With fuel prices rising sharply, geopolitical tensions lingering and global aviation markets becoming increasingly unpredictable, the Group is entering a phase that demands not just operational strength but clarity in leadership and discipline in decision-making. But AirAsia X is doing something rare: turning challenge into opportunity.

The appointment of Tan Sri Jamaludin Ibrahim as Independent Non-Executive Chairman signals exactly that shift. His leadership brings independent oversight and a long-term perspective that is critical as AirAsia X consolidates its seven airlines into a unified, cohesive group. The move reflects a broader emphasis on disciplined growth, resilience, and operational excellence.

Staying Grounded While Moving Forward

Despite the volatility, AirAsia X is not retreating. Instead, it is choosing to stay anchored to what it understands best, its Asean network.

At the recent media briefing happened in Red Q, CEO of Air Asia X, Bo Lingam has insisted that the regional demand remains resilient, and Kuala Lumpur continues to serve as the Group’s core hub, not just operationally, but strategically. It provides stability in a landscape where long-haul travel patterns can shift quickly.

At the same time, the airline is keeping its eyes firmly on long-term ambitions. AirAsia X Founder and Advisor, Tony Fernandes reaffirmed the Group’s unwavering commitment to developing the Bahrain hub, despite current uncertainties. The Bahrain hub represents a broader strategic vision to seamlessly connect Asia with the Middle East and Europe, an expansion that underscores confidence in the airline’s growth trajectory, even as the Group remains prudent about near-term market challenges.

Steering Through Volatility

Global jet fuel prices have surged to more than double 2025 levels, putting immediate pressure on the airline industry. While many carriers rely heavily on hedging strategies, AirAsia X is taking a more agile approach. Instead of locking in fuel prices, the Group is focusing on real-time operational decisions: reallocating capacity to stronger-performing routes, implementing a one-off fuel surcharge to manage costs, and leveraging Fly-Thru connectivity via Kuala Lumpur and Bangkok to capture demand efficiently.

AirAsia X CEO Bo Lingam confirmed that fuel supply from Petroliam Nasional Bhd (Petronas) is secured until June, with additional procurement underway for the following months. While global concerns over fuel shortages and rising prices remain, the airline is optimistic that continued fuel availability will allow operations to remain stable.

This combination of operational flexibility and proactive planning allows AirAsia X to respond dynamically to shifting markets rather than being locked into rigid financial positions. It reflects a broader shift in aviation leadership philosophy: in uncertain environments, adaptability and speed often outperform traditional hedging strategies.

AirAsia X – Balancing Discipline with Boldness

Group CEO Bo Lingam explains it clearly: “We are optimising our network, reallocating capacity to stronger-performing routes, and negotiating with partners to contain costs. As we reactivate our full fleet, unit costs improve, and strengthening Asean currencies act as a natural buffer.”

In conclusion, AirAsia X is turning challenges into opportunities. Strong demand across Asean shows the resilience of its network and the growing appetite for regional travel.

By strengthening Kuala Lumpur as a key hub, using Fly-Thru connectivity and reallocating capacity to top-performing routes, the airline is combining strategic planning with operational flexibility. Targeted fare adjustments, cost management and fleet optimisation show a leadership approach that is disciplined and forward-looking.

With stronger Asean currencies as a natural buffer and a focus on long-term growth, AirAsia X is not just navigating turbulence. It is positioning itself to grow stronger and connect Asia with the world. – NMH

The post How AirAsia X Is Navigating Cost Pressures and Uncertainty first appeared on NMH.

Commentary And Analysis . . . The Ringgit Malaysia (RM) isn’t the issue in Putrajaya as long as there’s no volatility in the velocity of circulation viz. how often a RM10 note, for example, changes hands within any given time period. That’s the Gold Standard used by Bank Negara in monitoring speculative activities in the Forex Market.

The RM note may change hands within one hour, 30 mins or even less. The greater the frequency, and the narrower the range, the greater the velocity of circulation, and there’s real risk of velocity introducing instability in fixing prices, making decisions on purchasing goods and/or paying for services including labour.

Speculative activities for starters, whether based on calculated risk-taking or otherwise, isn’t the real economy.

Ringgit Malaysia

These speculative activities do not create real wealth. They merely transfer gains, one benefitting at the expense of another, as with gambling activities. There’s no increase in the amount of money, viz. Ringgit Malaysia, at stake.

The real economy, based on creating real wealth, was about the production of goods and services. That adds for GDP growth and enlarges the GDP both in PPP (purchasing power parity) terms and token US$. PPP was about how far RM1 goes in Malaysia compared with US$1, for example, in America.

The Forex Market, based on speculative activities, has seen the RM going between RM1 = S$1/B$1 and RM4.80 = US$1 since 1965. The US$, as international reserve, serves as the trigger in the Forex Market for cross trading purposes. There’s no direct convertability of any currency except between the US$ and another currency. RM holders can only buy S$, for example, through the US$ viz. RM after conversion into US$ buys S$.

Gold

The US$ has been valued in gold which isn’t money but commodity. It’s only the US$ which can be used for buying gold since the US government holds half of all government gold in the world.

India, if household gold was considered, would be the richest nation on Earth. The Gold Trust of India, set up by New Delhi, isn’t even work in progress. Housewives don’t trust politicians and government with the gold they have been accumulating for at least between 15K and 8K years and perhaps for even 70K years i.e. if the Negrito, the first people in India, collected gold. Every household in India, no matter how poor, has some gold for that rainy day and ceremonies especially weddings. It’s the culture.

Inflation

The RM became the subject of speculative activities given the interest rate differentials in the US market. The money flowed in as Washington, spooked by the spectre of inflation, increased interest rates.

The RM has since strengthened somewhat against the US$ as profit taking came in. Speculators sold US$ and bought RM. The RM will stop heading north when speculators stop selling the US$ and start buying the American currency. They will sell the RM.

The RM began strengthening recently when the US stopped raising interest rates amidst signs that inflation has cooled. Inflation may even go down. So, there’s no real risk of stagflation i.e. stagnation and inflation at the same time.

Instead, the US economy risks recession, probably depression and even deflation as in Japan, being in and out on the phenomenon for many years ever since China entered the American consumer market.

Beijing, like Tokyo, may get caught up with deflation as well. Already, there are media reports that China’s consumer stimulus packages may not be working. Deflation, based on self-fullfilling prophecy, happens when consumers delay purchasing in the expectation of prices going down even further. The more that consumers delay on purchasing decisions, the more that prices drop. So, consumers see no reason for making purchasing decisions in great hurry.

It has been argued by subject matter experts that China may, in fact, not have any consumer economy at all. The consumer economy in China has been estimated at less than 50 per cent of the GDP. China, as factory of the world, has an export-oriented economy. The global supply chain and international logistics network appears completely China-dominated.

Consumer Economy

Malaysia’s consumer economy by comparison stands at 65 per cent, India above 50 per cent, and the US at 75 per cent.

There may be case in Malaysia, and India as well, for eradicating poverty once and for all, by enlarging the consumer economy while at the same time managing the supply side so that runaway inflation will not rear its ugly head. That will add for GDP growth and make for bigger GDP.

