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| USD-MYR Exchange Rate, 2009-2019 |
The scandal of ex Malaysian PM Najib has brought global embarrassment and massive losses for all Malaysians.
Over half a dozen countries plus the corrupt enabler Goldman Sachs were involved in siphoning off of tens of billions of dollars from the Malaysian Treasury into the pockets of Goldman Sachs and billions into the pockets of many people but most of all the ex Malaysian PM Najib himself.
The currency of Malaysia has been dropping since 2015 and has remained at a stressful level ever since, as you can see in the chart at top left.
The new PM Mahathir of Malaysia since last year is trying to change things but we believe he is on the wrong path.
He is doing what countries like Singapore have done and taken a hard anti China stance.
Well, he can do so, but it will be very very hard for the people, the entire economy and the future of Malaysia.
The entire world is in a slowdown mode as far as trade, real estate and banking goes (which are the major drivers of the world economy) and to reject Chinese money and shutter running projects in Malaysia while embarrassing China on an international stage has it's consequences.
So far, China is tip toeing because China does not want to ruffle any feathers from their end and will be on their best behavior to calm the Malaysians and take control of the situation.
However, it is not the fault of the Chinese companies who were allowed and did contracts and built infrastructure, whether due to corrupt ex PM or not.
Otherwise, Malaysians would not have these new cities or rail projects or as many buyers of their palm oil etc or so many jobs, good money flows and growth of their economy in the years gone by.
So to take a hard stance against one of the most powerful nations has consequences. We are already seeing massive slowdown in jobs, retail, shutdowns of businesses, declining real estate, weak banks , higher taxes for Malaysians etc.
"According to statistics from the Malaysian Employers Federation, the number of foreign workers has reduced to 1.8 million in 2017, from 2.07 million in 2014."
Additional levies are being enforced which will be more detrimental to businesses who employ foreign workers such as retail, hotels and restaurants etc and deter new businesses like call centres or tech to move to Malaysia due to such rigid rules.
"Currently, employers pay RM1,850 of levy for one migrant worker who serves less than 10 years. For foreign workers who serve more than 10 years, employers pay an annual levy of RM10,000."
"According to statistics from the Malaysian Employers Federation, the number of foreign workers has reduced to 1.8 million in 2017, from 2.07 million in 2014."
"Currently, employers pay RM1,850 of levy for one migrant worker who serves less than 10 years. For foreign workers who serve more than 10 years, employers pay an annual levy of RM10,000."
20 Mar 2019: Will Malaysians Continue To Suffer Job Loss in 2019?
Tech companies are paying a heavy price:
10 Dec 2018: Astro looking to shed jobs amid ‘relentless competition and unprecedented disruption’
26 Nov 2018: TV3 to retrench 190 staff, offers MSS to 43 others
This has been going on since at least a few years draining the economy that can be seen all around Malaysia.
Factories closing, retailers closing, empty malls, less jobs, less foreign workers, less real estate sales, weak currency etc.
Factories closing, retailers closing, empty malls, less jobs, less foreign workers, less real estate sales, weak currency etc.
Wendy's has just decided to shut all it's store in Malaysia.
29 Mar 2019: Wendy’s Malaysia to close down
One of the fastest growing companies in the world, Paypal, has decided to close in Malaysia but they opened a new office in Cebu, Philippines. It seems they have quietly shifted to Philippines from Malaysia.
Last month, Parkson department store also announced closure of their 20 year old large store in KLCC. This is their 3rd closure in about a year.
"However, they closed their Maju Junction outlet in Jalan Sultan Ismail-Jalan Tunku Abdul Rahman intersection in 2018 and they also shut down their Sungei Wang Plaza outlet, which had a space of 107,000 sq ft."
"However, they closed their Maju Junction outlet in Jalan Sultan Ismail-Jalan Tunku Abdul Rahman intersection in 2018 and they also shut down their Sungei Wang Plaza outlet, which had a space of 107,000 sq ft."
13 Mar 2019: Penang’s Oldest KFC Outlet Housed in 100yo British Colonial Building is Closing Down on 16 March
13 Apr 2018: Famous Bakery The Loaf Abruptly Shuts Down All Branches in Malaysia on April 12
18 Jul 2018: Western Digital to close its iconic PJ factory
30 Aug 2018: Aeon to shut down Index Living Mall Malaysia stores
Out of 347 1Malaysia medical clinics, 34 have been shut down recently.
15 Dec 2018: Closure of 34 1Malaysia Clinics to have minimal impact, says Health Minister
15 Dec 2018: Closure of 34 1Malaysia Clinics to have minimal impact, says Health Minister
All Crabtree and Evelyn stores were also shut in Australia, Malaysia and Singapore as the Canadian company went bankrupt and the local franchisee did not wish to continue.
