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KUCHING (Jan 1): Special celebration activities will be held to commemorate the 60th anniversary of Sarawak’s independence within Malaysia this year, said Minister of Tourism, Creative Industry and Performing Arts Dato Sri Abdul Karim Rahman Hamzah.
Noting that the celebration will officially be known as ‘Sarawak Day 2023’, Abdul Karim said his ministry will work closely with strategic partners to prepare for the celebration to make it more meaningful.
“Although the official anniversary date for the state’s independence falls on July 22, the celebration activities next year (2023) will be held earlier. This will present opportunity to Sarawakians across the state to join in the celebration and understanding the importance of the historical date,” he said.
Abdul Karim said this when speaking at the state-level official 2023 countdown event at Stadium Perpaduan, Petra Jaya on Saturday night. He was the minister-in-charge for the countdown celebration’s preparation.
He believed that the 60th anniversary celebration will be a good platform to instil patriotism and unity within the multi-racial society of Sarawak.
Touching on the 2023 countdown celebration, Abdul Karim thanked the state’s Arts Council, local authorities and police, among others, to ensure the smooth running of the event.
The event on Saturday night was graced by Sarawak Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg and his wife Datuk Amar Juma’ani Tuanku Bujang.
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Dr Sim extends his new year greetings to all Sarawakians regardless of their locations.
KUCHING (Jan 1) Sarawak will focus on completing most of the basic infrastructure development projects to see enhanced standard of living for Sarawakians, said Deputy Premier Dato Sri Dr Sim Kui Hian.
The Sarawak United Peoples’ Party (SUPP) president said these basic infrastructure development projects include water and electricity supply as well as better road connectivity.
“In (starting) 2023, Sarawak, in the next five years, will complete most of the basic infrastructure (projects) including water, electricity and roads.
“It is time also for us to move on, towards (bringing about) new revenues in terms of new economies such as digital economy and green energy that our premier Abg Jo has been talking about so that by 2030, we can achieve our Post Covid-19 Development Strategy (PCDS) 2030 for Sarawak,” he said in his New Year message posted on Facebook yesterday.
Dr Sim pointed out that the Year 2023 marks the 60th anniversary of the formation of Malaysia.
“I want to take this opportunity to wish every Sarawakian, no matter where you are, a Happy 2023, and most importantly, the best of health.
“I hope you will continue to support my programmes and follow my social media. Jangan tengooook saja (Don’t just watch),” added the Batu Kawah assemblyman.
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KUCHING (Jan 1): The Kuching South City Council (MBKS) would focus on growth in the New Year, embarking on its first major public infrastructure project, said Mayor Datuk Wee Hong Seng.
In this respect, he said the new Unesco Gastronomy Centre and Family Fun Water Park should be set to become a community hub for all the cityfolk.
“It will rejuvenate our traditional city centre, already a beloved attraction for locals and visitors alike.
“It will provide an impetus for appreciation of our traditions, already underway in our series of murals set to adorn the Padungan area in its 100th anniversary.
“It will also provide a basis for creative expansion for our youths and our communities. We hope all our city residents would get behind it as we proceed with the planning,” he said in his New Year message.
Adding on, the mayor stressed that the MBKS and Kuching City must ‘look back, and then look forward’.
“We have much to look forward to – a renewed period of growth and development for the city looks certain, and the council has been preparing the groundwork for expansion.”
Wee also acknowledged Sarawakians facing their own challenges.
“But as a city, we remain safe and secure, creative and connected. The council has come through the difficulties throughout the past few years on a firm basis of financial governance and commitment to service, which will set us up for any challenges yet to come.”
Wee said he had observed that many restrictions had been lifted throughout last year, allowing more movements of people and revving the nation’s economy that had previously stalled due to the Covid-19 pandemic.
Nonetheless, he stressed that everyone must spare a thought for those still struggling, and in this regard, he hoped that all these struggles would be over soon.
“MBKS will do everything in its power to support them. The council continues to provide the infrastructure and the environment for them to flourish – clean, safe, beautiful, sustainable.
“We are also launching our Mayor’s Awards next year (2023), to recognise all those unsung community heroes who have been giving up their time and energy to help those less fortunate than themselves,” he said.
Wee also called upon the community ‘not to slack off’, given that health and hygiene remained a key concern and everyone must retain the good practices.
“In fact, the pandemic has allowed us to take a quantum leap forward as the whole community combined in its efforts. It has shown us exactly what can happen when we act as one. This is a lesson as we move forward into the future.”
In welcoming New Year and the Chinese ‘Year of the Water Rabbit’, the mayor believed that Year 2023 would be tougher than the last.
He, however, placed high hopes that the community would have a more positive, colourful and brighter prospect throughout this year.
“Let’s not lose hope for a better life and a better self. I wish you all Happy New Year 2023 and may this year be the beginning of something great.
“Sending all my love, prayers and good wishes to you all. Stay alert, stay healthy and strong and take good care of yourself,” said the mayor.
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Uggah speaking to reporters on Nov 11, 2022. – Photo by Muhammad Rais Sanusi
KUCHING (Jan 1): A Port Masterplan Study starting with the Miri Port Authority will be carried out in 2023, says Deputy Premier Datuk Amar Douglas Uggah Embas.
The Minister of Infrastructure and Port Development (MIPD) has recently pointed out that ports have a pivotal role in the attainment of the Post Covid-19 Development Strategy 2030 (PCDS 2030); and the port facilities need to be upgraded for efficiency and efficacy.
“We will carry out a Port Masterplan Study starting with the Miri Port Authority first. We hope this June we can come up with some proposals to the government on the way forward for our ports.
“This will make 2023 a daunting and challenging year for all of us at the ministry, JKR, the port authorities, and all relevant departments under it,” he said in his New Year’s message.
Uggah said MIPD’s mission in 2023 is to implement existing infrastructure projects according to schedule while complying with the required standards, and to salvage all sick projects.
He said the Ministry will also strive to complete comprehensive planning of rural roads toward connecting all settlements that are yet to be connected by 2030.
“We are going to have an extensive discussion to review the cost of road construction. Currently it’s still very high, this will involve the study of the use of local materials such as river gravel for road construction,” he said.
He added that rehabilitating sick projects also tops their priority as there were 91 sick projects identified in July 2022.
“The number has been reduced to 35 as of November 2022. I have given JKR until July 2023 to complete the tendering of all remaining sick projects,” he said.
Uggah said for 2023, MIPD has a budget of RM795.7 million for new infrastructure, riverine ports as well as public and government buildings.
He said there is a need to fully utilise the funds in a transparent way so that the ‘rakyat’ especially those in the interiors will get what they rightly deserve.
“In this respect, we must avoid the occurrence of obnoxious sick projects at all cost,” he said.
Meanwhile, Uggah said Unit for Other Religions (Unifor) will continue its programme to assist houses of worship of Christian, Buddhist, Sikh, Taoist and Bahai.
