Malaysia is going from bad to worse

Jae Senn

The MYR is still sliding against the USD, our growth rate is still being revised downwards, inflation will increase further and there will be no goodies in the budget for next year. Taxes are not being reduced and we may even get new taxes after 2019. Minimum wage is just increased by RM50 per month. Our median household income remains flat with not much growth while our exports will quite likely see a contraction at the end of this year, which will continue throughout next year. Highway tolls will not have their rates reduced (much less eliminated) but at the same time public transportation projects are halted or delayed, and there will be no breaks for study loan debtors. Cost of goods have not gone down and in fact, the general consensus is that the cost of living seems to have risen slightly across the board.

Direct cash handouts for the B40 in the form of BR1M to increase liquidity and spending will be stopped. Pension funds are being given a long hard look. Government subsidies for cheap healthcare is being stopped. But, petrol subsidies that benefit the M40 and T20 are continued. The broad-based GST has been eliminated but the abuse-prone SST has been re-implemented with no indication of how tax evasion and non-compliance will be enforced apart from a heartfelt plea by the Finance Minister for business owners to be honest with their tax returns. Meanwhile, corporate taxes are under consideration to be revised upwards to make up for the shortfall of tax revenue.

Diplomatic visits to Japan resulted in no business deals and no soft loans. Diplomatic visits to China resulted in no business deals and no soft loans. Visits from the heads of states of Brunei and Singapore resulted in no business deals and no bilateral projects. A working visit to the United States resulted in no business deals but we’re assured that the Americans would love to invest in Malaysia.

We are in Month 5 of a 60-month term. We are reaching almost 10% of the current term before the next elections. And yet, we have no indicator of what the current government plans to accomplish by the mid-term, at the 30-month mark. You need to have a goal of what to accomplish or put in place at the 30-month mark which will come to fruition and provide benefits for the next 30 months, before the next General Elections, to have the solid results to convince the electorate that you should be voted into power once again. But so far, we have absolutely no direction or indication of where we’re headed towards the 30-month mark when we’re already one-sixth of the way towards the mid-term.

The biggest drivers for injecting liquidity and business opportunities into the market are public infrastructure works but those are all being delayed, put on hold or canceled, such as LRT3, MRT3, HSR, ECRL, PBH. Another area would be public housing development and affordable housing, which have also similarly been put on hold or postponed.

What about our agricultural sector? It’s getting battered from strong headwinds of severely reduced demand coupled with a brewing trade war that’s affecting all emerging markets in the region. The steep depreciation of the Indonesian Rupiah is a windfall for China to consider getting most of their palm oil from Indonesia.

What about our industrial and manufacturing sectors? Our head of state is obsessed with a third national car project while smaller and more agile nations have gone full-swing into new high-revenue industries such as fintech, mobile app development, IoT, Big Data and analytics, and a lot of other next-generation sectors. But somehow we’re being told that if we don’t have a successful national car, we will just be a nation of peasants and farmers.

So, how will the remaining 55 months play out?

For the current government, it’s a hard humbling lesson to remind them that it’s easy being a noisy and abusive Opposition but it’s difficult to actually run the country and get things done.

For the voters, it’s a reminder to be careful what you wish for and when you sow the wind, you shall reap the whirlwind.