Anwar to help or hurt Malaysia's sons of the soil?

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Ethnic Malay interests remain front and center in Prime Minister Anwar Ibrahim’s Malaysia Madani. An uptick in ethnic polarization and a poor showing by parties from Anwar’s unity government in Malay-majority seats in 2023’s state elections leave the administration under pressure to shore up Malay support.

To that end, the Malaysian government will be wheeling out a Bumiputera economic congress in January 2024 (Bumiputera, meaning “sons of the soil” in Malay, is an official term for Malays and indigenous ethnic communities). 

Decades after the inception of the New Economic Policy affirmative action program and its various reincarnations, Anwar has flagged the need to review the use of Malay corporate equity as the yardstick of Bumiputera empowerment and move towards a “participation rate and […] control of the Bumiputera economy [that are] more meaningful.”

This is a step in the right direction. Malaysia’s muddled Bumiputera empowerment plans and metrics are in dire need of change. Championing Malay corporate equity is historically synonymous with Bumiputera empowerment. However, the approach fails to empower the Malay majority and side-lines vulnerable communities while enriching the politically connected.

Yet the recent uproar over the arranged sale of Boustead Plantations (BPlant) — a Bumiputera government-linked company (or GLC, denoting part or whole state ownership) — to the primarily Malaysian Chinese–owned multinational company Kuala Lumpur Kepong suggests two things. 

First, securing buy-in for non-equity metrics will be an uphill battle because of political sensitivities. Second, significant issues, such as the principal-agent problem in Bumiputera empowerment agendas, remain unaddressed.

The government extended financial lifelines to the Armed Forces Fund Board (LTAT) in October 2023. LTAT is a government-linked investment company (GLIC) legally mandated to provide retirement earnings to Malaysia’s military personnel through profits generated via the GLCs in which it — or LTAT’s holding company Boustead Holdings — holds stakes. 

The roster of GLCs includes BPlant, Boustead Naval Shipyards and Pharmaniaga — all of which have added to LTAT’s financial woes by underperforming, due to mismanagement and corruption.

Successive CEOs have undertaken asset fire-sales and divestments to alleviate LTAT’s debts and improve cash flow, most recently through BPlant’s sale to Kuala Lumpur Kepong. But this acquisition was canceled at the last minute. 

While LTAT did not clarify why, several factors suggest that racial optics deterred the acquisition. Meanwhile, the 2024 Budget notes that the government’s 2 billion ringgit (US$428 million) guarantee, part of which is meant to rehabilitate BPlant, is linked to the Bumiputera agenda as an attempt to burnish the Anwar administration’s Bumiputera-protection credentials.

Members of parliament have vocally criticized this “bail-out“, asking who is accountable for LTAT’s mismanagement, why taxpayer funds are being channeled to Boustead Holdings, and why BPlant was not sold to a lower Bumiputera bid.

These are important questions. They scrutinize fiscal management decisions, move towards redress for poor GLC governance and reflect democratic policymaking. But this focus skirts around a key force shaping the event. Despite protracted debate, few — if any — are asking what protecting Bumiputera interests means in this case, and whether it should be done.

This is a classic example of the principal-agent problem, wherein conflicts of interest arise between the represented party and their elected representatives. Elevated Malay insecurity makes questioning Bumiputera interests risky. But the irony is that if lawmakers fail to question whether Bumiputera interests are misrepresented, they are not looking out for those interests.

Again, there may have been no good options in rehabilitating LTAT and its holdings, with Kuala Lumpur Kepong or otherwise. But absent such a debate and government communication on these matters, it is unclear what fuzzy terms around saving LTAT and its holdings for the Bumiputera agenda actually entail, or whether they even serve those interests.

GLC reforms — such as an independent panel to oversee how the Ministry of Finance governs the many GLICs and GLCs under its purview — are necessary. But a hard look at the untouchable loopholes of Malaysia’s political economy is too. 

Without parameters for exceptions such as Bumiputera interests, the cycle of propping up underperforming entities and avoiding reforms that appear — but may not actually be — hostile to Bumiputera interests will be perpetuated.

Constrained policy space and limited scope for Bumiputera interests may be a hard sell to the Malay majority. But reining in careless invocation and abuse of the concept is not without benefit to the Bumiputera empowerment agenda itself.

There is also a case to be made for greater political will to question Bumiputera interests. This could force more thorough assessments of whether politicians are assisting Bumiputera interests or misrepresenting them while smuggling in other policies. 

Greater scrutiny may also facilitate structural reforms by offering different perspectives that dissemble more problematic Bumiputera protection practices, such as the Malay corporate equity benchmark the Anwar administration is seeking to review.

Amalina Anuar is an independent research analyst based in Malaysia.

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

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Outlook for Asia equities in 2024

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“Asia is expected to account for 60% of global GDP growth in 2024 – higher than the pre-pandemic average. Despite higher risk attached to geopolitics and China’s economy, it will remain the main region for growth opportunities,” says the Economist Intelligence Unit.  

The EIU reports that Bangladesh, Indonesia, Vietnam, Malaysia and, to a certain extent, the Philippines are likely to see accelerated growth in the medium term. These nations are expected gradually to approach the GDP per capita levels observed in developed Asian economies such as Japan, Singapore and South Korea.  

The outlook for Asia has generated substantial optimism concerning potential prospects in the region’s stock markets for the upcoming year.

The anticipated robust growth and a relatively promising outlook in Asia could present attractive potential for discerning investors in 2024.

