Archive for the ‘Economics’ Category

We need new socio economic model

Monday, June 1st, 2020
The aspirations will raise our hopes and expectations for better economic growth, fairer income distribution and higher human welfare, for all Malaysians, regardless of race! -Pic for illustrations purposes only The aspirations will raise our hopes and expectations for better economic growth, fairer income distribution and higher human welfare, for all Malaysians, regardless of race! -Pic for illustrations purposes only

LETTER: The clear announcement yesterday by the Minister of Finance Tengku Datuk Seri Zafrul Abdul Aziz of his 6R economic Recovery Plan is most welcome, especially at this time of concern and anxiety.

The first 4Rs – covering Resolve, Resilience, Restart, and Recovery – are presently on track and could be achieved with a stronger political will to move faster.

These aspirations will raise our hopes and expectations for better economic growth, fairer income distribution and higher human welfare, for all Malaysians, regardless of race!

But, to fully achieve all these six goals and especially the last 2Rs, Revitalise and Reform, our present Economic Model must be transformed significantly.

We cannot do more of the same. We cannot carry on with business as usual. Some old norms must be radically reformed and new thinking adopted to be more successful.

The world economic recession, our own impending recession and the Covid-19 crisis, have all caused a great deal of uncertainty regarding our future well being. The political turmoil currently experienced in our country has further eroded our confidence and reduced our hopes for our brighter futures.

Hence the Finance Minister’s 6R Recovery Plan is very welcome, as a light in the dark tunnel.

The world economies, including Malaysia, are facing socio economic crisis. Some of these weak policies and mistakes have been as follows -

1. The wide and worsening unsustainable income gaps between the rich and the poor.

The new norm economic model should aim to narrow this unfair income and large wealth disparities. This would mean taxing the very rich much more in order to raise the standards of living of the poor who are struggling to make ends meet!

2. The basic needs of the rakyat have to be more adequately met in the Recovery Plan and especially in the New 12th Plan. The Covid-19 crisis has revealed more starkly , the large numbers of poor, the hungry and the homeless amongst us, who are embarrassingly better off. In fact the cramped and dirty housing provided by wealthy contractors , has largely caused Covid 19, to spread amongst us all. Surely we could do better to build more low cost but healthy houses for the poor!

3. Budgets and Five Year Plans are not exclusively concerned only about economic growth and raising incomes . More importantly , Budgets and Five Year Plans are meant to improve the quality of life of all Malaysians. This includes the UNs17 Sustainable Goals that we should implement with a stronger political will!

4. The 6Rs are great aspirations, but the question in most of our thinking minds is – will the new government be really be able to implement the last two most important Two Rs – to Revitalise and Reform?

Revitalisation and Reforming the economy would or should mean interalia –

a) Restructuring our Education system to make it more internationally competitive,

b) Reforming our labour policies especially in regard to employing such large numbers of Foreign Labour.

c) Reorganising the Public Services to make them much more multiracial and multi-religious to better reflect our national population composition

d) Redefine the role and scope of the private sector. Should we depend so much on Government Linked Companies (GLCs) that squeeze out the business sector.

e) Ensure our national Institutions are more professional and honest and fair in upholding a more efficient administration that is free from politisation and corruption.

The Governments 6Rs Strategy is encouraging, promising and welcome and needs our full support.

But, unless the Governments new 6R socio economic strategy fully takes into account, the above and many other public policy issues that can be discussed more openly and widely with the NGOs, Universities and Business and Community Leaders, we will not progress much.


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Entrepreneurs beating the odds, creating jobs during MCO

Saturday, May 30th, 2020

AFTER having to close their restaurant during the movement control order (MCO) period, husband- and-wife team Rosnizam Ishak and Roazian Md Noor (pic) were very worried as their source of livelihood had come to a halt.

The only foreseeable incoming money was the Bantuan Prihatin Nasional (BPN) cash aid which the government had announced in March as part of its RM260bil Prihatin economic stimulus package.

Armed with RM1,000 and restaurant-operating experience, the couple used the BPN money to start a marinated lamb delivery business.

Operating from their house in Bertam, Penang, they started with just 5kg of orders a day. With some social media savvy, business slowly picked up and at its peak, they were fulfilling daily orders of up to 100kgs (at RM55 per kg).

Their business – run fully online via WhatsApp, Facebook and Instagram – was eventually able to build a network of delivery partners and hire workers to help with the marinating and packing.

Further south in Melaka Tengah, single mother Siti Hartika Shaari, 32, lost her job as a chef when her employer was unable to pay her salary during the MCO – a common challenge amongst business owners. For several days, Siti Hartika was only able to provide plain porridge for her 11-year old son.

Having had to dip into her savings and with finances getting tight, Siti Hartika received her BPN payment on April 10.

