Malaysia Update: June 7, 2018

Malaysia Update| June 7, 2018
Authors: Kim Yaeger, Tina Jamaluddin, Emma Tabatabai, Alex Nguyen, and Annah Bachman
 
THE COUNCIL'S TAKE
 
 

Markets Remain Unstable Following Election and Debt Revelations

Pakatan Harapan’s unexpected win in the May 9 elections brought the market sell-off seen in other emerging economies to Malaysia with foreign investors responding negatively to general policy uncertainty, revelations that government debt and contingent liabilities were higher than previously reported, concerns over the fiscal impact of populist economic policies. The bond, stock, and foreign exchange markets have all been hit with some of the largest sell-offs in years in recent weeks. The stock market had hit a record high in April, evading the financial volatility seen in other emerging markets. Most of the selling seems to be coming from foreigners, with local investors holding steadier.

Credit ratings agencies warned following the election that the new government’s plan to raise spending and replace the GST with the older and less effective sales tax would be a risk the country’s credit rating, though it’s too soon to predict the exact effects. While these plans were being rolled out by the new government, Finance Minister Lim Guan Eng also announced that Najib’s government had been misleading the public about the country’s debt load. The new government estimates the debt to GDP ratio is 65 percent, substantially higher than both the previously reported 51 percent and the targeted cap of 55 percent. Though the revelations did further reduce market confidence, most of the debts were contingent liabilities that analysts had already been tracking and the initial reaction may have been overblown. Unlike in Indonesia, where BI has responded aggressively to limit the market fall, Bank Negara Malaysia has held interest rates stable after the election and said that market fundamentals are still strong. BNM was one of the first central banks in Asia to raise rates, back in January, likely giving it more space now. However, BNM has also been drawn into the scandals surrounding 1MDB, which reemerged with the national debt revelations.

The Ministry of Finance has announced several measures it would be taking to reduce its liabilities including through a series of expenditure cuts, more corporate tax revenue from higher oil prices, and increased dividend contributions from government-linked companies, which would allow the deficit to remain stable at the same percentage through the fiscal year and offset the lost revenue from the now-abolished GST. Lim also indicated the government plans to change Malaysia’s financial system from the present cash-based one to an accrual system to avoid future manipulation of figures in the country’s financial statement, specifically regarding the national debt. In addition to the MOFs plans to reduce the national debt, Prime Minister Dr. Mohamed Mahathir announced his intention to cancel the Kuala Lumpur-Singapore High Speed Rail project (see next Council Take) and cut the size of the government’s civil servant workforce. Prime Minister Mahathir has already called for the dissolution of the National Council of Professors, the Special Affairs Department (JASA), the Land Public Transport Commission (SPAD) as well as the Federal Village Development and Security Committee (JKKKP), which is expected to save the government around RM500 million annually. As the new government continues to come together and if it can bring the country’s liabilities into order, it is likely markets will begin to stabilize. A recent AmBank research note argued that the markets will bounce back in the coming months as governance improves and policy is clarified.

Citing Cost, New Government Moves to Scrap KL-Singapore High Speed Rail Project

Two days after newly-elected Malaysian Prime Minister Dr. Mahathir Mohamad announced that Malaysia will pull out of the Kuala Lumpur-Singapore high-speed rail project (HSR), citing as the primary reasons the project’s cost and the need for Malaysia to decrease government expenditures, the country’s new Cabinet voted on May 30 to scrap the project. Calling off the HSR, which was estimated at RM60 billion (US$15 billion), is part of a broader review of major infrastructure projects, the terms of which were negotiated under the previous Government of former Prime Minister Najib Razak. Mahathir first announced that reducing Malaysia’s national debt was one of his priorities after his first cabinet meeting on May 23. According to the new Minister of Finance, Lim Guan Eng, the country’s debt exceeds RM1 trillion (US$251 billion). Mahathir believes that renegotiating or scrapping expensive infrastructure projects such as the HSR could reduce the debt by as much as a fifth, or roughly RM200 billion (US$50 billion). Breaking the HSR agreement with Singapore may come with a financial cost, potentially as much as RM500 million (US$126 million). However, Mahathir has stated that the Malaysian Government is currently looking into how it might reduce the penalty, which was already much lower than the expected cost of the project. In an official statement by Singapore’s Coordinating Minister for Infrastructure and Minister for Transport, Khaw Boon Wan, he stated they have requested the Malaysian government through diplomatic channels clarify its official position on the project. He stated that Singapore is continuing to incur costs on the project as it still awaits Malaysia’s clarification and “that in the event Malaysia terminates the project, Singapore will study the implications and exercise our rights (including any right to compensation for expenses incurred) in accordance with the terms of the HSR bilateral agreement.”

Due to be completed in 2026, the HSR would have stretched 350 km (217 miles) across four states in Malaysia before reaching Jurong East in Singapore. Over 95% of the line, encompassing seven out of the total eight stops, would be in Malaysia. In addition to cutting the transit time between Kuala Lumpur and Singapore to 90 minutes from the current four hours by car, the previous Malaysian Government also hoped to stimulate development along the corridor and create economic clusters around each of the seven stations in Malaysia.