A significant theme is the potential for disruptive technological innovation, providing investors with rewarding and untapped opportunities in companies well positioned to benefit from ongoing transformations. 

We expect the attractiveness of small-cap companies to rise for investors too.

Also, there is an expectation of a dual impact on stock markets in the Asia-Pacific region. 

The possibility of a more relaxed global monetary policy might facilitate price-to-earnings expansion and higher prices. 

But there are also fears about companies facing issues to prevent declining earnings in the event of weak economic growth and rising unemployment, especially in key markets such as the US.

Despite these concerns, there is an anticipation of an upswing in earnings and dividends within the technology sector. 

Additionally, assertions are made that infrastructure, property, and telecom stocks may experience relief due to a halt in the ascent of interest rates.

The correlation between Asian earnings and export growth is emphasized, acknowledging a challenging backdrop for exports in 2023. Nevertheless, positive signs of recovery have emerged in Asian exports, providing a basis for earnings growth in 2024.

Additionally, Asian economies with robust local demand, a solid tourism recovery, and the ability to capitalize on AI (artificial intelligence) demand are expected to contribute to bolstering earnings growth.

Japanese equities in 2024

Goldman Sachs Research predicts a resurgence in the Japanese equity market in 2024, driven by robust global economic growth and reforms in the stock market.

The TOPIX, a gauge of Japanese stocks, is expected to climb by about 13%, reaching 2650 by the conclusion of 2024. 

Its economists anticipate another year of growth outperformance across various economies, including Japan’s. The country’s real (inflation-adjusted) GDP growth is forecast to expand by 1.5% in 2024, surpassing the consensus estimate of 1% from economists surveyed by Bloomberg.

A pivotal element in TOPIX analysts’ projections is the Tokyo Stock Exchange’s reforms in company governance, which they assert “have significantly impacted the Japanese equities market.” 

The TSE has introduced incentives for listed companies to enhance valuations and earnings, with the possibility of delisting companies unable to demonstrate efficient capital utilization. 

Investors will view the reduction of cross-shareholdings in Japanese companies, where firms own shares in their business partners to maintain relationships, as a positive indicator of improved governance.

All in all, we expect a positive year for Asia equities in 2024 driven by strong growth momentum.

Nigel Green is founder and CEO of deVere Group. Follow him on Twitter @nigeljgreen.

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New Zealand smoking ban: Māori mourn loss of hard-won smoking reform

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Maori health group advocates protesting against the government's plans to scrap tobacco controlsHāpai Te Hauora
By Frances Mao
BBC News

When New Zealand’s new government announced it was scrapping the country’s world-leading tobacco laws, it came as a particularly hard blow to the Maori people.

With the indigenous community being the country’s heaviest smokers, its leaders had fought for reforms for years.

The country’s model was the first to spell a complete end to smoking – and so was hailed by health advocates globally.

From 2024, the laws would have cut nicotine levels in cigarettes to non-addictive levels, eliminated 90% of retailers allowed to sell tobacco, and created “smoke-free” generations of citizens by banning cigarette sales to anyone born after 2008. But with the measures now abandoned, the Maori will suffer the most, advocates say.

Last year, Teresa Butler and her six-year-old daughter sat in front of a room full of politicians, begging them to enact the laws.

Dressed in a traditional feathered cloak, her voice quavered as she thrust a photo of her mother at the committee. She presented the death certificate.

Cause of death: Emphysema, the result of more than 30 years of tobacco smoking.

Teresa had her first cigarette aged eight. She recalls running down to the shops in Christchurch, with five dollars in hand and a note from her mum for a packet of smokes.

She only kicked the habit when she fell pregnant.

“I wanted a healthy baby to continue a healthy strong whakapapa [family line],” she said.

She has spent the last seven years of her life as an anti-smoking counsellor, going into Māori neighbourhoods to try and wean people off the deadly addiction.

These days, only 8% of New Zealand’s adult population are daily smokers, but the number is more than double that- 19.9% – among Māori. It is even higher among Māori women.

It takes a toll, not only on health but finances.

A packet of cigarettes in New Zealand costs NZ$40 (£19; $24) on average. Chain smokers can inhale a pack a day.

“It’s stress, it’s a lack of education, they have children, they’re single mums,” says Ms Butler, relaying a typical encounter.

“I go into a home and I can clearly see her kids don’t have any nappies on. There’s no food in the cupboard. And I’m saying to her: ‘It’s winter time, you’ve got no power. Why don’t you have any money?’ And she’ll tell me: “Because I’ve just spent the last $30 on smokes.”

Smokers tell her they want to kick the habit but feel trapped.

“They say to me: ‘Look, it’s too easy to access this Teresa. I can wake up at one o’clock in the morning, have anxiety, be depressed and go down to the local shop, the 24-hour petrol station and purchase cigarettes.’ It’s just a quick fix, just like alcohol.”

Teresa Butler

NEW ZEALAND PARLIAMENT

Targeting tobacco, not people

The proposed policies – especially denicotisation and the so-called Smokefree generation – have never been implemented anywhere.

But public health researchers considered New Zealand – a high-income country of just over five million people – an ideal setting to try and achieve tobacco “endgame”.

What was new here was the focus: targeting the industry, not the individual.

Almost all smokers will tell you that they want to stop, researchers say. The problem, for many, is individual capability and access to resources.

Like other countries, New Zealand had already had anti-smoking measures in place for years: excise increases on cigarettes, a Quitline phone service, and mass media campaigns carrying health warnings.

But while these helped drive down the smoking rate for European and Asian populations, the rate among Māori and Pasifika groups remained stubbornly high at around 20%.