She decided to invest the money into a fresh produce cleaning service. Every morning by 5am, she would purchase fresh produce – fish, chicken, squid, crab or prawns – from the local market, and upon returning home, she would gut and clean the fish, chicken, squid, crab or prawns for her customers.

Using just WhatsApp, Siti Hartika was able to grow her business from just eight orders a day to up to 40 orders and can earn up to RM2,000 daily. Having initially started the business with her cousin, they eventually hired three workers as well as four runners who send the orders throughout Melaka.

A collective effort

Despite the adversity they faced, both Rosnizam and wife, as well as Siti Hartika, were able to turn their fortunes around.

Motivated by the need to survive in these tough times and provide for their loved ones, an entrepreneurial spirit emerged.

On top of that, their efforts were facilitated by the ubiquity of private-sector technology (both were running fully online businesses) and government assistance (in this case, both used BPN cash aid as startup capital).

If not for the coming together of the human spirit – private-sector technology-government assistance – their stories might have been wholly different. They were able to not just provide for their own livelihoods, but also create jobs for others.

Theirs are some of many inspiring stories that have emerged during these tough times.

Staying vigilant

By now, we have heard a lot about how Covid-19 is a threat to not just our lives but also our livelihoods. That said, the unprecedented global nature of Covid-19 means we are yet to witness its full brunt on our economies.

According to the Statistics Department of Malaysia, the unemployment rate for March 2020 was 3.9% (or about 610,000 workers), which is the highest since June 2010. Depending on which organisation you ask, Malaysia’s unemployment rate could be anywhere between 900,000 (Statistics Department) to over two million (Malaysian Institute of Economic Research) by end-2020 because of Covid-19.

That is a whole lot of jobs. However, this is a predicament that is being faced globally.

According to the International Labour Organisation (ILO), a deterioration of working hours, equivalent to 305 million full-time jobs, is expected to occur in the second quarter of 2020. This is up from a previous estimate of 195 million full-time jobs.

In the United States, the unemployment rate stands at 40 million – a figure not seen since The Great Depression. The exacerbation of the situation has led to the United Nations labeling those impacted as the “Lockdown Generation”.

Staying resilient: what inspires you?

While the numbers and estimations tell a harrowing story, we cannot give up.

We can keep unemployment numbers low and save jobs, while also saving lives and protecting health – provided we come together.

I am inspired by the #KitaJagaKita campaign. It is a reminder that we can help our fellow Malaysians (and non-Malaysians) who are in need because we are blessed with an abundance of food, clothes, and shelter options.

I am heartened to see well-known figures from the private sector offering to use their social media reach to advertise for jobs and to connect job seekers. Tech companies are also doing their best to enable micro-businesses to sell their wares online and to a global audience.

At the same time, government assistance such as the BPN has helped over 10.5 million Malaysians. The loan payment moratorium by banks provide cashflow ease to millions of borrowers (to the tune of RM100bil), while programmes such as the Employee Retention Programme (RM240mil), Wage Subsidy (RM13.8bil) and Geran Khas Prihatin (RM2.1bil) will play a role in helping businesses stay afloat.

As at May 17, over 10.25 million (or approximately 67%) of Malaysia’s workforce has returned to work under the conditional MCO. Everyone is doing their best to achieve some semblance of normalcy, financial security and livelihood in this “new normal”. Workers in the 23 prohibitive list-industries are patiently waiting their opportunity.

Yes, jobs will be lost and businesses will close. Nevertheless, the measure of whether we succeed or fail in this war against Covid-19 is not in the peak of job-loss or business-closure, but rather our ability to bounce back and rise after the fall.

If there is anything the Rosnizams and Hartikas of this nation have shown us, it is that we are more resilient than we realise. There will be ups and downs, but always remember that we are in this together.

By Danial Rahman

Rethink how we feed the nation in the pandemic age

Tuesday, May 26th, 2020
Farming as a career should be made appealing to millennials given that conventional jobs may become scarce because of the Covid-19 pandemic.  FILE PIC Farming as a career should be made appealing to millennials given that conventional jobs may become scarce because of the Covid-19 pandemic. FILE PIC

IN the globally connected market we live in today, the value of food lies in the price for an average person or Malaysian, thus incentivising the import of cheaper food. The Covid-19 situation could prompt the government to rethink some of its food security policies as well as explore resilient ways to feed the nation.

Covid-19 has completely pressured the agri-food value chain. Given the current conditions, the price of chicken in Malaysia may increase significantly if the disruption to the animal feed value chain is prolonged. It may pressure imports, such as fruits and vegetables, as well.

What can Malaysia do about this? First, there is a huge opportunity in the short term to have massive awareness campaigns to get people to change their eating habits and value the quality of food intake. If every household could reduce food waste and the consumption of chicken and other staples, the change in the short term may absorb some food crisis shocks.

