FELDA White Paper, Tabung Haji, Brexit and geopolitics in focus

This article first appeared in The Edge Malaysia Weekly, on December 10, 2018 - December 16, 2018.
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This week marks the end of the current sitting of parliament and it promises to be an eventful one. Two papers on the fraud and mismanagement at two of the country’s major institutions are expected to be tabled.

While the White Paper on the financials and management of the Federal Land Development Authority (FELDA) has been scheduled since August, the revelations on the alleged shenanigans at Lembaga Tabung Haji (TH) only emerged in the last two weeks.

On Nov 30, TH made police reports against its former chairman Datuk Seri Abdul Azeez Abdul Rahim, former CEOs Tan Sri Ismee Ismail and Datuk Seri Johan Abdullah as well as four senior management officers over misuse of funds and wrongful conduct in a corporate deal. (Read more on TH in this week’s cover story.)

Minister in the Prime Minister’s Department Datuk Dr Mujahid Yusof Rawa could be the one presenting the problems at TH, while it has been reported that Economic Affairs Minister Datuk Seri Mohamed Azmin Ali will table the White Paper on FELDA on Monday.

Earlier, The Edge had reported that the White Paper on FELDA would include three proposals for the beleaguered government agency, which is now saddled with RM8 billion in debt. These are: (i) to improve the management of FELDA; (ii) the privatisation of subsidiary FGV Holdings Bhd; and (iii) merging FELDA with the Federal Land Consolidation and Rehabilitation Authority Bhd (Felcra).

The tiff between Malaysia and Singapore over air and sea territorial rights may continue to make headlines this week. Last Friday, Minister of Foreign Affairs Datuk Saifuddin Abdullah issued a statement proposing that both countries cease and desist from sending assets into the disputed area effective Dec 8, pending discussions on outstanding maritime boundary issues. This follows a protest last week by Singapore over Malaysia’s plan to extend port limits in Johor. Transport Minister Anthony Loke also said in parliament last week that Malaysia intends to reclaim airspace in southern Johor.

On the data front, the Industrial Production Index for October will be released by the Department of Statistics Malaysia on Wednesday. According to Bloomberg data, economists are expecting the IPI to chart a 3.3% increase year on year, continuing the upward trend from the 2.3% rebound in September following a slowdown the month before.

Manufacturing sales numbers for October will be released together with the IPI data.

A significant event that will be followed closely globally is the Brexit vote in the UK parliament on Tuesday, where Prime Minister Theresa May’s plan for her country’s withdrawal from the European Union is widely expected to be rejected. In fact, the BBC reported last Friday that the vote could even be postponed, although this was dismissed by May’s office.

May has spent 1½ years negotiating the UK’s exit from the EU. With the deal endorsed by EU leaders, May must now get the UK parliament’s stamp of approval for it to be enforced. However, the plan is likely to be rejected by most UK members of parliament as it is seen to put Britain in a worse off position than the status quo. Hence, it is the degree of loss that will determine the next course of action by May’s government.

According to The Economist, a 50-vote loss or less may see May heading back to Brussels to renegotiate for a slightly better deal, although this may be moot as the withdrawal agreement is legally binding. A defeat by close to 100 votes could lead to May’s ouster, a snap election or a new referendum. The UK is slated to leave the EU on March 29 next year.

At the time of writing, the pound sterling had strengthened against the US dollar on the back of weakness in the greenback, but the upside is expected to be limited, says FXTM.

“With Brexit-related uncertainty and political risk in the United Kingdom weighing heavily on sentiment, the sterling’s upside will be limited. The currency pair is expected to remain volatile, erratic and highly sensitive to Brexit headlines ahead of the parliamentary vote next week,” says Lukman Otunuga, research analyst at FXTM.

The fragile truce in the US-China trade war will continue to be monitored, more so with news that Huawei’s chief financial officer, Meng Wanzhou, who is also the daughter of the group’s founder, had been arrested in Canada at the request of US authorities, reportedly for alleged violations of Iran sanctions.

Important economic data due from the US this week include consumer and producer price indices and the labour market report for November. On the labour market report, UOB Global Economics & Market Research says the data has taken on added importance following US Federal Reserve chairman Jerome Powell’s comments that the US labour market is “very strong”.

While the US Federal Open Market Committee will have its last meeting of the year on Dec 18 and 19, the European Central Bank’s will be on Thursday.  

Among companies listed on Bursa Malaysia, Uzma Bhd and Malayan United Industries Bhd are holding their annual general meetings this week while those that could be releasing their financials include Scientex Bhd, Yinson Holdings Bhd, Gamuda Bhd and Eco­World Development Group Bhd.

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