In addition to the HSR, the Malaysian Government is also reviewing the already-started East Coast Rail Link (ECRL), which would cost RM55 billion (US$14 billion) and stretch 688 km (428 miles), connecting the country’s east and west coasts. A significantproject within China’s Belt and Road Initiative, the ECRL is being built by China Communications Construction and is largely funded by a China Exim Bank loan. Mahathir has stated that he hopes to renegotiate the project’s terms, though he also remarked that the project “is not going to give [Malaysia] any returns.” Given Mahathir’s criticisms of such mega projects during the general election campaign, especially those tied to China, there is an above fair chance that Malaysia will also scrap the ECRL.

Minimum Wage Under Review

Keeping Pakatan Harapan’s (PH) election promise, Human Resources Minister M Kulasegaranhas declared that the minimum wage for the private sector is currently under review and a new policy will be announced in August. PH campaigned on the promise to stabilize and increase the minimum wage which is currently RM1,000/month forPeninsular Malaysia and RM920/month for East Malaysia. PH pledged to raise both figures to RM1,500, in order to address concerns around the rising costs of living among the electorate. The minimum wage was last raised in 2016.
 

Minister Kulasegaran stated to the press that stakeholders, including unions and employers, will be consulted as a wage increase is under review. He added, “We realised some adjustments need to be done, in that the quantum of adjustment must take into account factors such as productivity, whether the increase can be sustained, [the new rate] has to be a win-win for all, the employers, the government and the unions in this country.”  The National Wage Consultative Council will meet on June 13 to review the 2016 Minimum Wage Act and will ultimately propose any changes to the Ministry of Human Resources. The Ministry will then prepare a memorandum to the cabinet’s consideration.

Several members of the local business community, including the Federation of Sabah Industries (FSI), have come out against the wage increase, warning that, sudden wage hikes could be a shock to industry. SME Association of Malaysia president Michael Kang raised concerns that a wage increase without a boost in productivity would negatively affect SMEs, but came out in support of a staged wage increase over five years that was matched with investment in workers’ skills and productivity. CIMB Research has released a statement that companies in the palm oil sector will be the hardest hit due to the labor intensive nature of the industry and the inability to pass the costs of higher wages to the customer and remain competitive in the market.

The Council is currently seeking a meeting for members with the Ministry of Human Resources in order to provide input on the expected wage increase.

 
 
IN THIS UPDATE
 
 

Regional Affairs
Malaysia and Singapore Investigators Meet on 1MDB Probe

National Affairs
Former BNM deputy governor Nor Shamsiah among candidates for governor
Bank Negara governor offers to resign, sources say
New minimum wage rate for private sector to be announced by August, says Kulasegaran
Malaysians Donate Nearly $2 Million to Pay Country’s Debts
Melaka disbands six depts and units, to review two agencies | Malay Mail
Malaysia plans to build island on strategic Singapore Strait rocks
Govt scraps MRT 3 project
Dr Mahathir charts new democratic path for Malaysia
Dr M: SST to be reintroduced in September
Malaysian PM Mahathir claims fraud in general election vote count
Malaysia to allow greater press freedom as part of reforms: Gobind Singh

Customs
Malaysia expects sales surge as 0% GST kicks in
Construction sector to benefit from 0% GST
Malaysia to start sales tax in September to shore up Budget


Defense & Security

Defence ministry mulls improving facilities, incentives
Malaysia to remain neutral state in South China Sea dispute, defence minister says
Ex-army head Zulkifli to be armed forces chief
Singapore, Malaysia agree to boost bilateral defence ties
Malaysian Government to Investigate Scorpene, other Defense Deals during Najib’s Tenure

Economics
Perda-Asean urges banks to support exporters
Malaysia vows to meet deficit target, plug $5 billion tax hole
Malaysia tries crowdfunding to plug ballooning debts
Malaysia cheapest place to employ expatriates - ECA survey

Energy
Malaysia's Petronas seeks court declaration on its ownership of...
Inflation Bogeyman Prompts Fuel Subsidies Across Southeast Asia
Malaysia sets aside 3 billion ringgit to finance fuel subsidies

Financial Services
Not so rosy for banking sector
Mahathir says to review Malaysia-Singapore stock market trading link, confirms central bank chief has quit
Import restrictions ripple across Southeast Asia
Bank Negara Malaysia’s strategy to promote cards payments questioned
Private healthcare cost in Malaysia still affordable
ASEAN neighbors feel Malaysia market maelstrom
Malaysia shares fall on foreign sell-off
Domestic gas appliances need approval from energy commission, SIRIM label | Malay Mail
Guan Eng: Government financial system to be changed to prevent manipulation

Food & Agriculture
First four members of National Agriculture Advisory Council named | Malay Mail
Agro ministry to cut red tape
+Transparency and fairness: Salahuddin to reform ministry

Health & Life Sciences
Set up monitoring system to ensure budget well-spent, health minister told
Better regulated medical fees in private healthcare needed
No patients ordered to buy own medicines at HSI - health director
Cabinet paper on health advisory council will be tabled next week
Review trade agreement for cheaper medicine, consumer group tells Putrajaya
Minister says proposed healthcare advisory council to Cabinet
Health minister plans to seek more funds in Budget | Malay Mail
Focus on health premises, mental health
Open tender policy positive for local biz