The poverty in India, for example, was estimated at 26 per cent before the pandemic. It has since gone up. The figures may not be available.

In Malaysia, based on government figures, 40 per cent of the people living in the money economy and those outside are poor viz. they have less money.

Corruption

Poverty cannot be eradicated by government projects as this approach, based on past trends, may be more than plagued by rotten form of politics driven by tribalism and feudalism under the guise of democracy, as euphemism, and hidden forms of bribery and corruption.

Poverty can be eradicated once and for all by the government pumping money directly, every month, into the pockets of those living below the poverty line.

This isn’t rocket science. The New Monetary Theory (NMT) in economics advocates this approach.

Money

Money remains intrinsically worthless.

It only gets value, based on the confidence factor, from the 2nd person accepting it from the 1st person. There’s hope that the 3rd person would accept the money in exchange for goods provided and/or services rendered.

Although it’s true that the government prints money, most of the money in circulation has in fact been created by banks. Banks, based on tried and tested formula, lend out RM8 for every RM1 taken in deposit. However, banks don’t create inflation.

It’s too few goods chasing too much money that creates inflation.

Government, in managing the supply side of the economy, should encourage greater local production and/or allow imports from cheaper sources based on bilateral trade denominated in local currencies. The US$ should be kept out of the picture.

It was the opening of the US market with MFN (most favoured nation) status, entry into the WTO (World Trade Organization) and local production by US multinationals that created jobs and took between 600m and 900m out of poverty in China within two decades. Beijing can adopt the same approach worldwide and help end poverty and terrorism once and for all.

It’s open secret that America, under the guise of the global security framework, has been stoking latent hatreds everywhere for creating violent movements for having ringside view through embedded intelligence gathering.

It has been US Government policy, no matter who comes and goes, in Washington that Opposition movements worldwide, NGO, and independent media, merits material and moral support.

Bilateral Trade

India, in the wake of US sanctions imposed on Russia after the war in Ukraine began, created the group of twenty countries for bilateral trade denominated in Rupee. The 20 countries include Russia and Malaysia.

Rupees can be retained in India for investment, including in the booming stock market, and for imports.

The Indian stock market, having overtaken Hong Kong in recent months, stands at the 4th largest in the world and shows potential for overtaking New York, London and Tokyo. The CCP, under the Common Prosperity Programme, frowns on speculative activities in the stock and property markets. Beijing, tightening loans for overseas purchases, allegedly caused the collapse and implosion of the Forest City in Johor. It was planned on several islands off the coast.

In future, if the China Story was well and truly over, most of the paper billionaires in the world would probably hold shares listed in the Indian stock market. — NMH

Related Internal Links . . .

The post Ringgit Malaysia, Like Gold, May Be In World All Its Own first appeared on NMH.

KUALA LUMPUR/SINGAPORE — The beleaguered Malaysian ringgit is testing levels not seen since the depths of the Asian financial crisis more than a quarter century ago, causing officials to step up their rhetoric to try and stem the slide.

The ringgit hit a 26-year low of 4.7965 to the greenback on Feb. 20. Three days later, Prime Minister Anwar Ibrahim called the decline “concerning,” but “under control.” Then on Feb. 29, a top Finance Ministry official said Bank Negara Malaysia, the central bank, is prepared to defend the ringgit by selling some dollar reserves.

By March 8, the ringgit had clawed back some gains, rising to 4.682 against the dollar, but authorities have stressed that their currency should be stronger, given the Southeast Asian country’s improving economic outlook. And although the ringgit is showing signs of stabilizing, analysts expect it to remain weak for the time being as it remains unclear exactly when the U.S. Federal Reserve will begin cutting interest rates, though such a move is expected this year. That would likely help relieve downward pressure on the ringgit and other emerging-market currencies.

The ringgit’s recent trough approached the 4.8850 mark hit on Jan. 7, 1998, a level fraught with symbolism for Malaysians. Malaysia, led by then-Prime Minister Mahathir Mohamad, took major steps, including the imposition of capital controls, to insulate itself from the regional financial turmoil that had decimated the Thai baht, the Indonesian rupiah and the South Korean won the previous year.

Weakness of the Ringgit

And while officials and analysts are quick to dismiss comparisons to the crisis years of the late 1990s, the ringgit’s current weakness is still a major concern. The government is keenly aware of the economic impact on consumers.

“If the ringgit continues to depreciate, this could stoke renewed inflationary pressure, which is something that Bank Negara Malaysia would wish to avoid,” Richard Bullock, portfolio manager of the fixed income team at Newton Investment Management, told Nikkei Asia.

With U.S. interest rates at a 23-year high, capital has fled Malaysia as investors seek better returns elsewhere. They expect the Fed to start lowering its benchmark rate in June, as U.S. policymakers seek more evidence that inflation is firmly on a downward path before cutting rates. Fed Chairman Jerome Powell told the Senate Banking Committee on Thursday that U.S. monetary authorities were “not far” from having sufficient confidence in falling inflation to start reducing rates.

Policy Makers

Malaysian policymakers, for their part, are trying to draw capital back home. On Feb. 29, Second Finance Minister Amir Hamzah told parliament that there would be “an intensified coordination” between the government and the central bank to urge state-linked firms to repatriate foreign investment income and convert it into ringgit “more consistently.”

The policymaker added that the central bank is “always ready” to curb the ringgit’s volatility and is prepared to sell dollars from its reserves to “restrict excessive weakness in the ringgit.”

In response to the minister’s remarks, Bank Negara Malaysia’s Financial Markets Committee said there had been an “immediate impact on market flows, and increased market interest in buying ringgit.”

The central bank has repeatedly attributed the fall in the currency to external factors, including U.S. interest rates and an uncertain Chinese economic outlook. The ringgit is undervalued, authorities say, and does not reflect the country’s positive economic prospects.

As an export-driven country, a weaker currency would typically benefit the economy. But that also means higher costs for importers, raising prices of goods and services.

“For Malaysians, the most serious effect is inflation, especially the cost of food due to high imports,” said Bridget Welsh, honorary research associate with the University of Nottingham Asia Research Institute Malaysia.

Malaysia has factors in its favor compared with the crisis days of the late 1990s, when it had a current account deficit of close to 5% of gross domestic product. That proved unsustainable, and the government could no longer maintain a managed currency float, resulting in a one-off devaluation of 50%.

Now Malaysia is running a structural current account surplus of between 2% and 3% of GDP, a positive for the currency. “The Malaysian economy is in a much stronger external position, with better functioning financial markets now,” said Charu Chanana, head of foreign exchange strategy at Saxo.

Still, the ringgit has been the weakest currency in Southeast Asia over the past year. While other regional currencies have also been affected by China’s economic slowdown and high U.S. interest rates, the Indonesian rupiah and Vietnamese dong have depreciated less than the ringgit against the dollar.

For Malaysia, slowing global demand is weighing on the country. Its current account surplus was 253.4 million ringgit ($54 million) for the October to December quarter, narrowing 97% from the previous three months, official data showed on Feb 16. A narrower surplus puts downward pressure on the currency as less capital flows into the country.

