Flagging ringgit bodes ill for Malaysia’s Anwar

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SINGAPORE – Prime Minister Anwar Ibrahim began his tenure with a pledge to enact structural reforms and boost investor confidence in Malaysia. But after eight months on the job, the veteran politician is finding it hard to pull the Southeast Asian nation out of a years-long economic funk.  

The local stock market saw foreign outflows of 4.19 billion ringgit (US$920 million) in the first half of 2023, with a benchmark gauge that is among the worst global performers so far this year. The Malaysian ringgit has likewise tumbled, making it among the worst performers in Asia’s currency markets.

On the other hand, Malaysia’s economy grew above market expectations at 5.6% in the first quarter of the year, during which approved foreign direct investment (FDI) reportedly rose 60% year-on-year to 71.4 billion ringgit.

Inflation moderated to a one-year low with the consumer price index coming in at 2.8% in May compared to last year, its slowest monthly pace in 2023.

Yet cost-of-living pressures and political dissatisfaction persists, with economic headwinds and external cyclical factors weighing on the government ahead of state elections in August that are seen as an early referendum on Anwar’s “unity” government, a multi-party alliance that sits uneasily with the long-rivaled political camps’ grassroots support bases. 

Malaysian Prime Minister Anwar Ibrahim and Deputy Prime Minister Ahmad Zahid Hamidi share a light moment but the falling currency is no laughing matter. Image: Twitter

The ringgit’s worrisome performance is a key watchpoint as analysts say that unfavorable exchange rate fluctuations risk deterring foreign investors due to a lack of confidence in earning lucrative returns when the national currency is too weak, which raises the cost of repatriating profits back to home markets.

The cost of servicing external debt in foreign currencies, especially US dollars, also increases as the ringgit wanes, compressing the profit margins and exacerbating credit risks of US dollar-leveraged firms. Malaysia has a relatively high foreign currency-denominated debt exposure compared to some of its regional peers, with data showing only 33% of total debt being ringgit-denominated as of 2022.

Anwar’s administration also contends with a fiscal deficit that is among the widest in Southeast Asia and a national debt that has ballooned to 1.5 trillion ringgit ($329 billion), exceeding 80% of gross domestic product (GDP) when liabilities are included.

In 2018, the then-PH-led government said government debt and liabilities exceeded 1 trillion ringgit, higher than what jailed former premier Najib Razak’s administration had previously disclosed.

Household debt is also among the highest in the region as a result of heavy borrowing by Malaysian citizens, accounting for 81% of the country’s nominal GDP in December 2022, compared with the ratio of nearly 89% in the previous year, according to Bank Negara Malaysia (BNM), the central bank. By comparison, household debt to GDP stood at 47% in 2000.

The Malaysian ringgit is down approximately 10.61% against the US dollar from early January, when it traded at 4.24 before falling to a low of 4.69 in late June. As a historical benchmark, the ringgit weakened to 4.88 during the 1997-98 Asian financial crisis and traded at 4.74 ahead of last November’s general election before recovering by year-end.

The national currency has gradually recovered since mid-July, due mainly to cooler US inflation data, and was trading at 4.55, or approximately 3.41% lower against the dollar in the year to date, at the time of publication.

Analysts are of two minds on whether the ringgit will rebound, with some seeing the government’s perceived lack of a clear economic strategy as a key factor.

Carmelo Ferlito, an economist and chief executive officer of Kuala Lumpur-based think tank Center for Market Education, told Asia Times that he sees “the lack of a comprehensive economic strategy which would include mainly pro-market reforms” as a factor behind the depreciation, saying that authorities fluctuate “between pro-market stances and a heavy desire to control the economy.”

Ferlito attributed lower-than-expected economic growth in China, Malaysia’s top trading partner, and continued strength of the US dollar as the “preferred reserve of value in periods of uncertainty, despite all the talk about de-dollarization,” as other factors driving the ringgit’s slump while also pinning blame on the Anwar-led government’s failure to address structural economic issues.

“So far, contrasting signals have been sent. The desire of attracting FDI is not matched by consistent policies in this direction. Price controls are still in place, labor regulations are still restrictive, and getting a bank account is becoming more complicated. In general, a comprehensive economic strategy is yet to be seen. The lack of vision will keep on playing against the ringgit,” he said.

Malaysia’s economy is losing steam after last year’s post-Covid rebound. Photo: Asia Times Files / AFP / Manan Vatsyayana

While Anwar’s focus has so far been on consolidating the government’s finances, plugging leakages and tightening rules for more transparent state procurement contracts, Ferlito voiced hopes that after upcoming state polls, “the government may become braver in addressing structural issues and start to remove price controls, subsidies, red tape and labor limitations.”

Some observers believe that politics have contributed to the ringgit’s recent weakness, which on July 12 hit a record low of 3.49 against neighboring Singapore’s national dollar. A poor performance by the Pakatan Harapan-led (PH) ruling alliance at August state elections, analysts and economists argue, could further impact investor sentiment and political stability.

Politics aside, economic headwinds are a serious challenge with the ongoing global slowdown sharply affecting Malaysia’s export performance, which plummeted 18.9% year-on-year in June, marking the fourth straight month of contraction. The country is a major exporter of electrical and electronic products, as well as petroleum products, rubber, palm oil and its derivatives.

Previous periods of ringgit weakness were generally a boon for Malaysian exports but sluggish growth in China and monetary policy tightening in advanced economies has darkened the global trade outlook. BNM forecasts GDP growth of 4% to 5% this year, falling well short of the two decade-high 8.7% seen in 2022 coming out of the Covid-19 pandemic.