ICT
Media council to be proposed to cabinet in 2 weeks, says Gobind
Malaysia scraps innovation centre, risking tech entrepreneurship in Asean

Infrastructure
Malaysia's Finance Ministry unearths S$3.2b gas pipeline scandal
Malaysian govt evaluating economic implications of cancelling HSR: Economic Affairs Minister
Malaysia axes project to build high-speed rail link with Singapore

Travel and Tourism
Malaysia takes over China’s position as largest tourist contributor

 
ARTICLE CLIPS
 
 
Regional Affairs

Malaysia and Singapore Investigators Meet on 1MDB Probe Bloomberg.com 31st May 2018
Malaysia said it’s working with Singapore to recover money believed to have been embezzled from its state investment company 1MDB, as Prime Minister Mahathir Mohamad’s administration acts on a pledge to cooperate with probes underway around the globe. Investigators on both sides met near Kuala Lumpur on Thursday, where they also discussed collecting evidence, identifying Singapore witnesses and mapping a money trail to detect funds and assets that still exist, according to a statement from a Malaysian task force overseeing 1MDB probes. Singapore has seized hundreds of millions of dollars in assets and jailed bankers over transactions linked to the scandal-plagued fund.

National Affairs

Former BNM deputy governor Nor Shamsiah among candidates for governor NST Online 5th Jun 2018
KUALA LUMPUR: Former Bank Negara Malaysia (BNM) deputy governor Datuk Nor Shamsiah Mohd Yunus is among the candidates being considered to succeed governor Tan Sri Muhammad Ibrahim if he resigns, two sources said on Tuesday.

Bank Negara governor offers to resign, sources say NST Online 5th Jun 2018
KUALA LUMPUR : Bank Negara Malaysia governor Tan Sri Muhammad Ibrahim has offered to resign from his post two years into his term, according to people familiar with the matter, who declined to be identified because the discussions are confidential. \

New minimum wage rate for private sector to be announced by August, says Kulasegaran The Edge Markets 4th Jun 2018
KUALA LUMPUR (June 4): The new minimum wage rate for the private sector will be announced by the government latest by August this year, according to the Human Resources Ministry.

Malaysians Donate Nearly $2 Million to Pay Country’s Debts WSJ 31st May 2018
KUALA LUMPUR, Malaysia—Malaysians are trying their hand at crowdfunding to help pay their country’s debts as the full extent of a financial scandal at state investment fund 1Malaysia Development Bhd., or 1MDB, becomes clear. Finance Minister Lim Guan Eng said Thursday that Malaysians had contributed nearly $2 million to a specially created fund on its first day, echoing how South Koreans lined up to hand over wedding rings, jewelry, sports medals or anything else made of gold to help bail out their government during Asia’s...

Melaka disbands six depts and units, to review two agencies | Malay Mail Malay Mail 31st May 2018
MELAKA, May 31 — Effective tomorrow, the Melaka government will disband six departments and units under the Melaka Chief Minister's Department (JKMM) to prevent overlapping of functions and roles, in addition to reviewing the status of two other agencies.

Malaysia plans to build island on strategic Singapore Strait rocks U.S. 30th May 2018
KUALA LUMPUR (Reuters) - Malaysia’s prime minister said on Wednesday his government planned to develop some offshore rocks which were the subject of a territorial dispute with Singapore, days after he canceled a big rail project with his southern neighbor.

Dr Mahathir: New SST to come into effect Sept 1 NST Online 30th May 2018
PUTRAJAYA: The new Sales and Services Tax (SST) will come into effect on September 1 this year, after the Goods and Services Tax (GST) goes zero-rated on June 1.

Govt scraps MRT 3 project The Star Online 30th May 2018
PUTRAJAYA: The Government has decided to scrap the MRT 3 rail transit project for now, says Prime Minister Tun Dr Mahathir Mohamad.

Dr Mahathir charts new democratic path for Malaysia The Star Online 30th May 2018
TUN Dr Mahathir Mohamad says he is in a hurry to restore genuine democracy to Malaysia after leading the Opposition to a historic election victory this month. But now the veteran politician is settling into his second stint as prime minister, he is reluctant to acknowledge his role in building the flawed political system that reached its nadir under Datuk Seri Najib Tun Razak, the former protégé he ousted at the May 9 polls.

Dr M: SST to be reintroduced in September The Star Online 30th May 2018
PUTRAJAYA: The Sales and Services Tax (SST) will be reintroduced in September, says Prime Minister Tun Dr Mahathir Mohamad (pic).

Malaysian PM Mahathir claims fraud in general election vote count Channel NewsAsia 29th May 2018
Malaysian Prime Minister Mahathir Mohamad on Monday (May 28) alleged that there were elements of fraud during the 14th general election, claiming that some Pakatan Harapan candidates lost due to a large number of spoilt votes.

Malaysia to allow greater press freedom as part of reforms: Gobind Singh Channel NewsAsia 29th May 2018
Allowing greater press freedom is a major aspect of the reforms that the Malaysian Communications and Multimedia Ministry will undertake, said its new minister, Gobind Singh Deo. He said the media in the country should be allowed greater freedom in its coverage and also in its criticism of the government.