“The problem we realised was because it was reliant on individuals too much,” says Andrew Waa, an associate professor of public health at the University of Otago who is Māori and who has led most of the tobacco control studies in the country.

He says these measures targeted “more superficial aspects” of tobacco control – for example focusing on helping people quit – instead of targeting fundamental causes for why people take up smoking and continue to smoke – like the widespread availability of cigarettes, and the tobacco industry’s role.

And the resources needed to quit aren’t equally distributed across New Zealand, researchers say. There remain significant hurdles.

There are many drivers behind “health inequity” – but the underlying reasons are rooted in New Zealand’s colonial history. White Europeans took over the Pacific nation in the 18th century.

“Colonisation is an underlying driver of ethnic inequalities in smoking behaviour,” Associate Prof Waa and other researchers wrote in the Tobacco Control journal last year.

They noted Indigenous’ people’s experience of generational theft, racism and cyclical poverty were the “basic causes” affecting access to income and housing and overall health.

So when the Smokefree measures were introduced in 2021, the resounding praise from public health circles was rooted in the view that such policies would vastly improve health equity.

And in a clear example of best practice, where policy is enacted not “on” Māori but “by” Māori, the laws were also the direct extension of a political push by Maori politicians in the mid-2000s, when one MP first suggested an end to tobacco sales.

In 2010, Māori legislators set up the country’s first large-scale inquiry into tobacco’s harm on Māori and other communities nationally- the parliament inquiry heard from a range of groups across the country.

The results of this inquiry led to the New Zealand government in 2011 setting one of the most daring public health targets in the world: a Smokefree country by 2025, with smoking prevalence under 5%.

However the National government at the time did little by way of policy to achieve it, researchers say.

It was only Jacinda Ardern’s government, a decade later, who decided to launch a package of radical reforms to get the country and in particular its Maori people across the finish line.

She appointed Ayesha Verrall, a doctor and epidemiologist, as health minister – who prioritised Māori community consultation in shaping legislation. The government further dedicated $14m to community health programmes, and set up Te Aka Whai Ora, the Maori Health Authority, an independent government body that sets Māori health policy and tailors the country’s health system delivery to Indigenous people.

The scientific modelling backed up the Smokefree reforms. Simulation studies conducted by Associate Prof Waa and other researchers concluded the measures would see the smoking rate for Māori drop to 7.8% by 2025, compared to a 2040 timeframe under previous smoking policy.

More profoundly, the mortality gap for Māori women would be shortened 23%, for Māori men nearly 10%.

“It is unlikely that any other feasible health intervention would reduce ethnic inequalities in mortality by as much,” the researchers wrote.

But New Zealanders in October voted in a change of government.

The conservative coalition then said it intended to repeal the health laws to fund tax cuts – a policy blindside given the leading National party never once mentioned the Smokefree laws during campaigning. The new government also plans to dismantle the Māori Health Authority.

“We thought that once the legislation was passed last year it was a done deal. So we’re really confused as to how and why this can happen,” says a furious Ms Butler.

“It’s heartbreaking because this is life changing, life-saving legislation, particularly for Māori,” she says.

Currently about 5,000 people die each year in New Zealand from smoking and smoking-related problems – nearly a 1,000 of whom are Māori, according to a New Zealand Medicine Journal study.

National has said they feared the smoking crackdown would fuel an already existing black market for tobacco in New Zealand and increase crime – arguments first used by tobacco companies opposing the laws.

Prime Minister Christopher Luxon argued that reducing the number of retailers would turn the shops left selling tobacco into a “massive magnet for crime”. Meanwhile, Deputy Prime Minister Winston Peters has argued the smoking ban is a violation of people’s rights and free choice.

The finance minister also revealed that the “about a billion dollars” in tax raised from cigarette sales would go directly into funding “tax relief for working Kiwis”. It has blamed negotiations with Act and New Zealand First, two right-wing, populist minor parties it needed to form government, for forcing their hand.

The New Zealand Health Minister’s office admitted to the BBC the repeal of Smokefree laws were “not a National Party policy – but that’s the nature of a negotiation.”

But previous government modelling had shown that Smokefree would save the country’s healthcare system $1.4bn over two decades.

Dr Shane Reti, the new Health Minister, has faced calls from the nation’s practitioners to step down from his medical registrations – given his abandonment of the public health policy.

His office told the BBC the government “remained committed to reducing smoking rates” but did not answer questions on how it would achieve that now with the Smokefree policies scrapped.

Critics have also raised questions about the tobacco industry’s influence in the policy reversal. New Zealand had been viewed as the dangerous ‘endgame’ precedent for Big Tobacco, Prof Waa says.

Since New Zealand announced the laws in 2021, they had inspired other countries; the UK this year also announced ambitions for a smokefree generation.

The National party declined to answer the BBC’s questions about political funding from tobacco companies.

Meanwhile, health activists and Māori leaders are fighting again to keep their hard-won reform. More than 20,000 New Zealanders signed a petition last week calling for the laws to stay.

“We simply cannot afford to go backwards, while our whānau continue to die at the hands of this product,” read the Hāpai Te Hauora petition.

Thousands also protested on the streets in capital city protests around the country this week, criticising the incoming government for its “anti-Māori” policies with many singling out the dismantling of Smokefree laws.

But there are murmurings and concerns that the government, with a majority in parliament, could scrap the laws by Christmas.

graphic

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Moody's warns US, China it's time to change their ways

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Moody’s Investors Service is actively and innocently prodding the two largest bears in the world economy.

