1 corporate MALAYSIA SEPTEMBER 12, 2022

2 TONG’S PORTFOLIO

There’s no free lunch in economics — it’s who

receives and who pays
BY TONG KOOI ONG + ASIA ANALYTICA
Malaysian Portfolio

M
alaysians just celebrated
Merdeka Day,marking our 65
years of inde- pendence,last
week.And Malaysia Day is just
around the corner, on Sept
16.This should be the time to
rejoice,to inspire,to be proud of the
nation’s success. Hence,we understand
that this ar- ticle may upset some people,
perhaps even
raise questions about our agenda.Do we have
one? You bet we do. Pretending to be an
os- trich, burying your head in the sand, -
serves absolutely no purpose. Not
acknowledging the underlying issues
does not mean they do not exist.
Problems will not be magically
resolved.On the contrary,they create
uncer- tainties and cautious expectations
and, as we know, investors work on
expectations. Indeed, to understand the
enormity of the challenges the country is
now facing — as we do — and to not
speak up is the least pa- triotic thing any
Malaysian can do.
We do not know if you have noticed,
but many of our recent articles have
focused on one key issue —
investments. Investment is the single
most important driver of eco- nomic
growth in a nation.Investments cre- ate
employment and raise the income level
and well-being of the people.The role of
the government is to facilitate a business
envi- ronment that is most conducive to
attract investments, be it by the domestic
private sector or foreign investors.
The fact is Malaysia is falling behind
in terms of attracting foreign direct
invest- ments (FDI) in the region. Our
share of FDI flowing into Asean has
fallen from 24% in 1977-1997 to just 8% in
2000-2020. And the fact is Malaysians
(corporates, institutions and individuals)
have been sending money out of the
country at an accelerated pace (af- ter
capital controls were lifted in December
2002 and the ringgit-US dollar peg
removed in July 2005) for more attractive
returns in- stead of investing
domestically.Investment as a percentage
of GDP has fallen sharply since the Asian
financial crisis (AFC).

We have written at length on why

this is so —

the failure to properly address underlying

structural weaknesses that have persisted
for years, all of which have made
Malaysia
increasingly less competitive as an inves
ment destination.
As a result, the country suffered from premature deindustrialisation. As invest-

ments declined, successive governments

have sought to boost economic growth
with short-term fixes.These included
encouraging domestic consumption
without correspond- ing income
growth,which only led to falling savings
rates and rising household debts. Raising
government spending to stimulate
demand and growth,à la Keynesian
theory,is also largely a myth.Yes,it works
in the short term but it is not sustainable
and there are
costs.To a certain extent,this is a
weakness of all democratic governments.
Most are, in effect, practising BNPL
(buy now pay later) economic policies,
that is, win over voters now, pay later.
But snowballing debts must be repaid.

And this is where Malaysia now

stands
— on the edge of a precipice. There is no that the government uses cash The most ominous statistic,based on Bhd would be making net losses.
sugar-coating it.The table on Page 14 accounting instead of the accrual method the country’s current trajectory,is the While Malaysia has run fiscal deficits
shows a summary of the financial of accounting.) These are the actual expected current balance deficit in 2023 every year since the AFC, the
situation of the public sector — total historical figures for 2014 to 2021 plus the — and critical- ly, its widening trend in government has always only had to
government revenue, operating budgeted 2022 numbers as well as our 2024 and beyond.A current balance borrow to finance development
expenses,debt servicing costs and projections for 2023-2025 (based on the deficit means that revenue is insufficient expenditure (capex). But our projections
development expenditures. (This would average rates of change between 2014 and to cover operating and interest expenses. show that the country, by 2023, will have
be similar to the profit and loss statement 2019, before the distortions due to the If we were to look at Malaysia as a to borrow to service its debts! The
and capex of a company, but bearing in CoVID-19 pandemic). corporate body, then Federal CONTINUES ON PAGE 14
mind Government
14 corporate MALAYSIA SEPTEMBER 12, 2022

