Malaysia's brain drain holding back economy...

April 28, 2011KUALA LUMPUR, April 28 — More than one million Malaysians live abroad, the World Bank said today, adding that policies favouring Malays are holding back the economy, causing a brain drain and limiting foreign investment.

In a Bloomberg news service report today, World Bank senior economist Philip Schellekens was also quoted as saying that foreign investment could be five times the current levels if the country had Singapore’s talent base.

“Migration is very much an ethnic phenomenon in Malaysia, mostly Chinese but also Indian,” Schellekens (picture) told Bloomberg in Kuala Lumpur on Tuesday ahead of the report’s release today.

Governance issues and lack of meritocracy are “fundamental constraints” to Malaysia’s expansion because “competition is what drives innovation,” he said.

Malaysia’s growth fell to an average 4.6 per cent a year in the past decade, from 7.2 per cent the previous period.

Singapore, which quit Malaysia in 1965, expanded 5.7 per cent in the past decade and has attracted more than half of its neighbour’s overseas citizens, according to the World Bank.

Malaysia has in recent years unveiled plans to improve skills and attract higher value-added industries.

The World Bank conducted an online survey in February of 200 Malaysians living abroad in conjunction with the Kennedy School of Government at Harvard University.

They cited better career prospects, social injustice and higher wages as their main reasons for leaving, the Washington-based lender said in the Bloomberg report.

Singapore has absorbed 57 per cent of Malaysia’s overseas citizens, with almost 90 per cent of those crossing the border ethnic Chinese, the World Bank said.

“If Malaysia has the investment environment of Singapore and also had the innovation and skills environment of Singapore, then foreign direct investment inflows into Malaysia could be about five times larger,” Schellekens said in the Bloomberg report.

“They need to boost productivity and strengthen inclusiveness.”

Prime Minister Datuk Seri Najib Razak has pledged to roll back the country’s NEP-style policies but he also told the Umno assembly last year that the government’s social contract of providing benefits to Bumiputeras cannot be repealed.

According to the Bloomberg report, Najib has eased some rules to woo funds, including scrapping a requirement that foreign companies investing in Malaysia and locally listed businesses set aside 30 per cent of their Malaysian equity for indigenous investors. Last year, he unveiled an economic transformation programme under which the government identified US$444 billion (RM1.3 trillion) of projects from mass rail transit to nuclear power that it would promote in the current decade.

“If everything is implemented as they say, Malaysia is going to be a star economy,” Schellekens told Bloomberg. “The problem is implementation.”

One word, BN has to go.

Courtesy of The Malaysian Insider news portal.

How government screw POS Malaysia and ...

One example of why foreign funds will never be interested with KLCI is the latest 1 malaysia email project.
This is a classic example of how pos malaysia is screwed after khazanah have decided to disposed of its stake. Now DRBHCOM, if they get POS and this 1 malaysia email thingy is imposed on all GLCs to use the service to notify its customers instead of snail mail, then DRBHCOM is screwed too.

Why KLCI is not moving in tandem with regional and world stock markets?...

Well, many people that I came across did ask me, hey why the KLCI is behaving in the opoposite manner particularly when the world markets rally? What the fuck is wrong with the market or am I missing something?!?
Ok, this is my answer.

KLCI is largely a local stock market with less than 10% in foreign fund manager participating on the average of 3 years. Most of the stocks in the bourse are inter-related and has many political influency due to the head of the companies particularly glaring are those GLCs.

More than 65% of the trading volume are coming from either EPF or other government institutions. The ultimate reason why we cannot move in similar trend when the world market rally is because mainly these foreign funds are not buying into the local market because of the unpredictability of the companies in terms of prospect. Why?, because the companies get contracts through networks and contacts rather than capability.

I'm not saying all who get have no capability to execute the project but rather most of these companies are stronger in their network than their ability. Unless you have very reliable contact to provide constant environment updates to you, you're expose to high risk of being caught in surprise by some decision that does not make sense in corporate world or rather the best interest of the companies affected.

Also the liquidity of stocks floating in the market is so low that many foreigh fund cannot participate and with the rule of 30% foreign ownership in local companies intact, it further adds salt to the already untasty meal.

Despite the above, I'm not saying KLCI is not a place for retailers to invest but if you compare to other stock markets like Hang Seng, NTSE, Nasdaq, Nikkei... KLCI really sucks big time hence why would big foreign fund managers even bordered with KLCI? Having said that, small investors should be even more careful especially those uncles and aunties who are buying with life savings... :)

To be successful traders in KLCI, one has to be aware of the political situation and also the relationship of the companies involved to lower the risk. You don't want to be hit later and worst not knowing what hit you.

KLCI stock market progress....

Sarawak election results are predictable and have played out as expected...
So is the KLCI.... :)
Stock market is expected to outperform regional markets and rise above 1585 soon...
Those who bought as adviced during the sell off last week, congrats... those who don't you can always buy in now....

POS Malaysia stake... sold to....?

Well, Khazanah will have its board meeting today to decide on the successful bidder for its major stake in Pos Malaysia....
Sources mentioned that only DRBHCOM and Scomi were the finalists that will be considered by the board. For those who have been in the market long enough and have done their homework will know that between the 2 companies, DRBHCOM will emerge the winner.... 90%... Why I said so?

All these are relative comparison which favours DRBHCOM:
1) Good corporate governance
2) Strong balance sheet and financial capability
3) High ability to unlock Pos's value - value and profit maximization

I would be very dissapointed if Scomi emerge as the winner.

Regardless, whether DRBHCOM gets the stake or not, it's stock price is still valued at above RM3 no matter which method you use to assess and evaluate the company.

Recent selloff in KLCI...

Hey, many are caught in surprise by the recent selloff and were scrambling to cover the loss for those with margin... sigh what an ironic situation for the government?
Huge selloff on the week the government are promoting itself to investors worldwide? come on, its a total disgrace and outright lack of trust in the government's GTP, ETP that triggers the selloff, whatever plans it has, the investors just don't give a shit.

Well there is also that the fear of uncertainty due to the impending Sarawak election this coming Sat and many are saying due to the huge crowd turn out for PR compared to BN, it signals the folks in the state is ready to move on after decades of poverty and mediocre improvement in lifestyle and basic infrastructure of the largest state in the country.

So every election the stocks go down, and there is no surprise for this round either. Question is what difference does it make? We survived the Japan earthquakes and mid east unrest pretty well and do you expect me to believe that only lately the external effect becomes more prominent?! Fuck la, its the increase in risk aversion due to local election...

My advice, BN is not likely to lose the state by having majority but its not going to be the same... What does that got to do with the stocks in KLCI?? Well, some stocks might be affected, CMSB and some others ;) ... other than that, life goes on...

So should we sell, hold or buy? My take is we buy during these silly selloff. Bear in mind only about 25% of the stocks in KLCI is worth the effort buying. The rest are just craps.

Seal bullish run to remain?

With the many wood related counters, Seal is definitely one of the cheap and highly recommended for trading buy... while fundamentally the Japan reconstruction will benefit this company its the cheapest of the many in this theme....demand will rise significantly soon....chart wise, its still bullish regardless of the situation in Japan in dealing with the many aftershocks...

Watch out... if it breaks 64 sen, it will likely fly...