The move away from placing value on price to quality may also need some policy rethinking, on how the distorted economic structure that forces households to spend on cars and houses, at the expense of food, can be mended.

The unemployment numbers that are bound to increase because of the global pandemic may be an opportunity for Malaysians to venture into farming. Like most developing countries, urbanisation and the rapid growth in income from office jobs compared with difficult agricultural jobs have moved people to the cities and created the perception that farming is for the uneducated and less hip compared with the gig economy.

Farming, especially industrial farming, is highly mechanised and although some farms may require manual labour, the appeal of venturing into farming is more like a hobby rather than an actual job for some millennials. Many trending small-scale farming concentrate on vegetables such as chilli and mushroom, but we have yet to see a chilli or mushroom billionaire in Malaysia who can be an icon for the younger generation.

In order to make farming profitable and attractive to millennials, it should first be profitable on a large scale and provide a sustainable income to farmers.

Buying local and fresh to support local farmers for a sustainable supply of healthier options, must be a target that requires not only government campaigns but also a perception change in every Malaysian.

This effort should be coupled done together with initiatives to modernise and digitalise farming. The government can incentivise technical solutions and innovations. Some start-ups and farmers are already developing their own handy tools, like the use of rechargeable drills as a cheaper source of power to run electric tillers, smaller harvesters and other devices. Such solutions make innovations affordable.

The Covid-19 pandemic and the disruption to the global food supply chain will accelerate the trend of rebuilding a resilient food value chain by improving efficiency through digitalisation. This includes the use of big data and blockchain technologies that may become a game changer for small farmers, as these not only increase efficiency but could also make farming hip and cool among millennials compared with office jobs.

Tools like crop planning and management help new farmers choose the right input factors, using fertilisers and pesticides accurately with access to online advisory services. More advanced tools that support traceability may allow farmers to connect directly to their customers and enable better planning of quantity and quality of production.

The level of accuracy in production will also minimise losses in the entire value chain. Significant losses in agriculture occur at all stages of the agri-food value chain, from on-farm post-harvest losses, storage and transportation to processing, packaging, wholesale and retail. An accurate understanding of loss patterns can help policymakers to develop impactful infrastructure, such as cooling, storage and transportation, which cause most food losses.

Rethinking how we feed the nation needs effort not only from the government, but also a mindset change in Malaysians, to put value in quality and not price that leads to abundance. This must be complemented by making small farmers profitable by reducing losses in the entire value chain and increasing productivity with innovative solutions.

At the same time, farming should be made appealing to millennials. Jobs perceived as cool and sustainable in the past may shrink altogether given the Covid-19 pandemic.

It is inevitable that a global food crisis will severely impact the world. We have a window of opportunity now to make small changes with big impact, if we can rethink how we feed the nation and build a resilient food value chain.

By Dr. Mohammed Faiz Shaul Hamid.

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Most Msian workers face dire situation within one week of unemployment

Sunday, May 24th, 2020
About 60 per cent of Malaysian workers would find it tough to survive beyond a week, and do not have the means to raise even RM1,000 for household expenses, if they were to lose their jobs abruptly due to the Covid-19 pandemic. - NSTP/EIZAIRI SHAMSUDINAbout 60 per cent of Malaysian workers would find it tough to survive beyond a week, and do not have the means to raise even RM1,000 for household expenses, if they were to lose their jobs abruptly due to the Covid-19 pandemic. – NSTP/EIZAIRI SHAMSUDIN

KUALA LUMPUR: About 60 per cent of Malaysian workers would find it tough to survive beyond a week, and do not have the means to raise even RM1,000 for household expenses, if they were to lose their jobs abruptly due to the Covid-19 pandemic.

Majlis Tindakan Ekonomi Melayu (MTEM) senior fellow Azlan Awang based this grim prediction on the fact that a Bank Negara-NEAC study in 2017 showed that up to 60 per cent of Malaysian households were surviving below the living wage, meaning that they did not earn enough to have a normal standard of living.

“The current Covid-19 crisis has exposed this major weakness in our society, (therefore) confirming the findings in the study. It also showed that (most) workers have enough money for only a week if they lose their jobs overnight, which is the criterion for the vulnerability classification,” he said in a Malaysian Trades Union Congress (MTUC)-organised webinar titled “Challenges Facing Workers in the Covid-19 Pandemic,” on Saturday.

Azlan said following the study, the central bank had classified 75 per cent of Malaysia’s work force as belonging to the country’s most vulnerable group and that they are the hardest hit in the current economic crisis triggered by the Covid-19 pandemic which has paralysed international trade and domestic businesses.