TONG’S PORTFOLIO
MOF, BNM, ASIA ANALYTICA

Malaysia will soon have to

borrow to cover operating
expenses
FROM PAGE 12 interest rates were in secular decline.In
thing is, once a company has to borrow other words, the cost of borrowing was
to make interest payments,debt servicing dropping, making debt cheaper. This
costs will snowball — with more and trend has now reversed and interest rates
more bor- are moving high-
rowings required to cover higher and er, at least for the foreseeable future.
higher interest expenses. Lenders will Even after the current hot inflation has
then surely demand higher interest rates peaked and price stability restored,
(to compen- sate for rising risks) and interest rates may not return to previous
finally,stop lending altogether. At that lows for some time. In short, our
point, the company will be insolvent.A projections are based on the best-case
country will have more room to assumption — that the aver- age interest
manoeuvre but make no mistake, there cost remains unchanged from current
will be very serious fallouts. levels. The reality, therefore, will likely
be worse.
How did we end up in this So, Federal Government Bhd was
looming debt spiral? barely eking out “profits” for years. No
As we mentioned, Malaysia has always thanks to years of profligate spending —
had enough revenue to cover all made worse by unchecked wastages and
operating expenses, including interest, theft — there was very little saved for a
save for two short years — 1986 and 1987. rainy day.And that rainy day came — in
Indeed, in the immediate years 2020. When the pan- demic hit,much of
following this shortfall, current balance the additional spending to alleviate
surplus increased strong- ly and economic hardship had to be funded
remained at healthy levels — until about through borrowings. The statutory debt BANK NEGARA, MOF

2008.That was a major turning point ceiling was repeatedly raised, from 55% of
when expenses began growing faster GDP to 60% in 2020 and then 65% in 2021.
than revenue, resulting in significantly There are now expectations that this will
smaller
surpluses (see Chart 1). imminently be lifted to 70%. What can (and cannot) be done? than GDP over the past six years (2014-2019)
As a result of dwindling current The spike in borrowings puts a huge Obviously, when expenses are greater — at 3.8% per annum on average,
balance surpluses,Malaysia has had to rely strain on the country’s financial position. than revenue, the answer would be (1) compared with 7% nominal GDP growth.
more and more on borrowings to finance Debt servicing as a percentage of revenue increase revenue and/or (2) reduce We attrib- ute this to the country’s
development expenditures. And as the jumped from an average of 12% in 2014- expenses.The lat- ter could be through a narrow tax base, low income levels and
total amount of debts grew, so did debt 2019 to 16.7% in 2020-2022. In other words, combination of steep cost-cutting stagnating corporate earnings growth.
servicing expenses. In the five years more government revenue now has to go measures and debt restructur- ing — for
before the pandemic (2014- 2019), interest towards servicing debt.This percentage is instance, lower the interest costs. How
expenses grew by 7.8% per annum on projected to keep rising in 2023 and probable is either action?
average, the fastest clip among all other beyond. Clearly, the current course that Government revenue, the biggest
major expense line items. And re- Malaysia is on is not sustainable. chunk of which is derived from various
member, this was the period when taxes (direct and indirect), has grown at a
globally, far slower rate

We have written extensively on the

struc- tural problems leading to falling
earnings for Malaysia’s largest listed
companies — the earnings per share
(EPS) on the FBM KLCI
CONTINUES ON PAGE 16
16 corporate MALAYSIA SEPTEMBER 12, 2022

