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New Straits Times
6 hours ago
- Business
- New Straits Times
Blacklisting individuals behind parent developer companies may be strong deterrent against misconduct: Expert
KUALA LUMPUR: The proposed amendment to the Housing Development (Control and Licensing) Act 1966 should enhance Malaysia's reputation as a reliable property market, attracting more sustainable domestic and foreign investment. The move will lead to adoption of better governance and financial practices among developers, said an expert. Universiti Teknologi Malaysia associate professor in property economics and finance Dr Muhammad Najib Razali said by ensuring that both residential and commercial developments are subject to stricter oversight, the reform strengthens overall investor confidence and enhances market stability. "Developers will be compelled to adopt better governance and financial practices, reducing the risks of stalled or abandoned projects. "This, in turn, will improve Malaysia's reputation as a reliable property market, attracting more sustainable domestic and foreign investments," Muhammad Najib told Business Times. He added that the proposed amendment is both timely and necessary, pointing out that although the act has traditionally centred on residential projects, commercial developments are just as vulnerable to delays, financial mismanagement and abandonment. "Small businesses and investors who purchase units in commercial developments face risks similar to homebuyers, yet enforcement mechanisms have been limited. "By expanding the scope of the law, the ministry is closing a significant regulatory gap and ensuring comprehensive protection across the property sector," he said. Muhammad Najib added that the blacklisting of board members of parent developer companies and ultimate beneficiary owners under the proposed amendments could be a strong deterrent against repeated misconduct. "Historically, some Malaysian developers have dissolved companies or rebranded under new names to escape liabilities, leaving buyers stranded with little legal recourse. "This has been a recurring issue in Malaysia's property sector, where abandoned and 'sick' projects continue to undermine market stability. "By targeting the individuals behind these companies, the amendment ensures greater accountability and reduces the chances of repeat offences," he said, adding that the move reflects growing public expectations for accountability in the property sector. However, Muhammad Najib cautioned that while blacklisting is a useful measure, it should be carried out with proper due process and clear guidelines to prevent unintended repercussions. He also noted that experts have long stressed blacklisting on its own is not a comprehensive solution, as deeper issues such as fragile financing structures, weak project governance, and speculative development practices persist. "If executed fairly, however, blacklisting could help break the cycle of abandoned projects that has left more than 42,000 housing units, worth over RM12 billion, abandoned in the private sector alone as reported by the Rehda Institute in 2024." Muhammad Najib said in Malaysia's real estate sector, the persistent issue of abandoned projects impacts not just homebuyers but also undermines confidence in both the commercial and residential property markets. "The scale is significant: as of October 2024, Malaysia recorded 113 abandoned housing projects, 212 delayed, and 382 categorised as 'sick', with a total gross development value exceeding RM113 billion. "High-profile failures such as Plaza Rakyat in Kuala Lumpur, left incomplete since the 1997 Asian financial crisis, or the under-occupied Forest City in Johor, demonstrate that both residential and commercial projects are exposed to financial and governance risks," he said Global approaches Muhammad Najib noted that several countries have adopted similar mechanisms to ensure developer accountability and safeguard buyers. He said in Singapore, developers must channel purchasers' payments into Project Accounts, which are closely regulated to ensure the funds are used strictly for construction purposes. "In China, the government has tightened rules on real estate financing and imposed restrictions on developers' ability to take on excessive debt through the "three red lines" policy, directly targeting corporate governance and financial responsibility," he said. He pointed out that in India, the Real Estate (Regulation and Development) Act 2016 enforces stringent disclosure rules, compels developers to place at least 70 per cent of buyer payments into escrow accounts, and blacklists those who abandon or delay projects without valid reasons. "These international examples show that enhanced accountability, blacklisting of errant developers, and stricter financial oversight are increasingly seen as necessary tools to safeguard property markets and protect purchasers," he added. Preventive checks Muhammad Najib said preventive measures are crucial to reduce the risk of housing or commercial projects being delayed or abandoned. He said that developers should undergo stricter checks before getting a licence, including proving financial strength, clear ownership, and feasible project plans. "The government also needs to play a stronger role by having rigorous knowledge and thorough evaluation before approving any new development. "Too often, approvals are given without deep checks into a developer's track record, financial capacity, or whether the project is truly viable. "With better due diligence, weak or speculative projects can be filtered out early, reducing the chances of them being abandoned later," he said. Muhammad Najib said this ensures that only serious, credible developers can enter the market, which protects both buyers and the overall real estate sector.