Malaysia PM Mahathir Mohamad to drop high-speed rail project with Singapore The Straits Times 28th May 2018
Malaysia is dropping a plan for a high-speed rail link between Kuala Lumpur and Singapore, Malaysia’s Prime Minister Tun Dr Mahathir Mohamad said on Monday (May 28). “It is a final decision but it will take time because we have an agreement with Singapore. We have to manage it at the least cost possible,” Dr Mahathir told a press conference.

Market Development

SMEs in Malaysia to invest more in tech to drive performance BorneoPost Online 6th Jun 2018
KUCHING: Small and medium enterprises (SMEs) in Malaysia plan to invest more in technology in order to succeed under increasingly challenging conditions, according to the findings of the Asean SME Transformation Study by United Overseas Bank (UOB) and Dun & Bradstreet. The survey found that 65 per cent of Malaysia’s SMEs will focus their investments on technology over other fixed assets in 2018 to drive business performance and remain competitive.

Malaysia warns foreign contractors as Chinese deals draw scrutiny Nikkei Asian Review 4th Jun 2018
KUALA LUMPUR -- Malaysia welcomes foreign direct investment but wants no part of lopsided contracts that bring no transfers of technology, a top adviser to Prime Minister Mahathir Mohamad said as China-led infrastructure projects come under scrutiny. In an interview with the Nikkei Asian Review, Daim Zainuddin said FDI had propelled Malaysia's transformation from an agricultural economy into a manufacturing- and export-oriented country since the 1980s.

Banking

Guan Eng: Government financial system to be changed to prevent manipulation NST Online 4th Jun 2018
KUALA LUMPUR: The government plans to change Malaysia’s financial system to avoid any more manipulation of figures in the country’s financial statement. Finance Minister Lim Guan Eng says the government plans to change the system from the present cash-based one to an accrual system as soon as possible.

Customs

Malaysia expects sales surge as 0% GST kicks in The Straits Times 3rd Jun 2018
PUTRAJAYA • Malaysian businesses are anticipating a robust period ahead as consumers will be more willing to open their wallets now the goods and services tax has been effectively scrapped.

Construction sector to benefit from 0% GST The Malaysian Reserve 31st May 2018
The construction industry is expected to benefit from zero-rated Goods and Services tax (GST) effective this Friday (tomorrow).

Defense & Security

Malaysia sets aside 3 billion ringgit to finance fuel subsidies U.S. 7th Jun 2018
KUALA LUMPUR (Reuters) - Malaysia’s government has allocated 3 billion ringgit ($760 million) to subsidize pump prices till the end of 2018, the finance ministry said in a statement on Thursday. The funds will be used to keep prices of RON95 gasoline and diesel at fixed prices, while the higher grade RON97 gasoline will be floated on a weekly basis.

Defence ministry mulls improving facilities, incentives Free Malaysia Today 5th Jun 2018
KUALA LUMPUR: The Defence Ministry will be conducting a study to improve facilities and incentives for Malaysian Armed Forces (ATM) personnel and veterans. Its Minister Mohamad Sabu said incentives received by ATM personnel should be aligned with the country’s economic situation.

Malaysia to remain neutral state in South China Sea dispute, defence minister says Yahoo News 4th Jun 2018
KUALA LUMPUR, June 4 — Defence Minister Mohamad Sabu reaffirmed today Malaysia’s stance as a neutral state amid growing hostilities over the South China Sea. Freshly returned from Singapore where he represented the country at the 17th Shangri-La Dialogue, Mohamad said he spoke about Malaysia’s wish to pursue peaceful solutions and keep Southeast Asia free from armed conflict with US Secretary of Defence John Mattis in a 20-minute four eye meeting.

Ex-army head Zulkifli to be armed forces chief Free Malaysia Today 2nd Jun 2018
GEORGE TOWN: Gen Zulkifli Zainal Abidin, a former head of the Malaysian army, is expected to be made the new chief of the armed forces, the highest-ranking operational position in the military, with supervision of all three services. A highly-placed source at the Defence Ministry said the decorated four-star general would replace Gen Raja Mohamed Affandi Raja Mohamed Noor on June 20.

Singapore, Malaysia agree to boost bilateral defence ties The Straits Times 4th Jun 2018
Defense Minister Ng Eng Hen and his newly minted counterpart from Malaysia Mohamad Sabu agreed yesterday to strengthen bilateral defence ties. During their first official meeting, which took place on the sidelines of the Shangri-La Dialogue, the pair affirmed the warm and longstanding defence relations between their countries, Singapore's Ministry of Defence said in a statement. The ministers noted the good progress made in bilateral defence relations, such as the recent conduct of a new exercise between the two countries' air forces.

