A Most Important Blueprint

The local bourse went into a groggy sleep today. That was a surprise considering our PM's speech at Invest Malaysia 2019. The bulk of the recommendations and initiatives were SPOT ON to reinvigorate Malaysia domestic economy, export competitiveness and capital markets. I couldn't have scripted a better blueprint, I think. Seriously, I think the markets should be up 20-30 points today, headed to 1850 by end April.

PM Tun Mahathir’s speech at Invest Malaysia 2019:

*Friendly ties with Singapore and China – growth partner. Key trading and investment partner. 

*GLC not to crowd out private sector – become a catalytic role in driving growth. (This is important but to actually see it, in reality, is another thing, a good initiative if carried out effectively).

*Fix and strengthen government – Cabinet committee set up for anti-corruption. (Just give MACC more teeth and more protection and/or reward for whistleblowers).

*No political appointees in GLCs. (Major... implement well).

*Change in the constitution – Prime Minister term to limit to 2 terms. (Do it while you have 2/3 majority cause somebody else could very well overturn this some years down the road).

*Parliament to appoint MACC Chief. 

*Budget transparency – mid-year Budget review to be done. (Budget is one thing, the government should place utmost importance on the Auditor General's annual report and punish all perpetrators and their heads. What's the point in Budget clarity and integrity in the numbers if "crimes/leakages" are not punished at the end of the day?).

*Ministry of Finance to provide guidelines on appointing Head of GLCs. 

*Prime Minister’s to review salary and remuneration of government agencies and GLCs. (Too narrow, and too much discretion here. Better to have a committee of 5 from respected disciplines. Successful business people who are in tune with the labour market for top executives on a domestic and regional basis).

*Look East Policy – Learn Japan culture in hard work. 

*Shared prosperity in income levels – Income gap widening and needs to narrow with higher worker salaries with growth in profits. (Local salaries won't grow much unless we fix the foreign workers numbers and minimum salary. Limit the number of foreign workers in certain industries over time. Increase minimum salary of foreign workers over time - e.g. RM1,300 by January 2020; RM1,500 by January 2022; RM1,700 by January 2024... thus allow business owners to plan accordingly).

*Fiscal Responsibilities Act – Government balance sheet to reduce debt and guarantees, greater risk control on government guarantees. (Need actual RATIOs, % of GDP, % of foreign reserves, etc... so that there is actual accountability and structure).

*Reduce GLCs stake of the government – monetization must not be at fire-sale prices. No disruption to capital markets. Some GLCs to be listed. 

*Fiscal Consolidation Committee headed by Prime Minister is on track to achieve targets. 

*Reduce tax leakages. 

*Holistic and simplified tax incentives for future investments. 

*Corporate tax to be reduced to 17% for SMEs. (Standing ovation!!! This will be major in boosting entrepreneurship - just remember to repeal bankruptcy laws to a 4-5 year non-perpetuity system. 17% brings us in line with even HK, and when you put in the indirect subsidies in electricity, gas, fuel... that will put Malaysia miles ahead. Thailand is not even in the race thanks to their silly foreign ownership laws).

*No new tax this year – only sugar tax to be implemented. 

*Rationalising government expenditure to be more effective – streamlining programmes for poor headed by Deputy Prime Minister. 

*NEAC given mandate to identify pain points and proposing measures to improve growth prospects. 

*Education improvements – Make National Schools Great Again. No exams for Standard 1-3. Single vocational schools. A special task force reviewing entire education policies to complete next month. 

*Regain status as Asian Tiger.