The central bank said in late June that it would intervene in the foreign exchange market to stabilize the ringgit, citing what it called “excessive” losses. BNM said the currency’s depreciation is not reflective of economic fundamentals and that the value of the ringgit will continue to be market-determined.

Re-pegging the ringgit to the US dollar has also been ruled out, with Malaysian Deputy Finance Minister Ahmad Maslan saying last month that doing so would inhibit independent monetary policy-making. The government’s aim is to implement structural policies to boost competitiveness and attract inflows of foreign investment to support the ringgit, he said.

“The depreciation of the ringgit bodes ill for the economy and even society,” said Mohd Shahidan Shaari, a senior business lecturer at the Universiti Malaysia Perlis, in a recent commentary. “If there is no government intervention to curb any further depreciation, one US dollar might be exchanged for five ringgit in the future, which can have numerous detrimental impacts.

“Therefore, closing the barn door before the horse bolts is of utmost importance. One possible measure the government might consider is fixing the exchange rate. By fixing the exchange rate, the government can stabilize the value of the currency and provide certainty for economic actors, including businesses and investors,” he added.

Malaysia's currency could come under pressure due to higher than previously disclosed public debt and a new expansionary budget. Photo: iStock
Malaysia’s currency is under pressure amid global economic headwinds. Photo: iStock

BNM opted to maintain its overnight policy rate at 3% earlier this month after it unexpectedly raised rates in May for the fifth time since last year. Analysts see any near-term policy changes as unlikely with headline inflation having eased in recent months, though some argue that further depreciation of the ringgit could cause BNM to raise rates again.

“Bank Negara can continue to raise interest rates to attract investors into the ringgit. However, as long as rates are elevated in the US, Europe and the UK, many investors will not come back into the ringgit to help it appreciate,” said Mayra Rodriguez Valladares, a financial risk consultant at MRV Associate and former foreign exchange analyst from the Federal Reserve Bank of New York.

“It is very challenging for one central bank alone to influence foreign exchange rates. In fact, no central bank wants to deplete its foreign exchange reserves defending its currency. The lessons from the Asian financial crisis of 1997 are important to remember,” she told Asia Times. “Central banks cannot go against foreign exchange traders; this is a market that is about $8 trillion a day.”

Follow Nile Bowie on Twitter at @NileBowie

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Bank of Japan tiptoes toward financial bedlam

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TOKYO — Has Bank of Japan (BOJ) Governor Kazuo Ueda, 103 days into the job, already blown it?

Inquiring minds in trading pits everywhere can’t help but wonder as inflation and gross domestic product (GDP) diverge in dangerous ways. And markets are getting exactly the last thing you’d want from Ueda’s BOJ: crickets.

Data released on Friday (July 21) showed that core inflation, which excludes fresh food, rose 3.3% in June year on year, faster than in the US. Japan’s inflation surge shows how quickly price dynamics can shift — and perhaps get away from a central bank.

This adds an economic exclamation point to next week’s BOJ policy meeting. The two-day event ending July 28 is shaping up to be the BOJ’s last chance to salvage its reputation in world markets.

The odds the BOJ will do just that aren’t great. “Although we don’t rule out some yield-curve-control-related change at the BoJ’s upcoming policy meeting, our base case is for the central bank to stick to its guns,” says Stefan Angrick, senior economist at Moody’s Analytics.

Norman Villamin, group chief strategist at Union Bancaire Privée, adds that “the Bank of Japan may once again be forced to defend the policy via liquidity injections moving through the summer.”

Given Ueda’s recent comments, Mitsuhiro Furusawa, a former vice minister of finance for international affairs, told Bloomberg: “It’s unlikely that the bank will modify the instrument at the upcoming meeting. In the past, I thought July is possible, but the way he’s speaking, if he moves next week, it’ll be a major surprise.”

This crisis of confidence confronting the BOJ has many fathers, of course. Blame must be shared by Prime Minister Fumio Kishida’s ruling Liberal Democratic Party (LDP) for squandering the last decade. The same goes for a succession of BOJ leaders who forget about what William McChesney Martin said about punch bowls 70 years ago.

It was in 1951 when Martin, then chairman of the US Federal Reserve, famously quipped that a central banker’s job is to remove the punchbowl just as the party gets going. Far from internalizing this mindset as, say the Bundesbank of old did, the BOJ has been refilling and refilling the punchbowl for decades.

First, with the quantitative easing that the BOJ pioneered in 2000 and 2001, just after cutting rates to zero in 1999. The unsurprising result is a level of financial intoxication that no Group of Seven (G7) economy had ever known.

Japanese 10,000 yen bank notes spread out at an office of World Currency Shop in Tokyo on August 9, 2010 Reuters/Yuriko Nakao.
Easy money: Japan has a long history of quantitative easing Photo: Agencies

Twenty-plus years ago, when then-BOJ leader Masaru Hayami served up quantitative easing (QE), it was meant to be a special monetary cocktail available for a limited time only. Over time, though, the Tokyo political establishment got hooked on loose monetary policy.

One government after another prodded the BOJ leader at the moment to keep the liquidity flowing — and to up the dosage. This cycle got supersized in 2013, when the LDP hired Ueda’s predecessor, Haruhiko Kuroda.

At the time, then-prime minister Shinzo Abe said he was mixing up his own cocktail of badly needed structural reforms to end deflation. Abe promised a mix of Ronald Reagan and Margaret Thatcher with Japanese characteristics. Mostly, though, Abe just prodded Kuroda to add more punch bowls.