TONG’S PORTFOLIO

Most democratic governments practise BNPL economic policies

Chart 3
FROM PAGE 14
trended broadly lower between 2014 and Government borrowings is be a double-edged sword.Elections,at regular
2019, which translated into flattish
corporate in- come tax (see Chart 2). Note
crowding out private sector intervals,can prevent unchecked
that the spike investments accumula- tion and abuse of power.But
few,if any,pop-
in 2021 Was primarily due to RM5 billion in Holders of government bonds issued domestically ulist governments have the political will
35
additional taxes from glove makers (which, (%) to make the hard decisions that inflict
as we know,have already fallen back pain on voters. Populist policies, on the
sharply) and to a lesser extent,plantation 30 other hand, are often short-term solutions
companies, on the back of higher crude that are not beneficial to the country in
palm oil prices. Tax contributions from 25 the long run.As we mentioned above,
plantation should remain relatively high in most democratic gov- ernments practise
the short term but commodity prices are 20 BNPL economic policies. This is a
volatile and,therefore, not reliable as a fundamental challenge for all democ-
steady source of revenue. Similarly,interest 15 racies — and quite possibly one of the
and returns on investment biggest weaknesses for this form of
— primarily from Petronas — are closely 10 government.
correlated to global oil prices.We discussed Malaysia has extensive subsidy pro-
some weeks back how Malaysia’s economy 5 grammes, including for petrol and
remained overly reliant on primary com- numer- ous food products. Petrol
0
modities despite years of industrialisation. subsidies, in par- ticular, have ballooned
Meanwhile, only 16.5% of the country’s 2012201320142015201620172018 20192020 2021 with higher global oil prices. Total
EPF, KWAP
15 million-strong workforce pay income Foreign holders Financial sector Bank Negara
subsidies are now estimat- ed to reach
tax, that is about 2.5 million (or less than Others Insurance companies RM80 billion, nearly five times the RM17
8%) out of Malaysia’s 32.7 million BANK NEGARA, MOF billion budgeted for 2022 — the higher
population. This is a very small base. subsidies will be partly offset by an
Plus, there is a limit to how much additional RM25 billion in dividends from
higher personal income tax Petronas. There has been talk of replacing
(or reducing) the current blanket
subsidies
collection can go, especially if the country think it is highly unlikely to be environment. It does not promote with more targeted subsidies for the low-
is not creating enough high-paying jobs. reintroduced invest- er-income households. Again, is this
Last year, the government announced anytime soon, and especially not with ments or savings. polit- ically palatable?
a one-off prosperity tax in Budget 2022 to the upcoming general election. For the same reasons,there is zero
help pay for pandemic expenses. And Government must reduce operating chance of a smaller civil service or a
there are calls to reintroduce the Goods Raising taxes to pay for expenses cutback in sal- aries, emoluments and
and Servic- es Tax (GST), which is a higher expenses does not Therefore,the best solution is for the pension payments in the foreseeable
broad-based con- sumption tax. GST was promote investments or govern- ment to reduce expenses.Cutting future. In fact, we are seeing more
hugely contentious and was a big issue savings expenses, especially on wastages, populist policies, such as di- rect cash
during the last general election, GE14. It But even if it could be done,finding however,has proved to be equally transfers to the people, to boost popular
was eventually scrapped addition- al tax revenue to pay for higher daunting over the years. This is perhaps support.
operating expenses is a bad option. less surprising.
Higher taxes will
in 2018, after the change in simply lead to an uncompetitive business The democratic form of government can CONTINUES ON PAGE 18
government.We

87.4%
68.9%
Portfolio returns
since inception
8.8% 8.0% NOTE:
InsiderAsia Income
Portfolio started on
May 29, 2015
FBM KLCI total
InsiderAsia Quality
returns over
same period
InsiderAsia Income Portfolio InsiderAsia Quality Portfolio Portfolio started on
March 31, 2016

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IN C O LL A B O R A T I O N
WITH Asia Analytica Asia Analytica Sdn Bhd a licensed investment adviser
MALAYSIA SEPTEMBER 12, 2022 corporate 17
TONG’S PORTFOLIO

Chart 1
Chart 3
Foreign demand for Japanese Comparatively lower interest rates but real yields are still attra
government bonds remains robust 5 10-year government bond yield (%)
(%) ¥
tril 4
100 1000