Experts at the agency threatened to remove Washington’s final AAA credit score next month. The increase in US 10 time bond yields to 17-year peaks was exacerbated by that volley.

Beijing was the next city to speak Moody growl this week. As Asia’s largest economy struggles with an economic slowdown and a worsening real estate crisis, Moody’S changed its outlook on the Chinese government of debt from” stable” to “negative” on Tuesday ( December 5 ).

A day later, Moody’s went even further by telegraphing potential rating steps against state-owned bank tycoons, numerous Foreign government-backed organizations funding system assignments, and even Hong Kong and Macau.

Threatening downgrades for the Industrial and Commercial Bank of China Ltd., China Development Bank, and another behemoths will undoubtedly work if Moody’s is attempting to capture the attention of Chinese leader Xi Jinping. It will also affect international investors who are concerned that Beijing is n’t moving quickly enough to contain contagion risks.

In general, the urge is to respond violently to these instructions. The group of US President Joe Biden carried out that action.

Treasury Secretary Janet Yellen responded to Moody’s risk to drop by saying,” This is a choice I disagree with. Treasury securities continue to be the world’s top safe and liquid asset, and the American market is ultimately strong.

China is also pushing up. Issues of Moody about the aspirations of China’s economic development and fiscal sustainability are unnecessary, the Ministry of Finance of Xi stated on Tuesday, expressing its “dissatisfaction.”

Beijing added that the fallout from financial and property issues is” stable” and that it is working to “deepen measures to tackle risks and challenges.” However, it’s important to take into account the potential benefits of rating agencies like Moody making a timely call for stronger action against the two economical powers.

Janet Yellen, the US Treasury Secretary, disagrees that the country merits a upgrade. Asia Times files / AFP picture

The rules of economic gravity however apply, as Moody’s served as a helpful warning to Biden, Yellen, and Jerome Powell, chairman of the Federal Reserve, in the case of America.

Faith in the money is rapidly eroding as the US federal loan surpasses$ 33 trillion, Biden’s White House raises spending, and the Fed tightens its restrictions with the most vehemence in years.

The price increases in gold and cryptocurrencies are merely the most recent example of how traditional Bretton-Woods economic realities are clashing with contemporary disregard for the ways in which markets you influence perhaps the largest economies.

China, as well. The 24 members of the Communist Party’s Politburo will soon meet to discuss policy priorities and determine rise objectives for the upcoming year. Following that, a course may be charted by the annual Central Economic Work Conference, which will bring up municipal and central government leaders.

A development goal of around 5 % is anticipated for 2024, according to economists at JPMorgan, Standard Chartered, and other major investment bankers.

An optimistic growth target, according to Goldman Sachs economist Maggie Wei,” may help lessen the risk of China falling into a self-fulfilling cycle of melancholy expectations, more depressing growth, and reinforcing negative expectations.”

However, Moody’s is reminding group leaders that economic gravity is more difficult than that.

According to Moody’s, the government and larger public sector may help financially strapped regional and local governments and state-owned enterprises in China, according to its reasoning.

When Moody’s warns of “increased dangers related to functionally and consistently lower medium-term economic growth and the continued reduction of the property sector,” it also speaks for many.

However, it is implied in bold font between the lines that many international investors are n’t buying Xi’s promises to carry out audacious structural reforms. And how new stimulus increases are then “posing wide downside risks to China’s macroeconomic, economic, and institutional strength,” according to Moody.

Chinese President Xi Jinping claims that he now favors more expansion driven by the private sector. Online Screengrab image

China’s finance minister responded by saying that mainland growth is improving in the October–December quarter and that the Chinese economy will account for more than 30 % of global GDP in 2023. That would be consistent with predictions made by the International Monetary Fund ( IMF).

However, there is no timeline for taking action to grow&nbsp, better, rather than just faster, in China’s new rhetoric. According to scholar Lee Lu at Nomura Holdings, more stimulus may become necessary in the short term. We also think it’s too early to say the bottom, he says, “despite the numerous trigger actions announced recently.”

The good news is that Premier Li Qiang is thought to have received Xi’s approval to speed up efforts to reinvigorate the private sector. Li’s team unveiled a 25-point plan package next month to level playing fields and increase funding for private companies.

Eight economic officials and firm tanks are involved in the program, including the All-China Federation of Industry and Commerce, the People’s Bank of China, National Administration of Financial Regulation, China Securities Regulatory Commission, &nbsp, and National Development and Reform Commission.

The goal is to significantly raise the loan to private enterprise ratio in order to increase innovation and productivity and support more powerful supply chains. According to Li’s group, the goal is to guarantee” ongoing revenue solutions” for private businesses that refrain from “blindly stopping, suppressing, withdrawing or cutting off money.”

The NDRC stated this week that China “is comfortable and more capable of achieving long-term robust growth, and constantly bringing new impetus and options to the earth through China’s accelerated advancement.”

According to scholar Diana Choyleva of Enodo Economics,” Beijing is serious about getting funds flowing to the healthier components of the home field, whether it be personal or state-owned.” &nbsp, They are not satisfied with entrusting the choice to the businesses, which have discriminated against the private market for a number of factors.

Jumpstarting the creation of a high-yield bond market to expand China’s money markets universe is an essential component of the business. Theoretically, a lively and varied range of debt offerings would boost options for private sector financing and boost China’s appeal to investors.

These, Xi’s efforts to make the yuan more popular on international businesses are advantageous. As concerns about the US dollar rise, the battle is gaining momentum. Nothing could hasten that progress more quickly than swiftly and openly putting in place significant reforms.