It backfired. As Kuroda fired his monetary “bazooka,” the yen plunged and exports soared. That generated a corporate earnings boom, one that propelled the Nikkei Stock Average up 57% in 2013 alone.

But those gains never made it to the average Japanese as wages flatlined. That’s because Abe’s party failed to implement the supply-side revolution it promised.

Moves fell by the wayside to cut red tape, liberalize labor markets, increase innovation and productivity, empower women and restore Tokyo’s place as Asia’s financial hub. Instead, Abe bet it all on ultraloose central bank policies, the likes of which modern economics had never seen before.

In short order, the Kuroda-led BOJ drove the yen down 30%, hoarded more than half of all outstanding Japanese government bonds and morphed the BOJ into a giant hedge fund by gorging on stocks. By 2018, the BOJ’s balance sheet topped the size of Japan’s US$5 trillion economy, a first for G7 members.

None of it generated real inflation, though. That took Vladimir Putin’s invasion of Ukraine. The massive boost to oil prices had Japan importing too much inflation too fast via an undervalued exchange rate. The Putin factor collided with Covid-19 era supply chain price pressures.

Japan suddenly had the inflation it sought for a decade. It was the “bad” kind, though, generated more by supply shocks than rising consumer demand. It also came too quickly, catching BOJ officials flat-footed.

On Thursday (July 20), Kishida’s government dramatized the problem by projecting that inflation will likely hit 2.6% this fiscal year.

That’s the highest in at least three decades and well above the BOJ’s 2% target. Worse, it’s double the government’s GDP expectations, now projected to expand 1.3% in the current fiscal year ending in March 2024.

In December, with his retirement less than four months away, Kuroda tested out how declaring “last call” might go down. Not well: Kuroda’s December 20 move to let 10-year yields drift as high as 0.5% caused bedlam in markets.

Then-Bank of Japan governor Haruhiko Kuroda has a QE problem. Photo: Asia Times Files / AFP

The yen surged, Japanese stocks cratered and Wall Street panicked. Kuroda’s response was refilling the punchbowl — again — and then passing bartending responsibilities to Ueda.

It now falls to Ueda to devise a 12-step program for Tokyo without crashing global markets. The trouble is, 23 years of open-bar policies made it okay for investors everywhere to drink free on Japan’s dime.

The arrangement gave way to the so-called “yen-carry trade.” Two-plus decades of zero rates made Japan the premier creditor nation. Investors of all stripes got into the habit of borrowing cheaply in yen to fund bets on higher-yielding assets everywhere.

This strategy has kept aloft everything from Argentine debt to South African commodities to Indian real estate to the New Zealand dollar to cryptocurrencies.

This explains why Kuroda’s flash of sobriety in December caused a mini earthquake globally. When the yen or JGB yields surge, the bottom falls out from under markets across the globe. Asian markets in particular don’t tend to fare well amid big yen gyrations.

These pivots back toward “risk off” crouches often blow up a hedge fund or two. And, clearly, the last thing China needs right now as GDP slows, exports stall and questions linger about the depths of its real estate problem is financial turbulence from Japan.

“Given the BOJ’s outlier status among global central banks that have spent the better part of the last two years fighting inflation,” says economist Udith Sikand at Gavekal Research, “even the smallest of changes to its policy stance could create a ripple effect through foreign exchange markets that have gotten used to the yen being a perennially cheap funding source.”

All of which explains why next week’s BOJ meeting is so crucial. It may be Ueda’s last chance to guide yen-denominated assets instead of being overwhelmed by negative market forces, not least the so-called “bond vigilantes.”

The reference here is to activist traders who take matters into their own hands to highlight government, monetary or corporate policies they deem as unwise or dangerous. They make their voices heard by driving up bond yields and boycotting debt auctions, thereby raising government borrowing costs.

If Ueda isn’t careful, the financial forces that the BOJ has long held at bay could strike back. At the very least, his team must emerge from the July 28 meeting with a plan to begin winding down decades of QE.

“We expect the BOJ to widen the fluctuation range for 10-year JGB yields,” says economist Takeshi Yamaguchi at Morgan Stanley MYFG. “That said, we do not see a meaningful rise in yields. We would see a potential knee-jerk negative equity market reaction as a buying opportunity.”

It’s easier said than done, of course. The last thing Ueda’s team wants is to tank the Nikkei — or Japan’s broader economy. Ueda, of course, has the events of December 20 on his mind. But the lessons from the 2006-07 era of BOJ policymaking also loom large.

At the time, then-BOJ governor Toshihiko Fukui tried his hand at weaning Japan Inc off the monetary sauce. QE, after all, was meant to bring the economy back from a kind of near-death experience; it was never meant to be permanent.

Fukui decided it was time to get Japan clean. First, he ended QE. In July 2006, he pulled off an official rate hike and then a second one in early 2007.

Not surprisingly, global markets struck back when investors, banks, companies and politicians howled in protest. Before long, Fukui was on the defensive and the rate hikes stopped.

By 2008, after Masaaki Shirakawa took over as BOJ governor, Tokyo was slashing rates back to zero and restoring QE. Then came Kuroda in 2013 to turbocharge QE.

Kazuo Ueda has a decision to make. Image: Facebook

Ueda also has lessons from Washington on his mind, namely the collapse of Silicon Valley Bank (SVB) amid aggressive US Fed tightening moves. As Ueda’s team understands, some of the conditions imperiling US lenders seem eerily familiar to headwinds facing Japan’s regional banks.