29 Dec 2018: Crabtree & Evelyn Closing Its Doors As Company Goes Bankrupt in Canada
There are a few retailers who are opening but many old ones are closing due to very tough economic headwinds.
In less than 5 years, a country (Solomon Islands) is closing it's diplomatic consulate because trade has not picked up.
"The decision, the official explained, was based on the fact that the Kuala Lumpur office has not met government expectations."
29 Mar 2019: Malaysia Mission to Close
The actions of PM Mahathir began as soon as he became the PM. He took a very hard stance against China and started shutting down almost all their projects.
A week later he went after one of the largest real estate developers from China.
The next day he announced a ban on Chinese who invested in the country from visiting their properties. WTH!
Let's hope he did not follow through on this because we are not sure what ultimately happened.
"Mahathir told reporters on Monday that Forest City “cannot be sold to foreigners,” saying that he was against the idea. “We are not going to give visas for people to come and live here,” Mahathir said."
Let's hope he did not follow through on this because we are not sure what ultimately happened.
"Mahathir told reporters on Monday that Forest City “cannot be sold to foreigners,” saying that he was against the idea. “We are not going to give visas for people to come and live here,” Mahathir said."
China is now offering to cut the total cost of the rail project that needs to be finalized within the next few weeks.
"Besides the ECRL, Mahathir's government last year cancelled two China-backed pipelines costing 9.3 billion ringgit after it discovered that, while 90 per cent of the project's costs had been paid, only 13 per cent of it had been completed."
Things have become so bad in the Malaysian Govt that they are running tight on cash and can not afford to even keep an office in London, UK which will barely cost a million dollars a year to run!
"Khazanah will also scale down its operations in Turkey because "we have started to exit the investments we have there" and as such, Khazanah doesn't require such a big presence, Mr Shahril said, without being more specific."
The Malaysian Sovereign Wealth Fund is losing money all over the globe. They had their first loss since 2005.
"The RM6.3 billion loss reversed the RM2.9 billion profit recorded in 2017."
5 Mar 2019: Khazanah posts first loss since 2005, on fewer stake sales and higher impairments
Khazanah had built this fancy Legoland in Malaysia for which there are not many visitors, nor any buyers plus they are drowning in debt.
They could not sell it fast enough with all the losses in Khazanah.
"However, Iskandar Malaysia now has the highest number of unsold residential properties and potentially the largest excess supply of retail space, according to a Bank Negara bulletin last November."
5 Mar 2019: Khazanah: No offers for Legoland yet
In addition, this week, Khazanah has put many assets on fire sale, this is causing grief in Singapore since billions will be pulled out.
This will further weaken ties between Singapore and Malaysia at a time when both neighboring economies are in serious economic decline.
"A year into a new ruling administration, Malaysia continues to grapple with a whopping 1 trillion ringgit debt (US$245 billion) – but as it goes on a selling spree of “non-strategic assets”, questions are being asked over who is benefiting from the exercise and whether the moves could cause ties with neighbouring Singapore to take a further hit."
30 Mar 2019: Sorry, Singapore: Malaysia dumps assets to cope with US$245 billion debt
Some people are calling the entire Forest City project in Johor Bahru a scam.
Even Malaysian Airlines that has been plagued with crashes and had a lot of bad luck with 2 fatal plane crashes and has a flailing Govt treasury. They have incurred hefty losses, sold many planes, retired their entire Boeing 777, yet they cannot make much money.
Last month, the PM himself has said that they could even consider shutting Malaysian Airlines unless they can find a buyer. This is the national shame we are talking about.
"“It is a very serious matter to shut down the national airline,” he told reporters at parliament. “We will nevertheless be studying and investigating as to whether we should shut it down or we should sell it off or whether we should refinance it. All these things are open for the government to decide. We have to decide soon.”"
"“It is a very serious matter to shut down the national airline,” he told reporters at parliament. “We will nevertheless be studying and investigating as to whether we should shut it down or we should sell it off or whether we should refinance it. All these things are open for the government to decide. We have to decide soon.”"
Similar to the massive 1MDB scandal, another scandal of Felda has been hidden under the carpet which is again rearing it's ugly head.
The Malaysian people are going to lose another RMB 3 billion.
"PUTRAJAYA is considering a RM3 billion package to ease the cashflow of scandal-plagued Federal Land Development Authority (Felda) and help the 112,635 Malay families whose livelihoods depend on the land development scheme."
"PUTRAJAYA is considering a RM3 billion package to ease the cashflow of scandal-plagued Federal Land Development Authority (Felda) and help the 112,635 Malay families whose livelihoods depend on the land development scheme."
The grim situation all across Malaysia is very very grim indeed.
Malaysians are saving pennies, having less number of employed, businesses are failing, foreigners are leaving and they have a tiny 32m population which will not be able to navigate this oncoming crisis especially if the Malaysian Govt has taken a stance of being anti China.
