9 Gig economy continues to grow

Having manifested in various forms over the last decade, the gig economy is here to stay and is sure to morph in the decade to come.

Data connectivity and social media have been two of the largest enablers of the gig economy.

Randstad Malaysia explains the gig economy as consisting of companies that engage contract workers for a temporary period or project-based jobs, instead of hiring them for permanent positions.

World Bank data shows that about 25.3% of the Malaysian workforce are freelancers — participants of the gig economy — and expects this number to grow further.

OCBC economist Lee says the gig economy has enabled less-skilled workers to earn a meaningful income by completing a “plethora of jobs” instead of relying on a single employer.

“This decade might be too soon to call for an end to 9-to-5 jobs, but the trend looks to be leaning in that direction as institutions offload the risk of employment from the organisations to the individuals,” notes Lee.

It has been recognised as a new source of economic growth by the government, with Mahathir reportedly saying that it will be made part of the 12th Malaysia Plan.

Regulation of the gig economy could benefit both participants and the nation as the rights of participants will be protected while there would be a new source of revenue for the nation.

8 Cost-of-living woes and shared prosperity vision

The high cost of living is still affecting almost all segments of society despite Pakatan Harapan’s (PH) attempts to bring down prices.

Among its initiatives were the abolishment of the goods and services tax (GST), which was replaced with the sales and services tax (SST), continuing the Bantuan Sara Hidup for the B40 group and ongoing plans to implement targeted fuel subsidies.

Over the current decade, PH’s Shared Prosperity Vision 2030 will be of interest to many as its goal is for Malaysia to achieve sustainable, equitable, inclusive and balanced economic growth.

Targets include raising the B40 monthly household income to RM5,800 by 2030 from RM3,000 presently, increasing the employee compensation to nominal GDP ratio to 48% from 35.7%, and raising the small and medium enterprise and micro businesses’ share of GDP to 50%.

This year, the 12th Malaysia Plan will also be unveiled. The development blueprint, which will set the tone for the nation’s economic direction and policies moving forward, has the potential to contribute to the nation’s prosperity.

How these targets will be achieved will depend largely on the way the 12th Malaysia Plan is executed and implemented.

7 Uplift for commodity prices

Brent crude oil prices have been pretty stable, hovering around US$60 per barrel in 2019.

In 2020, the US Energy Information Administration (EIA) expects Brent crude price to average US$61 per barrel, while national petroleum company Petroliam Nasional Bhd puts it in the high US$50s.

According to Maybank Investment Bank Research, crude oil is expected to continue to remain stable at US$60 to US$65 per barrel this year — a level seen palatable to everyone and sufficient to keep capital expenditure going.

Maybank has forecast US$369 billion in offshore exploration and production (E&P) investments globally over a three-year period from 2019 to 2021 — slightly more than double the US$155 billion in the previous three years (2016 to 2018).

In a recent December meeting, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to cut oil production by another 500,000 barrels per day for the first quarter of 2020, bringing total production to 1.7 million barrels per day.

The move to cut oil production globally should help to further support oil prices, but the persistent worry is that the supply of crude oil will outstrip demand as growth wavers.

A bright spot is the price recovery of crude palm oil (CPO) — another important local commodity.



As at Jan 2, CPO prices settled at RM3,049.50 per tonne — the highest since February 2017 — thanks to India’s recent move to cut import tax on Southeast Asian palm oil.

Kenanga Research outlines three factors that are expected to drive the recovery of CPO — the laggard impact of the dry weather thus reducing output in 2020, China’s increase in palm oil consumption on the back of the swine flu outbreak, and higher consumption in Indonesia and Malaysia owing to the increase in percentage of CPO in biofuel policies.

6 Lower interest rates

An escalation in trade tensions last year and slower growth momentum prompted the US Federal Reserve to pause its rate hikes. Instead, it chose to cut rates and extend its purchase of short-term Treasury bills.

The rate cut by the Fed sparked a series of cuts globally. Malaysia reduced interest rates by 25 basis points (bps) in May 2019 to 3%, ahead of the US rate cut, in a bid to stimulate the economy.

Will there be more rate reductions in the coming months since many believe 2020 will be even more challenging notwithstanding MOF’s forecast of a slight improvement in GDP growth?

Whether or not Bank Negara Malaysia (BNM) moves to trim interest rates will depend on the economic data to come. It is worth noting that the central bank had already reduced the statutory reserve requirement to 3% from 3.5% in November, a move that is expected to boost liquidity in the system.

Nevertheless, many see room for further interest rate cuts this year. CGS-CIMB Research notes in a report that the cautious global outlook and the “hairline cracks” in domestic resilience call for further monetary loosening. It expects two 25bps cuts in the next 12 months.