All too many of these 100-plus institutions saw profits squeezed by an aging and shrinking population. The communities they service have been hit by an exodus of companies keen on headquartering in Tokyo rather than the provinces.

The BOJ’s rigid “yield curve control” regime, which makes it hard for banks to borrow at one part of the maturity spectrum and lend at the other, is an added blow. So many regional lenders hoard bonds rather than lending SVB-style. This makes these embattled lenders vulnerable to BOJ tapering or tightening.

On the other side of the risk list is that the BOJ might be letting inflation become ingrained. Earlier this year, Japanese unions scored the biggest wage gains for workers in 31 years. The average 3.91% increase could add fuel to the BOJ’s inflation troubles and exacerbate concerns among traders worried the Ueda-led BOJ is already losing the plot.

“It’s a close call, but we still think yield curve control tweaks are possible, given that recent data support steady inflation growth and a sustained economic recovery,” says economist Min Joo Kang at ING Bank.

The only thing clear about the July 27-28 meeting, however, is that the BOJ will be in the global spotlight as rarely before.

Follow William Pesek on Twitter at @WilliamPesek

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Dollar angst boils up at worst moment for markets 

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The investment world has seen no bigger widow-maker trade this last decade than shorting the US dollar. Yet recent volatility in the reserve currency has punters once again asking whether the great dollar reckoning is finally afoot?

No one knows, of course. The dollar’s sudden and sharp drop in recent days, though, has the whiff of exactly the sort of foreign-exchange shock for which markets have been bracing. As investors wait to see if things unravel, finally, it’s worth exploring how bad things might get.

For now, the dollar’s stumble can easily be explained by shifting considerations of interest rate differential expectations. As strategist Steven Barrow at Standard Bank puts it: “Our call for the dollar to enter a multi-year downtrend is partly based on the fact that the Fed’s tightening cycle will morph into an easing cycle, and this will pull the dollar down even as other central banks cut as well.”

News that inflation rose just 3% in June year on year, a third of the rate of increase a year before, suggests that the most aggressive Federal Reserve tightening cycle in three decades is winding down. The Bank of Japan, by comparison, is locked in place policy-wise, while the People’s Bank of China is in rate-cut mode.

Yet currency crises tend to come very suddenly. It doesn’t take much for a stumble to morph into the real thing. Once a critical mass of global investors starts taking a serious look at the dollar’s fundamentals, things could go south at warp speed.

Chief among the negative data points: a fast-widening current-account deficit; a national debt topping US$32 trillion; highly indebted households, buckling under the weight of hundreds of basis points worth of higher borrowing costs; President Joe Biden’s move to weaponize the dollar to punish Russia over Ukraine; trade friction with China; and a level of political bickering in Washington that has Fitch Ratings mulling a downgrade.

“There’s little evidence, however, of a sustainable uptrend in dollars at this point,” says J C Parets, founder and president of advisory AllStarCharts.com. “In fact, the majority of the data continues to point towards a lower US dollar.”

Strategist Masafumi Yamamoto at Mizuho Securities thinks the dollar will remain “under pressure” unless new evidence emerges that the US economy is “outperforming other countries.”

Economist Edward Bell at Emirates NBD says indications are that “the dollar’s prime position appears largely unchallenged, thus far. But there are developments that may yet drive a longer-term shift away from the US dollar, including the use of sanctions as a US foreign policy tool. There has also been a rise in bilateral agreements to settle trade in local currencies rather than the US dollar.”

A key problem, of course, is a lack of ready alternatives. Analysts at Fitch Analytics argue that “while the US dollar’s role will continue to decline over the coming years, it will be a slow erosion, rather than a paradigm shift. Most importantly, there is no real alternative to the US dollar, and the Chinese yuan is unlikely to become one in the near future.”

Bell adds that “despite a potential longer-term desire amongst some economies to diversify away from the dollar, there are also some fundamental stumbling blocks that may slow or limit this process.” As the International Monetary Fund has suggested, Bell notes, “there is significant inertia in reserve currency status, with a strong bias to using whichever reserve currency has been dominant in the most recent past.”

One possible reason for this inertia, Bell says, “may be the US dollar’s safe-haven status, evident in the perennial demand for US government bonds, even during times when there is heightened risk within the US economy itself. There is also a lack of feasible alternatives, with both the euro and the yuan facing their own issues as real challengers to the dollar.”

Yet little of this will matter if fundamentals get away from Washington. In 1971, Nixon-era Treasury Secretary John Connally famously said that the “dollar is our currency, but it’s your problem.” Fifty-two years later, Asia is on the frontlines of this very phenomenon.

The dollar has peaked both in cyclical and secular terms,” says strategist Luca Paolini at Pictet Asset Management. “The overvaluation is significant and our models show the dollar is 20% above its fair value versus a basket of currencies. US productivity growth is weak, fiscal policy is too loose and interest rate differentials are no longer supportive of the US currency. The dollar’s depreciation is likely to be particularly pronounced against low-yielding currencies, such as the Swiss franc.”

The risk is that investors turn on the dollar en masse, setting off a disastrous domino effect. It’s then that the poor financial fundamentals unnerving markets collide with geopolitical tensions. A big one is governments from China to Russia to Saudi Arabia searching for alternatives.

The ways in which the Biden White House moved in 2022 to freeze some of Russia’s currency reserves only encouraged the anti-dollar movement.

