10 of the Most Consequential Headlines of 2015
Our strategic peninsula endured a drastic 2015. Indeed many of the catastrophes, natural or otherwise, continue to affect our daily lives with even bigger consequences to be realized in 2016. Even as you read our run-down, dwell on the fact that in every situation, good or bad, holds opportunities for those bright enough to spot them. August Man wishes you a great year!
We were always taught in school that Malaysia lies outside the Pacific Ring of Fire and so volcano eruptions and earthquakes were a pretty low concern when it came to natural disasters. But lo and behold, last year Mount Kinabalu in Sabah was hit with an earthquake registering 5.9 on the Richter scale causing the deaths of 18 people including Singaporean students, teachers and even mountain guides. Following the tragedy some turned their anger towards naked tourists and superstition while others recommended the need for an early warning system. Moving forward however, it would seem that according to Datuk Masidi Manjun, the Tourism, Culture, and Environment Minister of Sabah, the mountain is quickly regaining its status as the top climbing destination in the world with climbing permits fully booked for months in advance.
The Trans Pacific Partnership Agreement (TPPA)
So towards the end of 2015 talks of Malaysia joining the TPPA started surfacing and just recently the Malaysian Senate passed the motion on the signing of this agreement. If you don’t know what it already is, the TPPA is a Free Trade agreement between 12 countries on either side of, well, the Pacific Ocean spearheaded by American President Barack Obama. With the agreement, giant nations like America will be able to penetrate into local industries and with a decrease in import and export tariffs, Malaysia’s GDP is said to increase because of this. However a recent analysis conducted by PricewaterhouseCoopers indicates that GDP and exports would only grow an extra 0.22 percent at most, with TPPA. So what do we stand to lose? Well according to Parti Keadilan Rakyat MP, Wong Chen our sovereignty will be clipped not to mention we will be facing stricter IP laws, a higher cost for medicine and more.
National Security Council
The next big one comes in the form of the National Security Council (NSC); yes, the NSC has been around following the infamous racial riots on 13 May 1969 but late last year the Malaysian Senate passed a national security bill that has sparked serious conversation about what it will do to the country’s democracy and human rights. Our Prime Minister Najib Razak argues that the bill is a necessity given the rise of threats from non-state actors and gives the government the ability to declare so-called “security zones,” within which authorities would have wide powers of arrest, search and seizure without a warrant. Since the passing of the bill, political parties, activists, the Malaysian Bar and human rights groups have all voiced concerns that it violates the Federal Constitution and the sanctity of the rule of law.
The Suspension of The Edge
To say that freedom of speech in Malaysia is somewhat lacking would definitely be a huge understatement but ironically, we’ll have to leave it at that. So you could say that it came as a surprise when The Edge Financial Daily dedicated their entire front page to the 1MDB scandal with the headline that read “How Jho Low & PetroSaudi Cheated Malaysia of US$1.83B in Cash” along with a note from the publisher saying that they have a public duty to find and report the truth. The backlash was expected and the The Edge Weekly and The Edge Financial Daily were slapped with a three month suspension by the Home Ministry. Going by Ops Lalang and the things done under the Internal Security Act, way back when, a suspension seemed pretty mild; but then the High Court revoked the home minister's decision and even ordered a payment of RM15,000 (US$3,483) in costs to the publication company. Of course the fee might seem a tad short considering what The Edge lost during the time it wasn’t in circulation but, the fact that the suspension was lifted even before its three month period is a big step in the right direction and we can only hope that it will continue in 2016.
When our government finally announced that they will be removing the subsidies for petrol, many Malaysians had many things to say, none of which were particularly nice. At that point, yes the price of fuel did go up and over the course of last year, sort of stabilised. Recently however, the price of oil has been falling drastically reporting its lowest price per barrel in 12 years. So thanks to the managed float system, when the price of global crude drops so does the price of our petrol. The best part about this is, the price of a barrel of oil is set to dip a little more before it eventually rises again so maybe this will be the best time to start planning that road trip across Malaysia.
The Peninsula experienced some of the worst flooding in recent memory last year, with over 200,000 people affected and 21 unfortunate deaths. With the North-Eastern Monsoons starting to shower in mid-December, the situation hit critical point within a week, with thousands forced to flee rising waters first in Kelantan and Terengganu, before areas closer to home like Kajang began to experience road and railway closures. Storms moved steadily into Pahang, Perak, Perlis and Sabah too. Even Prime Minister Datuk Seri Najib Razak himself was chided by unsatisfied quarters for not returning soon enough from a diplomatic visit to the States. However, overall reports suggest the crisis indeed brought Malaysians closer together as we acted to save those in the most dire of states.
