☕️ Bangladesh investigates RM8.9 bil high level labour supply corruption to Malaysia

1. MARKET SUMMARY 📈

MYR up, KLCI up! The stock index climbed to a 4-year high yesterday.

2. NUMBERS AT A GLANCE 🔢

Starbucks’ new incoming CEO Brian Niccol is estimated to earn a total pay package of up to USD116.8 mil (RM500.4 mil) in his first year if he hit the target and fully vests his equity. A large part of this package, USD75 mil (RM332.1 mil) is to compensate for what he is forfeiting with his departure from another F&B giant Chipotle. On top of that, he’s getting a USD10 mil sign-on bonus as soon as he joins. His base pay is just USD1.6 mil, with an opportunity to earn up to USD7.2 mil more in cash plus an annual equity award worth up to USD23 mil. For comparison, the average salary (including bonus) for a Starbucks barista is USD49,287 (RM218.2k) per year - Niccol is earning 2,370 times more than an average barista.

Greater KL residential market experienced an upward trend in Q1 2024, recording a higher average transacted price compared to the pre-pandemic year in 2019. Greater KL refers to the area that stretches from Kampung Datuk Keramat in the east, Subang Jaya in the south, Shah Alam in the west and Sg Buloh in the north. Apartments and condominiums saw an overall price per sq ft of RM397.40 (2023: RM381.97). For two-storey terrace houses, overall price was RM473.42 in Q1 2024 (2023: RM381.97).

At just 44, Colin Huang is now China’s richest man with an estimated net worth of USD48.6 bil (RM215.2 bil) though still far off from his peak of USD71.5 bil in 2021, displacing Zhong Shanshan, the country’s bottled-water king who held the top spot since Apr 2021. Huang has stayed out of the limelight after stepping down in 2021, as Beijing began cracking down on China’s tech giants. Huang is the founder of PDD Holdings, the owner of e-commerce giant Pinduoduo and Temu. Thanks to Temu, which serves market outside China, has bolstered the company’s top line. PDD has about 750 mil monthly active users and reported revenue of CNY248 bil (RM153.3 bil) last year, a 90% jump from 2022. A short read on his profile here.

3. IN MALAYSIA 🇲🇾

Dhaka investigates RM8.9 bil high level corruption in labour supply to Malaysia
The Bangladesh Anti-Corruption Commission (ACC) has initiated an investigation into a manpower supply syndicate allegedly involved in corrupt practices related to sending workers to Malaysia. This syndicate reportedly includes former Bangladeshi finance minister AHM Mustafa Kamal, alongside MP’s Nizam Uddin Hazari, Masud Uddin Chowdhury, and Benazir Ahmad. The accused have allegedly embezzled approximately a jaw-dropping RM8.9 bil or so, through a labor supply scheme.

This intricate scheme is alleged to have sent around 450,000 Bangladeshi workers to Malaysia in just 18 months, with many returning home unemployed and without the promised jobs. Reports indicate that the syndicate operated with the backing of senior officials from Bangladeshi officials, allegedly with the aid of our local counterpart (who? who? who?). Workers were charged exorbitant fees, significantly exceeding the Bangladeshi government's set limit of RM2,941 (BDT79,000), with the average payment reaching RM20,253 (BDT544,000)— that’s almost 7 times the initial fee, with lamentably 0 times the promised return.

Since 2022, nearly 500,000 Bangladeshi workers have entered Malaysia. Only 75 Bangladeshi agencies have been approved to send workers to Malaysia instead of the set limit of 100, leading to allegations of nepotism and corruption due to the massive influx of migrants. The Malaysian government has been reluctant to increase the number of recruitment agencies, despite the high demand for labour.

PuTERA35 - another day, another policy to champion Bumiputera economic growth
The Malaysian government has launched the Bumiputera Economic Transformation Plan 2035 (PuTERA35), setting bold targets to significantly increase Bumiputera representation in high-skilled jobs and equity ownership over the next decade. Prime Minister Datuk Seri Anwar Ibrahim outlined the following key goals of the plan:

• Boost Bumiputera participation in high-skilled jobs from 61% in 2022 to 70% by 2035.

• Raise Bumiputera equity ownership, both by individuals and through Bumiputera-mandated agencies, from 18.4% in 2020 to 30% by 2035.

How are things looking now for the Bumiputera demographic?