In April, US Treasury Secretary Janet Yellen acknowledged that “There is risk when we use financial sanctions that are linked to the role of the dollar that over time it could undermine the hegemony of the dollar.” Yet, she added, the dollar “is used as a global currency for reasons” that include the fact it is “not easy for other countries to find an alternative with the same properties.”

Julius Sen, a political economy expert at the London School of Economics, notes that the term weaponization is “apt as it explains how a relatively neutral but essential facility – the dollar and its accompanying payment system – have been turned into a powerful weapon by one UN member state against another without appropriate sanctions in place.” In addition to amounting to weaponization, the freeze on Russian currency reserves “also represents an aggressive form of extraterritoriality which has perhaps not been seen on this scale in the past.”

Washington’s use of the dollar to gain political leverage could drive other countries to “find their own coping mechanisms,” Sen says. Possible mechanisms that he lists include diversifying into other currencies, shunning dollar-denominated assets and turning to capital controls.

For China’s yuan, the lack of full convertibility remains a turnoff for many global investors. And, in the short run, so is concern that Asia’s biggest economy is veering toward deflation.

Analyst Kelvin Wong at OANDA warns that “further yuan weakness is likely to put more financial burden on the current offshore bonds payment obligations of Chinese property developers where the property industry still faces a credit crunch issue due to a weak internal demand environment.”

What’s more, Wong adds, “brewing financial stress of major Chinese property developers is on the rise again: Prices of their onshore dollar bonds tumbled significantly in the last two days.”

Adding to the PBOC’s list of worries, Wong says, are a trading halt announcement made by Sino-Ocean Group in a local note that is due to mature in two weeks and Dalian Wanda Group’s issuance of a warning to its creditors of a funding shortfall for a bond that is due for redemption on July 23.

The bottom line, Wong says, is that “failure to negate the current negative sentiment in the China stock market may further reinforce a negative feedback loop into the real economy which in turn increases the risk of a deflationary spiral.”

Yet the dollar’s downward trajectory could have the yuan moving higher in the second half of 2023. Strategist Kit Juckes at Société Générale thinks the dollar could soon return to its December 2020 lows.

“As was the case in January/February before the SVB mini crisis, the market is anticipating the peak in US rates and a further narrowing relative rates,” Juckes notes. “If nothing happens to scupper those expectations — another upside surprise in US growth, or further European growth disappointment — I would expect the Dollar Index to move closer but not all the way to the lows at the end of 2020.”

After that, no one really knows. The typical financial dynamics and yardsticks are far less applicable in today’s market environment.

“We’ve got a one-in-a-100-years pandemic and a once-in-75-years war and a-once-in-25-years energy crisis all thrown into the mix together,” Juckes explains. “You’ve got to be 120 years old to have any understanding of this.”

One such imponderable today is how central banks and governments tame inflation emanating from non-monetary sources — including from supply chain tensions beyond policymakers’ control.

“The great lingering fear among central banks is that the longer it takes to bring down inflation, the greater the risk of it becoming entrenched,” says economist David Bassanese at BetaShares Exchange Traded Funds.

That’s why, notes George Saravelos, global head of FX research at Deutsche Bank, “a confirmation that the US disinflation process is underway in soft landing conditions is for us the most important macro variable for the rest of the year.”

Yet no risk trumps that of the dollar, the linchpin of international finance, finally having its comeuppance. It’s too early to say that this long-awaited reckoning is afoot. If it is, economies everywhere will quickly find themselves in harm’s way.

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Malaysia remains top three in terms of phishing attacks in Southeast Asia 

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Loss of US$5.9 mil recorded as of February 2023
Delivery services recorded highest % of clicks on phishing links 

Data from Kaspersky shows that email phishing attacks in Malaysia remain at an alarming rate. The firm said that in 2022, its Kaspersky Anti-Phishing System blocked 8,267,013 attacks.
According to Cybersecurity Malaysia, 4,741 cyber threats…Continue Reading

‘Aem Cyanide’ and accomplices indicted

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Attempted murder and related charges pressed, prosecutors still reviewing 14 murder cases

PUBLISHED : 19 Jul 2023 at 20:31

‘Aem Cyanide’ and accomplices indicted
Accused serial killer Sararat Rangsiwuthaporn, who has come to be known as “Aem Cyanide”, is taken to the Criminal Court on April 26. (Photo supplied)

Prosecutors have handed down the first indictments in the case of Sararat “Aem Cyanide” Rangsiwuthaporn, who is accused of poisoning 14 people to death.

Charges of attempted murder and colluding in theft have been pressed against Ms Sararat, 35, her ex-husband Pol Lt Col Withoon Rangsiwuthaporn, 39, and her lawyer Thanicha Aeksuwannawat, 35. Pol Lt Col Withoon and Ms Thanicha are also charged with helping Ms Sararat avoid arrest and colluding to conceal and destroy evidence. 

The indictments were handed down by the Office of Criminal Cases 5 in the Office of the Attorney General (OAG), a source said on Wednesday.

All three suspects have denied the accusations, the source said.

Prosecutors said Ms Sararat would be denied bail if she requests it. The charges are punishable by high penalties, meaning there is a high chance of the suspect being a flight risk.

Ms Sararat appeared before the court via a video link from the Correctional Institution for Women in the Bang Khen area of Bangkok, where she is being detained.

Pol Lt Col Withoon and Ms Thanicha have also appeared in court. They were released on bail of 100,000 baht each, the source said.

The court has set Oct 2 for evidence examination, requiring the presence of both suspects and victims.