Bullock at Newton Investment Management said Malaysia’s terms of trade, a measure of a country’s export prices relative to its import prices, have been falling steadily over the past year and a half as the relative value of the country’s commodity exports, such as palm oil, has declined.

Toru Nishihama, chief economist at Japan’s Dai-ichi Life Research Institute, meanwhile, says that despite Malaysia’s external balance being robust, the “public debt level is relatively high among Asian emerging economies, while its fiscal position continues to deteriorate since the COVID-19 pandemic.”

Looking ahead, analysts expect the ringgit to bounce back.

Rebound Forecast

On Feb 22, S&P Global Ratings sovereign analyst Yee Farn Phua forecast a 9% rebound in the ringgit, saying the bout of weakness does not pose a risk to the country’s sovereign rating. Local think tank MIDF also expects the currency to appreciate, benefiting from greater capital inflows. It predicts the ringgit’s average value in 2024 will rise to 4.38 versus the dollar and reach 4.20 by year’s end.

“[The] ringgit is likely to recover later in the year, especially as Fed rate cuts drive the dollar lower,” said Chanana at Saxo. Fitch Solutions’ BMI echoed that sentiment, saying that as the Fed eases in the second half of 2024, yield differentials are expected to “gradually favor the ringgit” and bolster its value.

Geoffrey Williams, an economics professor at Malaysia University of Science and Technology, concurs.

“We expect the worst is over. The ringgit will trade normally now and will likely appreciate during the year as we become clearer on global trends and move closer to Fed rate cuts,” Williams said.

Additional reporting by Hakimie Amrie. – Nikkei Asia

Editor’s Note: Article above was first published in Nikkei Asia.

The post Fall Of Ringgit Puts Central Bank, Government On Alert first appeared on NMH.

Saya memang tunggu ada menteri sebut perkara ini supaya saya boleh cerita apa yang pentadbiran mantan Perdana Menteri Datuk Seri Najib Razak buat pada OPR ketika Ringgit jatuh pada tahun 2015 dahulu.

Secara ringkasnya, jika kadar faedah meningkat maka pelabur dana akan cenderung untuk beli bon-bon dalam negara kita kerana pulangan yang lebih tinggi. Jadi permintaan terhadap Ringgit meningkat dan akhirnya nilai Ringgit juga akan naik.

Pentadbiran Najib

Tapi ketika Ringgit jatuh antara 2015-2017, kerajaan tak naikkan pun kadar faedah (OPR). Sebaliknya pentadbiran Najib turunkan pula OPR pada Julai 2016.

Kenapa ye? Bukankah kalau OPR rendah maka permintaan terhadap Ringgit akan jadi rendah dan akhirnya nilai Ringgit pun akan jatuh?

Ya, inilah bezanya antara orang yang tahu strategi ekonomi dan orang yang sekadar baca teori.

Memang betul, apabila OPR meningkat maka pelabur akan masuk untuk beli bon-bon / sukuk dan boleh menaikkan nilai Ringgit. Tetapi duit yang masuk kerana kadar faedah tinggi ini adalah duit yang sementara saja. Bila-bila saja boleh keluar balik apabila ada negara lain yang naikkan kadar faedah mereka

Duit ini dipanggil sebagai ‘Hot Money’. Ia bukan satu pelaburan yang bagus pun sebab bukan saja tak stabil tetapi juga tak bagi kesan sangat kepada kehidupan rakyat.

Sebab itu dulu apabila kerajaan Perikatan Nasional (PN) naikkan kadar OPR enam kali antara 2021-2022, saya dah tulis bahawa Ringgit takkan naik pun dengan cara begitu. Dan akhirnya memang Ringgit tetap jatuh sampai ke paras RM4.73/USD sebelum PRU15.

Apa yang pentadbiran Najib buat ketika Ringgit jatuh (selain 8 langkah yang saya dah cerita sebelum ini) adalah dengan menurunkan OPR. Apabila kadar faedah turun, maka bayaran bulanan pinjaman rakyat pun turun.

Kitaran Tunai Makin Sihat

Rakyat akan mempunyai wang lebih yang akhirnya menyebabkan kitaran tunai dalam pasaran semakin sihat.

Ditambah dengan bantuan tunai dan rasionalisasi subsidi, kuasa beli rakyat tetap stabil. Ini antara sebab pelabur asing tetap datang untuk berniaga dalam negara kita.

Pelaburan mereka kali ini adalah Real Money. Duit yang masuk ke dalam negara yang ditukar kepada aset fizikal dan memberikan manfaat langsung kepada rakyat.

Ini antara sebab FDI kita pada 2016 naik 36.6% kepada hampir RM60 bilion berbanding tahun 2015. FDI inilah Real Money yang meningkatkan permintaan terhadap Ringgit dan akhirnya menaikkan pula nilai matawang kita.

Ringgit akhirnya naik daripada RM4.40/USD pada November 2015 kepada RM3.87/USD pada April 2018. Kenaikan 13% dalam masa 30 bulan.

Ringgit naik, pelaburan naik, perniagaan naik, pendapatan rakyat naik dan akhirnya hasil kepada negara pun naik juga.

Inilah salah satu dari sekian banyak kisah, bagaimana Najib menyelesaikan masalah negara tanpa sesekali membebankan rakyatnya. – NMH

The post OPR Dan Isu Kejatuhan Ringgit – Apa Penyelesaiannya? first appeared on NMH.

Commentary And Analysis . . . The story telling on Malaysia’s economy appears bogged down by the fate of the Ringgit Malaysia (RM). The currency, not yet battered, has reached such depths never kept before except during the 1997/1998 Asian Currency Crisis.

1998 was the year that Datuk Seri Anwar Ibrahim was sacked by dictatorial Prime Minister Tun (then Datuk Seri) Mahathir Mohamad. Anwar lost the deputy premiership and finance ministry in the morning. He lost the Umno deputy presidency by nightfall. More on RM later.

Anwar, besides harping almost daily on Islam and Malaysia Madani, can only fall back on the economic policies and programmes pursued by former Prime Minister Datuk Seri Najib Tun Razak, before 2018, albeit minus the latter’s controversial political donation initiatives which cut short a promising career.

Anwar, like Najib, may be in unique position for helping make difference for the better on poverty eradication, and recovering money laundering assets and “secret profits” as state revenue and thereby help strengthen the RM.

Anwar for all the woes on managing the RM and economy has plus points unlimited.

The government should manage the supply side of the economy as well so that inflation can be kept at the ideal 2 per cent per annum. New money will not create new inflation. In fact, new money will enlarge the consumer economy — now at 65 per cent of GDP in Bank Negara reports — and make for bigger GDP. The government will benefit from increased tax collection especially if GST was brought back with better safeguards. Traders were cheating consumers on refunds due on payments above 6 per cent at the final retail end.

The supply side of the economy has become even more important in recent years after the Najib years from 2009 to 2018. Successive governments in Putrajaya, in emulating Najib, keep pumping money directly into the pockets of those living below the poverty line.

Anwar’s Focus

Poverty eradication remains one area where the Anwar government can also emulate the Najib Administration and make real difference for the better.

The focus should be on bringing all, especially in the east coast, and rural areas in Sabah and Sarawak, into the money economy.