Malaysian Government to Investigate Scorpene, other Defense Deals during Najib’s Tenure Defenseworld.net 4th Jun 2018
Malaysia’s newly formed government will conduct its own internal probe and audit in regard to defense spending under the previous administration, the new Defense Minister Mohamad Sabu has said. “We will investigate. If it is based on hearsay, it can have a negative effect on the image of individuals or departments. If there are (issues and scandals) with evidence obtained from detailed investigation and internal audits and, if necessary, we will use external audits, and if serious, we will take it to the Cabinet. We will not act wildly based on what we hear,” Sabu was quoted as saying in his first address to the press by Today Online Tuesday. Mohamad said he needed to get the complete information of all Malaysian Armed Forces services before looking in detail at issues and scandals within the MAF, including the purchase of the Scorpene submarines as well as other issues which were raised by non-governmental organisations. A former aide to Malaysia’s former Prime Minister Najib Razak was placed under formal investigation in August last year as part of an alleged kickbacks probe into purchase of two Scorpene submarines from French shipyard DCNS (now Naval group) in 2002. The accused Razak Baginda, who was an advisor to Najib was arrested after Malaysian human rights group Suaram claimed that a commission of $130 million was being siphoned off to a company linked to Najib in the Eur 1 billion sale. Two French former defense industry executives were also placed under investigation as part of the same probe in September last year.

Economics

Malaysia's new government considering replacing stock market chief: sources The Business Times 6th Jun 2018
[KUALA LUMPUR] Malaysia is looking to replace the chief executive officer of the national stock exchange, two sources said on Wednesday, the latest in a series of top management changes initiated by the newly elected government. The sources gave no reason why the government was considering replacing Tajuddin Atan at Bursa Malaysia. His term is due to end in March next year. A cabinet meeting on Wednesday could discuss Tajuddin's position, one advisor to the government, who is aware of the private discussions and requested anonymity, told Reuters.

Perda-Asean urges banks to support exporters NST Online 1st Jun 2018
KUALA LUMPUR: The Asean Traders Association (Perda-Asean) has called on the business community to go all out to promote Malaysian products, and the banking industry to help them succeed, in light of government efforts to revive the economy through measures such as the zero-rating of the Goods and Services Tax.

Malaysia vows to meet deficit target, plug $5 billion tax hole Reuters 31st May 2018
KUALA LUMPUR (Reuters) - Malaysia will be able to meet its budget deficit target for 2018 even though the scrapping of a goods and services tax will blow a $5 billion hole in the government’s wallet, the country’s finance minister said on Thursday.

Malaysia outlines new sales tax aimed at boosting budget Financial Times 31st May 2018
Malaysia’s government is introducing a new sales tax from September, after scrapping a hugely unpopular levy as it had promised during its recent successful election campaign. The new tax is part of plans to help keep the budget deficit within 2.8 per cent of gross domestic product. After assuming office following the May 9 election result, Prime Minister Mahathir Mohamad instructed ministers to cut spending and has cancelled big-ticket infrastructure projects tendered under the government of former prime minister Najib Razak.

Malaysia to start sales tax in September to shore up Budget The Straits Times 30th May 2018
KUALA LUMPUR (BLOOMBERG) - Malaysia will implement a new sales tax in September to replace the consumption levy that it is scrapping next month as Prime Minister Mahathir Mohamad seeks ways to temper concerns on the nation's Budget.

Malaysia tries crowdfunding to plug ballooning debts U.S. 30th May 2018
Malaysia has set up a fund for members of the public to donate cash to help the new government repay its hefty national debt, the finance ministry said on Wednesday, providing a bank account number for deposits.

Malaysia cheapest place to employ expatriates - ECA survey Bernama 29th May 2018
Malaysia is the cheapest place to employ expatriates among 40 countries surveyed by ECA International. This is one of the key findings of the latest MyExpatriate Market Pay survey published annually by ECA International, a leading provider of knowledge, information and software for the management and assignment of employees around the world.

Energy

Malaysia's Petronas seeks court declaration on its ownership of... U.S. 4th Jun 2018
KUALA LUMPUR (Reuters) - Malaysia’s Petroliam Nasional Berhad [PETR.UL], or Petronas, has filed a court application to declare its exclusive ownership of the country’s petroleum resources, following a move by the state of Sarawak to take a more active interest in local resources.

Inflation Bogeyman Prompts Fuel Subsidies Across Southeast Asia Bloomberg.com 5th Jun 2018
Oil-fired inflation that threatens to shoot ever higher is prompting governments across Southeast Asia to give some relief to pinched consumers. From fuel subsidies to tax incentives, governments are exploring ways to put a lid on rising prices -- for fear that consumers will revolt at the ballot box, or pull back on spending. Central banks in Malaysia, Indonesia and the Philippines have already raised interest rates this year to fight inflation and stabilize currencies as the U.S. tightens monetary policy. Elections loom in Thailand and Indonesia, and a new government in Malaysia is trying to boost support. Vietnam and the Philippines, too, are undertaking measures to control inflation across industries. “Oil prices are 50 percent higher than a year ago and in many countries in the region, core inflation is on the rise,” said Tamara Henderson, an economist at Bloomberg Economics in Singapore. “Consumption may be hampered in 2018 by weaker spending power, although government measures to support disposable incomes may contain the damage.”

Financial Services

Not so rosy for banking sector The Star Online 7th Jun 2018
PETALING JAYA: While policy uncertainty, following the surprising outcome of the recent 14th General Election (GE14), has a negative impact on the Malaysian banking sector, the downside risk to the sector’s earnings will likely be mitigated by cost discipline and stable credit growth. According to UOBKayHian Research, post-GE14, most banks in Malaysia are unlikely to perform as well as they did prior to the May 9 polls, hence the brokerage would maintain its “market weight” on the sector.