“Malaysian workers generally have very low purchasing power. This is the reason why they cannot cope with the rising cost of living especially in moments like this pandemic,” he said.

Even before the pandemic, he said wages in Malaysia were “something we could not be proud of,” adding that the wage share with the GDP was only 35 per cent, with a median amount of RM2,300 a month.

He said the impact of Covid-19 has shown that the Malaysian economy is actually very fragile.

“I hope this finding will not be made as a statement of fact over the next few months when the impact of Covid-19 bites further. From this experience, the MTEM feels the government has to reset the business and economic sectors to make them more worker-friendly and resilient enough to face situations similar to Covid-19 or even worse.

“We need to strike a balance and not focus on business and economic growth per se. We must have a system in place which will be more sustainable,” he said.

Touching on the economic stimulus package, he said only a faction or 16 per cent of the RM13.8 billion set aside under Socso’s Employment Insurance Scheme (EIS) has been approved to be distributed as a wage subsidy to two million workers employed by 267,752 employers.

“The actual number of workers eligible for this wage subsidy is nine million. (But only) a total of RM2.22 billion has been given. There could be a variety of reasons for this low figure.

“Among them are that some employers may be in the process of applying; others may not possess the necessary documents. But there could also be employers who aren’t keen (on applying for EIS) as one of the condition is that they cannot retrench workers for six months,” Azlan said.

He also said underemployment remains a major problem in the Malaysian workforce, as the official criterion for full employment is working at least 120 hours per week, meaning that many workers are in fact underemployed or unemployed.

This, Azlan said, also indicates that the unemployment rate is actually higher than the data provided by authorities and called for the actual figures to be disclosed to enable relevant parties to map out suitable policies for workers and those joining the job market.

Another panelist, labour lawyer Arun Kumar, pointed out that the government may be helpless in dealing with employers who were given wage subsidies, but went ahead and retrenched workers after three months or more, ignoring the six-month caveat on retrenchment.

He expressed concerns faced by workers such as unlawful deductions of annual leave, leave without pay, and unlawful deductions of wages.

“This wage subsidy scheme was not drawn up from any law or legislation passed by Parliament, unlike some other countries, which enacted specific Covid-19 laws before disbursing aid packages with specified (and legally binding) conditions.

“As things stand, there may be impediments for the Malaysian government to act against employers if they lay off workers after receiving the aid. Under existing labour laws, employers only need to notify the Labour Department if they want to retrench workers,” he said.

Arun said this is clearly insufficient and the department must investigate and verify the claims of firms requesting to lay off workers.

“The onus is on the firms to prove their losses. For this the (government) officers must be given more powers so that the laws can have more bite,” he said.

On workers being forced to take annual leave, Arun said the courts have come up with a binding ruling that annual leave is only for the purpose of personal travel as well as rest and recreation.

“Annual leave is not for the interest of the company’s financial situation and cannot be forced on employees. They are forced to stay home. So any worker who was forced to take leave can lodge a complaint with the Labour Department,” he said.

He also argued that there is no legal basis for employers to claim frustration of contract, since the Movement Control Order (MCO) is not for a prolonged period of time, or force majeure, in the case of Covid-19, when there is no such clause in employment contracts.

National Labour Advisory Council (NLAC) member A. Sivananthan urged the Human Resources Ministry to be more proactive and give workers encouragement and hope.

He also expressed serious concerns over the efficiency of Jabatan Tenaga Kerja (JTK).

“Hundreds of thousands of workers have lost their jobs, suffered pay cuts or are being forced to take leave. Arising from the arbitrary actions of employers, workers are suffering and undergoing extreme hardship to put food on the table for their families.

“I would urge the minister and MOHR officers to please engage the unions and workers. This is our livelihood. Workers are not a commodity that you can buy and sell in the market. Respect the workers and help them keep their jobs and their sanity.

“The Covid-19 economic impact is expected to worsen over the next few months *and the MOHR cannot remain silent. It must act to protect the workers. If MOHR ensures employers comply with the Code of Conduct for Industrial Harmony, the employers will not act arbitrarily,” he added.

Siva urged the ministry to implement an effective Standard Operating Procedure (SOPs) to ensure employers do not bully employees or hold them to ransom.

“The employers have raked in profits for decades and (now) they say they cannot function even for two months under Covid-19. They have made huge profits with the sweat and tears of the workers. At least 50 per cent of the Malaysian population are workers, that’s how big the current problem is,” he said.

He cited the case of Parkroyal Hotel in Kuala Lumpur, which decided to abruptly close recently for 15 months to refurbish, retrenching all employees in the process. Siva said shuttering the hotel in the midst of the pandemic and rendering the workers jobless, without warning, was an extremely insensitive and inconsiderate thing to do.

