If one cares to read articles in Malaysian mainstream media, alternative media and blogs on both sides of the political divide, one will find more or less the same news about speculation and opinion pieces on whether or not Anwar Ibrahim or Azmin Ali will be Malaysia's next prime minister after Mahathir, rampant speculation on who will be Malaysia's next Agong (Supreme Head), on how many UMNO members of parliament will jump ship to the ruling Pakatan Harapan coalition, especially Mahathir's party Pribumi which is one of the four parties within the Pakatan coalition, whether Barisan National coalition members the Malaysian Chinese Association and the Malaysian Indian Congress will collapse, who next will be hauled up for investigation by the Malaysian Anti Corruption Commission, whether someone with deep pockets buys the yacht Equanmity at a good used yacht price or whether it will end up becoming a glorified sampan, the latest whereabouts of Jho Low and so forth.
And whilst all this juvenile politicking is going on amongst politicians at the top who should instead be working to strengthen Malaysia's economy and business prospects, as well as working to reduce prices for consumers, Japanase stockbroking company, Nomura Global Research downgraded Malaysian equities to "underweight", the second downgrade since the Pakatan Harapan coalition won Malaysia's general election on 9 May 2018, and one of the reasons Nomura gave for its second downgrade is the politicking which has been going on, which only serves as free entertainment for coffee shop, tea shop, pub, bar and social media politicians, and which helps sell newspapers, a major one which I hear is offering about 40 experienced staff a Mutual Separation Scheme (MSS) in the wake of a second consecutive quarter of wafer-thin profits.
Below is an article in TheEDGE Financial Daily of 10 January 2019, with key paragraphs highlighted in yellow.
(If you cannot view the embedded image of the article, please enable "view images" in your e-mail client)
On 9 January 2019, Free Malaysia Today reported:-
Growing political tensions are also seen as putting downward pressure on rating.
Below is a key excerpt from the article.
"Downward rating pressures could also arise if growing political tensions and diverging views within the government undermine the effectiveness of policies or impair the government's ability to adhere to its fiscal consolidation objectives, and/or threaten the stability of capital flows to Malaysia."
Malaysia risks downgrade if debt burden increases, says Moody's
FMT Reporters - January 9, 2019 12:48 PM
PETALING JAYA: International rating agency Moody's says Malaysia's current A3 stable rating could be threatened if the government's debt obligation increases.
"We would consider downgrading the rating if Malaysia's fiscal prospects weaken, or its debt burden increases," it said in its annual analysis of the country's credit rating.
It added however that Malaysia's A3 stable credit profile reflected a large and diversified economy with healthy medium-term growth prospects.
"The relatively high government debt is partly offset by a favourable debt structure and large domestic savings," it said.
This follows the transfer of federal power to a new government following the 14th general election in May last year. It marked the country's first transition away from Barisan Nasional, which had ruled Malaysia since independence.
The Pakatan Harapan administration had signalled a significant shift in policy priorities, some of which are expected to affect the country's credit profile.
Moody's said it expects real GDP growth to slow to 4.7% and 4.5% in 2019 and 2020 respectively, after averaging around 5.0% from 2015 to 2018. The rating agency said external headwinds from trade protectionism would weigh on trade activity, while a review of infrastructure projects and slowing public spending would be a further drag on growth.
Moody's also said the new government's fiscal policy choices, particularly the move to abolish the goods and services tax (GST), would narrow its revenue base and reduce fiscal flexibility. Malaysia's debt burden, which is significantly higher than the A-rated median, is also expected to remain a credit constraint.
The rating agency sounded a caution on pervasive corruption which it said was likely to remain a challenge for the government.
Downward rating pressures could also arise if growing political tensions and diverging views within the government undermine the effectiveness of policies or impair the government's ability to adhere to its fiscal consolidation objectives, and/or threaten the stability of capital flows to Malaysia.
The moderation in growth incorporates the cancellation or postponement of several infrastructure projects and slowing domestic public spending, it said. Continued trade tensions between China and the US will also weigh on the growth outlook, given the large share of trade in the overall economy.
Moody's said the Malaysian economy had transformed since the early 1980s, moving away from a reliance on commodities. Diversification has been both horizontal, away from primary sectors to manufacturing and services, and vertical through a move into high value-added activities, which has reduced commodities' share of exports.
Some of the fiscal policies that the new government has implemented are expected to undermine its policy effectiveness. Abolishing the GST will have a long-lasting impact on revenue collection in terms of both magnitude and quality, while also increasing Malaysia's reliance on more volatile oil-related revenue.
Partly because of these policy choices, a steady path of deficit reduction has been disrupted. Future consolidation will be more difficult to implement with an eroding revenue base, particularly in a weaker global environment, it said.
I guess we voted to put children in charge of the kindergarten and now have to live with the consequences of THEIR frivolous actions.
Yours most truly
POLITISCHEISS
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