80 800 3

60 600
2

40 400
1

20 200

0
0 0
19
99

20
01

20
10
20
07
20
03

20
05
20
06

20
09
20
00

20
04

20
08
20
02

2
0
-1
Central bank Depository corporations Insurance and pension funds
Public pensions Households Overseas
Others Government bonds outstanding
(RHS)

April 2013

June
Sept
Oct 2009

2010

2014
May
Jan 2008

2008

Dec 2010
July 2011
Feb 2012

2012

Nov 2013

Aug 2015

2016
Oct 2016
May 2017
Dec 2017

Feb 2019
Aug

March
2009

Jan 2015

July 2018
March
BANK OF JAPAN/FLOW OF FUNDS ACCOUNTS

Chart 2
Debt servicing has fallen sharply on lower rates, even10-year
as government
debtsbond
rose
yield - inflation (%)
8
¥ tril
1000 12
6

900
4
10
800
2
700
8
0
600
-2
500 6

400 -4

4
300 -6

200 -8
2
100
-10
00
April 2013

June
Sept
Oct 2009

2010

2014
May
Jan 2008

2008

Dec 2010
July 2011
Feb 2012

2012

Nov 2013

Aug 2015

2016
Oct 2016
May 2017
Dec 2017

Feb 2019
Aug

March
2009

Jan 2015

July 2018
March
19

79
75

19

19
93
19
87
19
83
19
85

19
89
1
9
8
1

1
9
9
1
1
9
7
7

Government bonds outstanding Interest rates on government bonds (%) [RHS]

Interest payments (¥ tril) [RHS]

MINISTRY OF FINANCE JAPAN

EuropeJapanUS

BLOOMBERG

Japan reaps dividends Chart 4

from thrift and hard work Japan is a top creditor nation
Japan has the highest public debt-to-GDP
with substantial foreign
ratio in the world at over 262%. The Bank of
higher (see Chart 1). To be sure, the Japanese incomes
economy is beset with myriad long-term
Japan (BoJ) has been aggressively buying Japan current account (US$ bil)
structural issues. Yet, foreign investors are 300
government bonds, effectively monetising
confident in the country’s ability to repay.
massive government spending and deficits, 250 200
Japan’s credit rating remains relatively strong.
for more than a decade. And it has kept the
The yen is perceived as one of the few safe- 150
policy interest rates near zero for far longer,
haven currencies in the world. 100
since the Asian financial crisis (AFC). Yet,
In fact, not only is Japan able to raise its
inflation remained stubbornly below the 50
borrowings to record levels, it was able to do
central bank’s target and the value of the yen
so at low — and falling —interest rates. -
has held up well against global currencies, at
This, in turn, has kept a lid on debt
least until recent months. Clearly, Japan is no -50
servicing costs.
Argentina. But then few countries can
Total interest payments have reduced sharply -100
emulate Japan either.
since the AFC, even as the absolute amounts
For starters, almost all of its debts are
19
99

20
01

20
10
20
02

20
07
20
03

20
05
20
06

20
09
20
00

20
04

20
08

2
0

of borrowings continued to rise (see Chart 2).