In the face of all these concerns, Siva urged the Minister of Human Resources to introduce the Emergency Employment Regulation, which is critical to prevent workers from being abused by employers during this Covid-19 pandemic crisis.

By New Straits Times.

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Stop inflow of foreign workers post-pandemic

Tuesday, May 19th, 2020

The Malaysian Employers Federation recently estimated that there are nearly 3.3 million undocumented foreign workers against 2.2 million documented foreign employees in Malaysia, in addition to about 180,000 refugees. – File pic

The Malaysian Employers Federation recently estimated that there are nearly 3.3 million undocumented foreign workers against 2.2 million documented foreign employees in Malaysia, in addition to about 180,000 refugees. – File pic

I want to highlight a very serious problem on our hands - undocumented foreign workers. The Malaysian Employers Federation recently estimated that there are nearly 3.3 million undocumented foreign workers against 2.2 million documented foreign employees in Malaysia, in addition to about 180,000 refugees.

Many critics strongly assert the infected undocumented foreign workers have sucked in valuable public resources in their treatments.

The Foreign Workers Compensation Scheme under Socso does not cover their medical treatments but they are fortunate because our government does.

There are a few important facts pertaining to undocumented foreign workers. They not only contribute hugely to our labour market, but they also support our economic growth.

Their income fuels domestic consumption, which in turn drives economic growth. The World Bank in March 2018 estimated undocumented foreign workers in Malaysia worked in manufacturing (36 percent), construction (19 percent), plantation (15 percent), services (14 percent), agriculture (9 percent) and domestic helper (7 percent).

These jobs are low-skilled, and they are 3Ds (dirty, dangerous, demeaning) too, which Malaysians are avoiding.

Thus, our economy depends on foreign workers. We have to live with it. Otherwise, many firms could not have survived in marketplaces in and outside our homeland.

Undocumented foreign workers in Malaysia took enormous risk to come in order to earn a higher level of expected income than in their home countries.

They have invested in using borrowed money to come here. They also are sacrificing uncountable psychological costs while working here.

Notwithstanding, just like in many other developed countries, there are many risk takers who cross national boundaries in getting jobs in order to maximise their expected income.

This is extremely difficult to stop. In Malaysia, one could not prevent anyone who wants to move from a rural area to a city where there is a higher expected income.

International migration of workers is similar too, because people who live in a low-income country move to—legally or illegally—high income countries. Immigration laws can prevent this type of people movement, but they are unable to shut out foreign workers entirely.

I want to illustrate we can be receptive and inclusive by installing a well-planned strategy for accommodating foreign workers in low-skilled and high-skilled labour markets. Social economic environments in many countries, including Malaysia, will change substantially after the pandemic.

In this context, governments will have to redefine their roles: the state must give particular emphasis on inclusive, just, equal, and humane approaches not only in mitigating inequality, but also in strengthening the security of livelihood in living together with foreign workers.

This strategy has to be consistent to present laws and regulations in general and to those governing the labour market as well.

It must encompass: a fair, equal, and just due process in seeking jobs by foreigners; a compulsory study of at least the elementary level in Bahasa Malaysia (joint-investments from workers and employers); a mandated contribution in EPF; a mandated contribution to unemployment insurance and medical health insurance; a compulsory saving fund for returning home when the employment contract is terminated with mutual consent; a compulsory short-term (2 to 4 weeks) skill-up trainings to be subsidised by the state; and other requirements that are pertained to a specific sector.

Enacting a statutory body to manage the operation of the said strategy for ensuring accountability and transparency can assure fair, just, more efficient and effective management in executing this new plan.

The proposed strategy, when it is implemented, is costly for foreigner workers and their employers. This strategy implicitly contains a preventive means for constraining the inflow of too many foreign workers.

The upside is, it incentivises foreign workers and their employers to contribute their roles in strengthening the competitiveness of human resources in our economy. This will surely make our livelihood better, more secure, and more meaningful in the post-corona landscape.

by Lau Sim Yee.

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District growth councils will be economic game changers

Monday, May 18th, 2020
States and their local governments should simplify regulations by eliminating unnecessary licensing requirements, especially for small businesses. --BERNAMA picStates and their local governments should simplify regulations by eliminating unnecessary licensing requirements, especially for small businesses. –BERNAMA pic

BY allocating RM130 million to states under the Prihatin Stimulus Package, the federal government is signalling the important role that states, too, have in economic recovery. States can contribute much to developing a business-friendly ecosystem to promote competitiveness, especially at the district and local-authority levels. Competitiveness matters.

It is a magnet to attract talent and investments to a locality while enabling businesses to secure export opportunities. Combined, these business activities will increase jobs and incomes and thereby promote the economic growth of the states and nation. Here are three ways states can enhance their business ecosystems.