Poverty will persist as long as significant sections of the population remain outside the money economy. The self-sustaining portions of the rural areas, away from money, isn’t factored by the economic managers in government.

Poverty eradication efforts can be tweaked by increasing the amount of money pumped directly into the pockets of the poor and making the payments monthly.

There’s also case for monthly pension, perhaps starting at modest RM500 as in Brunei, for seniors drawn from citizens, permanent residents, stateless, economic migrants, illegal immigrants, refugees, and asylum seekers.

In law, Article 8 in Malaysia, there can be no discrimination.

University education does not guarantee jobs. It might not even provide education based on knowledge.

The government should not impose university education on all.

School leavers are better off at training institutes for skills needed by the workplace.

Ringgi Malaysia

It’s more than likely that Anwar chanting the Mantra on Malaysia Madani — based on Islamic civilisational values — on everything will be exercise in futility especially as the RM risks getting battered. If there’s volatility in the velocity of circulation of the RM, it would be impossible to price goods and services.

Then, Anwar will have mud on the face as in 1998 when Mahathir decided that his deputy was financially illiterate. There’s no volatility currently, on the velocity of circulation of the RM, unlike in 1998 when the local currency took the cue from bhat, won and rupiah which were all battered by the Asian currency crisis. The IMF came in. The 1MDB phenomenon in 2013 has no bearing on the current position of the RM in the forex market.

Welfare State

The welfare state in conventional economics and finance proved unsustainable model in Britain after World War II, in socialist India, USSR, China, and Cuba, among many places.

Islamic economy and finance, on paper, remains the untested minus usury and/or minus interest version of the welfare state in conventional economics and finance.

This may be no time for experimenting for politically expedient reasons on the economy and flogging redundant Articles in the Constitution. There’s consensus among subject matter experts that when politics comes in through the door, economics flies out the window.

Article 153 was rendered redundant in 1972 when the sunset clause, which facilitated discrimination, ended. Again in law, Article 8 in Malaysia, there can be no discrimination. Other facilitating Articles, all Article 153 related, have also been rendered redundant. These include the Defination of Malay as “form of identity” in Article 160(2), aberration in law Article 3 (Islam), Article 152 (national language), and Order 92, Rule 1, Rules of the High Court 2012 (national language).

In law, Article 4 in Malaysia, redundant Articles remain in the book unless removed by the court or Parliament or both.

In any case, it’s unlikely that the government would remove Article 153 without the consent of the Conference of Rulers and the pre-Council Meeting, a day earlier, delierates on the matter. Parliament and court can remove Article 153. They need no consent.

Principles

Anwar should take principled stand and not play the gallery, in competition with PAS, for rural votes. Anwar will never get these votes as proven during elections in six states last August. The poor states — Kedah, Kelantan and Terengganu — remain with PAS. The unity government can only make some headway in these states when the next delineation of constituencies will be completed in 2026.

It’s no use throwing good money after bad, even on poverty eradication, in the PAS-ruled states.

Economics has been defined as social science which studies human behaviour in the battle between unlimited wants and scarce resources which have alternative uses.

There are opportunity costs. Google opportunity costs and economic scale of preferences.

Anwar, based on oft repeated statements, belabours in the delusion that speculative activities are part of the economy. In fact, they don’t create real wealth. The losers are many, the winners few. The syndicates may be rigging the market and fleecing the small man after luring him with upbeat media reports.

Only the production of goods and services create real wealth as reflected in GDP growth rates and the GDP.

Anwar claims that unprecedented FDI (foreign direct investment) inflows show that there’s continued investor confidence in the economy. These investors, it must be stressed, are those already in the country for the longhaul. They invest using RM. Otherwise, the RM will head north as US$ come in for the FDI inflows.

The forex and stock market are speculative activities. If there’s outflow of short term investments, i.e. hot money, from stocks, the RM will fall. There’s inverse relationship between the stock market and bank interest rates. The stock market falls when bank interest rates go up.

Money remains intrinsically worthless. It’s the 2nd person accepting RM from the 1st person, based on confidence that the 3rd person will accept it, that gives it value.

Bank Negara probably has no options on the OPR (overnight policy rate) for inter-bank lending. In any case, the US Reserve Bank can’t keep raising interest rates indefinately, or risk the destruction of economies which benefit it as well.

Malaysia needs at least one million longstay tourists from India and China in the country. The two million tourists with one year visa will help strengthen the RM. The question of overstaying does not arise when the visa was for one year on multiple entry basis. The US, for example, gives ten years multiple entry visa. India gives 15 years multiple entry visa but only for persons of Indian origin. In law, others can also Apply.

Media

The media should stop harping on two million Chinese entering the country, not so long ago, and remaining behind. The Immigration DG explained during the Altantuya case that the Dept keeps each entry and exit record for only two months. The computer automatically purges entry and exit records which are two months old.

The conservative media in particular should not fan fears based on prejudice and hatred. It has cost the Johor government and Sultan dearly as the Forest City project lies virtually abandoned. Chinese investors, in particular, lost confidence in the future in the wake of hostile media reports and immigration raids. — NMH

The post Anwar For All The Woes On RM Has Plus Points Unlimited first appeared on NMH.

KUALA LUMPUR — In San Francisco last week, Malaysian Prime Minister Anwar Ibrahim was eagerly promoting his country, known as a Southeast Asian manufacturing hub and major commodity exporter.

“Malaysia and ASEAN are the most stable and vibrant places to invest, and I look forward to meeting you individually in Malaysia,” he said at the APEC CEO Summit. “I think we are on the right track to propel the economy of our country in the next few years.”

But as his government marks its first anniversary this week, political observers say mounting challenges may pose hurdles for Anwar to achieve economic and fiscal reforms that are necessary to create a more robust environment for the country’s future growth.

Meeting with representatives from tech giants such as Google, Microsoft and TikTok during the U.S. trip, he expressed Malaysia’s commitment to providing a speedy approval process for all investors.

“Hopefully, the meeting with all these giant companies can bring benefits to the country and the people as a whole, God willing,” he wrote on Facebook.

However, the domestic economy faces headwinds. The July-September gross domestic product data released last Friday showed that exports declined 12% from a year earlier, weighing on overall growth. Rising food prices and the falling ringgit currency, which hit a 25-year low last month, have also affected many businesses and households.

Anwar, a longtime opposition symbol who is now 76 years old, became Malaysia’s 10th prime minister on Nov. 24 last year after his Pakatan Harapan coalition won the general election that month. Forming a ruling coalition that he calls the “unity government,” he promised institutional and economic reforms.

Anwar 5th PM in less than five years

Malaysia had been politically unstable for years. Anwar is the fifth prime minister in less than five years, after Najib Razak (2009-2018), Mahathir Mohamad (2018-2020), Muhyiddin Yassin (2020-2021) and Ismail Sabri Yaakob (2021-2022). As such, Anwar’s victory raised hopes for a period of stability and progress at a time when Malaysia was recovering from the pandemic.

“For the first time I see a prime minister that Malaysia can be proud of when he goes overseas. He raises the name of the country,” said Kishan Buxani, a 26-year-old voter from Penang.

