Categories
Liberty

[1173] Of court rulling must be popular?

In The Star yesterday, Minister Nazri Abdul Aziz seemed to suggest that popularity has greater importance than individual rights:

Replying to Karpal Singh’s (DAP — Bukit Gelugor) query on why a decision had yet to be reached in the Lina Joy case, Nazri said:

“The decision is difficult to make as it is very sensitive and we have to consider the consequences. Even if it is made in the right decree, the acceptance may be difficult,” he said at the Dewan Rakyat when winding up the debate on the motion of thanks on the royal address. [Commission to study religious-sensitive cases. The Star. April 11 2007]

In Malaysia, your religion is determined by the mob.

Categories
Economics

[1172] Of pressure for liberalization builds up

The International Herald Tribune, one of many, picks up a report by Associated Press:

KUALA LUMPUR, Malaysia: Foreign funds inflows are keeping Malaysia’s markets on a long rally, but the money is staying in the country because of central bank restrictions and is starting to create economic imbalances, analysts say.

The local currency, the ringgit, is not allowed to be traded offshore, which means currency transactions are limited to within Malaysia. That has created a massive pool of money. [Awash in foreign funds, Malaysia faces economic imbalances over central bank restrictions. AP via IHT. April 8 2007]

Too much many chasing too few capital is a classic, or rather, a textbook recipe for inflation, as mentioned in the same report:

The excess cash in the country is leading to inflationary pressures as there is more money than before, chasing the same amount of goods. [Awash in foreign funds, Malaysia faces economic imbalances over central bank restrictions. AP via IHT. April 8 2007]

Further in the article:

Speculation is now mounting that Bank Negara might eventually lift a curb on the offshore trading of the ringgit that was imposed in 1998 during the Asian financial crisis. [Awash in foreign funds, Malaysia faces economic imbalances over central bank restrictions. AP via IHT. April 8 2007]

It is time to dump our neomercantilist policy in favor of liberal ones.

Categories
Economics

[1171] Of remember Suria Capital?

Yesterday, it opened trading at 68 sen. Today, it closed at 92 sen.

Categories
Environment Society

[1170] Of Kota Damansara Community Forest Park is being threatened

At Wong Chun Wai (via the Malaysian Nature Society):

Many city folk who wanted to live near a green lung bought houses and land to build bungalows, believing that the state government would be committed to protecting the 100-year-old forest.

But residents at Section 8, 9 and 10 now feel cheated. They are also appalled at the eagerness of the state government in wanting to bulldoze through its plans in a high-handed manner without any respect for the views of the affected residents.

First, they were told that a cemetery would be created next to their land and now, to their horror, they found that the Petaling Jaya Structural Plan 2020 has bigger plans to develop the reserve.

[…]

It is already bad enough that the cemetery issue has divided the community — one group that wants the cemetery but most of whom do not live in the area while the other group is the one affected and is understandably against it.

[…]

More importantly, there is a huge track of land in Sungai Buloh already reserved as a burial ground. However, according to Mokhtar, it has been found to be unsuitable for burial. It has been said that the burial ground in several areas have been found to be too rocky but surely the authorities may want to consider remedial work. If an open sea can be reclaimed and mountains removed, surely it would not be an engineering feat.

[…]

It is commendable that the protesters, comprising residents of all races, have stood together despite attempts to use race and religion to break their solidarity.

These residents have expressed their disgust at such shameful tactics by certain individuals to intimidate and coax them into silence.

Elected representatives, regardless of their race or religion, should not tolerate any use of gangsterism to scare off those who do not share their views. It is utterly shameful.

[…]

The affected residents have stated that they are NOT against the setting up of a cemetery but are against the de-gazetting of the forest and the manner it had been carried out. Sadly, the cemetery issue has been used to rally support from some misinformed constituents. [A grave matter. Wong Chun Wai. April 8 2007]

It is disgusting to see how some people use race and religion to de-gazette a forest reserve. The next time the MNS conducts a visit to Kota Damansara, I am going to lend a hand.

Categories
Economics

[1169] Of market liberalization or government intervention?

There has been noticeable liberalization in the Malaysian economy. Statement by the Managing Director of Khazanah Nasional Berhad, Azman Mokhtar further affirms the trend of an increasingly liberal economy:

KUALA LUMPUR, March 28 (Bernama) — Khazanah Nasional Bhd is prepared to cut its stakes in government-linked companies (GLCs) in line with the government’s aspiration to reduce its stake in state-controlled companies.

Its managing director, Datuk Azman Mokhtar, said the government investment arm was committed to reducing its GLC stakes in a gradual and orderly manner. [Khazanah Ready To Cut Stakes In GLCs. Bernama. March 28 2007]

This is in line with sentiment expressed by the chairman of Khazanah, the Prime Minister himself:

Prime Minister Datuk Seri Abdullah Ahmad Badawi recently announced that the government would reduce its stakes in GLCs that had high concentration of government linked ownership. [Khazanah Ready To Cut Stakes In GLCs. Bernama. March 28 2007]

However, there might more than market liberalization going on at the moment. I suspect so after reading several sources that seem to suggest that the government might be intervening with the market under the guise of liberalization.

At Bernama today:

KUALA LUMPUR, April 10 (Bernama) — The government will increasingly float the shares of government-linked companies (GLCs) to make the stock market more attractive and competitive, generating interest among foreign equity investors.

“The foreign investors are looking for liquidity and big companies in the market,” Deputy Finance Minister Datuk Dr Awang Adek Hussin said, Tuesday. [Govt To Increasingly Float Shares Of GLCs On Local Bourse. Bernama. April 10 2007]

How could the government intervene in the market through the floating of GLCs’ shares?

A short visit to how a central bank operates might shed some light on the matter.

The central bank to some extent could influence the prevailing interest rate. It does that by buying or selling money. Keep in mind that money comes in many forms and does not necessarily comes in cash.

In order to raise the interest rate, the central bank buys, or perhaps more precisely, hoards money in the market. Once that is done, the quantity of money in the market is reduced and hence, the interest rate goes up. If the central bank would like to decrease rate, it just floods the market with money by selling it. This is a rough explanation but for our discussion, it suffices.

If that is clear, let us consider the equity market. If the government wishes to increase activity, it increases liquidity by releasing its shares to the market. If it would like to curb activity in the market for whatsoever reasons, it buys shares. Instead of a central bank, we have Khanazah, the investment arm of the government.

If that is clear too, it is time to put all that to perspective.

Not too long ago, the Prime Minister said confidently the Kuala Lumpur Composite Index might hit the now famous and magical 1,350 mark. A few days after he shared his opinion, through sheer luck perhaps, the market plunged spectacularly. While the fall was temporary, that was all it took to make the Prime Minister looked bad.

Now, consider the Prime Minister’s expectation and the recent statement on floating GLC’s shares.

If I were the Prime Minister, it would be tempting to act towards the 1,350 goal. One easy way to achieve that goal is by increasing the market liquidity by selling GLC’s shares. Or, more eloquently, in Liar’s Poker:

One trader remembers that “Lewie would say he thought the market was going up, and buy a hundred million [dollar-worth of] bonds. The market would start to go down. So Lewie would buy two billion more bonds, and of course the market would then go up. After he had driven the market up, Lewie would turn to me and say, ‘See I told you it was going up’…” [Liar’s Poker. Michael Lewis]

Hence, the possibility of government interference in the market. Of course, it is not intervention if the reduction of government influence in GLCs is done genuinely for the sake of liberalization.

But the question remains: are we seeing real liberalization or is it just a convenient cover to self-fulfill a Notradamus-style prophecy (oops, I mean expectation…)?