New Straits Times
6 hours ago
- Business
- New Straits Times
Robust exports to support trade outlook
KUALA LUMPUR: Malaysia's trade prospects for 2025 remain supported by robust exports, after bouncing back to growth in July with the highest monthly value ever, economists said. But they warn that the outlook for next year will likely be riddled with headwinds as the full impact of the 19 per cent tariff imposed by the US sets in. Malaysia's trade hit a record high of RM265.92 billion in July, up 3.8 per cent from RM234.85 billion a year earlier, supported by stronger exports that reached their highest level in nearly three years. Investment, Trade and Industry Ministry said exports rose 6.8 per cent to RM140.45 billion, the strongest monthly performance since September 2022, reflecting sustained global demand for Malaysian goods. "Imports edged up by 0.6 per cent to RM125.47 billion, while trade surplus continued for the 63rd consecutive month, valued at RM14.98 billion for July 2025," it said in a statement. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said exports to the United States have been "commendable", growing more than 20 per cent in the first seven months of this year. This goes to show that front-loading activities among the US importers have been growing at a healthy clip and such trends are quite similar to the regional economies, he added. "In some sense, this should alleviate concern on the overall growth performance for 2025. Therefore, 2026 would be much more critical as the impact of the full 19 per cent tariff rate will be felt more visibly," he told Business Times. Meanwhile, economist Dr Geoffrey Williams said while the export and total trade figures are part of a continuing improvement in overall trade, the net trade figures are the indicator to watch. He noted that the current account surplus sank to just RM0.3 billion, or 0.1 per cent of gross domestic product (GDP), in the second quarter of 2025. In June 2025, Malaysia had a trade surplus of RM8.6 billion which was an increase from the RM0.8 billion surplus in May. "So the July figure is more positive, which is almost double the month before. Nonetheless the trade surplus is very volatile and has been on a general downwards trend since August 2023," he said. Williams expects continued global headwinds which will affect net trade volatility in the coming months and will reduce the contribution of net trade to GDP growth. "Already (Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said this week that the US tariff issue will cut 0.6-1.2 per cent off GDP, so on average this is a loss of RM20 billion," he said. Elaborating on the trade performance, the ministry said exports of electrical and electronic (E&E) products jumped by nearly RM12 billion to RM63.31 billion, a 22.5 per cent year-on-year increase. For the January-July 2025 period, total trade rose 4.7 per cent year-on-year to RM1.731 trillion, with exports expanding 4.3 per cent to RM900.47 billion and imports increasing 5.1 per cent to RM830.16 billion. This resulted in a trade surplus of RM70.32 billion, the highest cumulative value to date. The ministry said Malaysia's trade performance in the first seven months of 2025 reflected a cautiously improving global trade outlook. The US decision to cut reciprocal tariffs on Malaysian exports to 19 per cent from 25 per cent underscored the country's disciplined trade diplomacy, it added. "This tariff rate, which is roughly in line with the rest of our peers in Asean, will continue to support our competitiveness. "Despite global trade and US tariff headwinds, Malaysia's steady trade performance has contributed to the expansion of the nation's gross domestic product by 4.4 per cent in the second quarter of 2025."