Indeed, there was a sense of a breath of fresh air when Anwar first took office. The stock market rallied in the first few months, and the ringgit strengthened to 4.24 per dollar in February. According to the local pollster Merdeka Center, Anwar enjoyed a high approval rating of 68% in that month.

However, Anwar’s first year has been a balancing act, with the prime minister grappling with economic woes, political tensions and the lingering effects of the pandemic while striving to deliver on his ambitious reform agenda.

The government has introduced the New Industrial Master Plan 2030, which includes a target of boosting the manufacturing sector’s GDP by 6.5% annually through 2030, and the National Energy Transition Roadmap, which seeks to restructure the economy, achieve sustainable growth and ensure an equitable distribution of wealth.

Statistics show some positive developments in his first year. The government received 132 billion ringgit ($28 billion) of direct investment in the first half of 2023, achieving 60% of this year’s target of 220 billion ringgit. According to the local think tank MIDF Research, the unemployment rate maintained a post-pandemic low of 3.4% in September, with the youth unemployment rate falling to 10.6%.

Global Economic Downturn

But Anwar’s government was not spared from the global economic downturn. The World Bank in October downgraded Malaysia’s economic growth for this year to 3.9% from an earlier projection of 4.3%, compared to 8.7% in 2022 and the pre-pandemic years’ 4% to 5%, citing a significant slowdown in external demand.

The ringgit is the worst-performing currency in the region this year, falling by more than 5% against the greenback and hitting its lowest value in 25 years, at 4.792 per dollar, on Oct. 23. About 4.19 billion ringgit flew out of the Malaysian equity market during the first half of 2023, according to MIDF Research.

“As an oil exporting country, exposure to oil price shocks and vulnerability to sudden and sizable capital outflows are the main factors that likely explain why the Malaysian ringgit stands apart” compared with other Asian currencies, the World Bank said in the October report. Economists say a widening interest rate gap with the U.S. and the slowing economy of its key trading partner, China, are also among the factors in the ringgit’s depreciation.

Several business owners and small traders in Kuala Lumpur told Nikkei Asia that the weak ringgit has affected their supply of food items and other goods and increased overhead costs due to their dependence on imported goods, equipment and services, adding to the global inflation that has in turn affected Malaysia.

Small Businesses Affected

Wong Mee Fang, a 70-year-old owner of a vegetarian food stall in the city of Petaling Jaya, west of Kuala Lumpur, says the rising costs of rice and other materials have severely affected her business, forcing her to raise prices. The retail price of imported rice was raised 36% in September, reflecting a global price surge.

“Business has been rather uncertain. It is more difficult for vegetarian food stalls like mine,” Wong told Nikkei Asia. “I know the government is trying [to address food inflation], but the rising food prices over the past year have affected many of us, especially small businesses like ours. I’m not sure how long I can continue.”

While these economic issues have caused dissatisfaction among Malaysians, Anwar is also feeling pressure on the political front.

Currently, he enjoys support from two-thirds of the members of the 222-seat House of Representatives, including 147 from the ruling coalition and four opposition lawmakers who recently announced they will support his government.

But local elections held in six of the country’s 13 states in August resulted in a blow to the prime minister, with the ruling coalition losing about 30% of its state assembly seats. The Islamist and right-leaning opposition party Perikatan Nasional increased its inroads into his coalition’s strongholds.

Bridget Welsh, an honorary research associate at the University of Nottingham Asia Research Institute Malaysia, explained that the outcome of the state elections highlighted his weakness among Malay voters and placed his government at risk of losing its non-Muslim base that voted for tolerance and moderation.

“Few recognize him as a reformer, and even fewer see a commitment to reform in his first year,” Welsh said, adding that the current political stability was achieved at the cost of any meaningful reform and a betrayal of trust. In September, the country’s authorities dropped corruption charges against Deputy Prime Minister Ahmad Zahid Hamidi, the leader of a key partner in the ruling coalition, which raised questions over Anwar’s pledge to fight corruption.

“Anwar was supported for what people believed to be statesmanlike leadership and the hope for a clear vision of governance for the country. Neither have yet to materialize. A focus on trying to look good personally rather than actually laying out a clear program and governing has hurt Anwar’s government performance,” Welsh added.

Anwar’s government did introduce several reforms, including the repeal of the mandatory death penalty, decriminalization of suicide attempts, and rationalization of government agencies and departments to improve efficiency.

Anwar, who doubles as the finance minister, last month vowed his commitment to fiscal reforms. “Hence, reforms need to be implemented, notwithstanding that it may be an arduous and challenging process,” he said in his speech for the 2024 draft budget, referring to expanding the revenue base, implementing targeted subsidies and eradicating corruption and malpractice.

As his government enters its second year, Anwar must start delivering on his promises more, according to James Chin, a professor in Asia studies at the University of Tasmania.

“A lot of people don’t believe that he can do it, and that is why you can see the fall of the ringgit and you see the stock market is restless,” he argued. “He has to put in policies that will pay off in one or two years’ time. So time is running out for him.” – Nikkei Asia

Editor’s Note: This article was originally published in Nikkei Asia on November 21 2023.

The post Anwar Struggles To Boost Malaysian Economy A Year After Victory first appeared on NMH.

Commentary and Analysis . . . Malaysia’s RM393.8b Budget’24, announced by Prime Minister Datuk Seri Anwar Ibrahim as Finance Minister on Friday 13 October 2023, wasn’t really that much different from that trotted out by predecessor governments.

It was all about Islam Islam Islam, perhaps Malay Malay Malay as well, and now Hamas Hamas Hamas has re-entered the picture, albeit for token RM10m in Budget’24.

Eventually, sooner rather than later, Malaysia will get a government that the people deserve i.e. where the focus would be on overhauling economic policies, among other much-needed and long overdue wide-ranging reforms. More on this later.

It’s unfortunate that the singular focus in Malaysia’s Budget’24 was PMX Anwar’s obsession with Malay support for GE16 in 2027.

There would be no new Malay votes for Anwar despite Budget’24 being virtually about the Prime Minister’s religion, if not the community as well. He will not only fail in getting more Malay support for GE16, he will probably lose the taken for granted non-Malay and non-Muslim support as well and that includes Sabah and Sarawak.

He did throw some token sums at what he saw as problems and that includes Indian in Malaya. There are only 10K Indian in Sabah and 5K members of the community in Sarawak. We stand corrected on the Sabah figure as the pandemic-delayed 2020 National Census found 16K in Kudat alone, a God-forsaken poverty-stricken place in northern Sabah.

Wide-ranging Reforms

There’s dire need for wide-ranging reforms on economic policies and other areas. The grinding poverty and pension for seniors, citizen and permanent resident alike, hasn’t been addressed. Those living below the poverty line need at least RM4K per month, not measly RM500 monthly from the government.

The elephant in the room on the economy remains Article 153, which has always been observed in the breach, and the attendant ills that flows from it. That includes the quota system imposed by the 20 public universities indebting families for life under the PTPTN student loans and local authorities denying even cendol licences for non-Malay.

American scientist and systems engineer Dr Shiva Ayyadurai, untouchable from India and US 2024 candidate, explains in YouTube video that university degrees and student loans are scams foisted on unsuspecting and vulnerable families by government in cahoots with fund managers. Most university degrees, he claims, are worthless as they don’t impart skills for the workplace.