“We will also continue to assist mission schools in 2023. We must record our appreciation to the Premier of Sarawak for his generosity to allocate RM100 million to Unifor,” he said.
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The US consumer staples sector has been fairly resilient throughout the year despite the challenging equity backdrop.
AS global growth sours and the drumbeat of recession grows louder, we believe the consumer staples sector can provide shelter from the impending storm. We favour the US consumer staples sector which has outsized exposure to the resilient US consumers.
A growing trade-down trend anchors demand for staples as consumer preference moves from pricier, premium goods to cheaper, value-for-money goods. Strong pricing power in the sector further enables companies to hike prices to defend margins without harming sales and market share.
Margins are also holding up despite rising costs. Companies have cut back on sales and promotion as a consumer trade-down anchors demand. Alongside price hikes, this has protected margins as input costs rise. 3Q earnings’ positive sales and sales surprises continue to highlight resilient margins in 3Q earnings.
A strong track record for earnings and outperformance before and after the start of a recession add to the sector’s reliability as a strong recession play. Valuations are slightly rich but earnings resiliency during a recession may provide support.
In a year when markets have been sinking under the weight of inflation and jumbo rate hikes, the consumer staples sector has been a life raft for investors. Being defensive in nature, the sector has largely been shielded against waves of drawdowns and volatility while many others were badly battered.
As global growth sours and the drumbeat of recession grows louder, we are increasingly leaning towards quality and defensive plays that can provide shelter from the impending storm. We believe the US consumer staples sector is one of them.
The impact of consumer trade down is visible in spending data and sector sales estimates.
Consumer staples and its underlying industries exhibit gross margin strength and margin stability, hallmarks of strong pricing power.
Consumer staples sector in a nutshell
The consumer staples sector comprises companies with primary business activities in i) food and staples retailing and distribution, ii) provision of food, beverage, tobacco products, and iii) manufacturing of household and personal products.
In the US, the food, beverage, and tobacco industry makes up the lion’s share of the US consumer staples sector (51 per cent), led by multinational industry leaders like Coca-cola (KO), PepsiCo (PEP), Phillip Morris (PM), and Mondelez (MDLZ). Next is the food and staples retail industry (28 per cent), led by retail giants such as Walmart (WMT) and Costco (COST). The household and personal products industry (21 per cent) follows closely behind, led by global names like Procter and Gamble (PG), Estee Lauder (EL), and Colgate (CL).
The US consumer staples sector has been fairly resilient throughout the year despite the challenging equity backdrop. It is the second best-performing sector, behind the energy sector, returning two per cent year-to-date and outperforming the S&P 500 index, which has fallen by -13 per cent so far this year (as of end-November).
Strong pricing power and consumer trade-down protect margins
A common theme across the sector’s 3Q’s result is the observation of a consumer trade-down from pricier, premium goods to cheaper, value-for-money goods as rising prices crimp disposable income. Companies have reported that the trade-down, which we believe is still in the early stages, has helped kept demand firm.
In particular, supermarkets, food retailers, packaged foods and household / personal goods producers have been reporting stronger demand for cheaper alternatives and value packs.
For instance, Walmart was able to deliver better earnings results than Target, as a larger share of its sales came from groceries which often benefits from a consumer trade-down given its inelastic and essential nature.
This is in line with consumer spending data, which showed non-durable spending still growing but spending on durables have remained lacklustre. At the same time, sales estimates for consumer staples firms have been climbing while that of the consumer discretionary sector has been declining.
Looking ahead, with incremental stress on household income and a likely rise in unemployment rates, the trade-down trend will likely be full-blown next year, providing a strong counter against the softening demand from weaker global growth.
Another common trait within the sector is the strong pricing power observed in many companies amidst this high inflation backdrop. This can be measured by the gross margin and margin stability across the business cycle, as companies with pricing power are better able to protect and maintain their gross margins.
We see this from consumer staples and its underlying industries where gross margins have remained stable at around the market average over the past decade. Factors such as brand strength, low product elasticity, scale of economies, and effective low-pricing strategy have contributed to the sector’s strong pricing power, enabling most companies to hike prices without harming sales and market share.
Ih a growing consumer trade-down trend, keeping demand for staples firm, and strong pricing power to protect sales, we expect a higher degree of earnings resiliency in the consumer staples sector relative to the market and other sectors. These factors are likely to protect earnings even amidst a backdrop of high inflation and softening global growth.
Sales growth and sales surprise for the sector remained largely positive in 3Q despite the high inflation.
Despite higher input costs (COGS), the sector has maintained its net income margin by largely cutting back on cut back on selling, general, and administrative expenses.
Margins holding up despite rising costs
Despite the backdrop of heightened inflation, earnings for US consumer staples companies have remained relatively resilient. In 3Q 22, the sector delivered strong sales and earnings beat of 2.6 per cent and 6.2 per cent respectively, surpassing the 10-year quarterly average of 0.5 per cent and 4.3 per cent respectively. Sales growth and sales surprise are still largely positive and broad-based across the sub-industries, suggesting that the price hikes have been relatively effective in buffering rising cost.
A breakdown of aggregate sales for the consumer staples sector shows that input costs, such as raw materials and packaging, have risen slightly throughout the year, reflected by an increase in the share of cost of goods sold from 71.2 per cent (4Q21) to 72.3 per cent (3Q22).
This has led to a compression in gross margins, which is a common observation across most S&P sectors.
However, the perks of pricing power and consumer trade-down has helped staples avoid a larger compression. For confirmation, we look to the GFC where gross margins for staples compressed by 1.7pp (peak to trough) whereas, on average, gross margins for the other sectors compressed by -3.7pp.
Across many companies within the sector, we also observed a cutback on marketing and promotion expenses, one of the larger cost drivers for the sector, in a bid to offset higher costs and as demand remains anchored by a consumer trade-down. This is reflected by the decline in the share of selling, general, and administrative expenses (SG&A), from 19.7 per cent (1Q21) to 18.1 per cent (3Q22). This protected profit margins this year, which even rose when compared to 2021.
Companies are also starting to cut jobs and wages with Pepsico – an industry giant and often a bellwether – joining the layoff bandwagon. We think this signals an increasing inclination that even defensive companies are willing to adopt harsher measures to slash costs. Overall, with input costs likely moderating next year and companies demonstrating the ability to defend margins, as well as a willingness to further cut cost, we expect margins to remain resilient.
Earnings resilience across recessions
Aside from the inflation worries, another primary concern for equities is earnings resiliency as growth continues to weaken while recession risks rise. Often, this is not a key concern for the consumer staples sector as earnings tend to be better protected and demonstrate less severe downside in times of softening economic growth.
A primary reason is that the demand for consumer staples is relatively inelastic and non-cyclical as these goods are widely considered non-durable and essential in day-to-day life.