New Straits Times
2 days ago
- Business
- New Straits Times
Gold holds firm as crypto gains ground
KUALA LUMPUR: As inflationary pressures, rising living costs, and a weaker ringgit weigh on households, more Malaysians are diversifying their portfolios with gold and cryptocurrencies, signalling a gradual shift in investor behaviour toward alternative assets Economists say the shift reflects both structural and demographic factors. Gold continues to be the more established and trusted option, especially among retirees and conservative investors. While millennials - armed with digital literacy and a higher risk appetite - are more inclined toward cryptocurrencies, it is the middle- and upper-income groups, with their larger savings pools, that are ultimately driving overall investment flows. They agree that while alternative assets may help diversify portfolios, gold remains a safer haven than volatile cryptocurrencies. For Malaysians balancing inflation worries with wealth preservation, the choice of hedge often depends as much on risk appetite as on market cycles. Gold has long been viewed as a hedge, not only against inflation but also broader uncertainties, including geopolitical tensions, de-dollarisation, climate change and trade wars, said Sunway University economics professor Dr Yeah Kim Leng. "Cryptocurrencies such as Bitcoin and, more recently, stablecoins that are promoted by governments such as the US are fast emerging as alternative assets. Although highly speculative and characterised by volatile prices, these digital financial assets are also seen by savvy investors as a shield against government abuse of fiat money through uncontrolled money and debt creation," he said. However, Dr Yeah cautioned that cryptocurrencies carry significant risks. Unregulated markets are vulnerable to fraud, manipulation and cyberattacks. Even under regulation, crypto assets remain prone to speculative bubbles and crashes, rendering these assets inherently more volatile than traditional assets such as precious metals. If the market size grows large, a collapse could destroy wealth on a scale that threatens financial stability, he told Business Times. Macroeconomic conditions remain a key driver. According to Dr Yeah, factors such as a softening ringgit, rising interest rate volatility, and geopolitical shocks amplify the push toward asset diversification. "The greater the macro risks, the stronger the drive towards diversification into alternative assets, either to enhance capital preservation or achieve the expected returns in line with the risk level while protecting the performance of the investment portfolio in the event that any of the risks materialises," he noted. Beyond financial returns, some investors are weighing environmental and ethical considerations. "Astute and well-informed investors will consider the likelihood the specific ESG, ethical or environmental risks of crypto mining versus gold mining will crystallise and impact their prices and valuation. They will have to draw upon the environmental impact assessment by experts and weigh the likelihood of occurrence and severity of the impact to make an informed decision," he said. Regulatory authorities, meanwhile, have taken a light-touch approach. Apart from promoting financial literacy and ensuring sound markets, Bank Negara Malaysia and other agencies generally refrain from intervening in asset preference shifts. "The shift toward gold and digital assets is driven by investors' preference and the emergence of new asset classes in the rapidly changing economic, financial and investment landscape," Dr Yeah said. Echoing the view, Dr Oh Ei Sun, Senior Fellow at the Singapore Institute of International Affairs, said anecdotal evidence suggests crypto investors often see themselves as trendsetters or more forward-looking, while traditionalists still favour gold. "Conversely, some of the old-fashioned ones would invest in gold. I think more are speculating in the stock markets, with some, as mentioned above, investing in crypto or precious metals. Those investing in crypto are typically more speculative or even gambling-minded. Many knowingly go into crypto-themed money games thinking that they would get lucky while the downlines would suffer," he said. Dr Oh added that interest in both gold savings accounts and crypto trading platforms tends to spike during bull runs. "If they spot one, the uptake for such investments would typically increase," he said. Investors often chase momentum rather than fundamentals, he said, noting that political moves abroad, such as the US administration's tilt toward crypto, can also fuel demand. On whether the government or Bank Negara Malaysia are taking action or issuing guidance on the growing shift toward gold and digital assets, he said the monetary authorities appear to be cautiously encouraging legitimate investments in cryptocurrencies and digital currencies." Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said Malaysian investors are increasingly turning to gold and cryptocurrencies as alternative asset classes, lured by attractive returns and growing accessibility. "From my general observation, the demographics are wide-ranging, as people have become more accustomed to technology, where information such as gold and crypto prices is widely available on various platforms. So investors can actually make an informed decision despite the volatility," he said. With fixed deposit (FD) rates still relatively low, Dr Afzanizam believes digital assets and precious metals are becoming the "go-to" options for those seeking capital preservation. "I think the risk appetite for Malaysian investors has gone up. Traditional investments such as stocks, bonds and real estate will remain but now people will have more options," he said. When asked whether investors view both assets as safe havens, he stressed their differing fundamentals. "Gold and crypto have different characteristics. One is a precious metal that has intrinsic value and at one point it was used as a means to back the value of the US dollar during Bretton Woods in the 1940s until such an arrangement was dismantled in the early 1970s. The other is digital assets, whose sources of return are based on volatility," he explained. Dr Afzanizam also underscored the need for regulation. "Gold investment is being regulated by the authority, such as Bank Negara, as the products are being offered by the financial institutions. I'm not too sure about crypto." He added that demand is visible on the ground, with banks and fintech players reporting rising interest in both gold savings accounts and cryptocurrency trading. "We have been receiving a lot of queries and gold investment is one of the key products that are highly demanded by the customers," he said. Olive Tree Property Consultants executive director Tan Wee Tiam said the rising popularity of gold and cryptocurrencies in recent years is being driven by high inflation, easier access to digital trading platforms, and the growing need for portfolio diversification. He noted that sentiment continues to clearly separate the two asset classes. Gold, with centuries of history as a store of value, is still viewed as the ultimate safe haven – particularly in times of economic or geopolitical turmoil. Cryptocurrencies, while increasingly mainstream, are largely seen as speculative instruments whose returns hinge on volatility," Tan said. This distinction, he added, is reinforced by regulation. Gold investments in Malaysia are well established and tightly regulated, typically offered through banks and financial institutions. Cryptocurrencies, however, remain in a regulatory grey zone – an uncertainty that adds to investor caution. Although hard data is limited, Tan said anecdotal evidence points to rising demand. Local banks and fintech platforms have reported increased interest in gold savings accounts and crypto trading services, with a noticeable surge in investor queries and inflows since early 2025. "Cryptocurrency is typically associated with higher risk and is often appealing to investors or entities looking for greater autonomy or less traceability. Regulatory ambiguity only adds to this risk. In contrast, gold is a time-tested asset with well-established regulations, giving investors greater confidence, especially in times of geopolitical or economic instability." Tan also pointed to macroeconomic headwinds as catalysts for the shift. "While the relationships are complex, elements such as a weakening ringgit, global uncertainties, and shifting interest rates are certainly influencing investors to explore beyond traditional asset classes," he said.