He advises that school leavers are better off enrolling in training institutes for living skills that guarantee jobs in the marketplace.

Sixty six years later, it’s clear that Article 153 has not only failed Malay in education and every field of human endeavour but has long been rendered redundant in the process.

In law, Article 8, there can be no discrimination save as provided by law, If there’s discrimination, i.e. by law, there must be sunset clause. Article 153 had 15 year sunset clause which was abandoned after the disturbances which erupted in the streets of Kuala Lumpur on 13 May 1969.

In law, Article 4, even invalid law remains unless ruled otherwise by the court of law at the Federal Court level, declaring through the High Court on originating summons (OS) on Article 153 and the related Article 160(2) on the Definition of Malay as form of identity.

In any case, declarations are not remedies, but may serve as Advisory Opinion for future creation of case law for issues in conflict between parties in dispute. That would bring closure if there’s finality in litigation.

Plight of Indian

The plight of the Indian community in particular must be seen within the context of Article 153, by firstly being observed in the breach, and later rendered redundant. Anwar announcing RM100m, through Mitra, doesn’t address the longstanding grievances of Indian in Malaya, the only black mark on the otherwise hugely successful 35m diaspora worldwide.

The Indian diaspora has produced Prime Minister Rishi Sunak for Britain and Vice President Kamala Harris for America.

Dictatorial former Prime Minister Tun Mahathir Mohamad, who has roots in Kerala in southwest India, has been listed as Malay by “form of identity” under the Definition in Article 160(2). He denies Indian heritage except for spoonfuls of blood (Indian). Mahathir does not remember from which part of India his family came.

He has declared before the media, after attacking India on Kashmir, “that otherwise, I am Malay” i.e. blood. In science, there’s no Malay blood. All human beings — homo sapiens — have the same DNA.

PMX, also listed as Malay under Article 160(2), does not deny having a habitually Tamil-speaking paternal grandfather who remained Hindu in those days when conversion wasn’t normal. Anwar has claimed in the media that his paternal grandfather was Brahmin (priest caste).

Indian Don’t Need Handouts

Indian in Malaya don’t need the annual National Budget or even government. They can find their own way, as in the diaspora, if redundant Articles — read 153 and 160(2) on form of identity — are removed from the otherwise colour-blind and secular Constitution based on the rule of law.

In that case, Anwar need not allocate only RM1.9b for Islam Islam Islam and Hamas Hamas Hamas. He can take the entire annual Budget without batting an eyelid and no one but the Malay, Orang Asal and Orang Asli would complain.

He can also include the people in the Gaza Strip and West Bank in the annual national budget.

Also read:-

Palestine Should Be Administered By UN Under International Mandate

Anwar ‘caves in’ on Cabinet reshuffle and Role for Najib

Cabinet System

Briefly, for their own good, future government should abandon Mahathir’s dictatorial premiership and bring back the Cabinet System based on the two great principles viz. consensus — no voice against — and collective responsibility.

The system of checks and balances in government should be restored, there should be due diligence on everything including opportunities from the government for business, forensic accounting on the money trail from the public treasury as that would help detect illegalities and facilitate civil action on money laundering assets and “secret profits”, both state revenue collected through the High Court.

Then, under Article 145, there’s the little matter of ending selective political prosecution based on selective political persecution and abuse of power.

Former Prime Minister Datuk Seri Najib Tun Razak, for those unfamiliar, has filed 3rd bid against Attorney General Tan Sri Tommy Thomas for alleged abuse of power. The jury may no longer be out on whether Mahathir, Thomas and Chief Justice Tun Maimun Tuan Mat were in cahoots on forum shopping for judges on the Najib cases in court, criminal and civil. Najib was jailed, allegedly by hook or by crook, on August 23 last year.

Anwar keeps harping on the Agong having sole discretion on Pardon for Najib.

It’s like the proverbial chicken and egg situation. Science has since discovered that the egg came first. Anwar has implied self-servingly, but not in so many words, that he would not advise Agong on Pardon for Najib.

It’s highly unlikely that Agong would get out of bed on Pardon for Najib unless the Prime Minister gets off his skinny butt and takes a stand on the matter.

If Najib’s 3rd bid fails, the UN Review remains the fallback position for mud on Anwar’s face and the faces of Mahathir, Thomas and the CJ.

The UN Review can only find, based purely on the rule of law, that the RM42m SRC International case which put Najib in jail was incomplete. The conviction wasn’t perfected in law for perfection in law.

There’s also dire need for law reforms, from even before Najib, and obviously it must start with law education. We will revisit these issues another time. — NMH

The post No Malay Votes For PM Anwar Despite RM393.8b Budget’24 first appeared on NMH.

The resignation of UK Prime Minister Liz Truss on Thursday, 20 Oct, just six weeks after having been sworn in has given emphasis that for Malaysia’s GE15, it is imperative that the winning coalition or party be capable of stabilising the economy.

Liz Truss took her pledge of office on 06 Sept after Boris Johnson was forced to resign in July. Prior to taking office as the PM, she was the Secretary of State for Foreign, Commonwealth and Development Affairs of the United Kingdom (2021 – 2022).

Her credentials are no less impressive, yet she failed, bringing down the Conservative Party with her for being the shortest-serving PM in the history of the United Kingdom. In the six weeks she was in office, as much as she tried, she was getting nowhere. In fact, things were getting from bad to worse.

Where is the Hope?

For me, this is like deja vu like when we just came back to Malaysia in 2018, weeks after the Pakatan Harapan (PH) government came into being. It was like coming back to a disaster zone, and I was thinking: Where is the ‘Harapan’ (hope)?

Apart from the massive job layoffs, dragging opposition politicians to court to prosecute them without following the rule of law, lies unto lies about our national debt and spendings by the previous administration, the PH government also took on what everyone was calling as The Great Malaysian Sale. Scores of government assets were sold off en bloc, mostly to foreign entities. These assets were actually making profits, thus the government was going to lose out on the potential earnings.

Apparently, PH sold off almost RM30b worth of national assets within 500 days of taking power as the chart below has listed.

That is why I was so surprised when I came across this article in FMT recently quoting Professor Geoffrey Williams who said, among other things that a PH win will appear more stable as they have a clear, united prime minister and finance minister team.

To tell you the truth, I was gobsmacked when I read this and wondered where the learned professor was during the 22 months of PH rule. I was then inspired to seek the comments of a Professor of Economics, Dr Wong Chin Yoong from Universiti Tunku Abdul Rahman (UTAR).

A Unique GE15

According to Prof Wong, GE15 is going to be unique on several fronts.

“For the very first time we have all the major contending alliances (I mean BN, PH and PN) with administrative experiences, and the electoral atmosphere is apparently different from GE14. Enthusiasm for PH is lesser, and criticism of BN is less intense.

“While the electoral outcome is hard to be judged a priority, it seems more likely, at least at this point of time, that no alliance is going to win a strong majority, and that post-election political bargaining and coalition becomes more likely,” Wong said.

He added that this brings to some important implications on policy making: Don’t expect political and policy stability from a strong ruling alliance. The era of strong majority/strong government/strong man politics is over.