Here is where Xi and his team needed to win back the confidence of international investors. It is important to note that The Moody’s news did n’t destroy Chinese assets.

The most significant lesson from the Moody’s statement, according to economists at advisory organization China Beige Book, is that their team takes years longer than the majority of China viewers to reach an obvious conclusion. Little brand-new around. Continue.

However, analysts at Citigroup Global Markets predict that in 2024, China’s investment-grade payment issues will be more alluring than those of US counterparts. Following the Moody’s information, Citi experts wrote,” The market has now priced this in to some extent, and China investment-grade has some price.”

In Chongqing, China, a butler is seen strolling along dingy bridges with brand-new residential properties in the distance. Photo: Zhang Peng, LightRocket, CNBC Screengrab, and Getty Images

As Beijing works to regulate real estate markets, Citi experts also cited China’s” stronger, but still fragile micro story.” Chinese money bonds with an investment class are currently up about 5.4 % in 2023.

According to Citi researchers,” China risks are primarily in the price.” The Chinese offshore credit market, which is regarded as an asset and money diversifier for regional investors, tends to do well in times of inland equity-market volatility.

Analysts ‘ concern that China’s time of raising GDP rates solely through stimulus and funding is over, however, is where Moody makes a point.

For starters, “remaining plan room may be limited, as we believe central authorities needs to balance moral liability problems when supporting local governments with substantial debt burdens,” according to scientist Samuel Kwok at Fitch Ratings.

Another is that the quality of mainland growth can only be improved by strong financial retooling that unlocks China’s longer-term growth potential. This trend toward trigger over reform explains why S&amp, P Global Ratings predicts that China will grow below 5 % into 2026.

According to S&amp and P record analyst Eunice Tan, China’s real estate market is still under stress despite stimulus. The cash patterns of property developers and heavily indebted regional government borrowing vehicles are being dented by limited access to credit assistance and higher corporate debt utilize.

As a result, S&amp, P’s Tan claims that the rise website for the Asia-Pacific is moving from China to South and Southeast Asia. Tan notes that this change may limit China’s lenders ‘ medium-term face while enhancing those of India, Vietnam, the Philippines, and Indonesia.

China’s imports decreased by 0.6 %, despite data released on Thursday showing a 0.5 % increase in exports in November year over year. More policy supports are required to promote demand, according to a word from UBS analysts, and the data more dashed hopes of regaining China’s consumption-led economy.

According to OANDA researcher Kelvin Wong, “domestic need has remained weak in China despite continued revival efforts by policymakers via intended monetary and fiscal stimulus steps.”

Therefore, according to Wong,” It seems that the previous one-month treatment of transfer growth recorded in October is probably a “blip” and November’s bad year-on-year growth rate suggests the rolling twelve months of bad growth trend in imports remains intact.”

At the Horgos Port in the autonomous region of north China’s Xinjiang Uighur, business containers can be seen. Image: Xinhua

Global traders are anxiously anticipating the Politburo’s next chamber event as difficulties mount. This once-every-five-year program typically takes place in early December.

The fact that it has n’t been scheduled yet has led to rumors that Xi wants to address a number of pressing issues, such as rising local government debt, deflationary pressures, and real estate to record youth unemployment.

As a madly polarizing 2024 presidential election draws near, the US even faces significant obstacles. The US government’s estimated annualized loan interest payments have increased to the$ 1&nbsp, trillion level, among other things.

Shareholders are free to disregard the financial paths in Washington and Beijing that Moody’s, S&amp, P, and Fitch have to say. However, as payment prospects deteriorate, it is important to keep in mind that some observers, analysts, and investors are n’t buying the party line, despite Biden and Xi’s insistence that they are on top of their individual debt problems.

Following William Pesek on X, previously Twitter, at @WilliamPess

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'Crazy rich' Chinese making headaches for Singapore 

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SINGAPORE- &nbsp Deng Xiaoping, China’s past liberal elite who unlocked the once-closed country to the outside world, when famously remarked that “if you open the window for clean air, you have to expect some flies to blow in.”

It’s a proverb that holds true in Singapore as the city-state welcomes an increasing number of carefree, high-net-worth Chinese only to find that not all of their investment is tidy.

2023 was anticipated to be a time of economic growth for China. Instead, Asia’s largest economy has experienced its largest capital outflow in years, with rich Chinese nationals being pushed to Singapore as an immigration secure haven amid slow growth, a regulatory crackdown on private enterprise, and ever-expanding domestic societal controls. In addition, &nbsp,

Singapore, known as the” Switzerland of Asia” due to its political neutrality and accessible banking services, is feeling the inflow of Chinese currency very strongly. High-net for individuals from Hong Kong and mainland China are thought to have played a role in the city-state’s report capital inflows over the past two years.

In turn, this has led to skyrocketing real estate and rental costs, which earlier this year helped prices reach a 14-year great. Tales and pictures of” crazy rich” Chinese emigrants flaunting their money in difficult times have gone viral in the meantime, and many people in Singapore have been offended by the outward displays of wealth.

Eugene Tan, a political scientist and law professor at Singapore Management University ( SMU), told Asia Times,” It should not surprise us if Singaporeans are concerned and perceive their city-state is becoming an playground for the rich and feeling extremely priced out.” There is undoubtedly social pressure on the government to solve perceived injustice.

In fact, the political sensitivity of Chinese capital inflows has increased as a result of the arrest and charges of 10 Chinese nationals in August by local authorities, who have been accused of crimes ranging from money laundering to illegitimate playing and scamming.

