This article first appeared in The Edge Financial Daily on May 14, 2018
KUALA LUMPUR: The business community wants more engagement with the new government led by Pakatan Harapan (PH) chairman Tun Dr Mahathir Mohamad.
Small and Medium Enterprises Association of Malaysia president Datuk Michael Kang hopes that the new government will sit down with industry players to talk about ways to reduce the cost of doing business.
Kang cited the policy to abolish the goods and services tax and bring back the sales and services tax under PH’s proposals in its election manifesto as an example.
"When there are any changes, we hope the new government will sit down with the industry to discuss how to reduce the costs of doing business so that there are no additional costs involved when there is change in policy," he told The Edge Financial Daily.
“In the past, policies were just implemented despite us voicing out and this makes the costs of doing business unpredictable," he said.
Kang also hopes the new government will look into ways to help industry players improve productivity of the labour workforce.
“When the increase in minimum wage does not jive with the increase in productivity, this leads to an increase in the costs of doing business,” he said.
More engagement with the government is also on the wish list of local manufacturers.
“Over the past few years, the manufacturing sector has been facing continual rising costs of doing business. One of the biggest challenges faced is the implementation of government policies without proper engagement with relevant stakeholders," said the Federation of Malaysian Manufacturers (FMM) in a statement last Friday.
“FMM has been actively voicing these concerns in various engagements with the government and through the media.
“We hope that there will be a closer relationship between the public and private sectors to reduce regulatory burdens so that Malaysian industries can be more competitive in the global market,” it added.
United Malacca Bhd chairperson Datin Paduka Tan Siok Choo concurred, saying whatever proposals that are being considered by the government should be done in consultation with the private sector.
“These proposals should be phased in rather than implemented overnight and without any warning to businesses.
“For example, if salaries are to be raised, this should be discussed with employers and ideally it should be effected over a three-to-five-year period to give businesses time to adjust," she said in an emailed response to The Edge Financial Daily.
“Similarly, if the number of unskilled foreigners is to be reduced, again this should be effected through consultation with the sectors likely to be adversely affected such as the construction and plantation sectors.
“Levies on hiring foreign workers should be gradually raised to encourage the hiring of more locals and to motivate businesses to mechanise their operations,” she added.
A clear and comprehensive economic plan
Founder of governance and strategic advisory firm Inovastra Capital Sdn Bhd Nik Mohd Hasyudeen Yusoff said it is essential for the new administration to come up with a clear and comprehensive economic plan which incorporates steps in delivering all its election promises and how the government’s financial position will be enhanced.
“This would enable businesses and investors to assess their positions and to strategise how they could benefit from all the new initiatives,” he said.
Nik Hasyudeen, who is also the former executive chairman of the Securities Commission Malaysia’s Audit Oversight Board, believes that the tone set by the new administration in the early stages of its term will shape public perception on whether there will be significant reform in the ways the country will be governed.
“The rule of law and the spirit of the constitution must be upheld through the policies and conducts of the new administration.
“Among the steps which could be considered include appointing individuals who are capable and having high integrity to lead and govern public institutions and making transparency as the foundation of governance," Nik Hasyudeen said.
“This includes public consultation on policy matters, facilitate freedom of information such as providing information regarding key decisions made by these institutions to the public. Also the media should be encouraged and allowed to provide constructive criticism on the conducts and performance of public institutions,” he added.
RHB Research Institute Sdn Bhd chief Asean economist Peck Boon Soon opined that the new government should be able to further strengthen the country’s fundamentals.
“Dr Mahathir is an experienced statesman and has led the nation through previous ups and downs. With a capable team, we believe the new government will be able to further strengthen the country’s fundamentals and put in place strategic plans and initiatives in the administration in order to boost foreign investors’ confidence,” he told The Edge Financial Daily via email.
Areca Capital Sdn Bhd chief executive officer Danny Wong said the investing community will need time to digest the government change in the country.
“So far, the change in power has been carried out smoothly and safely. Therefore, I believe it is more positive moving forward as the incoming new government comprises an experienced prime minister and cabinet members.