Policy Arrogance

“This is probably good for the economy, as political monopoly typically ends with policy arrogance and mistakes with less ability for self-correction.

“That doesn’t mean we can’t have a good policy in such a political reality. As a matter of fact, a more balanced distribution of political powers means policy made by post-election political coalition will better reflect the needs of different segments of society. It also means that we are going to have a more decent opposition with stronger voices for check and balance in policy formulation and implementation,” he added.

In short, Prof Wong opines that power-sharing among alliances with effective checks and balances from the opposition, rather than a strong government/strong man politics, shall be the road to stability and prosperity ahead for Malaysia.

We shall learn from the mistakes of Truss’s government, but carefully. It is not about engaging in budget deficit. One shall not cry wolf on government debt, claiming that the financial market chaos is all about government debt. Because it is not.

Lessons to be Learnt

He pointed out two core lessons from Truss’s mistake:

1. Never forget about being and showing fiscal sustainability. The market reaction was neither about the temporary spending on energy-saving bills nor tax cut, but a tax cut without being serious about its financing. All the plan miraculously hopes for is the growth that follows tax cuts. The market just didn’t buy it.
2. Ignoring economic reality at its political perils. The interest rate is on rising cycle, and ordinary people are suffering from soaring energy prices. And yet, the plan pledges more tax cuts for the rich, funded by more borrowing on the rising cost. It doesn’t make any political sense.

NMH‘s feature writer on finance and economy, Zam Yahaya chipped in with his opinions too.

“It’s simple, really. On things that you are not certain of, look at the track record. In this case, look at Najib Razak’s track record both during the crisis as well as during other times.

“Not even Mahathir can match it. The latter failed at least three times during his 22-year rule to manage the impact of the economic crisis. Not to mention the domestic mess created during his time such as BMF, Maminco, FOREX scandal losses to name a few which directly, and indirectly, had a serious negative impact on the national economy then.”

Zam added that different alliances that ruled before did bring both good and damage to the economy. At the end, it is the policy and institution that matter to the economy, not the party.

Marked Differences

As for me, I would like to say this: if you take 22 months of PH rule and any 22 months of BN rule, we can tell the marked differences.

Even if they claim that PH had to inherit massive debts and service the 1MDB loans, we must always remember that PH themselves destroyed any potential of 1MDB recovering any losses via an IPO which they sabotaged.

They were sabotaging the country’s economy prior to GE14, and when they took over they were clueless about what to do and dug a bigger hole. Should we trust such people ever again? After all, our national debt has really reached over 1 trillion now (see poster).

What are PH lawmakers going to do about it if they were to take over the country again? Sell more assets until the country is left with just skin and bones?

Vote wisely, people of Malaysia. So much is at stake right now. – NMH

About the writer: Carole Raymond Abdullah is a freelance writer who used to domicile in Hongkong for many years. She is now back in Malaysia, totally surprised at the turn of events in the country lately.

The points expressed in this article are that of the writer and do not necessarily reflect the stand of the New Malaysia Herald.

The post GE15: Who Can Really Stabilise The Malaysian Economy? first appeared on NMH.

Although there may have been no volatility in ringgit Malaysia (RM) since Russian President Vladimir Putin
resolved, on Thurs 24 Feb 2022, to end the civil war in eastern Ukraine, the Malaysian currency continues to fall steadily. The Bank Negara Governor must be SACKED, like Finance Minister Anwar Ibrahim in 1998, if the ringgit declines from USD1 to RM5. The excessive speculation in RM, even if there’s no volatility, must be discouraged so that morale remains high and USD1 to RM5 can be avoided!

We need the brightest and best, from around the world, to lead the way for all. The times have changed since the Pandemic came in late 2019. The riff-raff can no longer use the politics of their sheer numbers and voting for a living — and probably not paying taxes — to squat on the brightest and best working for a living and paying taxes. Read here.

Paper money is intrinsically worthless i.e. it can’t be eaten on its own. It’s the idea behind it, i.e. public confidence, that gives it value. For example, if a seller accepts RM10 for goods and services provided, it’s in the belief that a third person will accept the same RM10 in exchange for other goods and services. The number of times the same RM10 circulates, i.e. exchanging and going from one hand to another, shows the velocity of circulation. It’s the velocity that makes up the amount of money in circulation.

If there’s too much money in circulation, and the demand for goods and services exceeds supply, there will be inflation. The government must focus on supply side economics to bring about a balance in the economy i.e. supply and demand being at an equilibrium.

Sanctions Hit RM Hard

Washington’s imposition of sanctions against Russia, particularly in the use of the US$, has affected Malaysia in more ways than one. It has disrupted the global supply chain and international logistics, already reeling from the effects of the two-year-long Pandemic brought by the novel Coronavirus.

If there’s no need to peg the ringgit to ensure no volatility, the steady fall in the currency must be addressed. In the present forex market, there’s a case for pegging the ringgit within a narrow range . . . US$1 to RM4.40 and US$1 to RM4.60 to discourage further speculation. This will help prevent the RM from falling further from USD1 to RM5 unless Bank Negara isn’t against continued speculation and depreciation. In that case, the gov’t must be prepared to double annual subsidies to RM140b from the present RM70b and announce COLA (cost of living allowance) for all workers. It has been said that even RM70b is unsustainable.

The USD falls as speculators unwind positions, rises as they build up positions. Very few probably make money since speculation may be all about gambling. Many may even lose by not speculating in the forex market or stock exchange.

The return of tourism to the pre-pandemic levels and foreign investments in the stock market — i.e. if they can make capital gains — will see the ringgit gain against the USD and SGD. FDI (Foreign Direct Investment) inflows will also help with the exchange rate.

Bring Back Assets Abroad

GLCs and GLICs must be encouraged to bring back assets abroad and invest in the local stock market. The act of bringing back assets abroad will increase demand for the ringgit and help strengthen against the USD. Shares in the local market are already at rock bottom. This has affected companies which pledged their shares as collateral for loans. These companies should consider buying back their own shares and even delisting and going private before listing again. Short-term money flows into the local market, also called hot money, should be levied tax if they exit within three months.

The M’sia My 2nd Home Programme and M’sia Global Centre of Educational Excellence Policy could also help bring in valuable foreign exchange on a long-term basis.

Malaysia needs renewed emphasis on the English language. It’s counter-productive to play politics with Bahasa Melayu as the national language. Prime Minister Ismail Sabri’s decision to speak in Bahasa Melayu at the UN shows that he’s stubborn, recalcitrant, incorrigible and hardcore. Even Tamil-speaking Indian Foreign Minister Subrahmanyan Jaishankar, for example, spoke in English at the UN although 650m people in India speak Hindi as their mother tongue. Hindi and English are official languages in India. India has the largest number of English speakers in the world.

Indonesia has already rejected the adoption of the 20K Bahasa Melayu as the 2nd official language for Asean i.e. after English. In Malaysia itself, Bahasa Melayu fell into official disuse by 1969 when the 40K Bahasa Malaysia emerged. Indonesia has also declared that Bahasa Malaysia and Bahasa Indonesia are not Bahasa Melayu — Johor Lingga Rhio version — and vice versa. Indonesian Ministers, including President Joko Widodo, speak far better English than Ministers in Malaysia.