Last year, NBAD from Abu Dhabi also shut down in Malaysia in less than 6 years.
7 May 2018: ‘National Bank of Abu Dhabi Malaysia to close this year’
In the capital city of KL, things are so bad that customers won't pay for service charge, they get their food packed and then they eat in the restaurant itself.
Using this trick, they can save a few bucks in this dying economy while the Govt keeps hiking taxes and loses it in Khazanah or the various scandals or halted projects while taking more from the pockets of Malaysians.
"Restaurant goers have been paying a 6 per cent service tax since September, when the Malaysian government reintroduced the sales and services tax to help offset the loss of revenue it suffered after effectively scrapping the unpopular goods and services tax in June."
"Order takeaway food, eat it in the restaurant and save on paying service charges - this is how some Kuala Lumpur residents are coping with the rising costs of living in the Malaysian capital."
23 Dec 2018: KL residents dine in on takeaway to avoid service fees
Last year, NBAD from Abu Dhabi also shut down in Malaysia in less than 6 years.
7 May 2018: ‘National Bank of Abu Dhabi Malaysia to close this year’
Using this trick, they can save a few bucks in this dying economy while the Govt keeps hiking taxes and loses it in Khazanah or the various scandals or halted projects while taking more from the pockets of Malaysians.
"Restaurant goers have been paying a 6 per cent service tax since September, when the Malaysian government reintroduced the sales and services tax to help offset the loss of revenue it suffered after effectively scrapping the unpopular goods and services tax in June."
"Order takeaway food, eat it in the restaurant and save on paying service charges - this is how some Kuala Lumpur residents are coping with the rising costs of living in the Malaysian capital."
23 Dec 2018: KL residents dine in on takeaway to avoid service fees
As a result of a halting economy, the happiness index of Malaysians has plunged in just 1 year!
It is very strange that the PM of Malaysia even gave unsolicited advice to Philippines about staying away from China when Philippines has made itself one of the best friends of China and is gaining benefits, an upsurge in it's economy as well as the employment of Filipinos.
It does not make sense to give advice to another country when your own house is on fire!
Philippines needs to spend billions of dollars on it's signature "Build Build Build" Program of President Duterte.
Who does PM Mahathir think is going to fund it?
Bankrupt Malaysia or bankrupt America or bankrupt Saudi...perhaps Greece or Italy could send a few billion?
Or does PM Mahathir think money grows on trees or maybe we can get it from aliens without any conditions?
Whoever funds it, will obviously have an agenda and will want it back as per the terms and conditions.
There are always pitfalls and one must take reasonable precautions which is why we have Finance Ministers, Parliaments, expert committees and the legal experts who help draft these agreements after months and years of consultations and meetings.
Corruption is also part of it, which is present in every single country.
Every country in the world except perhaps the Top 5 countries at any stage have taken funding from outside. Even America issues bonds in overseas markets and nowadays Saudi does it too as does Philippines but that alone is insufficient because infra building requires long term funding and bridge loans plus contractors and low cost materials etc as well.
How can any developing country not borrow from SOMEONE?
"Philippine President Rodrigo Duterte plans to spend trillions of pesos to bridge the Philippines’ infrastructure gap, and to do so he sought Beijing and other countries' help for funding to reduce strain on his government’s budget."
7 Mar 2019: Malaysia’s Mahathir tells Philippines: ‘Be very careful’ with Chinese loans
It does not make any sense, because when USA and IMF used to give aid, donations, loans and billions of dollars in the decades gone by, where were such leaders like PM Mahathir? Why they never spoke in 1970 or 1980 or 1990 against funding from USA or US owned IMF, World bank etc to the developing nations?
Is it because the PM's of those era were corrupt and personally benefiting and passed laws that were beneficial to America by taxing their citizens and indebted the nations to IMF, while today, China does not have any such restrictions which does not personally benefit the current administration anywhere much?
Any unsolicited advice must be taken as such because there are political agendas on both sides while absolutely nobody cares about the needs and requirements like jobs or infrastructure or curtailing corruption or benefit the the poor citizens of any nation.
In the case of China, not only it creates jobs for it's own citizens and that in the country's where it lends, but this enhances prosperity for all. While China does not also ask for regime change nor bomb any nation or ban or put unilateral sanctions. Hence, we must see the overall picture not just the financial aspect of it.
If a Govt defaults in loan repayment, then the price must be paid, just like it was to America/IMF in the past and shall be to China in the future.
Why is it so difficult for people in different countries to understand that if they don't want money from China, they can go wherever they want?
But accepting money from China, then using it to enrich the country (or themselves) and then talking bad about them, is not fair.