Fundamentally, this means that companies tend to possess predictable and resilient earnings that are less sensitive to changes in the business cycles, even during recessions.
This is evident when comparing the US sectoral earnings decline and negative revision (on EPS estimates) over the past three decades, across four recessions since 1990.
Amongst all the US sectors, consumer staples have registered the smallest decline in earnings, at an average of three per cent from peak to trough. The sector has also seen the smallest negative revision to earnings estimates, at an average of three per cent from its peak in the same period.
The resilient earnings extend beyond recessionary years, as growth rates have largely remained positive on a year-on-year basis over the past three decades, with only three years of negative growth.
Strong track record of outperformance across recessions
The US consumer staples sector has a reliable track record of outperformance during recessions.
Over the past three decades, across four recessions, the sector has managed to beat both the market (S&P 500) and most sectors during the 12 months before and after the start of a recession.
On average, the sector generates a return of 14 per cent in the 12 months before and 10 per cent in the 12 months after a recession. Again, this is attributed to the sector’s defensive nature and having one of the lowest beta to the market (gauged by S&P 500) which implies that sell-offs tend to be relatively milder. Collectively, the strong track record of earnings resiliency and outperformance before and after the start of a recession add to the consumer staples sector’s reliability as a strong recession play.
Strong support from resilient US consumers
US consumers have remained resilient relative to their global counterparts amidst this challenging environment. Real consumer spending continues to increase month-on-month (in October 2022), with levels above its pre-Covid trend.
The robust spending has largely been fuelled by a drawdown in savings, with the personal saving rate falling to a near all-time low (in October 2022). With limited ammunition in terms of savings, spending will be incrementally dependent on income.That said, the US labour market remains tight, with better-than-expected gains in non-farm employment and a steady employment rate (in November 2022). We do see signs of cooling, such as the decline in jobs opening (in October 2022) and average hours worked weekly (in November 2022).
Nonetheless, the tight labour market is supporting income as both wage growth and personal income continues to record positive month-on-month growth in October, bolstering consumers’ ability to spend.
Lastly, household balance sheets remain healthy as liquid assets are near an all-time high, while debt servicing as a share of disposable income remains near historical lows despite rising household debt.
A healthy balance sheet should limit the risk of drastic spending cuts in the event where income falls and unemployment climbs.
In our view, the relatively resilient US consumers supports the case for US consumer staples sector when compared to its global peers. The sector possesses an outsized 50 per cent – 60 per cent revenue exposure to the US and comprises of many large industry leaders with brand names easily recognisable by the US consumer (and global, to a large extent).
Valuations are rich but not a major pushback
The US consumer staples sector is currently trading at a forward PE of 21.7-folds, relative to the 10-year average of 19.6-folds. The sector may be trading at a premium but this is not a major pushback for us, especially heading to a potential recession. In our view, as growth weakens further, the sector’s earnings resiliency will likely keep valuations anchored.
Compared to other sectors where valuations may increase as earnings estimate plunge, multiples for consumer staples could become increasingly palatable on a relative basis.
Also, as macro and earnings risks intensify, we think valuations for the sector can remain elevated. This can happen when investors re- allocate from cyclical and growth sectors back to defensive ones.
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THE energy transition continued apace in 2022 despite Russia’s invasion of Ukraine, ongoing disruptions to global supply chains and inflationary pressures – all of which translated into high energy prices around the globe.
However, sustained high prices may ultimately mark an inflexion point – or prove to be a major catalyst – in shifting the global energy system away from a dependence on hydrocarbons and towards lower-cost clean energy resources. Hydrocarbons are unevenly distributed around the world, require supply chains that are vulnerable to disruption, and carry the financial uncertainties associated with the cyclical and often volatile pricing of commodities.
In 2022 hydrocarbons-producing countries reaped record revenue on the back of high oil and gas prices.
At the same time, renewable energy capacity increased by more than eight per cent, surpassing the 300GW mark for the first time, according to the International Energy Agency (IEA). Global electricity energy demand growth, meanwhile, slowed to 2.4 per cent, down from six per cent in 2021. While an accelerating energy transition promises short-term challenges with bouts of supply disruption and financial volatility, it also offers emerging markets tremendous opportunities if they can embrace the clean technologies and sources that will shape the future energy mix.
Alternative sources
Energy security took centre stage with the disruption of Russian hydrocarbons supplies to Europe in the aftermath of its invasion of Ukraine.
Russia has the world’s largest natural gas reserves and has historically accounted for some 40 per cent of Europe’s gas imports – and as much as 55 per cent of Germany’s in recent years.
As European countries scrambled for alternatives to Russian hydrocarbons, new policies and initiatives advanced the move towards new sources of imports and alternative energy sources.
In May the EU announced a ban on seaborne imports of Russian oil, which presented an opportunity for oil-exporting emerging markets – both Organisation of the Petroleum Exporting Countries (OPEC) and non-OPEC members – to increase production to meet demand.
When the ban was instituted in December, the EU found itself with ample supply thanks to increased cargoes in the intervening months from Africa, Latin America, the Middle East and the US.
Members of OPEC and other allied oil-producing nations, collectively known as OPEC+, cut production in September as global demand softened, which has thus far avoided the oil-supply shortages envisioned by the EU ban.
To curtail Russian revenue from natural gas, the EU is also debating a measure to cap its price, but the bloc has yet to agree on the measure.
The EU’s attempt to limit Russian hydrocarbons has encouraged countries in Latin America to focus on developing green hydrogen from clean energy resources that can be exported to Europe and consumed locally.
Argentina announced plans in June to invest US$6 billion in the province of Tierra del Fuego – located at the southernmost tip of South America – to develop a hydrogen and ammonium industry powered by wind and transform the country into a major exporter to Europe and Asia.
Brazil has similar ambitions and is seeking to leverage its position as the world’s second-largest producer of hydroelectric power, with substantial wind and solar resources.
Gulf national oil companies are also looking to bolster hydrogen production. In March, Saudi Arabia started construction on the US$5 billion wind- and solar-powered hydrogen plant at its NEOM mega-project, which will be the largest hydrogen plant in the world upon completion, producing 650 tonnes per day.
Electricity and emerging markets
Going forwards, the speed and effectiveness of the energy transition hinge on the electricity sector, where replacing coal with solar and onshore or offshore wind – or even reviving more traditional renewable sources like hydroelectric – could go a long way towards meeting global electricity demand.
Among these sources, solar began to take the lead in 2022, eclipsing wind in China and Australia. Of the 300GW of growth in renewable energy capacity in 2022, solar photovoltaic (PV) accounted for 60 per cent, or 190GW, of the increase, marking growth of 25 per cent from 2021.
Leading solar researchers meeting at the eighth World Conference on Photovoltaic Energy Conversion in September predicted that the next 1TW of solar PV capacity would take as little as three years to install.