Singapore Gov’t

The status of the RM in the forex mart also depends on the S’pore gov’t which doesn’t want the M’sian currency to be too far from the SGD. Otherwise, the S’pore economy would be affected. When the ringgit started dropping from SGD1 to RM1, the media used to openly blame S’pore. Already, the RM continues to drop against the USD but by not so much or appreciates against the SGD, Sterling and other currencies.

S’pore is an international financial centre and also holds the Asian dollar market. The Euro dollar market was started by the old KGB in the USSR.

The 25m Chinese diasporas in Southeast Asia invest in S’pore as a safe haven. Much of the property in S’pore is held by the Chinese diaspora in Southeast Asia. It has contributed to GDP growth and maintained prices and values.

The exchange rate and the stock market are not the real economy i.e. creating wealth through the production of goods and services. They are speculative activities.

Outdated Methods

Bank Negara can take the cue from former Harvard University Economics Professor Dr Subramaniam Swamy. He has interesting YouTube videos on economics and economies. He sees India as pacing the US, not China, in the race to the top. Most of the innovation in the US, according to Dr Subramaniam, comes from Indian-American and Indians from India.

He argues that savings, investment, cheap labour and FDI were outdated methods of managing the economy. He points out that 60 per cent of the growth in US GDP comes from innovations i.e. new ways of doing old things.

He advocates the Indian gov’t printing more money and giving it directly to the people to eradicate the 26 per cent still living below the poverty line in India. New money in the people’s pockets will not result in inflation, argues Dr Subramaniam. “There will be increased demand which can be matched by supply. The supply side should be managed.”

(The Tamil-speaking Dr Subramaniam, a China expert, represents a seat in North India in the Rajya Sabha, the upper house of Parliament. He speaks fluent Hindi besides English and Tamil and some Mandarin).

Again, the exchange rate doesn’t matter as long as there’s no volatility of the currency. Currency stability is important so that employers, professionals, exporters and importers can work with the RM.

Again, if there’s no volatility of circulation but the ringgit continues to fall towards USD1 to RM5, the currency can even be pegged within a narrow range against the USD. For example, USD1 to RM5 and USD1 to RM4.80.

Who are the speculators? The widespread belief in social media has focussed on Mahathir Mohamad and former Finance Minister Daim Zainuddin. They may have learnt from currency speculator George Soros in 1997 during the Asian Currency Crisis which saw Finance Minister Anwar Ibrahim being summarily sacked in 1998. Others who have come under public scrutiny include Gua Musang MP Tengku Razaleigh, local exporters and importers, and S’pore, among others. Both Mahathir and Razaleigh have hypocritically called for the ringgit to be pegged.

Before the pandemic, AirAsia used to hedge in the USD and the oil market.

Zero Inflation

According to econometrists — they deal in a combination of economics, mathematics and statistics — it’s not advisable to have zero inflation. There must be at least two per cent inflation per annum. Otherwise, there’s a risk of deflation as in Japan during the last 15 years. Bankruptcies will increase exponentially. The economy may collapse and implode. See here.

Generally, it’s unlikely that locals would be affected by the exchange rate unless they go overseas. Malaysians must be encouraged to holiday in the country and attend local institutions of higher learning. Those who still want to holiday and study abroad may proceed after paying an exit tax.

Exporters and importers have long kept their revenue and income in USD accounts including locally. So, they are unlikely to worry about the exchange rate.

Exporters would see their revenue increase.

In fact, imports sold locally should not see any increase in prices. Also, the gov’t is subsidising goods and services at RM70b a year and has placed price controls on the basket of goods used to calculate the CPI (consumer price index).

Importers should pay in the currency of the source countries.

Likewise, exporters should demand payment in RM.

USD can be used only when buying from the US. The US, for example, should pay in RM when buying from M’sia.

Likewise, S’pore, China and India should pay in RM when buying from M’sia.

Then, the RM would go up against the US$ as well. – NMH

About the writer: Longtime Borneo watcher Joe Fernandez keeps a keen eye on Malaysia as a legal scholar (jurist). He was formerly Chief Editor of Sabah Times. He is not to be mistaken for a namesake previously with Daily Express. References to his blog articles can be found here.

The points expressed in this article are that of the writer and do not necessarily reflect the stand of NMH.

The post If RM Declines Further, Bank Negara Chief Must Be Sacked, Like Anwar first appeared on NMH.

All three major U.S. stock indexes fell sharply, snapping four-day winning streaks and posting their biggest one-day percentage drops since June 2020, when the COVID-19 pandemic was in full swing.

Surging risk-off sentiment pushed every major sector into negative territory, with interest-rate-sensitive tech and tech-adjacent market leaders such as Apple Inc (AAPL.O), Microsoft Corp (MSFT.O), and Amazon.com Inc (AMZN.O) weighing the most heavily.

“(The sell-off) is not surprising given the rally leading up to the data,” said Paul Nolte, portfolio manager at Chicago-based Kingsview Asset Management.

The Labor Department’s consumer price index (CPI) came in above expectations, breaking a cooling trend and casting doubt on the Federal Reserve’s ability to ease up on interest rate hikes after September.

Core CPI, which strips out volatile food and energy prices, increased more than expected, rising to 6.3% from 5.9% in July.

The report points to “very persistent inflation and that means the Fed is going to remain engaged and raise rates,” Nolte added. “And that’s an anathema to equities.”

Financial markets have fully priced in an interest rate hike of at least 75 basis points at the conclusion of the FOMC’s policy meeting next week, with a 32% probability of a super-sized, full-percentage-point increase to the Fed funds target rate, according to CME’s FedWatch tool.

“The Fed has increased (interest rates) by three full percentage points in the last six months,” Nolte said. “We have not yet felt the full impact of all those increases. But we will feel it.”

“We are at recession’s doorstep.”

Worries persist that a prolonged period of policy tightening from the Fed could tip the economy over the brink of recession.

The inversion of yields on two- and 10-year Treasury notes, regarded as a red flag of impending recession, widened further.

The Dow Jones Industrial Average (.DJI) fell 1,276.37 points, or 3.94%, to 31,104.97, the S&P 500 (.SPX) lost 177.72 points, or 4.32%, to 3,932.69 and the Nasdaq Composite (.IXIC) dropped 632.84 points, or 5.16%, to 11,633.57.

All 11 major sectors of the S&P 500 ended the session deep in red territory.

Communications services (.SPLRCL), consumer discretionary (.SPLRCD) and tech (.SPLRCT) shares all plummeted more than 5%, while the tech subset semiconductor sector (.SOX) sank 6.2%.

Declining issues outnumbered advancing ones on the NYSE by a 7.76-to-1 ratio; on Nasdaq, a 3.64-to-1 ratio favored decliners.

The S&P 500 posted 1 new 52-week high and 16 new lows; the Nasdaq Composite recorded 29 new highs and 163 new lows.

Volume on U.S. exchanges was 11.58 billion shares, compared with the 10.33 billion average over the last 20 trading days. – NMH

The post Wall Street Suffers Its Worst Loss In Two Years Following CPI Data first appeared on NMH.