Singapore Law Watch
6 days ago
- Business
- Singapore Law Watch
MAS considers calibrating corporate governance code to meet diverse needs of companies
MAS considers calibrating corporate governance code to meet diverse needs of companies Source: Business Times Article Date: 14 Aug 2025 Author: Janice Lim Firms also tend to limit themselves to the bare minimum disclosure requirements, says a central bank representative. The Monetary Authority of Singapore (MAS) is considering adopting a nuanced approach in its ongoing review of the corporate governance code. This includes calibrating the rules such that they cater to the diverse needs of different types of companies, from large-cap firms to family-controlled enterprises, said Lim Tuang Lee, assistant managing director of the central bank's capital markets division. Speaking on Wednesday (Aug 13) at the release of an annual corporate governance scorecard for Singapore-listed companies, Lim said that this will be among the primary focuses of a group undertaking the review. The sub-committee will fall under a main advisory committee, with a view to facilitate 'more meaningful and practical application of the code'. He added: 'One key objective of this review is that we want to take a long, hard, introspective look at our corporate governance requirements across the corporate governance code and practice guidance, to look at whether they are delivering the outcomes that we want. So a one-size-fits-all approach may not be the way to achieve this.' In May, MAS said that it was reviewing its corporate governance code to complement ongoing efforts in revamping Singapore's equities market. Regulators had previously announced that capital markets would be moving towards a disclosure-based regime. Noting the need to 'look outward and engage widely with different stakeholders', Lim said MAS is taking 'a broader consultative approach beyond the Corporate Governance Advisory Committee... to engage widely across the ecosystem'. 'So this includes both investors and companies of various profiles,' he added. A second sub-committee will examine new code provisions to guide companies' boards on corporate culture, board effectiveness, as well as mismanagement in emerging areas such as artificial intelligence. 'The aim is to strengthen boards' abilities to capture opportunities brought about by the dynamic environment that we are facing, especially with rapid changes in technologies,' Lim said. Stakeholder engagement He also noted that MAS has received feedback, as part of its equities review, that listed companies in Singapore can do more to engage investors and stakeholders. 'Too many companies here limit themselves to the bare minimum disclosure requirements, and in doing so, they've missed the opportunity to articulate strategic visions and plans for companies,' he said. He added that listed companies should hold more active dialogues with investors and the boarder markets, and use these conversations to guide strategic direction. 'The most effective companies do not wait for the annual general meeting to engage their investors and stakeholders. They maintain regular dialogue to seek to better understand their views and concerns,' he said. 'The investor-relations function should not be seen as just a help desk to answer queries. Strong investor-relations teams anticipate queries, provide meaningful context and help shape the narratives around the company.' Such engagements can become a strategic advantage for companies, as they may lead to better valuations, greater trading liquidity and a lower cost of capital. Source: The Business Times © SPH Media Limited. Permission required for reproduction. Print
New Straits Times
13-08-2025
- Business
- New Straits Times
Bursa poised for gains on US tariff cut, 13MP rollout
KUALA LUMPUR: A cut in United States import duties on Malaysian goods and the pragmatic rollout of the 13th Malaysia Plan (13MP) could inject fresh momentum into Bursa Malaysia in the coming months, analysts said. They expect the tariff reduction from 25 per cent to 19 per cent to ease cost pressures on a large share of Malaysian exports, improving margins and lifting sentiment, especially as the rate undercuts China's 25 per cent and Vietnam's 20 per cent. UOB Kay Hian Wealth Advisors Sdn Bhd head of investment research Mohd Sedek Jantan said the tariffs reduction could ease cost pressures on roughly 40 per cent of Malaysia's US$26 billion worth of exports to the US. This is particularly in electrical and