Mahathir says to review Malaysia-Singapore stock market trading link, confirms central bank chief has quit The Straits Times 6th Jun 2018
KUALA LUMPUR - Malaysian Prime Minister Mahathir Mohamad said on Wednesday (June 6) his new government will study a project announced by the previous administration to form a new trading link between the stock markets of Singapore and Malaysia.

Import restrictions ripple across Southeast Asia Resource Recycling News 5th Jun 2018
Months after China ramped up restrictions on scrap imports, countries such as Indonesia, Malaysia and Vietnam are initiating similar, if less extensive, policies as officials try to get a handle on massive increases in shipments and improper use of permits.

Zero GST for life, general insurance and takaful products BorneoPost Online 4th Jun 2018
KUALA LUMPUR: The General Insurance Association of Malaysia (PIAM), Life Insurance Association of Malaysia and Malaysian Takaful Association announced that life and general insurance companies and takaful operators in Malaysia will be charging the Goods and Services Tax (GST) at zero per cent effective June 1, 2018.

Bank Negara Malaysia’s strategy to promote cards payments questioned Malay Mail 4th Jun 2018
IDEAS has today published “Payment Card Reform Framework (PCRF): A Policy Evaluation Study”, written by Dr Teo Wing Leong of Nottingham University. IDEAS hosted a Roundtable Discussion attended by industry players, academics and researchers to discuss the report. Bank Negara introduced the PCRF to slow the increase in interchange fees and promote wider use of card payments over cash. A key measure of the PCRF is the cap on interchange fees for credit and debit cards.

Private healthcare cost in Malaysia still affordable The Malaysian Reserve 30th May 2018
Malaysia’s private healthcare expenditure is nowhere close to the inflationary level in other South-East Asian markets and is driven by the value of return on investment obtained by consumers, supported by the maturity, complexity and quality of services provided.

ASEAN neighbors feel Malaysia market maelstrom Asia Times 29th May 2018
The shock election victory of Malaysia’s opposition alliance and the anti-corruption and economic-policy cleansing it has promised roller-coasted stocks before a slight MSCI index gain, and cast a shadow on ASEAN peers the Philippines and Thailand with their own political and fiscal battles under overall asset-class retrenchment. The International Monetary Fund chimed in with caveats at a Singapore event marking a decade since the 2008 financial crisis, as it called for “budget and monetary buffer rebuilding” to counter capital outflows.

Malaysia shares fall on foreign sell-off Nikkei Asian Review 28th May 2018
KUALA LUMPUR (Nikkei Markets) - Malaysia's shares buckled on Monday as foreign funds continued sell-off following mounting concerns over policy uncertainties, while Singapore shares rebounded.

Domestic gas appliances need approval from energy commission, SIRIM label | Malay Mail philstar.com 28th May 2018
KUALA LUMPUR, May 28 — All domestic gas appliances using liquid petroleum gas (LPG) have to be approved by the Energy Commission (ST) and have the SIRIM labels before they are marketed in the country.

Food & Agriculture

First four members of National Agriculture Advisory Council named | Malay Mail Malay Mail 5th Jun 2018
PUTRAJAYA, June 5 — The first four members of the National Agriculture Advisory Council who among others will help the government raise the level of national food security and agricultural exports, were named today. They are Dagang NeXchange Bhd chairman Tan Sri Abdul Rahman Mamat, Leong Hup International Sdn Bhd executive director Tan Sri Francis Lau Tuang Nguang, Universiti Putra Malaysia Institute of Agriculture and Food Policy Studies director Datin Paduka Fatimah Mohd Arshad and young influential entrepreneur Mohd Najib Asaddok.

Agro ministry to cut red tape NST Online 4th Jun 2018
PETALING JAYA: The Agriculture and Agro-based Industry Ministry has pledged to minimise bureaucracy to ensure stakeholders will get assistance they need without much hassle. Its minister Salahuddin Ayub said a fast track system will be established for the purpose, involving agencies under the ministry.

Malaysia sets aside 3 billion ringgit to finance fuel subsidies U.S. 7 Jun 2018
KUALA LUMPUR (Reuters) - Malaysia’s government has allocated 3 billion ringgit ($760 million) to subsidize pump prices till the end of 2018, the finance ministry said in a statement on Thursday. The funds will be used to keep prices of RON95 gasoline and diesel at fixed prices, while the higher grade RON97 gasoline will be floated on a weekly basis.

Health & Life Sciences

Set up monitoring system to ensure budget well-spent, health minister told Malaysiakini 6th Jun 2018
A local think tank has urged the Health Ministry to ensure that its plan to increase healthcare spending is accompanied by a comprehensive monitoring and evaluation system.

Better regulated medical fees in private healthcare needed BorneoPost Online 6th Jun 2018
Better regulated medical fees in the private healthcare sector is needed as the current costs are expensive and still beyond the means of most Malaysians, according to the Federation of Malaysian Consumers Association (Fomca). This was among the proposals and recommendations conveyed by its Chief Executive Officer Datuk Paul Selvaraj during a meeting with the Council of Eminent Persons at Menara Ilham here yesterday. According to Selvaraj, healthcare is a basic right of consumers and the prices cannot be set upon solely depending on the market or profits but must be looked as a welfare component.