While monetary policy is not the only measure to stimulate economic growth, is there wiggle room in Malaysia’s coffers to unleash other forms of stimulus?

5 Pace of economic growth

The trade war was one of the biggest wild cards in 2019. It is expected to continue to be one factor that could either ease or aggravate uncertainties and the economic growth of nations in 2020 and beyond.

Currently, the jury is out on whether global growth in 2020 will be better or worse than in 2019. The International Monetary Fund projects a mild recovery from 2019, and for global growth to touch 3.4% — a downward adjustment of 0.1% to the IMF’s initial October forecast.

The Organisation for Economic Co-operation and Development (OECD) and the World Bank are more bearish, the former projecting a dip in 2020 to 2.9% and the latter 2.7%.

OCBC Bank economist Howie Lee says in a report that he does not see any suitable growth catalyst that could return global growth to the Great Moderation period — the time before the 2008 global financial crisis.

That said, a bright spot appears to be the abating of the risk of a global recession.

On the local front, the Ministry of Finance (MOF) has pegged gross domestic product (GDP) growth at 4.8%, in contrast with more subdued expectations.

In a report, AllianceDBS Research notes that business and consumer sentiments are not only uninspiring but extremely dismal. “This does not bode well for the future given the critical role of private consumption and investment as a key growth driver.

“Critically, business sentiment has dropped to a depressed level that was never seen over the past 20 years, indicating the poor appetite among business owners for more investment in the near term,” explains the research house, whose GDP forecast is 4.5%.

Will the government’s efforts to boost economic activity through Budget 2020 help?

4 Malaysia’s political brouhaha

Observers say the political situation in Malaysia is a wild card, a key issue being the leadership post-Prime Minister Tun Dr Mahathir Mohamad.

During the 14th general election in 2018, it was agreed that Datuk Seri Anwar Ibrahim would succeed him after two years in office, but there seems to be less clarity on the matter now as Mahathir has been vague on the handover date.

The thorny matter aside, sentiment on the ground also suggests that the people are dissatisfied with the performance of the coalition government, which has been beset by constant infighting to the dismay of voters who had pinned their hopes on a “New Malaysia”.

Voter dissatisfaction was demonstrated in the recent Tanjung Piai by-election where Pakatan Harapan received less than 30% of votes cast, giving Barisan Nasional a landslide win.

2020 is all the more significant for Malaysia as the two-year mark for Mahathir’s being in office draws near. Will he hand over the reins of power to Anwar as agreed, or will a new contender emerge?

Sadly, many foresee more infighting within the coalition this year.

This does not bode well for Malaysia economically as foreign investors will shy away from a country deemed to have unstable politics and unclear policies.

3 Populist movement on the rise

In the last decade, the populist movement has been on an undeniable rise, starting from Trump’s triumphant presidential win that set in motion similar upsets around the globe, including in Turkey, Hungary, Italy and the Philippines. The outcome of the Brexit referendum was yet another instance of the populace moving to the right.

The disillusionment with capitalism and rising inequality has contributed to a large extent to the rise in populism as established leaders are increasingly perceived to be unable to address the changes happening in the global economy.

Chile, one of the latest to be snared in the populist movement, has been in unrest for several months after protesters took to the streets because of an increase in subway fares. But commentators say the unrest is underscored by years of inequality and the high cost of living.

As with the US, the populist movement has led to protectionism, anti-immigration policies and other policies that are viewed as anti-globalisation — in turn, seen as detrimental for economies globally as trade and immigation form an important part of sustainable long-term growth.

The years ahead will continue to put populist leaders and their governance on the centre stage. Time will reveal if their policies and strategies can appease the masses without compromising economic growth.

2 Geopolitical risk continues to brew

Despite a pause in the trade war, geopolitical risk remains at a high. The political situation in the US aside, European politics are also calling out for attention.

With Brexit set to happen after a three-year deadlock, the UK and the European Union will soon negotiate the terms of their divorce. Will there be an amicable resolution? Already many fear the UK economy could suffer a deeper-than-expected shock during the transition process.

Conflict in the Middle East is another worry as the region has been mired in war and strife for many years.

“We see flashpoints in the fragile Middle East, including fallout from attacks on Saudi oil facilities, Turkey’s incursion into Syria and protests around the region,” BlackRock Investment Institute observes in a report.

In Southeast Asia, CGS-CIMB Research notes that political dynamics remain fluid in Malaysia and Thailand with the present ruling coalitions governing on thin majorities. Meanwhile, Singapore is expected to call for an early election this year.

1 Trump’s re-election and the trade war

This year is an important one for the US because of the presidential election on Nov 3 — an election that will be closely watched by the global community as it could determine the fate of the US-China trade war.