In the previous era, America, Europe and IMF etc used to fund nations and now the only nation who can fund is China, whether anyone likes it or not. People better get used to it.
This is the reality.
Finally, thanks to the tight anti China stance, guess who is not coming to Malaysia in droves? Is it any surprise?
We told you so, there will be consequences on Malaysians for the decision made by their Govt.
9 Oct 2018: China tourist arrivals plunge during peak period
20 Feb 2019: Over 20 KL Hotels Claimed to Be Closing Due to Low Tourists Inbound and Airbnbs
It does not make sense to give advice to another country when your own house is on fire!
Who does PM Mahathir think is going to fund it?
Bankrupt Malaysia or bankrupt America or bankrupt Saudi...perhaps Greece or Italy could send a few billion?
Or does PM Mahathir think money grows on trees or maybe we can get it from aliens without any conditions?
Whoever funds it, will obviously have an agenda and will want it back as per the terms and conditions.
There are always pitfalls and one must take reasonable precautions which is why we have Finance Ministers, Parliaments, expert committees and the legal experts who help draft these agreements after months and years of consultations and meetings.
Corruption is also part of it, which is present in every single country.
Every country in the world except perhaps the Top 5 countries at any stage have taken funding from outside. Even America issues bonds in overseas markets and nowadays Saudi does it too as does Philippines but that alone is insufficient because infra building requires long term funding and bridge loans plus contractors and low cost materials etc as well.
How can any developing country not borrow from SOMEONE?
"Philippine President Rodrigo Duterte plans to spend trillions of pesos to bridge the Philippines’ infrastructure gap, and to do so he sought Beijing and other countries' help for funding to reduce strain on his government’s budget."
7 Mar 2019: Malaysia’s Mahathir tells Philippines: ‘Be very careful’ with Chinese loans
It does not make any sense, because when USA and IMF used to give aid, donations, loans and billions of dollars in the decades gone by, where were such leaders like PM Mahathir? Why they never spoke in 1970 or 1980 or 1990 against funding from USA or US owned IMF, World bank etc to the developing nations?
Is it because the PM's of those era were corrupt and personally benefiting and passed laws that were beneficial to America by taxing their citizens and indebted the nations to IMF, while today, China does not have any such restrictions which does not personally benefit the current administration anywhere much?
Any unsolicited advice must be taken as such because there are political agendas on both sides while absolutely nobody cares about the needs and requirements like jobs or infrastructure or curtailing corruption or benefit the the poor citizens of any nation.
In the case of China, not only it creates jobs for it's own citizens and that in the country's where it lends, but this enhances prosperity for all. While China does not also ask for regime change nor bomb any nation or ban or put unilateral sanctions. Hence, we must see the overall picture not just the financial aspect of it.
If a Govt defaults in loan repayment, then the price must be paid, just like it was to America/IMF in the past and shall be to China in the future.
Why is it so difficult for people in different countries to understand that if they don't want money from China, they can go wherever they want?
But accepting money from China, then using it to enrich the country (or themselves) and then talking bad about them, is not fair.
In the previous era, America, Europe and IMF etc used to fund nations and now the only nation who can fund is China, whether anyone likes it or not. People better get used to it.
This is the reality.
Finally, thanks to the tight anti China stance, guess who is not coming to Malaysia in droves? Is it any surprise?
We told you so, there will be consequences on Malaysians for the decision made by their Govt.
9 Oct 2018: China tourist arrivals plunge during peak period
20 Feb 2019: Over 20 KL Hotels Claimed to Be Closing Due to Low Tourists Inbound and Airbnbs
We strongly urge the Malaysian Govt not to have such a tough stance in all aspects with China else the collapsing Malaysian economy will completely grind to a halt and will go into a reverse gear which it probably already has (unless you believe the fake GDP data coming out of every country in the world, like the Santa Claus who promises gifts for ever and ever). :)
This is an eye opener for me since I've applied for MM2H visa and be going to shift there with family on permanent basis in this summer. Thank you for sharing all the reality with detail which is very much appreciated once again. That's definitely going to help me in future to determine my family future. Although everyone living there gets affected but people earning money outside of Malaysia and that too in strong currencies like USD (comparing to MYR), then it doesn't affect much to them. Also my business is online and my earning will be coming mostly from U.S but still I need to think about all this after settling there...
ReplyDeleteDear AbdulBasit,
DeleteSomehow missed replying to this earlier. Sorry about that.
Glad you found the updates on Malaysia useful.
Although your income may be abroad, but please read up on crimes and Govt taxes as the laws will continue to evolve.
Crimes may be also rising because more people will be unemployed.
Another tip for you that in Malaysia banks may make it compulsory to convert all USD receipts into MYR. We suggest you to enquire with multiple banks to know whether it may apply to you and we suspect it will.
We wish you all the best in your move!
Thank you and best wishes,