denominated in yen, which means there is
Why?
no default risk as the government can (in
While the yields of Japanese sovereign
theory) just print more money to repay its
bonds were far lower than those of US Goods and Investment
borrowings.
and eurozone bonds, real yields are still INTERNATIONAL MONETARY FUND
There are only a handful of countries in
competitive given its very low inflation (see
the world that can issue huge amounts of
Chart 3). trade surpluses every year between 1981 and of those held by Germany, Hong Kong and
government debt in their own currencies.
As we explained in our previous article 2010. (Deficits in recent years were primarily China at end-2021. These assets generate
Japan is also a country with historically
(Issue 1434, Aug 22, 2022) the value of a free- due to oil price surges). As a result, it has substantial dividend and interest income and
high savings rates. Therefore, it has
floating currency is largely determined by accumulated massive foreign assets over strong current account surpluses (see Chart
accumulated a huge pool of money, mostly
aggregate demand and supply in the market, the years. Indeed, it has been the world’s 4). And this is the biggest difference between
kept in domestic insurance and pension
both domestic and foreign. The biggest top creditor nation for 31 straight years, with Japan and Malaysia. It goes to show that our
funds, to take up the government debt.
sources of demand are net capital inflows and external assets totalling more than US$3.2 future generations will either benefit from
And despite the rising debt-to-GDP ratio,
repatriated export earnings and investment trillion, according to its Ministry of Finance. thrift and hard work or pay for the indulgence
foreigner demand for its bonds too remains
incomes. As we have shown, there is growing Japan’s net external assets were well ahead of the present generation.
robust. In fact, the percentage of foreign
demand for Japanese bonds (capital inflows).
holdings has been trending consistently
More importantly, Japan recorded big
18 corporate MALAYSIA SEPTEMBER 12, 2022

NEWSBREAK

KWAP CIO Hazman to head KPJ Healthcare, sources

say
BY INTAN FARHANA ZAINUL
position as KPJ Healthcare’s man- and chief corporate officer at the first half of FY2022 ended be offset by higher revenue con-

H
azman Hilmi Sallahuddin, aging director. It is not a surprise IHH Healthcare Bhd from July June 30,KPJ Healthcare’s net tribution.
chief investment officer considering his past experience to De- cember 2017. profit more than doubled to “We see total revenue rising
(CIO) of Kumpulan with the JCorp group,” a source KPJ Healthcare,which owns RM49.29 million, from RM19.93 further quarter on quarter in the
Wang Persaraan says. He joined KWAP earlier 28 hospitals throughout million a year ear- lier,on the third and fourth quarters this
Diperbadankan this year as CIO, a position that Malaysia,has seen its share price back of higher revenue of year, as KPJ Healthcare said the
(KWAP),could be had been vacant for more than a decline since the start of the RM1.36 billion compared with group’s blended bed occupancy
poached year. JCorp owns a 45.2% stake in year, falling more than 22% to RM1.24 billion previously. rate (BOR) had continued to
to helm the country’s largest pri- KPJ Healthcare, followed by the 84.5 sen at Friday’s close, giving Analysts appear to have improve and sur- passed 60% in
vate hospital operator,KPJ Health- Em- ployees Provident Fund it a market capitali- sation of mixed views on the counter, July to August,with some of its
care Bhd, according to sources. (12.17%), Waqaf An-Nur Corp Bhd RM3.67 billion. with seven research houses hospitals currently hav- ing BOR
This follows the departure of (12.17%) In the past, the healthcare having a “buy” call, and another in excess of 70%.
and KWAP (5.4%). group has been a privatisation seven calling a “hold”. “This should help improve
Datuk Mohd Shukrie Mohd
With Shukrie’s target, as reported by The Some expect KPJ the profitability of its loss-
Salleh effective from Sept
departure,chief financial officer Edge. Quoting sources, it was Healthcare to see better making hos- pitals over time; it
7,after just five months as
Norhaizam Mo- hammad reported that JCorp and private earnings growth in the coming hopes to have three of them to
managing director (MD) of KPJ
assumed the role of of- ficer in equity fund TPG were quarters on the back of health turn around to Ebitda [earnings
Healthcare, which is con-
charge. submitting a proposal to the KPJ tourism, with the open- ing-up before interest, taxes,
trolled by Johor Corp (JCorp).
This changing of the guard Healthcare board to take the of the borders,and recovery in depreciation and amorti-
Syukrie,48,said he had
will be the third at KPJ Health- healthcare group private in an patient volume. sation] profitability by year-
resigned “to pursue other
care,which over the past two exercise that valued it at up to Some reckon that its new end,” the research house says in
opportunities”.
years has seen two MDs come RM5.4 billion. hos- pitals, which are still in a recent note to clients.
Prior to
and go JCorp had declined to gesta- tion, will have an impact KPJ Healthcare raised a RM3
KWAP,Hazman,41,was MD of
— Shukrie and Ahmad Shahizam comment on the matter at the on its earnings. bil- lion sukuk in June,which the
Damansara Assets Sdn Bhd,
Mohd Shariff. time.The pri- vatisation did not KPJ Healthcare unveiled the com- pany says is to “rebalance
which is a subsidiary of JCorp.
Ahmad Shahizam was pan out,putting a dampener on latest addition in its network of its capi- tal and finance future
He had a 12-year stint with
appoint- ed head honcho of the KPJ Healthcare’s share price. hospitals,KPJ Damansara expansion”. As at June 30, the
Khazanah Nasional Bhd, where
group in June 2020, and It is worth nothing that the Special- ist Hospital 2 (DSH 2), group had RM1.92 billion in
he served in various roles across
resigned less than nine months healthcare group has seen its on Sept 1. debt, of which 44% is short
the organisa- tion,including as
later in March 2021. He was CEO CGS-CIMB Research estimates term, while its cash
senior vice-pres- ident of
of Pantai Holdings “gestation losses” of RM70
Khazanah Europe Invest- ment
Ltd, based in London. million
“Hazman has been offered Bhd from July 2014 to June 2017 earnings improve this year. For from DSH 2 this year, which will stood at RM330 million. E