Overall, the IEA now expects that the imperatives of energy security will drive global renewable power capacity to expand by 2,400GW between 2022 and 2027, the equivalent of the entire power capacity of China and 30 per cent more than was forecast in 2021.
Global solar PV capacity is set to triple during this period, while wind capacity is expected to double.
The problem will then be how to handle all that clean electricity, as the world requires an estimated US$14 trillion in investment in power grids – including decentralised and inter-regional links – by 2050 to keep pace with renewable energy gains.
Earlier this year Vietnam’s Ministry of Industry and Trade announced that no new solar or wind projects would be connected to its grid in 2022, citing the fact that the build-out of over 20GW of renewable capacity over the last three years has led to frequent grid overload and wasted renewable power generation.
New technologies for traditional clean sources
Technological advances are helping to revive traditional clean energy resources that are domestically generated, most notably hydroelectric power.
Severe drought in China and elsewhere resulted in lower output in 2022, but the IEA forecasts that the adoption of pumped storage hydropower (PSH) will expand the role of hydropower in the global energy mix. The technology is projected to account for 65GW of additional hydropower capacity by 2030, mostly in Asia and Africa.
New cross-border trade deals were signed in 2022, with Nepal planning to build out and send hydropower to India through the West Seti and Seti River projects, and Ethiopia sending 200 MW to Kenya as part of the Kenya-Ethiopia Highway Project.
At the same time, biogas and biomethane are set to bolster the green circular economy in emerging markets.
Although the biogas industry is well established in Europe and North America, it has ample unexplored potential in emerging markets, especially in Asia, where crop residue and animal manure could be harnessed to help biogas account for up to 20 per cent of global natural gas supply. For example, Thailand has launched a scheme that uses feed in tariffs to reach power-purchase agreements, with plans to add 335MW of biogas capacity between 2026 and 2030.
This column was produced by the Oxford Business Group.
Leading solar researchers meeting at the eighth World Conference on Photovoltaic Energy Conversion predicted that the next 1TW of solar PV capacity would take as little as three years to install.
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Normalisation of monetary and fiscal policies that delivered unprecedented support during the pandemic is cooling demand as policymakers aim to lower inflation back to target. — Bernama photo
AFTER more than two years of battling a pandemic that has disrupted lives globally, the world is finally easing out of its grips.
However, while this is supposed to be an optimistic time as the economy finds its footing again, the impact of the pandemic and several other factors including China’s zero-Covid lockdown and the conflict in Ukraine remain as hurdles to the global economy’s recovery; with some economists warning that the global economy might be heading towards a recession next year.
“The global economy is experiencing a number of turbulent challenges. Inflation higher than seen in several decades, tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering Covid-19 pandemic all weigh heavily on the outlook.
“Normalisation of monetary and fiscal policies that delivered unprecedented support during the pandemic is cooling demand as policymakers aim to lower inflation back to target.
“But a growing share of economies are in a growth slowdown or outright contraction,” the International Monetary Fund (IMF) highlighted in its latest World Economic Outlook report.
“As storm clouds gather, policymakers need to keep a steady hand.
“The global economy continues to face steep challenges, shaped by the lingering effects of three powerful forces: the Russian invasion of Ukraine, a cost-of-living crisis caused by persistent and broadening inflation pressures, and the slowdown in China.
“Our latest forecasts project global growth to remain unchanged in 2022 at 3.2 per cent and to slow to 2.7 per cent in 2023 – 0.2 percentage points lower than the July forecast – with a 25 per cent probability that it could fall below two per cent.
“More than a third of the global economy will contract this year or next, while the three largest economies – the US, the European Union, and China – will continue to stall.
“In short, the worst is yet to come, and for many people 2023 will feel like a recession,” IMF economic counsellor Pierre-Olivier Gourinchas cautioned.
Latest PMI indicators are starting to signal economic contraction gathering pace in some of the largest world economies – US, EU and UK.
“Global manufacturing PMI has slipped further into contraction territory at 48.8 in November, while global services PMI declined further to 48.1, as new order intakes and international trade flows continue to deteriorate.
“Meanwhile, tight labour market conditions in many countries are boosting wages, consequently lending support to domestic demand and growth.
“However, this also contributes to broad-based and entrenched inflation.
“Following the rising economic uncertainty and persistent inflationary pressures, major central banks are anticipated to continue their course of tighter monetary policy action going forward.
“Financial conditions are also being tightened due to ongoing reductions in bank balance sheets. In addition, the uncertain development of commodity prices and the risks associated with the weak property sector in China also pose as headwinds to growth,” Hong Leong Investment Bank Bhd’s research team (HLIB Research) pointed out in its 2023 outlook report.
On the other hand, RHB Bank Bhd’s research team (RHB Research) believe that the US is unlikely to head into a recession in 2023 as the path of US GDP growth is a print of around 1.4 to 1.9 per cent y-o-y in 4Q22 versus the Bloomberg consensus estimate of 0.2 per cent y-o-y, which it believed would not materialise.
“In 1H23, we expect a modest deceleration followed by a recovery in 2H23. Meanwhile, the analyst community has been pushing out further into the future to 2023 and 2024 its recession view compared to its earlier view of an imminent recession in 2022.
“We term this as “herding behaviour” and we would fade these pessimistic forecasts for 2023.
“Our 2022 and 2023 US GDP growth forecast remains unchanged at 2.2 per cent y-o-y and 2.0 per cent, respectively. The Bloomberg consensus estimate for 2022 and 2023 US GDP growth is 1.8 per cent y-o-y and 0.4 per cent, respectively,” RHB Group chief economist and head, market research Dr Sailesh K Jha said in RHB Research’s Global Market & Economic Outlook report for 2023.
“The easing of financial conditions in 4Q22 as exemplified by an acceleration in global money supply suggests that global economic activity – which includes the US – could remain resilient in 1Q23, to which the US Federal Reserve’s (FED) policy response will be to continue to hike the Federal Funds Rate (FFR) in 1Q23 to five to 5.25 per cent.
“In other developed markets, we expect the European Union (EU) to avoid a recession in 2023. We maintain our 2023 GDP growth forecast of 1.5 per cent y-o-y versus the Bloomberg consensus estimate of -0.1 per cent. The price cap on Russia’s liquefied natural gas (LNG) is unlikely to be effective as implementation is difficult. In addition, we expect US LNG supply to the UK to increase, of which some portion will end up in the EU. Hence, in our view, supply-side shocks via the LNG channel to EU growth are likely to be limited in 2023.
“On the demand side, we continue to believe that if a recession becomes imminent in the EU, a counter-cyclical fiscal policy will be implemented to avert a significant deceleration in GDP growth,” he added.
In Southeast Asia, RHB Research believed that GDP growth will slow to trend in 1H23, followed by a recovery in 2H23.
“Resilient labour market conditions, tail winds from past loose fiscal and monetary policies, and resilient US growth are likely to keep the region well supported in terms of economic activity in 2023.