electronics, rubber-based goods, furniture and machinery, which together account for more than 55 per cent of shipments. He said these sectors could see margin relief of between 10 per cent and 15 per cent, similar to the equity uplift experienced by the Philippines earlier this year after comparable tariff concessions. "US exemptions for semiconductors and pharmaceuticals safeguard Malaysia's high-value exports, preserving its position in global manufacturing networks and supporting earnings visibility for listed corporates," Sedek told Business Times. While US President Donald Trump recently threatened a 100 per cent tariff on semiconductor imports with exemptions for firms investing in US manufacturing, Sedek said the immediate impact on Malaysia is expected to be minimal. However, he cautioned that the sector may face supply chain recalibration if the tariff is implemented across major manufacturing hubs. Sedek said 13MP — with an RM611 billion expenditure framework for 2026–2030 — prioritises digitalisation, AI adoption, renewable energy and industrial upgrading. Major projects include Nvidia's RM10 billion AI facility and large-scale solar initiatives, which Sedek said could attract private investment and spur productivity gains. "Infrastructure and digitalisation efforts such as the Johor–Singapore Special Economic Zone and the GovTech transformation agenda will also drive structural improvements, echoing efficiency gains seen in Estonia's digitalisation push," he added. Given these tailwinds, Sedek projects the FTSE Bursa Malaysia (FBM KLCI) to trade between 1,570 and 1,585 in the coming months, keeping it on track for a year-end target of 1,650. However, he cautioned that global monetary tightening, geopolitical risks and commodity price volatility may temper gains. "Capital flows and exchange rate stability will remain critical to sustaining momentum. Policy agility and disciplined execution will be essential in translating these short-term catalysts into a durable re-rating of Malaysia's equity market," he added. Looking ahead, Sedek said the FBM KLCI may face several downside risks such as export sensitivity to global uncertainties. This includes the possibility of US tariffs cutting electronics and furniture export revenues by up to US$2 billion annually, even as Malaysia retains competitiveness over China. "Domestically, implementation inefficiencies in 13MP, such as bureaucratic delays, may undermine investor confidence in the RM611 billion investment plan," Sedek said. Apart from the lower tariff and 13MP rollout, Hong Leong Investment Bank (HLIB) Research said sentiment is also supported by rising odds of a US Federal Reserve rate cut as early as September. However, August could see guarded trading amid persistent foreign net outflows totalling RM14.21 billion year-to-date — the largest since the RM24.6 billion recorded during the pandemic-hit year of 2020. HLIB analyst Ng Jun Sheng said other headwinds include possible new US tariffs of up to 250 per cent on pharmaceutical products and up to 100 per cent on chips built outside the US. Sentiment may also be weighed by expectations of a subdued August earnings season and the index's historical seasonal weakness, with average returns over the past 10, 20 and 30 years at 0.7, 1.2 and 2.2 per cent, respectively. "On the domestic front, concerns surrounding subsidy rationalisation and a potential Sales and Service Tax expansion could further dampen consumer sentiment and cloud corporate earnings visibility," he said. The FBM KLCI staged a strong rebound from an eight-week low of 1,488.90 to close at 1,557 last Friday, marking its fourth straight gain and surging 23.6 points from the previous week. The gains were supported by easing US-Malaysia tariff tensions, a pragmatic 13MP rollout and supportive technical signals. Despite this, HLIB Research said underlying sentiment remained cautious, with market breadth still weak at 0.83 compared to 0.82 previously. Turnover stood at 2.43 billion shares worth RM2.72 billion. This came amid persistent foreign outflows for an 11th consecutive session, valued at RM1.13 billion last week, mostly in the financial services, healthcare and utilities sectors. Local institutions remained net buyers at RM1.03 billion, while local retailers bought RM105.5 million in equities. Average daily trading volume fell across the board, with foreign investors and local retailers down 6.6 per cent and 6.1 per cent, respectively, while local institutions recorded a 4.8 per cent increase.