Cash and other assets worth about S$ 2.8 billion ($ 2 billion ) have so far been frozen or seized in the case. Members of exclusive neighborhood golf clubs and contributors to neighborhood organizations who chose to immigrate and open new businesses in Singapore are among the accused.

One or more of those who are allegedly facing claims have connections to one family offices that the ultra-rich have established to manage their money and investments and that were originally given tax breaks by the central bank.

With minimal income tax rates, no taxes on capital gains or inheritances, strict financial privacy laws, and good incentives for multinational corporations to set up corporate headquarters, this little Southeast Asian country of 5.9 million has long offered banking and investment management services to wealthy people.

Investors can also become permanent residents, though the minimum investment requirement was significantly increased in March from a previous requirement of at least S$ 10 million ($ 7.4 million ) invested in the local business entity, fund, or family office. From 2020 to 2022, about 200 individuals received PR andnbsp through these investments.

In a nearby Straits Times report, rich mainland Chinese flaunt their tastes. Twitter Screengrab and Straits Times picture

Rich island Chinese looking for a way out are drawn to geography and culture as well. About 70 % of Singapore’s people is of Chinese descent, with Mandarin and other frequently spoken official languages being one of the city-states. Popular provincial Chinese cuisines have, have n’t, and also have multiplied as more mainland Chinese workers moved to Singapore.

The incident raises “legitimate concerns whether the emigration regime is weak for that lawlessness is being “imported” into Singapore,” according to SMU’s Tan, even though the government of Singapore has claimed that the current arrests demonstrate its self-proclaimed zero-tolerance for crime and authorities have started a review of anti-money laundering rules for individual family offices.

Social scientist Chong Ja Ian of the National University of Singapore ( NUS) claimed that the case of money laundering involving Chinese nationals “indicates the tension between the need for accountability and effective regulation on the one hand, and the desire to keep bank secrecy and ease of business to get wealth, respectively.” It is challenging to have your cake and eat it to, he continued.

A variable capital company (VCC ) scheme, similar to those well-known in offshore hubs like the Cayman Islands and Luxembourg, has been seized by investment management firms. It offers tax and legal protection for hedge funds, venture capital firms, and private equity firms among others. More than 1, 000 VCCs have been established, re-domited, or established in Singapore this time.

In fixed asset investment commitments for Singapore&nbsp, a record S$ 22.5 billion ($ 16.8 billion ) in 2022, nearly double last year’s S$ 1. 8 billion. According to the Monetary Authority of Singapore ( MAS ) and the central bank, &nbsp, with 76 % sourced from abroad and 88 % invested in overseas assets, the asset management industry oversaw and/or S$ 4.9 trillion ($ 3.6 trillion ) in 2022.

Additionally, there was a huge increase in the number of home offices and single-family offices overseeing the assets of the wealthy and occasionally well-known people last year. The number of individual family practices increased from really 400 in 2020 to 1, 100 in 2022, according to the MAS.

According to the Boston Consulting Group, Singapore now has more than 800 multi-family agencies than it did just 100 years ago.

According to NUS’ Chong, the increase in home offices raises concerns about Singapore’s potential benefits. According to him, family offices “tend to be gentle in terms of their personnel needs and frequently hire account managers abroad.” Furthermore, if money is being moved around a lot, portfolio investments typically do n’t have the same direct positive effects on the local economy as foreign direct investments.

Fund managers in Singapore have been cited by Bloomberg, &nbsp, Financial Times, and other global media outlets as saying that despite significant new money inflows, family offices have largely shied away from investing in capital markets, with accounts of rich newcomers rather lavishly purchasing condominiums and golf club memberships.

According to property consultancy OrangeTee &amp, Tie, andnbsp, which included nearly one-quarter of the 425 recorded “luxury” home purchases, defined by values of at least S$ 5 million ($ 3.7 million ), Mainland Chinese were the top foreign buyers and not the bottom of private property in Singapore in 2022.

Residential real estate prices in Singapore increased by 14 % last year, according to data from the Knight Frank Real Estate Consulting Group. &nbsp,

Authorities increased the property tax charges imposed on Singaporeans and permanent occupants who buy andnbsp, second- and third-year homes in April in an effort to calm the marketplace. The tax was set at an eyewatering 60 % for international buyers. According to reports, foreign buying andnbsp accounted for 7 % of all real estate transactions in the first quarter of this year, an increase from roughly 6 % from 2017 to 2019.

Singapore-housing-property-society, FOCUS, by Idayu SupartoThis photo taken on January 23, 2010 shows people playing basketball in front of the Pinnacle@Duxton, a made by government public housing apartment in Singapore. Eager shutterbugs lined their tripods across the fences overlooking a panoramic skyline of Singapore’s city centre as families and curious visitors milled around the 156-metre high rooftop garden. Tall turnstiles guard its entrances and visitors are required to pay an admission fee of five Singapore dollars to see the view. AFP PHOTO/ROSLAN RAHMAN / AFP PHOTO / ROSLAN RAHMAN
The cost of accommodation in Singapore is constantly rising. Roslan Rahman, AFP, and Asia Times Files

Since then, the demand from foreign buyers has decreased to about 4 % of all transactions so far in 2023. According to &nbsp, the MAS, which on November 27 stated that personal prices may continue to fall as a large number of innovative products are scheduled for completion, residential property prices have since moderated from an increase of 11.4 percent year over year in the first quarter of 2023 to 4.4 % by the fourth quarter.