“The main area of weakness in 1H23 will be real exports, where we expect further weakening before recovering in 2H23. Real exports in Southeast Asia will mirror the deceleration we are expecting in US private consumption growth in 1H23 followed by a recovery in 2H23,” Sailesh added.
Malaysia’s growth remains susceptible to higher risk aversion in global financial markets, further escalation of geopolitical conflicts and re-emergence of supply chain disruptions. — Bernama photo
Malaysia’s economy to expand by four to five per cent
AS for Malaysia, after going through a turbulent last couple of years, analysts are now cautiously optimistic about its prospects next year, particularly given its current political landscape and the full reopening of its economy.
This year, with the full relaxation of most, if not all Covid-19 restrictions, Malaysia’s economy has begun to gain back its pre-pandemic momentum albeit at a slow pace due to the current unstable macro landscape.
According to Bank Negara Malaysia (BNM), Malaysia’s economy is expected to continue to expand at a more moderate pace, in the fourth quarter of 2022 (4Q22).
The expected slower pace of growth reflects the more challenging global environment as well as absence of base effects. Nevertheless, growth for the whole year of 2022 is expected to remain robust given the strong outturns in the first three quarters of the year, it stated.
Looking ahead, the Malaysian economy is expected to expand by four to five per cent in 2023.
BNM Governor Tan Sri Nor Shamsiah explained, “The Malaysian economy will continue to be supported by firm domestic demand amid continued improvements in the labour market.
“Growth would also benefit from the realisation of large infrastructure projects as well as higher tourist arrivals. However, Malaysia’s growth remains susceptible to a weaker-than-expected global growth, higher risk aversion in global financial markets, further escalation of geopolitical conflicts and re-emergence of supply chain disruptions.”
The central bank also noted that headline and core inflation are expected to remain elevated amid both demand and cost pressures, as well as any changes to domestic policy measures in 2023.
“Additional upward pressures to inflation will remain partly contained by the existing price controls, subsidies, and the remaining spare capacity in the economy. The balance of risk to the inflation outlook in 2023 is tilted to the upside and continues to be subject to domestic policy measures on subsidies, as well as global commodity price developments arising mainly from the ongoing military conflict in Ukraine and prolonged supply-related disruptions,” it said.
Meanwhile, analysts believe that domestic consumption will continue to be Malaysia’s key economic driver.
“We forecast Malaysia’s GDP growth to moderate to 4.0 per cent y-o-y in 2023 (2022e: 8.2 per cent y-o-y) as the base effects and initial boost from pent-up demand wane.
“Our projection sits at the lower-end of the government’s official target of four to five per cent as we expect growth to also be weighed down by further tightening of global monetary policies and its resulting weaker global growth environment, higher risk aversion in financial markets and geopolitical tensions.
“Nevertheless, Malaysia’s growth is expected to be supported largely by domestic demand, benefitting from the improvement in labour market conditions, and a continued influx of tourists following the ongoing recovery in the tourism industry,” HLIB Research remarked.
“The realisation of multi-year projects is also anticipated to spur the investment landscape. Malaysia’s diversified export base is also expected to cushion the slowdown in global trade activity,” it added.
The research team further pointed out that private consumption is expected to remain the key driver of growth in 2023 (six per cent y-o-y; 2022e: 10.1 per cent y-o-y), albeit at a slower pace, on the back of continued improvements in labour market conditions and income prospects.
“Unemployment rate has continued to trend downwards (3.6 per cent; peak: 5.3 per cent), while private sector wage growth gathered further pace (3Q22: 7.9 per cent y-o-y; 2Q22: 7.8 per cent y-o-y).
“The vibrant economic and social landscape following the easing of containment measures, particularly in tourism-related industries, should also support consumption activity in upcoming months,” it explained.
It also pointed out that the special financial aid planned to be distributed in January next year to civil servants and pensioners is expected to lend additional support to household disposable income.
“Following better labour market conditions and supportive domestic policies, MIER’s consumer sentiment index has climbed to 100.0 in 3Q22 (2Q22: 85.9). However, we expect sentiment to turn more cautious due to growing uncertainties in both the domestic and global front,” HLIB Research said.
On the other hand, UOB Kay Hian’s research house (UOBKH) believe that Malaysia’s domestic consumption will slow down appreciably by end-2023 to reflect the cumulative inflationary and interest cost impact in raising the cost of living, the waning effect of the previous government-mandated Employees Provident Fund’s (EPF) special withdrawal scheme in April 2022, the expiry of car sales tax exemption (delivery deadline by March 23 for qualified purchases), and possibly (a minor factor) the unity government’s more restrictive spending compared with previous regimes.
“The GDP growth outlook is highly dependent on the government’s ability to ensure manageable cost of living for the people by maintaining subsidies.
“Hence, we expect the unity government to maintain prudence and pragmatism in re-tabling 2023 Budget (expected in December 2022), by preserving the previous UMNO-led government’s subsidy bill of RM55 billion (3.8 per cent of our estimated nominal GDP and 15 per cent of the federal government’s 2023 Budget).
“Much of the subsidies relate to petrol pump and electricity tariffs. However, we expect more significant cuts in the government’s non-essential development and operating expenditures,” it opined.
On the performance of corporate Malaysia, analysts are more optimistic about the outlook for Malaysia’s equity market next year.
In its 2023 outlook report, the research team at MIDF Amanah Investment Bank Bhd (MIDF Research) opined: “Going into 2023, assuming baseline scenario in which, the US Fed is pivoting (hence result in unwinding pressure on equity required return), risk of US recession is not insignificant (despite being either one or two years away), no escalation in the Russia-Ukraine war beyond the borders of Ukraine (but the situation could change rather drastically), and the authorities in China would be adept in handling its domestic economic situation (thus limiting the risk of cross border contagion), we foresee a situation whereby the equity market would becoming more bullish principally due to the unwinding or subsiding pressure on required return as the upside risk diminishes with the end of tightening cycle.
“On the flip side, the market would also be expected to tread cautiously due to the heightened risk of an impending US recession, the unsettling situation in Ukraine which could change rather drastically, as well as uncertainty surrounding the real situation of China economy.
“In gist, the market is foreseen to be climbing the proverbial wall of worry in 2023.”
It added, “In 2023, we expect the equity market to be supported by a less hostile monetary environment.
“However, equity valuation would continue to remain subpar relative to its historical range due to the limiting factors discussed in above (i.e. risk of US recession, unsettling situation in Ukraine, and China economic uncertainty).
“In addition, we also foresee a downside risk to the prevailing consensus earnings forecast for 2023 which remains undented since the beginning of 2022 despite the emergence of multiple headwinds thenceforth.”
A timely China’s reopening will help to fill the demand gaps for natural resources and manufactured goods left by the US and Europe on the back of the slowdown in their economies. — AFP photo
China’s reopening a boon or bane?