FIRST, states and their local governments should simplify regulations by eliminating unnecessary licensing requirements, especially for small businesses. States should also quickly clear the backlog of development applications and accelerate land conversions for development.

Relaxing regulations should not, however, compromise societal welfare or encourage deviant behaviour. It will be tough to determine where the balance lies between over-regulation on the one extreme and under-regulation on the other. But it is a task that must be undertaken as regulations impose a cost on business. Any help offered by state and local governments will, therefore, aid businesses tremendously in their hour of need.

Public services at the local level can also be delivered instantly online. With businesses and government becoming increasingly tech-savvy in using digital technology during this pandemic, such online delivery should not be beyond the pale of state and local governments.

SECOND, states need to forge stronger collaboration with federal agencies. They will have to work closely with Malaysian Investment Development Authority to attract foreign investments. Industrial parks will also have to be upgraded to attract high-tech investments. Specialised clusters of industries will pull in quality investments and offer added confidence to the federal government to locate priority investments there.

By working closely with the Malaysia External Trade Development Corporation, states can boost the export potential of businesses in the state.

THIRD, states should create a district growth council in each district along the lines of the regional economic development councils of the State of New York.

New York has 10 such councils. Comprising representatives from business, academia, local government, and non-governmental organisations, these councils promote economic growth in their respective jurisdiction. They exemplify a community-based, bottom-up approach to economic growth.

Serving as a single point of contact, these councils help businesses navigate state regulations and the public bureaucracy expeditiously. More important, the councils help mitigate regulatory burdens. Consequently, they enhance business competitiveness and economic growth.

Their success at enhancing competitiveness and growth makes these regional economic councils exemplary. It points to a similar arrangement in districts, in the form of a district growth council (DGC).

As the administrative head of the district, the district officer (DO), with the participation of local businesses, can establish a DGC. To signify that it is a partnership, both the DO and an elected prominent business leader can co-chair the DGC. The DGC’s membership can mirror that of the New York regional development councils.

However, membership should be kept small. This will make the DGC nimble. A launching grant could possibly be carved out from the state allocation under the Prihatin package. DGCs could then supplement that allocation with contributions from the business community.

For it to be effective, the DGC should champion local business interests and economic growth. To do that, the DGC should first set the vision and strategy for district growth. And it should work towards eliminating obstacles to business and growth. In promoting public-private collaboration, DGCs can sharpen the government’s sensitivity to business needs at the local level. Collaboration with academia and training institutions is vital if the DGC is to promote innovation and skills development among small and medium-sized enterprises.

DGCs will constitute a fundamental shift from traditional district management. They will be game changers, improving local business ecosystems and competitiveness. Greater business prosperity and national wealth will be the natural result.

By Datuk Dr. John Antony Xavier.

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New chapter for oil and gas sector after Sarawak, Petronas agreement

Monday, May 18th, 2020
File Photo: This agreement has been long in coming; absorbing the energies of three prime ministers and two Sarawak chief ministers. None will be more cheered by the concord than the industry as a whole. ​NSTP/EMAILFile Photo: This agreement has been long in coming; absorbing the energies of three prime ministers and two Sarawak chief ministers. None will be more cheered by the concord than the industry as a whole. ​NSTP/EMAIL

As the nation continues to be absorbed by news and events related to the ongoing Covid-19 pandemic, what has escaped much notice is how our new months-old national government finally forged an agreement with the Sarawak government on the vexed and much-ballyhooed issue of the nation’s oil and gas (O&G) resources, last week.

This agreement has been long in coming; absorbing the energies of three prime ministers and two Sarawak chief ministers. None will be more cheered by the concord than the industry as a whole.

The agreement comes after over half a decade of sometimes heated exchanges between both state and federal governments – first over the quantum of royalties Sarawak rightly should be getting, then over ownership of the said resources themselves, the constitutionality (or otherwise) of Petroliam Nasional Berhad or Petronas’ role over those resources and, finally, the decision by Sarawak Chief Minister Datuk Patinggi Abang Johari Abang Openg to impose a state sales tax (SST) on O&G products derived from the state.

It was apparently that last fiscal move by the state which led to the new agreement. Petronas held out over payment of the tax for over a year until the state government decided to take the corporation to court over non-payment.

A new understanding was immediately forged when the High Court in Kuching decided last week that the SST is binding on Petronas.

That the agreement was announced right after the court decision came out indicated that both the Sarawak government and Petronas had actually already hammered out a deal in anticipation that the court would rule in favour of the state.

And Petronas, being wholly owned by the federal government, would clearly have had the blessings of Prime Minister Tan Sri Muhyiddin Yassin in sealing this new deal.

As with any compromise deals, both parties (the federal government/Petronas and the Sarawak government) came away with something to show.

