Election is over, so do not quite care of politics. Everything is confusing, directionless and at the extreme, it is heedless.
Kedah, Perak and Sabah is still in a turmoil. Conspiracy theory say the days of Tun Mahathir is numbered the moment Agong suddenly pardoned Dato Seri Anwar Ibrahim.
The government with a ruling party with 125 seats and opposition BN with 79 and PAS 18 is not a stable country. The underlying reason Malaysia attracted investments from abroad over the many decades of BN rule is due to political stability and continuity of the ruling party.
With that changed, foreign investors should look at the transition. Foreign financial media painted a rosy picture of a BN win.
The macro picture that won their heart for Malaysia is expected to change but it could not be done with Tun Dr Mahathir’s loud mouth.
The new Pakatan Harapan government came out from the win with a rather reckless disposition to change everything within a short time and Mahathir could not hold back on executing his revenge towards Dato Najib swiftly.
Facebooker Salahuddin bin Hisham expressed the reason for the market fall.
A few worrying statements coming out from new Govt over past week:
1. Tun M: Do not worry if Malaysia’s credit rating is downgraded.
Why we should worry: A downgrade of our credit rating will lead to foreign investors pulling out of our share market and bonds market. This will also increase interest rates which means the country’s debt repayment cost will increase by RM10 billion per year while ordinary citizens will be hit with higher interest rates.
2. LGE: Our national debt is now RM1 trillion.
Why we should worry: This is a political statement and is not true. LGE lumped our official debt together with lease payments and contingent liabilities – a move which does not comply with international standards and is inaccurate. Not only will this scare the financial markets which had contributed to our stock market dropping like a stone for days on end and our Ringgit weakening, it may be used as an excuse for PH not to deliver on its manifesto promises.
3. Tun M: The decision to cancel the HSR project is final. Singaporeans tired of their PAP govt.
Why we should worry: The HSR project was one of the reasons why international agencies increased our GDP growth forecasts. Cancelling this project may mean that our GDP growth forecast will be lowered, leading to more investors scrapping plans to invest in Malaysia. Also, the confrontational statement against Singapore and the lack of respect in unilaterally cancelling the HSR via a press conference without informing Singapore govt first can only lead to unfavourable policies by Singapore – to victimize Malaysians who work there or trade policies that are detrimental to us.
Why we should worry: The HSR project was one of the reasons why international agencies increased our GDP growth forecasts. Cancelling this project may mean that our GDP growth forecast will be lowered, leading to more investors scrapping plans to invest in Malaysia. Also, the confrontational statement against Singapore and the lack of respect in unilaterally cancelling the HSR via a press conference without informing Singapore govt first can only lead to unfavourable policies by Singapore – to victimize Malaysians who work there or trade policies that are detrimental to us.
4. Ong Kiam Ming (special officer to MOF): To replace GST, we will be raising corporate taxes, ask for higher dividends from Petronas, BNM and Khazanah. Sales and Service Tax (SST) base will be expanded
Why we should worry: Increase corporate taxes at a time when our neighbours such as Thailand and Indonesia has been aggressively reducing theirs will drive away investments. Where would you rather build a new factory or start a new company? A country with higher corporate tax or a lower one?
Raiding Petronas and depending on higher oil prices which the previous BN Govt had avoided is never a good thing as global oil prices is out of Malaysia’s control. It will also starve Petronas of funds to invest in new upstream/downstream investments where the effects will only be seen 10 years or 15 years down the line. Similarly, raiding BNM and Khazanah for funds is also not a sustainable measure. How many years can you raid them?
Surely it is not a renewable source of income. Does it also mean that BNM will have to print more money which will cause inflation and devalue our currency? The part about expanding the SST base is also worrying. GST was able to collect more money compared to SST as GST had covered more goods and services that SST did not cover.
However, expanding the SST base means SST will also cover more items – meaning prices for more items will increase in price since SST is 10% while GST is 6%. We are back to square one in terms of cost of living!! With the only difference being we no longer know how much tax is collected on the items we buy since SST is hidden while GST charges were transparently shown in our receipts. Folks, we have to be mindful of what is happening to our country.
Changing to a new govt that we wanted does not mean we have to let our guards down. At the end of the day, it is our purchasing power, our jobs, our investments, our economy and our futures at stake here – no matter who the govt is.
Looking for Al Ayubi
Malaysians, particularly Malays have this thinking similar to Arabs.
They believe there exists Muslim saints that will protect this country in facing calamity. Like the Arabs, there will rise a Salahuddin Al Ayubi that will take the people and country out of its misery.
Never mind Salahuddin Al Ayubi or as the west called the great Kurdish warrior and Sultan, Saladin, Malaysians are willing to wait for a Daim.
There was a conspiracy theory expressed by a Facebooker Cassius Pereira:
Wishful typical Malaysians think it is all intentional and a modus operandi to monopolise and control the market is possible.
Someone will be picking from the bottom, naturally Tun Daim is expected to do his magic.
All sort of conspiracy theory being conjured up by both sceptics, cynics, and opposition (we know, we know … it means BN these days).
Can he?
Daim mentioned leaving the Council of Elders, which is similar in approach to the committee set-up by Tun Dr Mahathir to face the financial crisis of 1997-2000, after the 100 days PH “magical”Manifesto delivery deadline.
Mahathir do his politics and revenge, while the Council of Elders do the difficult part on the campaign promises and Manifesto. There is no way, even if we give the new government a chance. for them to deliver to voters expectation.