EARLIER in December, following mass protest in the country, China announced that it has scrapped its strict zero-Covid policy and will begin reopening its economy in January 2023.
According to news reports, travel overseas for Chinese citizens will become easier as the National Health Commission announced that Covid would be formally downgraded to a Class B infectious disease on January 8 which means quarantine would be axed and the number of flights into China is also expected to increase.
In a report, the research team at Kenanga Investment Bank Bhd (Kenanga Research) noted that China had unveiled measures that limit lockdowns, allow home quarantine (compared to centralised quarantine facilities), scrap the health QR code for entering public places, using public transport and travelling, and accelerate vaccination for the elderly.
Prior to this, the quarantine on arrival for inbound international travelers had been cut to five days (from seven days), followed by three days of isolation at home. The local governments in certain major cities had also started to discontinue mass testing.
“China’s gradual abandonment of the zero-Covid policy could also be inferred from media reports that the Chinese leadership is setting a five per cent GDP growth target for 2023, which represents a significant improvement from 3.2 per cent in 2022 based on the current consensus estimates,” it noted.
With the reopening of China’s economy, the research team believe that Chinese demand is expected to cushion the slowdown in the US and Europe.
It pointed out that a timely China’s reopening will help to fill the demand gaps for natural resources and manufactured goods left by the US and Europe on the back of the slowdown in their respective economies (the US due to steep monetary policy tightening, while Europe due to an energy crisis triggered by the Russia-Ukraine war).
“The revived demand from China will significantly cushion the impact of an external slowdown on mostly export-dependent developing economies including Malaysia,” it said.
However, there are concerns on China’s transparency in regards to the way it has handled its Covid cases prior to its reopening.
News reports have indicated that Covid has spread ferociously in the wake of restrictions being lifted
“There are concerns over China’s ability to deal with the inevitable surge in infections upon reopening, which could worsen the supply-chain issue in China that will reverberates throughout the world,” Kenanga Research warned.
Tourism to rise from China’s reopening
With the reopening of China’s market, tourism-related industries are expected to gain drastically from the reentry of Chinese tourists.
Before the pandemic, China has been Malaysia’s third biggest tourist source country after Singapore and Indonesia since 2012.
According to data by Tourism Malaysia, Malaysia received approximately 3.1 million visitors from China in December 2019 but the numbers plunged to approximately 405,149 in 2020 following the mass lockdown and closure of borders.
In 2023, analysts project that tourist arrivals in Malaysia will likely jump four-folds to 9.6 million, from an estimated 2.5 million a year ago.
Kenanga Research explained that this is expected to be driven by the return of both business and leisure air travel globally as the pandemic comes to an end, the revocation of all on-arrival quarantine and testing requirements in Malaysia from August 1, 2022, and the eventual gradual reopening of China which historically contributed to an estimated 12 per cent of total tourist arrivals in Malaysia.
“This should underpin growth in Malaysia Airports Holdings Bhd’s (MAHB) passenger throughput and Capital A Bhd’s (Capital A) passenger demand in 2023,” it said.
“We project MAHB’s system-wide passenger throughput to rise by 29 per cent to 101 million in 2023, but it’s still a long way from matching the pre-pandemic level of 141 million recorded in 2019.
“Already, the total passenger traffic of its entire network of airports has continued to gain traction in September 2022, recording 8.2 million, bringing 9M-YTD numbers to 58 million (165 per cent) or 74 per cent of our FY22 full-year passenger throughput forecast.
“We expect the traffic to grow gradually in subsequent months driven by domestic seat capacity nearing 90 per cent of pre-Covid level from July and international seat capacity is expected to recover to at least 50 per cent of pre-Covid level during the same period.
“AirAsia and Scoot Airlines were the first international airlines to resume services to Kota Kinabalu International Airport on April 16 and 29, respectively, after a two-year lull. Among the airlines that have resumed services are Thai AirAsia, AirAsia X, Vietjet Air and AirAsia covering Bangkok, Incheon, Hanoi and Hat Yai. Royal Brunei Airlines has resumed services to Kota Kinabalu from Bandar Seri Begawan, utilising Airbus 320neo with two-time weekly frequencies.”
It also said that there has been similar trend for Capital A’s passenger demand in 2023, paving the way for its system-wide revenue seat km (RPK) to grow 52 per cent to 35 billion in 2023, after recovering by 19 billion to 23 billion in FY22 based on our forecasts.
“Beyond 2023, we project MAHB’s system-wide passenger throughput to rise by another 15 per cent to 116 million in 2024, but it’s still a long way from matching the pre-pandemic level of 141 million recorded in 2019. Similarly, we project Capital A’s RPK to rise 18 per cent to 52 billion in 2024, but it still falls short of 63 billion prior to the pandemic in 2019,” it noted.
Given PH’s strong aversion to the consumption tax (evident by their move to abolish it in 2018), it believed it would take a while before talk on this resurfaces again. — Bernama photo
Re-tabling of Budget 2023 to set the stage for Malaysia’s year ahead
THE upcoming year will also begin on a new note, with the re-tabling of Budget 2023 under the new government.
To recap, October’s RM372.3 bllion Budget 2023 has yet to be passed in Parliament and hence, the new Budget 2023 is expected to be re-tabled soon.
On Thursday, the Ministry of Finance (MoF) confirmed that the new Budget 2023 will be presented in the Dewan Rakyat on February 24, 2023.
HLIB Research expected that there could be a possible cut in development expenditure (DE) as Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim has signalled for more transparency and lower leakages.
It believed that there is a possibility that DE may be scaled down from RM95 billion (under Budget 2023-1.0) to RM85 billion (similar level of RM72 billion in 2022 + RM13 billion estimated 1MDB bond repayment).
“Hypothetically, should DE reduce by our postulated quantum, the fiscal deficit target for 2023 would lower from -5.5 per cent to -4.9 per cent.
“Broadly, a reduction in DE is negative for construction – there is a 77 per cent correlation between DE and nominal construction GDP,” it said.
The research team also expected targeted subsidies to address the rising cost of living, especially to the lower income group.
Aside from that, notable pledges by PH include reductions in PLUS toll charges gradually and ultimately eliminate tolls, structure a minimum wage policy plan, 100 per cent stamp duty exemption for first-time home buyers (less than RM500,000) to cover sub-sales, increase healthcare spending to 5 per cent of GDP within five years, increase investments in RE to achieve 50 per cent of country’s energy mix and table the Climate Change Act and Transboundary Haze Act.
As for BN, these include: Assistive Basic Income (ABI) scheme which auto credits cash into households earning less than RM2,200 per month by 2025, two per cent income tax cut for M40, tax cut for companies that uphold gender and ethnic diversity, doubling healthcare allocation by 2027 – similar to PH, East Malaysia as the new economic giants, and RE to represent 30 per cent of electricity generation by 2030.
“Given a different government post GE15, it would only be natural to expect changes to the re-tabled Budget 2023.