The Sarawak government won Petronas’ concession about paying the SST, a by no means small concession given that the national oil corporation could very well have gone the whole hog and tied the legal tax case and the related constitutional question over its regulatory role and ownership of all the nation’s hydrocarbon resources interminably in protracted court proceedings.

In return, Petronas won the state’s nod that the corporation’s constitutional position over national O&G resources is on sound legal footing. The best that can be said about this new agreement is that it put a somewhat facile argument over resource-ownership behind us.

The state government itself signed its O&G rights over to Petronas in the early 1970’s and it was churlish to turn around and question anew where those rights ought to reside after over 40 years. But an important and worthy lesson must come out of this wrenching episode.

What has stuck (and may remain so, despite this latest deal) is a commonly-held popular perception in Sarawak over the decades that the state has been hard done by with the original state agreement which led to Petronas’ incorporation in 1974.

It is this troubling perception that both the current state government and Petronas must work tirelessly to banish. There is some rather vague and generalised language contained in the latest agreement for both Petronas and the state to work towards fulfilling the latter’s aspirations for greater and more meaningful involvement in the O&G sector.

It will be a mistake for Petronas to continue to pay mere lip service to such aspirations by those in Sarawak. It will also need to do a much better job of educating Sarawakians about what it has actually already done towards furthering these local aspirations as well as the challenges which may stand in the way of better fulfilling them.

Clearly, a serious thorn pressing against what otherwise has always been a good overall federal-state relationship has now been removed. It cannot be coincidental that this comes after the Gabungan Parti Sarawak ruling Sarawak coalition decided to pitch in and form the current federal administration.

By John Teo.

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NST Leader: Crude deal

Thursday, April 16th, 2020
There are just too many barrels chasing too few customers. In the trader’s calculation, something between 30 and 40 million barrels a day must be taken  out of the market for crude prices to look north. (Image from Pixabay)There are just too many barrels chasing too few customers. In the trader’s calculation, something between 30 and 40 million barrels a day must be taken out of the market for crude prices to look north. (Image from Pixabay)

SUNDAY put an end to one war — a crude one at that — after a month or so of tossing barrels between Saudi Arabia-led Organisation of Petroleum Exporting Countries (Opec) and its Russian-led allies.

No plus points for the Opec+ group, say analysts. In the words of one former Petronas trader, it is too little too late. He is right on many counts.

One, the market is on pandemic mode. In one analyst’s estimate, global demand is down by 35 per cent. But the pact is only offering a 10 per cent cut. And that is not deep enough.

There are just too many barrels chasing too few customers. In the trader’s calculation, something between 30 and 40 million barrels a day must be taken out of the market for crude prices to look north.

Two, storage will normally help, but not this time around. Everywhere, it is close to full, if not full. After hitting brimful on land, they have taken to the sea. Very large crude carriers, or VLCCs, are dotting the sea with oil.

There simply isn’t space for the 25 per cent of extra oil. Three, many exporting countries need the money. The money may be a need for some and want for others, but produce they will. With or without the pact.

Russia and Nigeria have done this in the past. Malaysia is an exception, though it is not an Opec member. Historically, Petronas has been loyal to the cause of Opec. After all, it owes its birth to an Opec-inspired oil crisis.

This time around, it has joined the Opec cut of 9.7 million barrels for May and June, says a media report. Exactly how much can only be estimated. In a statement, Petronas said it will do what a prudent operator needs to do. It didn’t provide any further details.

Based on Petronas’s past action, a safe estimate will be a barrel-cut of between 50,000 and 80,000 barrels per day. This may be just a pinch in the thick epidermis of the crude market, but Petronas can’t do more.

Two impediments stand in its way. Firstly, oil field performance requires production to be maintained at a certain minimum level. Oil fields aren’t assembly plants which can tolerate unplanned stop-start flick.

Secondly, Petronas isn’t a million-barrel producer. At its highest, years ago, it produced 750,000 barrels per day. Today, it is around 650,000 barrels per day. What Petronas will do is to go for the fields under risk service contracts (RSCs).

RSCs will be hard put if the benchmark Brent crude is anything less than US$50 per barrel.

One thing for sure, the current price is bad news for Malaysia. And Petronas, too. The government earns its revenue from crude oil production in four ways: Petroleum Income Tax, petroleum export duties, royalty and dividends.

This is a barrel and price play. The first, we can control but not the second. As this Leader went to press, Brent was trading at about US$32 per barrel (It was US$23 on Sunday).

Malaysia needs a US$60 or higher Brent price for it to make anything between RM60 billion and RM70 billion a year from the four sources.

At US$32, Malaysia is set to lose at least RM10 billion a year. A US$60 Brent price will only happen if global production is reduced by a further 30 million barrels a day.