Implementation of the GST
Malaysia’s Budget 2014 announcements were perhaps the most important in recent decades, with the implementation of the Goods and Service Tax (GST) rating as the number one topic of debate. Designed to allow the Government to diversify tax revenue sources, it was also devised to be revenue-neutral, meaning consumers were not expected to pay more or less than current rates before implementation. However, independent think-tanks have noted the overall prices of all categories have in fact increased, but were offset by the drop in oil prices late last year. Still, with one single tax system like the GST, the Government can more easily lower or raise rates to manage our economy better. In the event of economic downturns for instance, the GST can be reduced to balance societal output and offer more employment opportunities. Whereas it can be increased during booming periods to allow the Government to construct stronger social welfare systems. We continue to wait with bated breath as for its effects on Malaysia.
The Falling Ringgit
When the Ringgit fell beyond the crucial 4.0000 level at 11:03am, August 12, 2015, it was at its weakest since the 98’ Asian Financial crisis. Alarm bells were went off but the ringgit was already the worst performing Asian currency, followed by Indonesia’s Rupiah, South Korea’s Won and the Thai Baht. Still, there are positives and negatives for all parties in all situations. Domestic businesses who create and sell goods locally should not feel any impact on their bottom line; which explains a call for businesses to source their materials locally. On that note, those who export to foreign countries (Malaysia was ranked 23rd world’s largest exporting country in 2014) will probably benefit from the weaker currency. Effectively, local producers will pay for production in the cheaper Ringgit, while selling them in a higher valued currency, like the US Dollar. In addition, some investors may see value in doing business in a country where setting-up shop is a cheaper option. For regular folks however, the sagging Ringgit is eroding purchasing power, and with it our confidence about spending at a time when the economy needs it most. And inflation can easily go up as we import goods from countries with stronger currencies. So while Tan Sri Zeti Akhtar has sought to allay fears with reports that our foreign-exchange reserves remain significant, we’re still tumbling down the proverbial rabbit hole and prudent Malaysians would do well with tightening their belts.
The 1MDB Debacle
Malaysians in the know, understand the influence of money politics, even accepting that the game will always be controlled by the biggest of fish. But when the bombshell that was 1MDB exploded, it cracked the very foundation of Prime Minister Datuk Seri Najib’s party, causing predecessor Tun Dato’ Seri Mahathir to openly criticise his one-time protégé. The PM’s defence seemed sensible enough – how could he willingly accept illegal monies of such magnitude, only to hide it in plain sight in his personal accounts? But then a series of dubious moves to remove the former attorney general and several members of the inquiry committee mid-investigation, stoked public outrage and before you could say “donation”, America’s Wall Street Journal had published its personal findings, claiming wrongdoing and misappropriation. The world and Malaysians all over the globe, continue to follow this unfolding saga with great intent.
The Cabinet Reshuffle
Last July, a hasty top-level cabinet shuffle did little to encourage foreign investment, suppress the intense heat of 1MDB or sustain an eroding currency. The biggest head to roll was Deputy Prime Minister Tan Sri Muhyiddin Yassin, amid much gnashing of teeth. Cabinet posts were also given to four senior members of the Public Accounts Committee – the group overseeing the 1MDB parliamentary investigation, effectively halting inquiries. International watchers claimed these moves were creating more problems than they were solving. Winners at the end of Round One include Datuk Seri Najib Razak for eliminating dissenters in his ranks, Datuk Seri Ahmad Zahid Hamidi for his promotion to Deputy PM, and interestingly, Tan Sri Muhyiddin Yassin who has grown in stature as an upright and uncompromising UMNO man. Those left to lick their wounds include Tun Dr Mahathir Mohamed, who did his utmost to stoke a rebellion that almost was, Datuk Seri Shafie Apdal after losing a minister’s post for his vocal though vague criticisms of 1MDB, and of course the MACC (Malaysian Anti-Corruption Commission), who had several officers questioned by police over leaked 1MDB documents and two senior investigators swiftly transferred out to the PM’s department following their work on the case.