“However, as most political parties in this unity government are similar to the pre-GE15 one (BN and the Borneo bloc), chances are that the changes won’t be too drastic.
“Continued cash handouts (BKM or whatever new abbreviation it may be rebranded to) is almost certain, although increasing its allocation could prove challenging given tight government coffers. As the unity administration is still in its early days, unpopular moves involving subsidy rationalisation (though needed) that directly hit the rakyat are unlikely to be featured in the budget but some signalling is probable,” HLIB Research said.
On GST, it noted that given PH’s strong aversion to the consumption tax (evident by their move to abolish it in 2018), it believed it would take a while before talk on this resurfaces again.
And while construction is traditionally a budget favourite, the possibility of a reduction in DE (vis-à-vis the high allocation in Budget 2023-1.0) could be negative for the sector.
“Initiatives for the property sector will probably be targeted to the B40 and M40 buyer group (such as tax relief for first time homebuyers, while not ruling out another HOC),” it added.
“Further expansion/extensions on the benefits accorded to EV car buyers is very likely. We believe a tax/excise hike can be averted for casinos (last hike in 2019 and still recovering from the pandemic), NFOs and tobacco (both still face a sizable illegal/illicit market) – we view the special draw cuts for NFOs as an isolated case rather than a prelude to more witch hunting for the sins.
“On the ESG front, we may see details on Carbon Tax (taking cue from the impending VCM launch), incentives for more RE capacity and push for higher female board representation,” HLIB Research said.
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Photo for illustration purposes only. — Photo by RF._.studio/Pexels
KUALA LUMPUR (Dec 31): The eye-rolling she received from the doctor while she was already in a panicked state horrified Charmaine Boo.
“I had never been treated by a doctor that way ever,” the 30-year-old social media content strategist said.
She had told the doctor about her fainting spell at a whisky event the night before and instead of taking her seriously, he dismissed her concerns by telling her she had probably been drugged or that maybe she had drunk too much.
“I knew it wasn’t either of those because I barely had a glass and I shared that one glass with my friends,” she said.
She had to insist he take her blood pressure and a blood sample just in case, later finding out on her own that it was a vasovagal episode.
(Vasovagal episodes — where you faint because your blood pressure drops suddenly — happen because the body reacts to certain stressors like emotional distress or the sight of blood, etc.)
Then there was the time she had a terrible attack of hives where her entire body was covered with red welts — the first time in her life she had such an experience as she had no history of allergies.
She ended up seeing three different doctors but one consultation stood out because of the doctor’s rush to push her out the door.
“He brushed off my concerns and it was so obvious that he just wanted the consultation to be done and over with,” she said.
Eleda Zaaba, 31, who works as a publicist, panicked about giving birth (her first child) due to her doctor’s lack of empathy as she was keen to explore alternative birthing options.
Unfortunately, she soon found that the local healthcare system provided few alternatives for mothers who wish to do so in Malaysia.
“Mothers are expected to just follow anything that is convenient to the doctors. For example, giving birth lying on your back,” she said, explaining that it made more sense to give birth sitting upright as gravity helps to push the baby out, citing one study that supports this.
The doctor she had been seeing near where she lived, however, disagreed with her, saying that the conventional method was the only way in a tone that Eleda felt strongly implied she was a coward.
“I was about to pop and she wasn’t going to deliver my baby gently,” she said, describing her fears.
Eleda and Charmaine are not alone as some research suggests that women are much more likely to be gaslighted over their health due to gender biases.
But AKM, 28, added the same thing happens to fat people to the extent that he has neglected his health because of the dread he feels when he has to go to the doctor’s.
“I’m always wary that whatever the issue is, even when I was at what I’d call my ideal weight, I still have that dread that the issue would be related to my weight and having to lose weight,” the engineer said.
The experience is not limited to healthcare settings. A social engagement once saw a doctor whom he had never before lecturing him for an hour about his weight.
“It takes a lot of convincing and time for me to actually go for a check-up because of the generally horrible experiences I’ve had with doctors,” he shared.
So is there something we can do about these less than empathetic doctors?
“There are avenues to report any dissatisfaction in the delivery of healthcare services. People can make a formal complaint to the Malaysian Medical Council (MMC),” president of the Malaysian Medical Association (MMA) Dr Muruga Raj Rajathurai said, adding that medical training is not only about diagnosis and treatments.
“How to interact and communicate with patients is part of the training in medical school and is also emphasised in the medical profession,” he said.
“Doctors are trained to be neutral when seeing their patients and to listen without being judgemental.”
Dr Mohd Fadzil Man, a 72-year-old psychiatrist, shared his observations about the training doctors undergo, saying: “Back when I was in medical school, we had a lot of bedside supervision from Year Three onwards. I feel a lot of the younger doctors today don’t get enough of that training.”
He said the problem seems especially dire in new private medical schools which are not staffed sufficiently.
“You get a lot of lectures and tutorials, so there are no problems passing exams. But there is not enough staff to supervise them bedside so they don’t have the soft skills,” he explained.
He also said there were other reasons such as the immense stress that comes with the profession, such as stress.
“Doctors, like other human beings, are vulnerable to stress and psychiatric breakdowns. Under stress, sometimes it’s very difficult to be empathetic because you’re caught up with managing life and death situations so it may come across to the patient as the doctor as not having empathy,” he explained.
Besides that, there is also the issue of toxic workplaces where junior doctors may encounter seniors and supervisors who do not care about their struggles with inadequate training and mentoring.
He has seen young doctors break down and give up over this, to the point that they leave the profession.
“I find that doctors under stress are aggravated by their consultants, who themselves lack empathy about what their junior staff are dealing with,” he said.
To him, a good doctor is one who not only provides treatment but one who also helps the patient through the emotional turmoil that illness can bring.
“I don’t think anyone can have a successful career in medicine if they lack kindness and compassion. A passion for helping people should be an innate quality in anyone pursuing a career in medicine,” Dr Muruga said.
He agreed that it was not only a matter of academic qualifications and hard work.
“You also have to have the right qualities as a person. A person’s values and upbringing are important,” he said. — Malay Mail
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Data breaches have become increasingly rampant in Malaysia over the last two years. — Malay Mail photo
KUALA LUMPUR (Dec 31): Malaysians have been hit with yet another data breach. This time involving a banking institution, multimedia and broadcast agency and a government electoral agency where millions of personal information were said to have been sold online.
In the latest allegation, the leaked databases contain the full names of some 13 million voters sourced from the Election Commission (EC) and customers of Maybank and Astro Malaysia as well as their MyKad numbers, addresses and mobile numbers.
Such incidents have become increasingly rampant in the last two years.
Here are some of the major data breaches that have happened in 2021 that continues to test the fragility of the nation’s cybersecurity even as the nation seeks to embrace 5G broadband network.