the

TONG’S PORTFOLIO

Too-low interest rates penalise responsible savers, discourage savings and

investments
leaves will be worth less than the value when
FROM PAGE 16 liquidity and keep interest costs low to
they were borrowed.
If the reality is limited options for in- mitigate shocks to the financial system.
creasing revenue and cutting expenses, A more protracted QE, though, will
then more government borrowings raise the perception that the central
appear inevitable. This is, in fact, what bank is monetising government fiscal
has been happening over the past few deficits. This will, without doubt,
years. But we are very close to, if not damage investor confidence in its
already at, the point where we can no independence and in the country. And
longer afford to kick the can down the by printing more money, it will also
road — without serious con- sequences. create inflationary pressures — and
asset bubbles. In the worst-case sce-
Crowding out private-sector nario, it could trigger runaway
investments inflation. Case in point is
One important fallout from rising Argentina,where inflation hit 71% in
public debt levels is the crowding out July this year.
effect on the private sector.This is Some may argue that Malaysia is not
clearly evident in Chart 3.It is worrying Ar- gentina and that Japan is the poster
that the percentage of government bonds child for unlimited QE,which the Bank of
bought by foreign inves- tors has Japan (BoJ) has undertaken for more
decreased over the past few years, and than a decade.The Japanese government
more government issuances are taken has consistently run huge deficits,
up by domestic institutions. increasingly financed by the BoJ — and
Obviously, lenders will always the yen has yet to suffer major
gravitate towards borrowers they repercussions, at least until recent
perceive to be least risky (government) months. But,in fact,the financial
and/or require relatively higher positions of Malay- sia and Japan are
premiums for riskier borrowers (pri- vate very different (see sidebar for a more in-
sector). In particular, the banking sec- depth discussion on this topic).
tor and, to a lesser extent, local
institutions (such as the Employees Keeping interest rates low has
Provident Fund and Kumpulan Wang serious long-term consequences
Persaraan Diperbadankan), are holding an Yes, keeping interest rates low will
increasingly large percentage of make it easier for the people and
government bonds. government to service their debt levels.
As the government absorbs more of And yes, inflation will reduce the real
the available domestic pool of savings, it value of debt, that is, fu- ture repayments
fiscally-disciplined, including government raising the people’s standard of living in Dream — have proved to be great jobs, and lift per capita income for all
spending. the 65 years since achieving independence. motiva- tors in attracting and fostering Malaysians.
Worse, low interest rates discourage But the actions of past governments — talent, and removing rent-seeking The Global Portfolio fell 2.5% for the
sav- ing — especially if the interest rate is the years of profligate spending and activities.Singapore is the preferred week ended Sept 7, underperforming the
so low that it cannot even offset inflation wastages — have led us to this critical hub for Asean because its public MSCI World Net Return Index. The
(in effect, savers would be earning crossroad.Instead of al- ways going for service is perceived as transparent, biggest losers were Yihai International
negative real returns) — and/or encourage short-term fixes,is it not time for Malaysia streamlined,efficient and absent of Holding (-11.4%), Alibaba Group Holding (-
people to invest in higher return assets to finally acknowledge — and reform — systemic corruption. The country is 7.3%) and Chinasoft International (-