No patients ordered to buy own medicines at HSI - health director Bernama 5th Jun 2018
Johor State Health director Dr Selahuddeen Abd Aziz said initial investigations by Sultan Ismail Hospital (HSI) here found no patients were directed to buy their own medicines as posted on Facebook. The Johor Health Department (JKNJ) is referring to a statement posted on Facebook dated June 3, 2018 which claimed some patients had to buy their own medicines as none were available at the hospital which had allegedly run out of funds. "There is adequate supply of medicines and patients are given medicines according to those listed in the Ministry of Health Medicines Formulary," he said in a statement posted on the Facebook page of JKNJ today. Dr Selahuddeen said HSI had contacted the Facebook account owner to seek clarification and was told that he had only heard stories from one party and did not confirm the matter with HSI. He said JKNJ wanted to assure the public that the supply of medicine was adequate and that it would always strive to provide the best service to the community.....

Cabinet paper on health advisory council will be tabled next week Bernama 5th Jun 2018
A Cabinet paper on the proposed establishment of the Health Advisory Council will be tabled next week, said Health Minister Dr Dzulkefly Ahmad. He said the council, which would comprise five to seven experts in various fields, would serve as an advisory body, problem solver and think tank in boosting the healthcare sector delivery. "Members of the council are not necessarily (members) of the medical (field)m there is also an economist. We will choose the best among the best to empower the Ministry of Health and make it world-class," he told a press conference after the ministry's monthly gathering here today. According to him, the long waiting period to meet the doctors, especially specialists, the disruption in the supply of medicines and congestion at health facilities were the main focus to be addressed in healthcare operations.

Review trade agreement for cheaper medicine, consumer group tells Putrajaya Malay Mail 5th Jun 2018
Malaysia should assess its position in various trade agreement negotiations as it would have an impact on the prices of pharmaceutical items, the Consumer Association of Penang (CAP) said today. Its honorary secretary Martin Khor told reporters that the Health Ministry was recently able to reduce the prices of a Hepatitis C medicine from RM300,000 to merely RM1,000, benefitting some 500,000 Malaysians who suffer from the illness. Khor said if the government was to sign on a trade agreement, it must ensure such decision dubbed the “government order” can still be made.

Minister says proposed healthcare advisory council to Cabinet Malay Mail 5th Jun 2018
he Health Ministry has suggested the formation of a Healthcare Advisory Council to the Cabinet. Health Minister Dr Dzulkefly Ahmad said the council would primarily advise the government on solutions to problems that may arise in the provision of universal healthcare in the country.

Health minister plans to seek more funds in Budget | Malay Mail Malay Mail 5th Jun 2018
The Health Ministry will request for additional allocations in Budget 2019 to improve on healthcare delivery. Minister Dr Dzulkefly Ahmad said he hoped for more resources to enable the ministry to improve its services and enhance their availability.

Dzulkefly: Health Ministry needs to be more proactive Malay Mail 5th Jun 2018
Health Minister Dzulkefly Ahmad wants his ministry to be more proactive in providing healthcare. At his first official town hall with ministry officials and staff, Dzulkefly said he wanted the ministry to transform its image and keep in line with the “new Malaysia” emerging after the 14th general election. “As a ministry that has direct and daily interactions with the rakyat, their welfare, grievances and suggestions must be the utmost concerns for all of us “Put yourself in the rakyat’s shoes. Ask yourself what do I expect from an efficient and rakyat-conscious (Health Ministry),” he said.

Focus on health premises, mental health Bernama 3rd Jun 2018
Ensuring the safety aspects of health premises and boosting the development plan for mental health are among areas which must be stressed by the Health Advisory Council proposed by the Health Minister recently. Social activist Tan Sri Lee Lam Thye said these two aspects were important, taking into account the incidences reported in the country. "Based on information from the Fire and Rescue Department, there are still public and private health premises which are unsafe and have high risk of fire. We are also often shocked by many cases of criminal cases, including murder which involved suspects with mental problems," he said in a statement here today.

Open tender policy positive for local biz BorneoPost Online 31st May 2018
BCM Alliance Bhd, a company specialising in medical devices and commercial laundry equipment, lauds the open tender policy advocated by the government as it will provide more opportunities for local businesses. Managing director Liaw Chong Lin said previously, tenders for the supply of medical devices to government hospitals and healthcare centres were often conducted through closed tenders, which made it difficult for other companies to enter into the government healthcare segment. “With this (policy), everyone will stand a chance to secure government contracts now,” he told reporters after the company’s annual general meeting yesterday.

ICT

Media council to be proposed to cabinet in 2 weeks, says Gobind The Malaysian Insight 30th May 2018
COMMUNICATIONS and Multimedia Minister Gobind Singh Deo said he would propose the formation of a media council to the cabinet in two weeks' time. He said the structure of the council was being planned and that he was meeting all relevant parties involved.

