Challenges lay ahead for the Pakatan Harapan govt to manoeuvre the economy — shrouded by local and global turbulences
By RAHIMI YUNUS & SHAZNI ONG / Pic By TMR
It is the New Year and events in 2018 seemed like aeons ago. The historic Pakatan Harapan’s May 9 general election win is already a footnote in the country’s history.
Challenges lay ahead for the government to manoeuvre the economy, shrouded by local and global turbulences. These are some of the key events that will shape the country, the region and the world this year.
1. Economic Fundamentals Remain Resilient
Malaysia’s economic fundamentals are expected to remain resilient against external factors. Domestic consumption and foreign investments will continue to drive growth. Bank Negara Malaysia (BNM) had predicted economic growth of 4.9% this year. Global economy is expected to expand 3.7%, according to the International Monetary Fund’s estimates.
But the challenges will be the country’s exports, commodity prices volatility, balancing the national debt and churning wealth at a faster pace. The government will reinstate the weekly float system for fuel prices beginning this month. A targeted subsidy programme for fuel is expected to come into place by the middle of this year, erasing billions of subsidy from the government’s balance sheet.
2. Smoke-Free Eateries
Smoking ban at eateries including vapes and shisha containing nicotine has started. The ban had drawn mixed responses from smokers and non-smokers. Smokers who are caught smoking at such premises could be fined a maximum RM10,000 or jail up to two years. Eateries that failed to enforce the new rule are liable to a RM2,500 penalty.
Smokers can smoke 10ft or three metres away from such food outlets. Restaurant operators had asked the government to designate smoking areas, similar to such zones in Singapore and South Korea. The government is giving a six-month grace period to educate smokers before fines are slapped on offenders.
3. Socso and EIS for Foreign Workers
Starting this month, employers who hire foreign workers with valid documents and expatriates must register their employees with the Social Security Organisation (Socso) and contribute to the Employment Injury Scheme (EIS) under the Employees’ Social Security Act 1969 (Act 4).
This comes after the Cabinet decided to expand Socso coverage to include foreign workers as Putrajaya plans to repeal the Workmen’s Compensation Act 1952. The move had received positive feedback from employers and employees as local and foreign workers will receive equal protection under the scheme.
Malaysia had been criticised in the past for not extending similar treatment to foreign workers with some reports of foreign workers being mistreated at the workplace. Some 1.8 million foreign workers are expected to benefit from the scheme.
Employers are given a one-year cooling period (from Jan 1, 2019, to Jan 1, 2020) to settle the outstanding compensation of their workers before the employees are registered with Socso.
4. PTPTN Loan Repayment
The National Higher Education Fund Corp (PTPTN) loan repayment scheme has been in the spotlight. With an estimated RM36 billion in unpaid student borrowings, the figure has added a strain to the
PTPTN has struggled to collect the repayments with more than 400,000 borrowers blacklisted and barred from travelling overseas previously.
PTPTN announced on Dec 5 the new scheduled salary deductions that were supposed to take effect starting January 2019. However, the plan had been shelved due to criticisms over the quantum. A review will be conducted before a definite plan is tabled to the Cabinet for approval. PTPTN loan repayment runs as per status quo for now.
5. New Ruling for E-hailing and Taxis Operators
Level playing field for e-hailing operators and taxis. App-based car ride services drivers will need to abide by new rulings including the Public Service Vehicle (PSV) licensing and annual vehicle inspections.
E-hailing drivers must also attend a six-hour course at designated driving institutions to obtain their PSV licence. Drivers have until July 12 this year to obtain the PSV licence. Vehicles used by ride-hailing drivers will be required to achieve a minimum of three-star recognition by the New Car Assessment Programme for Asean Countries, and cars over three years need to be inspected at Puspakom (Computerised Vehicle Inspection Centre) with a RM55 fee. The vehicles are required to be insured for the driver, passengers and third parties.
The government has also limited the commission amount to be paid to companies, ensuring cabbies and ride-hailing drivers are not milked for their hard work.
6. Cryptocurrency Regulations
Bitcoin meteoric rise has produced overnight millionaires across the globe. But the usage of the digital token and the laws that govern its usage have yet to materialise in Malaysia.
Putrajaya is expected to introduce a cryptocurrency-related framework by the first quarter of this year as the country seeks to have footing in the digital assets.
The Securities Commission Malaysia and BNM are expected to spearhead the development of the framework. The move would ensure Malaysia will not be left behind as other countries seek to stamp their mark in the flourishing but volatile digital token world.
The laws, which will govern the digital assets ecosystem, are vital to safeguard investors and support the growth of blockchain technology.
Malaysia is already lagging neighbour Singapore as the latter would witness 10 new initial coin offerings (ICOs) after November 2018, according to the ICO Bench. Malaysia has none for the period under review.
Property developer Country Heights Holdings Bhd has plans to issue an ICO called “Horse Currency”, making the company the first listed company which will take that route to fundraising.
7. Global Uncertainties
Uncertainties around the world will be keenly watched. The US-China trade war continues to dent global growth despite assurances from the leaders of the world’s two biggest economies. Britain is expected to exit the European Union and Prime Minister Theresa May is under enormous pressure to seal a worthwhile divorce settlement with the country’s partners.
It is also an election year for Thailand and Indonesia. The region’s two biggest economies will have their general elections in February and April respectively. Thailand’s election will be keenly watched as it is the first since the military took over the reign of the country
ASEAN currencies, including ringgit, expected to perform well this year - Credit Suisse