The investigation into the murders started from Ms Sararat’s arrest on April 25 in connection with the death of Siriporn “Koy” Khanwong, one of her 15 alleged poisoning victims.

Siriporn collapsed and died on the banks of the Mae Klong River in Ban Pong district of Ratchaburi, where she had released fish while merit-making on April 14 with Ms Sararat. Cyanide was found in the victim’s bloodstream.

Ms Sararat was also reported to have stolen Siriporn’s designer bags, mobile phones and lottery tickets worth 154,630 baht.

Later Ms Sararat was accused of poisoning 15 people with cyanide and killing 14 of them. Police have alleged she pawned the victims’ property and used the money to pay off her ex-husband’s debts.

Police last month wrapped up their investigation into the 14 killings and one attempted murder and began turning over their case files to prosecutors, who are still reviewing the 14 murder cases.

Deputy national police chief Pol Gen Surachate Hakparn said Ms Sararat faces more than 75 charges — including premeditated murder, attempted murder, theft causing death and forgery in 15 cases that spanned from 2015 to this year.

The crimes were committed in seven provinces — Nakhon Pathom, Samut Sakhon, Kanchanaburi, Phetchaburi, Ratchaburi, Udon Thani and Mukdahan.

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Chamoli: Fifteen die from electrocution near India river

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Chamoli accidentANI

Fifteen people have died after an electricity transformer exploded on the banks of the Alaknanda river in the north Indian state of Uttarakhand.

Authorities say a police official and five home guards are among those killed in the accident which took place in Chamoli district.

The state’s chief minister, Pushkar Singh Dhami, has ordered an enquiry into the incident.

Police say at least 15 people have also been severely injured in the accident.

They are being treated at the district’s main hospital.

Chamoli’s superintendent of police Pramendra Dobhal said the incident took place last night, but was reported to them on Wednesday morning.

According to NDTV news channel, the transformer exploded and electrified a bridge which spans the river.

“We got a call from the village that a watchman had died of electrocution. When the police went to check they found that 21 people had been electrocuted and severely injured. Fifteen people died in hospital and the rest are critical,” Mr Dhobal said.

Deaths from electrocution are frequently reported in India where poor wiring and infrastructure often lead to serious accidents.

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Asia’s ESG investors must ‘re-imagine role of capital’ | FinanceAsia

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A version of this story was first published by sister title, AsianInvestor.

Infrastructure investors in Asia can promote a new, more ambitious role for capital in funding social and environmental development, according to Nikhil Chulani, investment director covering the industries, technology and services sectors at British International Investment.

“On the markets that we at BII focus on in Africa and South Asia, there are huge opportunities for growth and achieving greater scale,” he told an audience at the Sovereign Wealth Fund Institute conference in London in June.

“To accelerate progress in realising the potential of these opportunities, one key aspect is vision and ambition, and tapping into creative solutions via financial services sector to re-imagine the role of capital.” 

The UK development finance institution currently invests between $1.5 and $2 billion per year in Asia, Africa and the Caribbean.

He noted that, as ESG investing broadens from a focus on people to include the environment, the scope of allocations, and the range of problems they address, is widening. He said developing bottom-up strategies is more important than ever.

Being able to clearly identify and articulate which problems investors are aiming to address with their allocation is crucial, he added, emphasising the need to integrate impact and financial return within an investment model.

“Having an impact doesn’t exist separately from investing, it is a core part of investing,” Chulani said, adding that, while many investors still saw the ESG potential of their investment as distinct from its investment potential, attitudes were changing.

Size matters

Michael Anderson, who was director general between 2010 and 2013 of the UK’s Department for International Development, a government department that was responsible for more than $6 billion in annual aid programmes, said that a pressing question for enterprises and projects with a social or environmental dimension was achieving the scale necessary to unlock large investments.

“It’s not that we need to do more to attract major investors, but when they are attracted they need to have the deal flow to enable large ticket sizes,” he said.

“Big investors with multibillion dollar funds can’t go after small deals,” he added. “The key challenge is thinking at a bigger scale, especially in areas beyond infrastructure.”

“There has been some good investment in green infrastructure, but not enough in other areas,” he noted, pointing to social services, social infrastructure, and businesses designed to have a positive social impact.

Anderson, who is founder and CEO of MedAccess, a social enterprise improving access to medical innovations wholly owned by the British International Investment, gave the example of essential medicines. 

“The critical reason that these drugs are not getting into markets where they are needed is that the companies who manufacture them don’t find it commercially viable to sell into those markets,” he said. 

Investors were essential in providing the “catalytic finance” to de-risk distribution into less profitable markets, he added. 

Anderson gave the example of a recent TB drug project mediated by MedAccess, where the finance provided reduced the per dose cost from $40 to $15. MedAccess also facilitated increased production by the drug company and worked with companies to secure distribution. 

“Sometimes this means lower margins [for manufacturers],” he noted. 

Local opportunities

However, Ana Nacvalovaite, research fellow at the Centre for Mutual and Co-owned Business to Kellogg College, University of Oxford, speaking at the same session, said small-scale, local projects offered considerable opportunities for ESG investors, given their strong social and environmental credentials in many cases.

Such projects that are aimed at securing specific social or environmental outcomes often involve joint investment by development banks alongside sovereign and other institutional investors such as pension funds.

But those institutions best placed to provide such “blended finance” are not necessarily the biggest, Nacvalovaite observed, pointing to the example of funding for rural farm co-operatives in Rwanda.