Some believe that Trump’s re-election as US president for a second term could result in a prolonged trade war with China, even though both countries have agreed to the so-called Phase 1 trade deal. Trump is expected to continue with his agenda of “Making America Great Again” if he is re-elected.

At present, the US has cancelled a further 15% tariff on US$150 billion (RM615 billion) worth of imports from China that was supposed to take effect in December and has taken steps to cut tariffs imposed since September 2019 on US$120 billion worth of goods from 15% to 7.5%.

China, on the other hand, according to US Trade Representative Robert Lighthizer, has pledged to purchase an additional US$16 billion in agriculture goods over the next two years.

As things stand, however, Trump will first have to survive an impeachment trial in the Senate for abuse of power and obstruction of Congress. He is the third president in US history to be charged with committing high crimes and misdemeanors, but his popularity ratings have not been hit by the impeachment.

The latest polls tracked by FiveThirtyEight show his approval rating at 42.6%, representing the upper end of the range since he took office in January 2017.

With this in mind, consider the 10 main factors to look out for in 2020 and beyond.

The State of the Nation: 10 things to look out for in 2020 and beyond

THE last decade was full of surprises with events such as the election of Donald Trump as president of the US and the subsequent uprising of populism around the world; the commercialisation of shale gas and precipitous fall of crude oil prices; as well as the advent of the gig economy, just to name a few.

These curveballs have paved the way for an interesting decade ahead as global economic growth is expected to meander along going forward.

As an open economy, Malaysia will feel the impact of external headwinds, although many believe they are subsiding, as well as its own domestic issues.

Good day guys!

If the deceased is proven to be a genuine tourist, we must leave no stones unturned in the investigation. How on earth an innocent tourist can be detained and died in custody. This is totally irresponsible and unacceptable. Common sense must prevail that he overstayed because of multiple constraints due to covid19 pandemic that disallowed him to return to his home country. Rightly arrangements should be made to take care of all the stranded tourists. There must be a total disconnect in the chain of command to result in this tragic incident and those found negligent must be sacked or demoted.

All the crooks who were in Putrajaya and other govt depts,who were chased out by the PH govt ,are now back in Putrajaya and have started plundering and stealing.

No young and educated people for senator only thief’s and traitor’s

MIC.....hahaha...

Damn ! While KKM showing to be the cream of best Govt services provided, other depts are showing otherwise !

QuellingBlaster! Yeah, coming from a former head of an English daily that is a mouthpiece of UMNO. Unity government will not solve our problems, but delay them and allow those kleptomaniacs and their cronies to hide and get out of jail free.

That's absolutely true CES. The greatest success of the NEP and every UMNO cretin who championed it is the normalization of corruption in its various forms. It is so normal now that it is not even recognized as a crime - as the carte blanche acquittal of that Sabah thief shows.

The resignation yesterday of the recent;y appointed PNB chief and his less than cryptic address to his staff is also proof that the thieving has started again in earnest after a brief hiatus.

A unity government as described here will be giving every one of the parasites we know and detest the license to steal as much as they can, as often as they can.

Yes a very good morning, for me analysis or whatsoever i usually read and tend to forget. But for investing in Arb i keen to look out for THEREALDEAL dreams, if small dream we goreng, big dream we hold, Happy trading ya

Shahril we need more Umno youths of your caliber with broad outlook. The present Umno Youth leader is disgusting. He is racist and religious bigot like PAS.

comparing apple to orange.

By all means,Anwar should be the PM should PH manage to retake Putrajaya.
DSAI is a seasoned politician and he has gone through the thick and thin in politics.Most important of all he is by far the most suitable candidate for PM .We are absolutely disappointed to see the current leaders in PN including those convicted and tainted politicians now returning to its fold.The rakyat expect PH under DSAI to bring hope and future to the nation again .

The future of Malaysia should be lead by a person who truly serving the country to the highest level. The current PM is just play politics by using the power of authority and I don't think he is serving the country and also the way into the government by using the back door is so ridiculous to the "Rakyat". So, all Malaysians should look for the people with dignity, progressive and fair to all. STOP harping on racism and religion usage in politics.

I agree 100% , Malaysians at large also can't think properly - they just say what others say like a parrot just for popularity - the GROUPTHINK phenomenon. Anwar is already the best of the lot as he stuck by his principles and stayed true to reformation. In comparison to leaders such as Mahathir, Najib and Zahid omg, he is 1000% better now

Nobody politician is perfect and all of them have their flaws. PKR president Anwar Ibrahim had gone through the toughest times but yet stands strong on his principles.

He could have easily walked away a rich man by compromising, but he stood through the times alone in a cell separated from his family. None of us could understand this as we have not spent any time behind bars.

So it is time we should give him the honour. As Anwar said, he may not be perfect, but look at the leaders the nation is under.