Also, if Covid-19 is put down for good. Barrels of hope are needed for both to happen.

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PM urged to intervene and extend contracts of 3,500 govt pharmacists

Sunday, April 12th, 2020

PETALING JAYA: The Malaysian Pharmaceutical Society (MPS) has appealed to Prime Minister Tan Sri Muhyiddin Yassin to extend the contracts of about 3,500 government pharmacists who may potentially lose their jobs from April to December.

MPS president Amrahi Buang said the pharmacists concerned were currently with the Health Ministry, university hospitals, and the Armed Forces’ pharmacy division.

He said that the matter was brought to the attention of Senior Minister Datuk Seri Ismail Sabri Yaakob in a letter dated March 29, 2020.

“Some will leave as early as April 16,” Amrahi said in a statement Sunday (April 12).

He argued that pharmacists play a critical role in the battle against Covid-19, which has infected more than 4,000 nationwide to date.

“Performing medical supply, counselling and review anywhere from wards to the pharmacy, pharmacists serve as key anchors to the full suite of pharmaceutical services offered by the Health Ministry, with the ultimate objective of ensuring efficiency and accuracy,” he added.

The extension of these pharmacists’ contracts, said Amrahi, would enable the government to harness the experience and skillsets they possess.

“These pharmacists are also eager to serve and will most certainly hit the ground running – without the need to acclimatise themselves to the inner workings of the Health Ministry.”

Amrahi added that there was a petition signed by more than 6,000 pharmacists calling for the government to extend these employment contracts.

“Considering all factors stated above and the extraordinary circumstances we are in, we plead with the Prime Minister to intervene for the sake of the country’s healthcare needs.

“Your urgent attention on this is appreciated. We look forward to working with you in our fight against Covid-19,” he said.

The government started employing doctors, pharmacists and dentists on a contract basis since December 2016.

Pharmacists are hired on contract as provisionally registered pharmacists (PRPs) for one year (with a maximum one-year extension) and thereafter, on compulsory service for one more year.

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Sabah unveils own digital payment system

Wednesday, February 12th, 2020

KOTA KINABALU: Sabah has become the second Malaysian state after Sarawak to embrace the E-Wallet system, Sabah Pay, paving the way for Sabah to move towards a digital economy in Borneo.

Chief Minister Datuk Seri Mohd Shafie Apdal highlighted the move is another major step forward for Sabah in becoming a progressive state with the adoption of cashless digital application, which not only is convenient but more efficient and cost-effective than conventional payment methods.

“Not only do we expect to attract investors and businesses by simplifying the process of payments online using just our handphones, but it is also aimed at reducing the burden of the public in terms of needing to travel to make payments or go to the bank, for example.

“This application is set to place Sabah at a very competitive position, and members of the public are encouraged to register now,” he told a press conference after launching Sabah’s very own centralised digital payment application Tuesday.

The application, developed and managed by state-owned statutory body Sabah Credit Corporation (SCC), offers a range of features including a centralised cash collection for the State Government. Sabah Pay can be used by both locals as well as tourists.

“This is just the first phase, there will be more services to be linked to the app which includes virtual account, e-Parking, E-ticket (park entrance and transport) and smart loans,” said SCC Chief Executive Officer, George Taitim Tulas.

During the function, SCC also made an interim dividend payment of RM10 million to the State Government for the financial year 2019.

In his remarks at the event, George said other features of Sabah Pay include an Announcement Module to share news by government departments and agencies, Event Module for information on important local events, segments for promotions on latest offers and deals by business entities. Furthermore, there will also be features for reporting and highlighting incidents to relevant government agencies and links to all government agencies’ web portals.

“At present, there are 27 departments/agencies and 28 business and commercial entitles participating in Sabah Pay,” said George, adding more efforts will be made to get more departments and agencies onboard with the aim of five per month, beginning in February.

For the initiative, SCC has partnered with Boost as the e-wallet operator, Sunline International (Malaysia) Sdn Bhd as the system developer and integrator, and Alibaba Cloud Malaysia Sdn Bhd as the cloud service provider.

By year-end, George said 60 per cent of the state departments’ and agencies’ collection can be done through Sabah Pay’s Collection Module, with the target of signing up 100,000 users for the new application.

“We target that by year-end, 60 per cent of state departments and agencies’ collection can be done through the Sabah Pay’s Collection Module, with an aim of 100,000 users signing up by then.

For tourists, George said there are future plans to introduce features to allow them to enjoy the benefits of cashless payment systems via Sabah Pay when visiting parks and islands under Sabah Parks.

Among those who witnessed the launching ceremony are Deputy Chief Minister Datuk Seri Panglima Wilfred Madius Tangau, who is also State Minister of Trade and Industry, and Sabah State Secretary, Datuk Hj Safar Bin Untong.


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