“The [Government Pension Fund of Norway] has its hands tied, since approval is required by the ministry of finance. But Rwanda’s fund [the Agaciro Development Fund, launched in 2012] could trial this. It is the right size and Rwanda has lots of co-operatives, so they are looking at these blended finance opportunities,” she said.

Nacvalovaite said that while single project investments with a finite lifecycle might produce tangible environmental or social benefits during their lifetime, they also created challenges when they complete.

“The community that has been built up around it has to pack up and move on,” she said.

By contrast, financing co-operatives and employee-owned businesses provided longer lasting social outcomes. “We are talking about people creating their own infrastructures,” she said.

 

¬ Haymarket Media Limited. All rights reserved.

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China’s financial regulatory regime finding its feet

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On March 16, 2023, Beijing released an official plan to reform Party and state institutions. This document lays out plans to address deficiencies in the ability of the Chinese government’s own institutions to lead the nation’s development. Part of the 2023 plan is to reform and restructure the financial regulatory framework.

According to the plan, a central commission for finance will be established as the Central Committee’s own decision-making institution — designing, coordinating and overseeing the country’s efforts to achieve financial stability and development. 

It will replace the existing State Council’s Financial Stability and Development Committee. This is Beijing’s way of enhancing its authority over a financial sector that has become a source of turbulence in recent years.

A new national regulatory body, the National Bureau of Financial Regulation, will also be set up. It will oversee consumer rights protection and regulation of the financial industry except for the securities industry. The China Banking and Insurance Regulatory Commission will be abolished and the PBOC will focus on monetary policy and macroprudential regulation.

China’s financial regulatory framework has come a long way from a one-regulator structure to the current one bureau, one commission and one bank structure. Before 1990, China’s financial sector consisted of a few state-owned commercial banks and the PBOC was the only financial regulator.

China’s financial industry started to change in the early 2000s as cross-sectorial financial products, such as bank wealth management products, began to emerge. This has posed challenges to the sectoral regulatory framework as these blended financial operations require supervision from more than one regulator. 

It also creates room for circumvention of regulation in territories where supervisory responsibilities are unclear and rent-seeking in areas where supervisory responsibilities are overlapping.

In an attempt to address supervisory inefficiency, the State Council approved an inter-ministerial joint meeting system for all financial regulators to coordinate cross-sectorial regulations in 2003. This failed to achieve its goal because none of the regulatory bodies had actual executive power to lead the way.

Beijing started a major reform in 2017–18 after seeing turbulence in the stock market, real estate market and internet financing in the past few years. First, the Financial Stability and Development Commission was created under the State Council in 2017. 

This commission is on a higher administrative ranking than the existing regulators, which ensures that it has the executive power to mobilize others to tackle major issues and to lead financial reform. Then the Banking Regulatory Commission and the Insurance Regulatory Commission was replaced by a China Banking and Insurance Regulatory Commission in 2018.

China has implemented waves of financial reforms. Photo: Facebook

The 2017–18 reform shows a gradual transition from sectorial regulation to functional regulation as Beijing responds to the changing financial sector. The 2023 reform is a continuation of this transition, and yet shows Beijing’s pressing concern about financial risks and desire for a stronger grip over the financial system.

The Central Commission for Finance was created in 1998, after the outbreak of the Asian financial crisis, to centralize forces to stabilize the economy and coordinate risk management. Its resurrection today suggests that Beijing’s concern over the financial system has reached the same level as during the crisis.

The 2023 plan also seeks to optimize the central bank’s structure. All the regional branches, which operate across multiple provinces, will be removed. 

Instead, there will be one provincial-level branch in each of the 31 provinces and five separate branches in the cities of Shenzhen, Dalian, Ningbo, Qingdao and Xiamen. It will be a better central–local structure for monetary policy implementation and macroprudential regulation.

Local financial regulatory frameworks will be modified. Central financial regulators will send out local agencies to oversee, coordinate and implement financial supervision and reform, in collaboration with local governments’ own financial regulatory bodies. 

Local governments are no longer responsible for promoting financial development. Rather, they have been given the clear task of reining in financial risks. It is clear that Beijing wishes to control financial supervision at the local level as much as at the national level.

The reform of the local financial regulatory framework arises from a deep concern over the scale of local government debt. In 2022, the Chinese local government’s debt reached 35 trillion RMB (US$4.8 trillion) and the local government financial vehicle (LGFV) debt was close to 60 trillion RMB ($8.3 trillion).

Beijing has recognized the risks embedded in this multi-trillion local government debt and aims to resolve implicit LGFV debt via large-scale debt restructuring and swapping. Reform of the local financial regulatory framework will ensure that Beijing will lead the debt restructuring at the local level while making the local governments accountable for controlling financial risks.

The 2023 round of financial reform comes at an extraordinary time for the Chinese economy. The external environment is uncertain again, due to the pressure of high inflation and tightening monetary policy in advanced economies. Domestically, slow growth, accumulating systemic risk and the shrinking policy room are the biggest challenges.

Given the uncertain economic outlook, it is increasingly critical that the plan for reforming the financial regulatory framework will be implemented seriously. The National Bureau of Financial Regulation is key to this plan. On May 10, 2023, it was officially open for business — we will wait and see whether it can get the job done.

Jiao Wang is Research Fellow at the Melbourne Institute: Applied Economic & Social Research, University of Melbourne.

This article was originally published by East Asia Forum and is republished under a Creative Commons license.

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Is the worst over for Sri Lanka’s economic crisis?

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People gather to buy clothes on the busy street market of Maharagama, near Sri Lanka's capital ColomboGetty Images
By Archana Shukla
BBC News, Colombo

At first glance, life in Sri Lanka’s financial capital Colombo looks deceptively normal.