The stock market could be reading it as an indication that it is beyond Daim to be able to do anything about it. He is physically not well and be seen going around with a cane.
Who could then wave the magic wand this time or be the Salahuddin Al Ayubi, the Kurdish saviour of the Arab but for the Malays and Malaysia this time?
The Mahathir fanatic still think he can pull it off. The trick is as Lim Guan Eng announced the possibility of listing Petronas and many other DAP promises from past General Election. [Read The Star HERE].
It is an option – has its merits and demerits – but it should be a last resort option.
It only raised the conspiracy theory that it is another of Mahathir’s scheme that in the past emptied the Petronas coffer for bailout and now doing the final go.
On Monday, he announced the cancellation of the RM60-70 billion HSR to and from Singapore (but fake news-ed as RM110 billion).
Similar in modus operandi to RM9 billion second phase of ECRL announced as RM11 billion and national debt of RM686 billion mentioned as RM1 trillion.
Malaysia run the risk of being sued by Singapore and paying RM500 million for compensation. The savings from firing government servants is rechannelled there?
Market is down at mid-day by 44.86 points. From the off-set this morning, market was down at the opening and practically wipe out Friday’s recovery of 21.74.
Dead cat
And, Facebooker Salahuddin bin Hisham called it a dead cat bounce the Monday morning the morning itself.
He saw the danger to the market is imminent:
DEAD CAT BOUNCE, FOREIGN RELATION AND UNCERTAINTY AHEAD
Friday’s market recovery seemed to be a deadcat bounce. Its down near the opening this morning by 13 points.
Though LGE pretended to not be concerned and Mahathir and Daim evaded the matter, they are not ignoring but taking actions.
Petronas listing could only be a ‘trick’ to get Msian market back into the foreign fund radar. Sense it is moving out of the radar.
Foreign investors were comfortable with the previous fiscal policy including contingent liabilities and PFI figure that are not govt debt. Both not on balance sheet but are reported.
The macro numbers are good and its a natural figure without mega projects and endless new govt project initiatives which end up into long list of failures.
Despite first year problem with GST, it was the govt with biggest people initiative ever since Tun Abdul Raxak. Even 1MDB had that intention behind all the greenfield initiatives. (The criminal aspect need be established by rule of law and not trial by media)
Got wind that foreign investors are concerned with the rule of law in the country and there are many reasons to think so, including the disrespect towards the royal institution and Agong.
It is not impossible that the Middle East governments of UAE, Qatar and Saudi is unhappy with the development in 1MDB as it is embarassing them.
No news of any Aramco pullout but no discounting of an outburst of Middle East investors sellout. Najib does not have the trump card in Msia’s Middle East relation but Mahathir will not able to get any cardgame with them. So does with the human rights conscious EU.
Thus far, only the low in the power hierarchy at envoy level of China is dealing with the new government.
Mahathir is putting his hope on Kuok to balance the trust China had with Najib. Maybe possible with the Fuchow connection but Kuok’s close contact was with the late Deng Xioa Peng.
Mahathir is putting his hope on Kuok to balance the trust China had with Najib. Maybe possible with the Fuchow connection but Kuok’s close contact was with the late Deng Xioa Peng.
US is only comfortable with Anwar Ibrahim. Mahathir does not play golf. There is also Singapore. Diplomatic tie will not break because of the new government. However, the new government has yet to appoint a now critical Foreign Minister to manage foreign affairs.
It makes no sense for him to try persuade a key Minister in Najib’s administration to help out at Wisma Putra. Not with Shafie Apdal is on the same path of vengence in him and his brother. Najib was laying the foundation for a more open and international Msia.
At this juncture, it is not certain where Mahathir is taking the country. His old ways including the “jual negara” rhetorics was seen by investors as regressive and anti-globalisation.
Cross border property ownership is part of attracting FDI on permanent basis but voters ate his old nationalism political narrative.
Its a challenging path ahead. Mahathir needs more than 2 years to unravel Najib’s 9 years. Najib needed 15 years to repair Pak Lah’s 6 years and more to repair Mahathir’s. If this was the consideration of voters, it has to be respected. Voters seemed willing to contribute to reduce the now RM800b, then RM1 trillion and latest spin at RM1.2 trillion govt debt.
Muslims must respect the wishes that one will expect Haj quota reduced and subsidy removed as it could cost more. The people have spoken. For better or for worse, respect their wishes!
Still expecting Mahathir to do the magic trick?
The fanatic thinks he still could pull it off. They will deny that Mahathir is no more as alert and sharp in his policy management.
In an occasion, he was parroting DAP and quipped he is getting old.
With CI index crossing 1770, it means recession is on the horizon. If it cross 1700, the recession is as instant as Maggi Mee, claimed a reknown stock operator privately.
The problem of doing these instantaneous changes at a fast and furious pace is it has gone uncontrollable and unmanageable.
To address it, market can read every past playbook of Mahathir. The Majlis Orang Tua-Tua will not have new genius ideas to surprise market. Malaysia looks to be heading down the dark hole as deep as the Marina Trench in the Pacific Ocean.
It will be beyond any opportunity for Nathan Mayer Rothchild to make a fortune from any chaos. Mahathir will achieve his wishes to prove Malaysia is bankrupt. Naturally, he will blame Najib.
Well done Mahathir, Pakatan Harapan and their voters!
– http://anotherbrickinwall.blogspot.com
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