“With four major party components, this provides sufficient check and balance, in addition to a strong and experienced newly turned opposition. A more clean and efficient government will attract foreign investment,” said Wong.
Industry player’s wish list
Serba Dinamik Holdings Bhd
Group managing director and chief executive officer Datuk Dr Mohd Abdul Karim Abdullah
Frankly speaking, we are lucky that the local oil and gas sector, led by Petroliam Nasional Bhd (Petronas), all this while is being managed professionally with the proper code of ethics being put in place. The new premier Tun Dr Mahathir Mohamad had been the brain behind such an approach during his previous tenure and I strongly believe such an approach will continue. There are weaknesses, but there’re manageable.
Petronas should start awarding as many contracts as soon as possible to qualified bidders so that the players will be able to have continuous cash flow to serve their respective borrowings.
Successful bidders should subcontract these projects to Malaysian peers to help [revitalise] the industry.
United Malacca Bhd
Chairperson Datin Paduka Tan Siok Choo
I note there is no specific ministry for the plantation sector. While I applaud Tun Dr Mahathir’s wish to limit the number of cabinet ministers, I hope greater and more urgent attention will be paid to the serious challenges facing the plantation sector.
Some critical issues that threaten the plantation sector are also faced by the Federal Land Development Authority (Felda) and smallholders — in particular, the labour-intensive nature of planting oil palms, the shortage of agricultural land for expansion and most of all, the multi-skills needed to manage an estate in the 21st century.
Are Malaysian universities providing the appropriate courses to equip Malaysian plantation managers and those charged with managing Felda schemes? Today, managers need to know how to use information technology to manage their estates better, how to manage their staff (whether Malaysian or foreign), how to utilise scientific developments to increase oil palm yields and accounting skills to optimise financial management of their hectarages.
Eversendai Corp Bhd
Executive chairman and group managing director Tan Sri A K Nathan Elumalay
The construction industry, for example, has seen certain ongoing projects which have been given to contractors from China due to some investments, but these contractors are almost sourcing everything from China and depriving the businesses of Malaysian contractors, especially specialist and subcontractors, equipment and material suppliers.
If this is not rectified, in the time to come many Malaysian subcontractors might go out of business and eventually this will leave a huge gap in the availability of capable subcontractors as we move forward towards the future. Our government must renegotiate existing contracts to stipulate that all subcontracts must be awarded to legitimate Malaysian companies and not to companies with a local façade, but which are actually foreign-owned. Priority must also be given to Malaysian manufactured products. It is impossible for Malaysian companies to fairly compete with companies from China as the latter are supported by their government with incentives.
If you look at the Tun Dr Mahathir-era [back then], international contractors were brought in from Japan and South Korea, but they only brought top project management staff with expertise and construction innovation. With that, they were able to provide employment to Malaysians and engage local subcontractors, as well source for services, materials and equipment, most of which were supplied by Malaysian companies.
In that process, many Malaysian companies that were subcontractors then have become quite sizeable entities and some of them have elevated to become leading turnkey contractors in Malaysia today.
It is a blessing that Tun Dr Mahathir has made a comeback to save Malaysia, as he is a very experienced, dynamic and a very strong leader, and Malaysia needs such a distinguished leader to turn the country around. With him and the new government coming onboard, there is hope for many Malaysians to look forward to a better future putting Malaysia back on the world map again. I am proud to say that I am one of the by-products of Dr Mahathir ‘s Look East policy.
Managing director Datuk Chew Lak Seong
For businesses, we expect the new government to be more business-friendly with fewer redundant governance requirements and red tapes.
Nevertheless, for the government’s judiciary, legislature and executive bodies, we expect the new administration to put in more stringent checks and balances to ensure that the ruling authority is less able to abuse their power for corruption and personal gain.
We hope to see an improvement in the regulations for listing requirements for initial public offering and for listed entities towards a more market-friendly environment. For example, relaxation in listed entity requirements and more efficient processing of applications and submissions.
Naturally as REITS are typically geared, we also hope that the new government will properly evaluate the need for interest rate hikes before implementing them.
Also, we expect the government will focus on the economy at large for the rakyat because if the rakyat prosper, so too will businesses, including REITS.