Malaysia scraps innovation centre, risking tech entrepreneurship in Asean Asian Correspondent 29th May 2018
MALAYSIA witnessed a whirlwind of changes after its recent elections, including a slew of announcements aimed at streamlining government operations. Among other things, the new government decided to dissolve MaGIC, the Malaysian Global Innovation and Creativity Centre. Many believe this move will affect the startup ecosystem across the region as it is part of a support network of 10 Asean countries, known as the Asean Centre of Entrepreneurship.

Indonesia

Malaysia takes over China’s position as largest tourist contributor The Jakarta Post 5th Jun 2018
Malaysia has taken over China’s position as the largest contributing country of tourists to Indonesia in April, according to the Central Statistics Agency (BPS). The BPS said on Monday that foreign tourists visiting Indonesia reached 1.3 million in April, 215,339 of which came from Malaysia or 16.56 percent of all foreign tourists.

Infrastructure

Malaysia's Finance Ministry unearths S$3.2b gas pipeline scandal The Straits Times 5th Jun 2018
KUALA LUMPUR (THE STAR/ASIA NEWS NETWORK) - Malaysia's Finance Ministry has discovered dubious payments made in two pipeline projects, with nearly 90 per cent of the contracts worth RM9.4 billion (S$3.2 billion) being paid out but only 13 per cent of the work being completed.

Singapore will be told of Malaysia's wish to scrap high-speed rail: Mahathir The Straits Times 30th May 2018
Prime Minister Mahathir Mohamad said on Tuesday (May 29) that Singapore will be informed about Malaysia's wish to scrap the high-speed rail (HSR) project. He also said that he stood by earlier comments that the project would cost a total of RM110 billion (S$37.2 billion), after a former Malaysian minister who was in charge of the project said on Tuesday that estimates had put the cost at RM50 billion to RM70 billion. He had told the media on Monday that the HSR would be scrapped as the new government seeks to trim its RM1 trillion debts. Asked on Tuesday whether Singapore had been informed, he replied: "No, I made a statement with the press (on Monday), but they will be informed." The HSR deal, inked by the previous administration in December 2016, would see the 350km line slash travelling time between Singapore and Kuala Lumpur to 90 minutes when completed in 2026.

Malaysia's Cabinet agrees to scrap KL-Singapore high-speed rail, citing national debt: Mahathir The Straits Times 30th May 2018
Malaysia's Cabinet has agreed to scrap the Kuala Lumpur-Singapore high-speed rail (HSR) project due to high financial costs, subject to discussions with the Singapore government, Prime Minister Mahathir Mohamad said on Wednesday (May 30). When asked why the project, estimated to cost RM60 billion (S$20.25 billion), was called off, he said: "The most important thing for us now is to reduce the amount of borrowings by the government. "We have borrowed too much money. And we cannot pay so much money if we continue with the project. So we are not only looking at HSR but also mega projects which cost us billions of dollars," he told a news conference after chairing the weekly Cabinet meeting. When asked if the HSR and other mega projects would be revisited once Malaysia's finances are better, he said: "Definitely. I think tomorrow (Thursday) you will get a more detailed briefing of what we are doing to ensure that these borrowings can be handled, that government spending will be reduced, and we will achieve a budget that will not show a very big deficit."

Mahathir confirms Malaysia will scrap KL-Singapore HSR project Channel NewsAsia 29th May 2018
Prime Minister Mahathir Mohamad confirmed in a press conference on Monday (May 28) that Malaysia will drop the Kuala Lumpur-Singapore high-speed rail project (HSR), saying the project will not benefit his country. "It is a final decision, but it will take time because we have an agreement with Singapore," Dr Mahathir said. "It's not beneficial. It's going to cost us a huge sum of money. We'll make no money at all from this arrangement," he added. "(The HSR) is only a short track. It is only going to save people one hour by taking the HSR." When asked by Channel NewsAsia if the decision had been communicated to Singapore, Dr Mahathir replied: "I don't know."But he said Malaysia will discuss the matter with Singapore.

Malaysian govt evaluating economic implications of cancelling HSR: Economic Affairs Minister The Straits Times 28th May 2018
The Malaysian government is looking at the possible economic implications if it were to cancel the Kuala Lumpur-Singapore high-speed rail (HSR) and East Coast Rail Link (ECRL) mega projects.

Malaysia axes project to build high-speed rail link with Singapore U.S. 28th May 2018
Malaysia is cancelling a project to build a high-speed rail link between its capital, Kuala Lumpur, and Singapore, and will talk with its southern neighbor about any compensation Malaysia has to pay, Prime Minister Mahathir Mohamad said on Monday. Mahathir, the 92-year-old who triumphed in a general election this month, has made it a priority to cut the national debt and pledged to review big projects agreed by his predecessor that he says are expensive and have no financial benefit. “It is a final decision, but it will take time because we have an agreement with Singapore,” Mahathir told a news conference referring to his scrapping of the project, valued by analysts at about $17 billion. Mahathir said Malaysia may have to pay about 500 million ringgit ($125.63 million) to Singapore to get out of the deal. “We had agreed to proceed with the High Speed Rail project based on mutual benefits and obligations,” Singapore’s Ministry of Trade said in a statement. “We will wait for official communication from Malaysia.”