2022
December 30 – Communications and Digital Minister Fahmi Fadzil has put two agencies on the tail of the latest data leak allegation involving some 13 million account holders from Malaysia’s largest bank Maybank, the EC, and satellite broadcaster Astro.
The stolen information was posted on a popular online database marketplace where the seller asked interested parties to message them directly through Telegram or use the forum’s direct messaging features to complete the sale.
Lowyat.net reported that a separate listing also existed on the same day where the seller said they had personal database of internet provider Unifi’s mobile customers. The seller was asking for US$850 (RM3,752) for the sale.
This latest breach was made public by Twitter user @Xanda whose original tweet is no longer available.
November 28 – Several sources report that an ad was posted on a well-known hacking community forum claiming to sell a 2022 database of 487 million WhatsApp user mobile numbers, of which, 11 million are Malaysian numbers.
The leak includes accounts from 84 countries. According to the source, countries with the highest number of hacked accounts are Egypt with 44,823,547, Italy with 35,677,323, and the US with 32,315,282. Malaysia has the 12th highest number with 11,675,894.
The seller, however, did not specify how they obtained the database. But quite often, massive data dumps posted online turn out to be obtained by scraping — which violates WhatsApp’s Terms of Service.
Meta, the company who owns WhatsApp, dismissed these reports calling it speculative and based on unsubstantiated screenshots.
November 10 – Malaysia’s election regulator had its database hacked. The seller of the stolen data claimed to have registered voters’ MyKad numbers, full name, email addresses, passwords and home addresses.
It even had the pictures and identity card numbers of citizens as Malaysia moved towards automatic voter registration. The EC exercise began in 2019. The EC website is still used for updating voters’ personal information such as phone numbers and addresses.
Twitter user @acaiijawe first tweeted about the data being sold online for US$2,000 (RM8,824) to be paid in Bitcoin or Monero (a decentralised cryptocurrency abbreviated XMR).
November 5 – Budget airline AirAsia was hit by a Daixin ransomware, jeopardising the personal information of five million passengers. Following investigations, the Communications Ministry said the company had detected an unauthorised access on its servers on November 12.
AirAsia’s parent company Capital A was told to hand over any important document and data related to the incident. Efforts to track down the perpetrators are ongoing.
Daixin is a ransomware and data extortion group. It admitted to the attack in an interview with databreaches.net, stating that it was unhappy with AirAsia’s chaotic organisation and alleged its absence of any standards.
October 25 – Around 2.6 million Carousell users from Malaysia and Singapore fell victim to a data breach on the popular online secondhand goods selling platform. All the stolen data was sold online for a mere US$1,000 (RM4,412).
Carousell users’ account creation dates, usernames, full names, email addresses, phone numbers and more were publicly posted online by the hackers. Investigations revealed a bug in the system migration used by a third party to gain unauthorised access to the company’s database.Carousell said it has contacted all affected users and advised them to look out for any phishing emails or SMSes, and not to respond to any communications that ask for information such as their passwords.
September – Data theft incident where hackers claiming to be from a ‘grey hat’ cyber security organisation alleged that they had breached the civil servant e-payslip system (ePenyata Gaji) to expose its weakness.
The group claimed that it could access over a million rows of identities via the database, which is in the format of JavaScript Object Notation (JSON) and comma-separated values (CSV). These contain the government employee’s MyKad number, rank, department, payslip numbers, email address and mobile phone number.
The group also claimed that it has extracted almost two million pay slips and tax forms in PDF format with a total file size of 188.75GB. Then communications and multimedia minister Tan Sri Annuar Musa said the government had found a lead regarding the alleged data theft but there has been no updates of investigations since.
September – Another budget airline Malindo Air, now rebranded as Batik Air, saw 45 million customers’ email addresses, dates of birth, addresses, passport numbers and phone numbers were all revealed online by hackers who claimed to have gained access to the database in 2019.
It was alleged that the data was obtained from a cloud storage service and was leaked by an individual or organisation called Spectre.
Batik Air acknowledged the issue in a press statement and disclosed that two former employees of its eCommerce partner GoQuo (M) Sdn Bhd in their development centre in India were involved. Police reports were made in both Malaysia and India. Malindo Air said the incident is not related to the security of its data architecture and none of the payment details of customers was compromised.
August – Leading payment gateway iPay88 had customers’ card data compromised after a cybersecurity incident. The company said that it initiated an investigation and brought in relevant experts to contain the issue after the discovery on May 21.
iPay88 is a payment gateway company established in Malaysia in 2000 that offers comprehensive payment methods to companies that include e-commerce and retail solutions.
According to KiplePay, a prepaid card provider offered free replacement cards for those affected by the data breach.
May – News emerged that millions of datasets belonging to the National Registration Department or NRD were up for sale for just US$10,000 (RM44,095).
The seller who posted the sale online claimed to have the data of all those born in Malaysia from 1940 until 2004. According to lowyat.net the database was purported to be 160GB large and contained full names, identity card number, addresses, dates of birth, genders, races, religions, mobile numbers, and Base54-based photos.
The seller also posted the details of then home minister Datuk Seri Hamzah Zainuddin to demonstrate the authenticity of the database.
2021
April – Israeli cybersecurity company Hudson Rock co-founder Alon Gal highlighted a leaked database containing data from 533,000,000 Facebook users in 2021. More than 100 countries were affected, with over 11 million Malaysians data leaked.
The data leaked included names, mobile numbers, emails, genders, occupations, cities, countries, marital statuses, and more.
Facebook said the leak was old data that was previously reported in 2019 and they had fixed the issue but the data here was leaked for free meaning the information can still be exploited by crude marketers, scammers, and hackers according to Gal.
The previous government had proposed RM73 million towards CyberSecurity Malaysia as well as the establishment of the National Scam Response Centre as announced in Budget 2023.
They also announced the removal of the One-Time Password (OTP) sent through text by banks for higher risk transactions, a platform will be created for the public to report any sort of online scam cases, government to spread more awareness regarding digital literacy to decrease online scam victims and the creation of a bill to protect credit card users will be proposed nearing the second quarter of 2023.
March – National carrier Malaysia Airlines informed customers of its frequent flyer programme Enrich that there had been a “data security incident” at one of its third-party IT service providers. According to the airlines, the incident happened between a nine-year-period from March 2010 to June 2019.
However, the company did not disclose the number of members affected. Data such as tier levels, status and personal details were stolen but the airlines suggested that there was no evidence to show the stolen information was being used elsewhere but advised members to change their passwords and update their details via phone call.
February – Personal details of over 300,000 E-Pay customers appeared to have been exposed online through a data breach. A threat actor was spotted selling a database of 380,000 customers on a data sharing forum for US$300 (about RM1,322). That’s about 0.32 sen per user.
From the sample record posted on RAID Forums, the database contain the customer’s name, email address, hashed password, date of birth, full address including city and postcode and mobile number. If purchased, these details if legit can be misused for scam activities and 380,000 records is quite a significant size. — Malay Mail
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