The Malaysian soap opera, “The hibbie jibby”, has been raking
a storm for a few months now. While raking in a huge global fan base and boosting
ratings sky high, it has simultaneously given Malaysia a space in the world map.
Alas, the land mass between Thailand and Singapore has been discovered! But the reasons for its finding may not be
that glamorous. With new skeletons dragged out of closets, dirty linens aired
in public and vile statements proclaimed to audiences, what was once a melting
pot of cultures has been transformed into a melting pot of political ridicule.
It is rather exasperating to see the main casts of this “soap opera” make
decisions that are bringing the local audience through a downward spiral that
seems to be never-ending. So perhaps we,
the audience, need to ask ourselves 3 questions. Where are we headed as a people? Where are we
headed as a nation? And where are we headed as an economy?
With so much “political soot” covering our “windows”, the
producers are keeping us captive, with sheer desperation of wanting to know
what tomorrow’s episode beholds. With only a privileged few having full access
to the “early screening”, the general populace is left to believe the pictures
or trailers that are being painted by those who wield the remote controller.
The silver lining however is that the majority (of the audiences) are unison in
thought. They are able to logically assess the validity of the information rendered
to them by the various parties and have come to act in a rather pristine
manner, although being instigated to act otherwise. As threats come showering
from the main casts of the soap opera, the people are forging closer. As a
people, we are now gathering in strength. As a nation, we are now becoming one.
Guess the 1Malaysia dream is finally becoming a reality.
As our leaders claim to have no involvement in the falling
of the ringgit, we, the people, are left to face the harsh realities of what is
left in the wake of this local economic calamity. As the gap between the US
Dollar and Malaysian Ringgit widens, panic has started to seep into our social
fabric. Would the gap between the
currencies widen? Are we going to
declare bankruptcy? Are prices going to go up? What is going to happen to our
investments?
So many questions… Where do we begin?
Well, let’s begin by understanding the brains running our
country. Our parliament, an expensive
shelter for the children of past leaders, houses many individuals who are there
not because of their caliber or educational prowess but rather because of their
birth luck. With quite a number of positions filled by people who lack both the
paper qualification and wisdom, it is only expected that bad decisions come
pouring in along every step of the way. With most of them seeming to not have a
clue on how the economy works or of the calamity, it seems rather comical that
they would make bold statements about it. What’s more, they ensure that it be
made a press statement.
Our currency is in such a state because of the huge
withdrawals of foreign funds from our local markets. With the lack of
confidence in the leadership of the nation, foreign direct investments are
being channeled to surrounding countries or even back to the country of origin.
As discrepancies mount the movements of large funds in Malaysia, many have
started questioning the credibility and viability of the nation from a business
stand point. Also the growing social unrest amongst people seems to forming a
hindsight that we may be in the making of the next Arab spring. Whether or not
this comes to fruition depends entirely in the manner the government and
uniformed officials are going to be handling public displays and addressing concerns.
With the youth of the nation being the pivotal bunch, how they are addressed is
going to be the determinant of the existence or obliteration of the current
political entities.
As many uncertainties are coming to be, other economy
drivers are also facing the brunt. With almost a 30% drop in tourism, foreign
spending has started to gradually reduce. As Malaysia chairs ASEAN this year,
we are inevitably under the limelight of the global eye. As the current
honorific position allows for even the slightest of news to make it big in the
tabloids, such negative publicity could bring about quite a devastation. After all, we are well
aware that negative news sells best. As there is a strong political drive in
the ASEAN movement, it would and has inevitably affected the trade front of
Malaysia with other nations. With our nation being subjected to heavy scrutiny
by our surrounding peers, it would only be a matter of time before these
countries decide to avoid us for the sake of their countries.
Being an oil producing nation and with the significant fall
of crude oil pricing, the slowdown in trade would start affecting the economy.
With our foreign reserves dropping another $2.2 Billion, we have to acknowledge
the fact that our financials are weakening by the minute. Eventually, it is us,
the people, who would have to bear the cost. This may not be immediately
noticeable. But when the cost of acquiring raw materials starts burning a hole
through the pockets of manufacturers, they would be forced to increase their
prices to sustain their profit margin. If they decide to not increase their
pricing, the other better option would be for them to cut down on overhead. And
that means, they would have to let go of their employees. Yes, it is a double
edged sword.
Does that mean that Malaysia is on its way to becoming the
Asian “Greece”? Well, the answer is no. The idea of Malaysia becoming bankrupt
was somehow foolishly fortified when news got out that the nation’s Employee
Provident Fund (EPF/KWSP) had invested billions into 1MDB. Reports state that
almost RM3 billion had been invested into the very questionable company. But
let us, for the sake of discussion, imagine that EPF had invested RM20billion;
it would still not lead the nation’s provident fund to “close shop”. With over
RM1billion in employee monthly contribution going into the provident fund, even
a 20 billion Ringgit investment would not be enough to upstage this entity. But
that does not exonerate the provident fund managers from the bad decision
making and lack of proper due diligence. Then again, they could have had their
arms twisted.
The fact is that Malaysia is not looking very lucrative for
the local “day to day” investor. We are not only forced to fork out more to
maintain our current lifestyles but have become fearful of the security of our
money, let alone its growth. When people start fearing investments, liquidity
(money in circulation) reduces in the system. In normal circumstances, when
such a thing happens, the central bank would look at avenues on increasing the
money circulated in the system. So, more money will be printed to be pumped
into the system which would in turn reduce interest rates. It is reflective of
the theory of Demand and Supply. When Supply surpasses Demand, interest rates
go down. This would also act as a catalyst for banks to increase loan
availability, big corporations to come out with more lucrative bonds, more
stocks to be released and so forth. We would also have foreign direct
investments increasing as the nation would be deemed able to provide a better
value for the dollar. HOWEVER, this may not come to be in this current economic
state. The financial instruments may be made available but the people may not
find the confidence or ability to partake in such investment spending as
skepticism is at an all time high.
I would like to believe that I am one who loves Malaysia and
would take it unto myself to ensure that I inject as much investments as
possible into the local system to do my part for its financial stability. However,
I have to be practical and understand that loyalty does not put food on the
table. Thus, my advice to people is simple. Utilize local fund houses to divest
your monies overseas. Many fund houses provide off-shore platforms for people
to invest into foreign markets at a very minimal cost. With even regular
investments of RM100.00, many fund houses currently provide amazing
opportunities for the everyday Malaysian to be able to grow their money the
legal way on these off-shore platforms. The best part is that some of these
investments actually allow for the money to be held in US Dollar denominations.
This would then enable investors to protect their investments from devaluation
and make added gains due to the US Dollar hike. Get in touch with your
investment advisor to learn on how you can go about these investments.
Having said that, it would also be beneficial to set aside a
portion of your investment in the local scene as pricing is pretty low. You can
even utilize your EPF contribution to invest into the local scene. That way,
you can have a say on the local portfolio (instead of leaving it completely to
EPF) while having the freedom to utilize your cash investments for the various
other markets out there. That way, we would be able to do our part for the
nation by increasing liquidity in the market while also developing ourselves to
be financially strong for a better future. Remember, as long as you fight for
what is right and take calculated risks, you will end up with a future nothing
less than great!
By,
Ashveen Chakravarthy Sekaran
August 23, 2015
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