abroad. This will result in even less money the underlying structural issues? Quite highly effective in planning and 6.5%).There were only three gainers in the
available do- mestically for investments. honestly,we see no good (painless) driving long-term indus- trial- portfolio last week — Airbnb (+2.6%), Bank
Inevitably, capping domestic interest options. Short-term fixes will only exac- investment strategies and has strong Rakyat Indonesia (+2.4%) and Guangzhou
rates (relative to the rest of the world), and erbate the challenges. And not acting private property rights. Both the US Automobile Group Co (+0.1%). Total
adding to money supply that results in will mean watching the country descend and Singapore are among the top portfolio returns since inception now
high inflation will lead to capital flight into a debt spiral — that will certainly destinations in the world for stand at 20.3%, trailing the benchmark in-
(foreign and domestic) — and rapid bring even more pain as well as risking investments. Investment is the answer dex’s 34.7% returns.
depreciation of the ringgit. This would the well-being to sustainable long-term growth Total returns for the all-cash
diminish the pur- chasing power of the — investments will spur innovations, Malaysian Portfolio remained at 120.9%
ringgit and effectively destroy the savings boost productivity and corporate since inception. This portfolio is
of the people. profits, create more and better-paying outperforming the bench- mark FBM
The nation has made great progress in KLCI, which is down 18.5% over
less — and costlier — funding for the This is the obvious solution for most of future generations of the same period, by a long, long way. E
private popu- Malaysians.
sector.That means fewer list regimes — do not make the difficult Over the past series of articles, we have
investments,which (and
as we have pointed out, repeatedly, is unpopular) decisions.It is more palatable spelt out some of the most critical Disclaimer: This is a personal
THE most important driver of future to keep interest rates low and allow the structur- al issues that must be urgently portfolio for information purposes
economic, productivity and income ringgit to depreciate, which is then easily addressed. First and foremost, we must only and does not constitute a
growth. blamed on global foreign exchange reinvigorate investments by creating a recommendation or solicitation or
Of note, Bank Negara Malaysia’s movements that are beyond a business-friend- ly environment that expression of views to influence
hold- ings of government bonds have government’s control. But at what promotes innovations. The education and readers to buy/sell stocks.
risen sig- nificantly over the last two consequences to the future generation? training system must be able to provide Our shareholders, directors and
years. In other words,the central bank is Make no mistake,maintaining ultra-low the necessary talent pool to attract employees may have positions in or
financing some of the government debts, interest rates is a form of wealth transfer investors. The brain drain must be may be materially interested in any
whether directly or indirectly in the — from lenders (savers) to the borrowers stopped and talents recruited from of the stocks. We may also have or
secondary market — or as the world (gov- ernment) and asset owners. If we go abroad. We can learn from the successes have had dealings with or may
calls it, quantitative easing (QE). down this road, responsible Malaysian of others. Equality of opportunity and provide or have provided content
Limited QE during the pandemic crisis savers will be penalised and asked to high social mobility — the services to the companies mentioned
is a defensible move, to ensure sufficient subsidise the less quintessential American in the reports.