The Financial Times reported in April that the MAS had indirectly directed andnbsp, bankers, and regulators to avoid talking about the cause of rising cash outflows. An unnamed executive&nbsp, who was quoted in the report, said,” We have n’t been explicitly told not to talk about China, but there is a sense that talking about it publicly will not be welcomed.”

The central bank has advised money managers against aggressively courting company from Hong Kong because the region has experienced heated political unrest in 2019 and has lost waves of international businesses and executives as a result of alleged extreme Covid-19 lockdowns. Singapore has worked to avoid the perception that it is taking advantage of China’s problems.

In relation to current arrests of Foreign nationals related to money laundering, Singaporean officials have more lengthy denied any pressure from Beijing.

There has been some rumor that this operation was carried out at China’s request, both domestically and internationally, in media sources. Regarding the August prosecutions, which included people wanted in China for fraud and illegitimate online gaming, Josephine Teo, Singapore’s following minister for household affairs, told parliament in early October.

According to SMU’s Tan, the idea that Singapore has acted in response to Chinese pressure “makes for eye-catching stories but fails to recognize Singapores ‘ acute awareness to its independence being trampled on.” While dealing with transboundary illegal activities is crucial, He&nbsp stated that” Singapore wo n’t be coerced or bullied into serving as a policeman for China.”

According to NUS Chong, if Singapore comes to be seen as a healthy destination and an outflow, that was “introduce problems” in Singapore-China ties. If Singapore keeps drawing in a lot of money and the PRC market finds itself in need of more money to spur growth or deal with its debt problems, he said, Singapore will have to take that risk.

Despite speak of sluggish consumer demand, China’s economy has not yet experienced the post-pandemic recovery that many had predicted. Instead, the growth of the second-largest economy in the world has sputtered, and a widening interest rate difference with the US has contributed to the renminbi’s 16-year low, making it one of Asian currencies that has performed the worst this year, falling by 6 %, measured andnbsp, against the U.S. money.

China has seen net capital outflows in 2023 for the first time in four years, according to Alicia Garcia Herrero, chief economist for Asia-Pacific at Natixis SA, pointing to negative foreign direct investment ( FDI) flows despite a sizable trade surplus. She continued by saying that fixed-income outflows and loss pressure on the renminbi have been exacerbated by the US Federal Reserve’s aggressive policy.

According to China’s data, international businesses operating there are not simply declining to spend their profits but are also, for the first time, massive online sellers of their existing investments in Chinese businesses and repatriating the funds. In the first three quarters of 2023, FDI&nbsp’s outflows exceeded$ 100 billion, and analysts predict that they will continue to do so as a result of trends, current & infrp.

In display slides reviewed by Asia Times, Herrero stated that” the recent tolerance of the Fed’s voice is helping to succumb amortization pressure and may also help plant off the capital outflows.” She continued by saying that a real estate problems, declining industrial income, and stagnant economic growth have all contributed to net capital outflows into China’s stock markets.

Chinese stocks have been among the worst performers in the world in 2023, with an annual loss&nbsp of 9 % for the MSCI China Index, following a 23.6 % decline for 2022 and 22.8 % for 20, despite initially optimistic expectations. Chinese shares traded in Hong Kong, Shanghai, Shenzhen, and New York have lost$ 955 billion in market capitalization this year, according to Bloomberg data.

Regarding concerns about Singapore’s growing unaffordability for visitors, Nydia Ngiow, a managing director at BowerGroup Asia, an consulting firm for policy advice, stated that” for sentiments did not stem from the new influx of Chinese citizens.” Singapore’s rapid economic growth over the past few decades has been fueled by policies that promote business and wealth, which ultimately led to an increase in inequality.

The rich should pay more, according to Singapore’s taxman. iStock / Getty Images pictures

Ngiow observed that despite Singapore’s efforts to court the powerful, government policies have recently undergone a “leftward shift.” Ngiow stated that “examples of these steps include increased taxes on large incomes and pleasure goods, such as luxury cars, and a proportionate increase in taxes based on the value of private property.”

This year, the city-state increased its tax rate from 220 % to a staggering 320 % on high-end vehicles with an open market value greater than S$ 80, 000 ($ 59, 560 ). Along with making improvements to extravagance property taxes, government increased the personal income tax rate for top-tier workers in 2022, focusing on the top 1.2 % of citizens.

While the migration of Chinese citizens to Singapore is undoubtedly a moving point for the nation because it highlights the number of ultra-wealthy people, Ngiow continued, noting that “deep financial assistance and large investment flows between the two nations go much deeper than disputes over some businessmen,” this is unlikely to significantly strain relations between China and Singapore.

Observe Nile Bowie @NileBowie on X, originally Online.

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Upgraded Singapore-China free trade agreement among 24 signed at annual top-level meeting

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Mr. Wong and Vice Premier Ding concurred during the JCBC meeting that cooperation between the two nations had been” comprehensive and progressive” and that both sides should” continue to adopt a forward-leaning approach,” according to Singapore’s Prime Ministers Office ( PMO ) on Thursday.

The impact of climate change, the digital revolution, and international political tensions on lives and livelihoods were noted by Mr. Wong and Mrding&nbsp at their earlier bilateral meeting, according to PMO.

They “also affirmed the significance of fostering greater human interaction and trade between the two nations, as well as exploring partnerships to improve communication, including cross-border economic communication,” according to PMO.