Roads are packed with traffic, public spaces and restaurants are full of both locals and tourists, while shops are bustling.

It is hard to imagine that just a year ago, this was a country struggling with massive shortages after it ran out of foreign currency.

With no money to buy fuel, roads were empty with even public transport at a standstill. Sri Lanka had to go back to pandemic-era measures such as online classes and working from home. But even this was not practical because of power cuts – some of which went on for up to 13 hours a day.

Food, medicine and other essentials were also in short supply, exacerbating the crisis. People had to stand in such long queues in the brutal heat, that at least 16 people – mainly the elderly – died.

But now, just a year later, food, fuel and medicine are available again, offices, schools and factories are all open, and public transport is back up and running.

Restaurants, especially high-end ones, are bustling.

A vendor deals in rupee notes on March 21, 2023, in Colombo, Sri Lanka.

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“Last year this time I was on the verge of selling my restaurant. We had to close for a few days as the shortage of fuel meant no customers were coming. But now footfall has gone up nearly 70%,” said Chathura Ekanayake who runs a fine dining restaurant in Colombo.

The country’s main source of foreign currencies – tourism – is also witnessing a revival. The industry has recorded a 30% jump in revenue from the previous year.

“The recovery has been magical for us. Last year we didn’t even know if the country would survive”, said Hiran Cooray, CEO of Jetwings Symphony, a leading travel and hospitality player in Sri Lanka.

Despite these good news stories, Sri Lanka’s economy is still in a precarious place.

The country still has more than $80bn (£61.1bn) of debt – both foreign and domestic. In the worst of the crisis last year, the country defaulted on its foreign debt for the first time in its history.

Ranil Wickremesinghe who took charge as President after widespread protests saw then-ruler Gotabaya Rajapaksa resign, has managed to secure a lifeline of $2.9bn from the International Monetary Fund (IMF).

This has been crucial to opening other funding channels and easing shortages, but the money came with strict economic and governance policy reforms. The country is now seeking to restructure terms of its debt payments with both foreign and domestic lenders, as mandated by the IMF.

The main focus has been on restructuring its $36bn of foreign debt. This includes more than $7bn of loans from China, Sri Lanka’s largest bilateral creditor.

However, it is the restructuring of domestic debt that is likely to have a much bigger impact on the Sri Lankan people. Domestic borrowing accounts for around 50% of the country’s total debt. Sri Lanka’s cabinet recently approved a domestic debt restructuring proposal, but it has drawn massive criticism as it aims to cut workers’ pensions, while banks will not be affected. There have been protests against the proposals in Colombo.

It highlights that while life may seem to have returned to normal, in reality people are still struggling.

Protesters chant slogans during the protest on July 12, 2023, in Colombo, Sri Lanka. The Inter-company Employee Union held a protest in front of the Labour Department. This protest was held, asking not to touch the Employees' Trust Fund and Employees Provident Fund.

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Essentials are available, but unaffordable for many. Things are more expensive than ever before. Almost half of all Sri Lankan families spend about 70% of their household income on food alone. And prices of food, clothing and housing are continuing to rise.

To add to the burden, income tax has been hiked to as much as 36% and subsidies on everything from food to household bills have been removed.

One area where this has had a huge impact is electricity bills, which have soared by 65% after the subsidy was removed.

“Many families from the middle class have now slipped below the poverty line,” said Malathy Knight, a senior economist with private think tank Verite Research.

And according to the World Bank, this is likely to continue for a while.

“Poverty is projected to remain above 25% in the next few years due to the multiple risks to households’ livelihoods,” it said in a report. The organisation has extended a $700m loan to Sri Lanka for budgetary support, including $200m for the poor and vulnerable.

This is a dramatic fall for a country that was long held up as an economic success story and had one of the highest average incomes in South Asia. The quality of its infrastructure, its free public health and education systems and its high levels of social development have all been held in high regard.

So how did things get so bad?

The government blamed the crisis on the Covid pandemic, which badly affected tourism. However, although the pandemic was a factor, disastrous economic policies were more to blame. Populist moves like big tax cuts in 2019 cost the government $1.4bn in annual revenues. And a move to ban imports of chemical fertilisers in 2021 caused a domestic food shortage.

Police used batton to disperse the university students during an anti-government demonstration by university students in Colombo On June 7, 2023.

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In order to cut expenses further the government has proposed privatising state-owned enterprises like Sri Lankan Airlines, Sri Lankan Insurance Corporation and Sri Lanka Telecom. This has triggered a fresh wave of protests – this time by trade unions.

“The government should not put the burden of the reforms on the salaried class and middle class who are already affected by the economic crisis,” said Anupa Nandula, the Vice President of the Ceylon Bank Employees Union.

Mr Nandula and his union participated in a recent demonstration against the proposal to privatise the Sri Lankan Insurance Corporation. He believes privatisation will lead to massive job losses and further burden the working class.

Ever since last year’s demonstrations were violently broken up, Sri Lankan authorities have been using force – such as tear gas, water cannon and even beating protesters. But experts warn that this is not a tactic that can work.

Rather than using force, the government needs to be transparent and explain that reshaping the economy will be tough, says Bhavani Fonseka, a constitutional lawyer working with Centre for Policy Alternatives.

“I think people since the crisis has happened have gotten used to a harder lifestyle. But in the absence of information coming, in the absence of answers being given, there is growing uncertainty and fear that we will go back to a crisis point.”

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