Look at some of those being freed from cases involving hundreds of millions of ringgit and even billions. These are the leaders that are now in charge of the Treasury.

The nation and its people are in danger. The pillars holding the nation are collapsing around them. All government agencies are now placed in compromising positions. Principles and integrity are thrown out of the window.

The new normal is money, position and power. And also, to attain it at any cost. Even to the extent if it destroys the nation.

That is why we need leaders with principles. We can only dream of a perfect leader. But a leader like Anwar who stood by his principles must be given that opportunity to prove his words and promises.

The time is now - or it might be too late to save this nation.

pity....

Come with rent control act for commercial buildings to support small and medium business.

The only certainty about this year is the uncertainty of the next course of action by the virus—nothing else. There may be a growth in the subsistence economic activities as commonly witnessed in Kelantan nationwide. Such growth won’t create wealth to support the population’s real need of education, accommodation, healthcare and savings. PAS still can’t go beyond its theology of cave lifestyles that thrives in a subsistence economy.

"...we need to question the government for its race-based policies." - we can't , Charles. In our country, those are institutionalized policies.
You were one of the more vocal PH lawmakers in the deposed PH govt. but were there any efforts to dismantle those apartheid like policies even then?

ChineseKungFuMaster.....Inferior complex, desperate and spineless parasites ...boleh !

Look at the epidemiological statistics. Children dying from COVID???? The few deaths are deaths WITH covid. Learn the difference. I am not here to educate you for free.

Dato Seri, should said they are from bodohPbhd, so bodoh hahaha

Replace 270 Bangladeshi with 270 Rohingya

Then sent back 270 Bangdeshi back

Deal....

Exactly TRD. Any short time pain will be worth it to get the American (and other) subversive elements out of HK. HK will be even more prosperous after this.

Similarity from zhangliang a.k.a 蟑螂

Transformers by Micheal Bay a billion dollar movie!-vs-Transmorpher a ripped off by a nobody!

TUN M, Glad with your caused? Grand plan for Wawasan 2020 has been literally thrown out of the window. With the way PN is running the government, I am not sure whether Malaysia can recover and not fall into another “failed state” category. How sad for a grand old man with big ego and full of Machiavellian acts.

This trial, with 46 charges, barely commenced. Forty-six charges are not to be dismantled so lightly.

It would be good to know what the grounds for the acquittal are. Yes, it is a full acquittal.

I will feign ignorance as to how powerful the ex-accused is and express my extreme shock that the prosecution appears to have totally collapsed without any attempt to prove even one charge.

All the case file preparation - time, money and effort - have gone down the drain. This is setting a terrible benchmark for what may come in the near future.

This MB ni buat tak tau only.
Actually, this news came directly from arsssmin, deputy pm.
Just wait and see when this MB play PN backside ?!

Thanks for the info bowman!

Hong King’s loss will be Taipei’s gain. Many HongKongers could move to Taiwan because Chinese action will adversely impact their democratic rights. Think Chinese reaction to Trump actions will be severe. So far there has been no official statements from Chinese foreign ministry.

I think the measures announced by Trump is actually very lenient on HK. The largest sector which US businesses have the highest level of investment in HK is the financial sector and this is completely untouched by Trump’s measures.

Malaysia is blessed to have capable and credible professionals who orchestrated the entire covid19 MCO. The public trusted the DG and his team with his daily press conference. He answered all questions by reporters in the most efficient and transparent way. He offers the current best approach by WHO and best practices of the medical experts. Thank you Mr DG, the frontlines, the police and army for the control of the MCO.

Yup, If USD suddenly becomes such a risky asset, who is going to own it. De-dollarization will end the US as a super power

Want to understand racism close to home? Ask a black man in Guangzhou. China is no better on this issue, actually worst ask any Uyghur in China.

QueenElizebeth IV,Why are you so determined to separate people by nationhood or even ethnicity, some villain/pillager in the past enslaved your ancestors just as some other villain/megalomaniac/pillager enslaved mine. That’s how countries and to some extent enticing groups began. Genetically we are all one family, yet so many are infected by Nationalism (think WW2). Nationalism was Once described as the last Vestige of the scoundrel.

Probably the all wonderful and powerful country known as the UK still uses it. In fact they may not even have fax and just rely on the highly efficient Royal Mail.

To hell with you kenie!

They are ignoring the Basic Law and Sino British Joint declaration. Britain should have a claim for resumption of sovereignty of Hong Kong if this goes ahead!

Sunday’s demonstration was also called to protest against a bill that would criminalise abuse of the Chinese national anthem in Hong Kong. The anthem bill, which city leader Carrie Lam Cheng Yuet-ngor has called a top priority, provides for jail terms of up to three years.