Mr. Wong and Vice Premier Ding co-chaired the JCBC meeting as well as the 24th China-Singapore Suzhou Industrial Park Joint Steering Council ( JSC), the 15th Sino-Somali Tianjin Eco-City JSC, and the 7th Chinese-Southern Singapore ( Chongqing ) Demonstration Initiative on Strategic Cooperation.

These JSCs evaluate the three lineup government-to-government jobs ‘ development and talk about potential future collaboration.

UPGRADE PROTOCOL CSFTA FURTHER

Singapore will gain more market access to China’s service sectors under the China- Singapore Free Trade Agreement ( CSFTA ) Further Upgrade Protocol, according to a press release from the Ministry of Trade and Industry ( MTI).

In 22 industries like construction, retail and wholesale, and structural and industrial planning service, China has committed to not limiting foreign ownership restrictions for Singapore investors.

China was Singapore’s fourth-largest buying companion in the service sector in 2021, while Singapore was the third largest.

According to MTI, Singaporean investors and service providers will “also like more democratic and clear guidelines that level the playing field for them to participate in and trade with China.”

According to MTI, a fresh services book will be established in the area of telecommunications to help business collaboration for innovation and development as well as provide clearer rules and increased transparency for regulatory processes.

Chinese Minister of Commerce Wang Wentao and Singaporean Minister for Trade and Industry Gan Kim Yong signed the CSFTA More Upgrade Protocol.

” I hope companies will take advantage of this increased partnership to acquire options in China, and I look forward to working more closely with my Chinese rivals to improve our assistance in areas of common attention,” Mr. Gan said.

China’s initial extensive diplomatic free trade agreement with an Asian nation, the CSFTA, went into effect in 2009.

When it was updated in 2019, bilateral trade and investments increased on average by 7 % and 7.7 %, respectively.

The 16th JCBC gathering in 2020 saw the start of negotiations for this most recent update, which ended last quarter.

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Axiata names Nik Rizal Kamil as Group CFO

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visit is essential to the group’s mission to grow into a long-lasting dividend company.Prior to February 2021, he served as the team CFO at RHB Bank.As of January 1st, 2024, Axiata Group Bhd will be without a group CFO, and the position has been filled by Nik Rizal Kamil Nk Ibrahim…Continue Reading

Is there a basic problem with autonomous driving?

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( See&nbsp,” Artificial intelligence faces serious roadblocks,” Asia Times, July 18, 2017 ) The viability of autonomous vehicles for general use in public traffic has long been questioned. Years later, after spending billions of dollars, we are faced with the fact that the technology still falls short of standards for dependable public traffic use.

When the autonomous-driving division of General Motors, Cruise, was shut down by the California Department of Motor Vehicles next fortnight, this shortcoming came to light. The expulsion was brought on by an event on October 2 in which a human-operated aircraft struck and pushed the feminine pedestrian into the course of an uncontrollable Cruise car.

She was dragged on 6 meters after the driverless vehicle collided with her, came to a stop, and then tried to pull over to the side of the street. Undoubtedly, the demands of this circumstance were not met by the vehicle’s computer system.

It’s not because there has n’t been enough technological investment; through extensive road operation, billions of dollars have gone into developing autonomous vehicles with sophisticated sensors and sophisticated software.

There was a perception that these cars were getting ready to handle the complexity of regular highway customers. In addition to GM’s defeat, the self-driving vehicle manufacturer TuSimple&nbsp Holdings is liquidating, wiping out billions of dollars in market value.

Despite these ongoing setbacks, optimists continue to believe that artificial intelligence ( AI ) software will eventually enable vehicles with better driving performance, potentially saving countless lives by reducing human-caused accidents.

Prior to the disqualification, GM had estimated that its autonomous taxi business would generate US$ 50 billion in revenue by 2030. The subsidiary was valued at$ 30 billion in a 2021 funding round, reflecting this upbeat forecast.

Why is this software so difficult, given the wonders brought about by new AI software technology?

These self-driving cars stand out from other robots made for commercial or industrial settings in a significant way. Regular robots are made to perform predetermined programming tasks, like soldering or manufacturing painting.

To reduce harm to the creation line, the robot stops or engages in predetermined techniques if expected events interfere with the assigned process. These default-programmed techniques can be confidently carried out in standard production environments.

Then think about a self-driving car. Mechanical performance can become programmed because the planned activities are constrained if it is intended to operate in a controlled environment where things are repetitive, such as closed streets or restricted tracks. For example, driverless trains on inter-airport rail lines run properly because track access is restricted. The cameras may pick up on any obstructions and stop the train if they occur.

However, an autonomous car like the GM vehicle, which can move easily through available traffic, must function properly under virtually limitless circumstances. In essence, it is anticipated that the car will mimic human knowledge. Despite assertions that these cars will surpass people drivers, human knowledge continues to be important due to its special abilities.

Customers accidents are by nature arbitrary occurrences that differ from one another in some ways. Rapid considering and access to information that the vehicle robot cannot see, such as external data that automated sensors might not be able to pick up, are necessary to handle such situations. No amount of training can get the car ready to handle any kind of transportation situation.

To” coach” these vehicles, thousands of kilometers of traffic driving have been used, and billions of dollars have gone toward software upgrades. However, they occasionally run into situations where the” trained” conditions do n’t match reality and the vehicles perform worse than what would be expected of human drivers.

Will additional investment overcome these mechanical restrictions, and will autonomous vehicles outperform people drivers? are the remaining questions. They’ll probably find their specialty in handled settings, in my opinion. Taking the place of common people driving? Hmm.

Henry Kressel is a long-time private equity investment in tech companies as well as an innovator, technologist, and writer.

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