country in the world to have the capability of sea-based nuclear strike.

While striving to improve its strike capability, the submarine force has also maintained a good safety record, with no single nuclear accident reported during the past four decades, said the reports.

The People's Daily on Monday hailed the submarine force as "a shield preserving world peace and stability" and "a cornerstone to safeguard state sovereignty, security and development interests."

Du Wenlong, a military expert, told the Global Times on Monday that the latest publicity shows the maturity in the submarine force's sea-based nuclear strike capability, and implies progress in the development of China's new generation of submarines.

According to military observers, the submarines shown in the CCTV report and newspaper photos are the old models, which were put into service in the 1980s. It is reported that the navy is replacing them with Jin-class submarines, and a newer model, the Tang-class, is reportedly in development.

Du said in comparison to foreign submarines, China occupies a seat within the leading group but lags behind the US and Russia in terms of the submarine's noise output and the number of missiles it can carry.

Li Jie, another military expert, shared similar views, noting Chinese submarines still fall behind US and Russian ones, but have better prospects than French and British ones.

The growing capability of the Chinese submarine force is in line with the global emphasis on sea-based nuclear strike capability.

Sea-based nuclear deterrence is more covert, so it gives the countries the capability to launch a counterstrike after their main nuclear bases are destroyed, Li explained, noting its development requires strong comprehensive scientific and technological capabilities.

In addition to the demonstration of more transparency in the military, Li said the revealing of the force is also a deterrent to foreign provocation.

According to reports, during the submarine force's drills, it has repeatedly been tailed and interrupted by foreign ships and aircraft, including one time in international waters in the West Pacific.

"The changing international situation has caused containment to China's growth. The US-Japan alliance and US pivot to the Asia-Pacific both apparently target China. The publicity of the submarine force is a warning to any country that attempts to provoke China, telling them whoever makes the first strike should think about the consequences," Li said.

CCTV commentary said the submarine force has equipped China with a more covert and reliable nuclear counterstrike capability in addition to its intercontinental ballistic missile and strategic bomber, which would make China's rivals abandon their war attempts for fears of the unbearable price they might have to pay.

- Contributed By Yang Jingjie Global Times