• Bumiputera ownership in publicly listed companies stood at just 7% as of 2022, representing a minuscule 62 companies out of the 945 listed on Bursa Malaysia.

• The number of unemployed Bumiputeras totalled 387,800, or 61.5% of the national total of 630,400 as of 2022.

• 70.8% of unemployed Bumiputeras are youths, aged between 15 and 30 years.

Ex-PM in hot water with Pahang royalty after multiple police reports
The private secretary to Tengku Hassanal Ibrahim Alam Shah, Pahang Crown Prince, has issued a statement (view here) and filed a police report against former Prime Minister Muhyiddin Yassin. The report stems from Muhyiddin's recent campaign statements during the Nenggiri by-election, where he allegedly addressed sensitive issues related to religion, royalty, and race (3R). Amir Syaffiq Hamzah expressed concerns that Muhyiddin's remarks incited public distrust in the Malay Rulers and could divide the community. The report was lodged after Amir viewed a YouTube video (watch here) of Muhyiddin's speech, which included claims that the 16th Yang di-Pertuan Agong, Al-Sultan Abdullah, had not invited him to be sworn in as prime minister, suggesting a failure to respect the federal Constitution.

Muhyiddin defended his remarks and stated that he had no intention of inflammatory remarks towards the royal institution or inciting division among the people. He emphasised that his speech at Nenggiri was a statement of fact that did not violate any laws and that he would fully cooperate with the police investigation.

Shorts

1. Najib’s 2,500 pages of defence
   Disgraced former PM Najib Razak has submitted over 2,500 pages of arguments for his defence in his RM2.28 bil 1MDB corruption trial, claiming the charges are defective due to "overwhelming evidence". The prosecution closed its case in May after a trial that spanned more than 200 days. Najib faces 25 charges in total — 4 for abuse of power and 21 for money laundering.

2. Public Holiday (Only in Johor, btw) to cheer on Johor Darul Ta’zim (JDT) football in Finals
   The Johor state government has declared a special holiday on Aug 25 to allow residents to support JDT in the FA Cup final against Selangor on Aug 24. Mentri Besar Datuk Onn Hafiz Ghazi emphasised JDT's successful history, including three FA Cup victories in 2016, 2022, and 2023. He also highlighted the club's transformation since Tunku Ismail Sultan Ibrahim became president in 2012, including being the first East Asian team to win the AFC Cup in 2015 and consistent appearances in the AFC Champions League.

3. Former Perlis MB charged with false claims in cancelled state-funded London trips
   Former Perlis MB Azlan Man is facing trial for allegedly pocketing over RM629,000 in refunds for family trips to London that were booked and paid for by the state government but later cancelled. Testimony from travel agency accounts assistant Fazilah Jelani revealed that Azlan made bookings through Sri Kedawang Travel & Tours from 2013 to 2015, with the state government covering the costs. Azlan is charged with submitting false claims exceeding RM1.18 million for overseas trips between 2013 and 2017 and has pleaded not guilty to multiple counts of receiving illicit funds totalling RM1.06 million between 2014 and 2017.

4. AROUND THE WORLD 🌎

Underlying Switzerland’s beautiful nature lies real, ticking time bombs
Switzerland has plenty of bombs at risk of explosion under its lakes. For years, the Swiss military used the lakes as dumping grounds for old munitions between 1918 and 1964, believing they could be disposed of safely there and was advised for decades by geologists that the practice was safe. Some of the munitions are at depths of 150 to 220 meters, and in some lakes, these bombs are just 6 or 7 meters below the surface. In recent times, this practice has raised safety concerns. The munitions pose 2 risks: the risk of explosion as the fuses were not removed before dumping the munition and water and soil contamination from the highly toxic TNT. 

The Swiss government does not have a feasible solution of its own to remove the munitions without harming the environment. To this end, the government is crowdsourcing for a solution — it is offering 50,000 francs (RM253k) in prize money to the 3 best ideas for a safe and environmental solution to retrieve the munitions, though the salvage operation is expected to cost billions. If only the Swiss could treat its munitions like how its banks treat money. 

Nobel laureate and Bangladesh’s interim PM reveals first major policies
84-year-old Muhamad Yunus delivered his first major government policy address, setting out priorities in front of diplomats and UN representatives. He returned from Europe after being picked by President Mohammed Shahabuddin, fulfilling a key demand of the student protest leaders to lead one of the world’s most populous countries (171.2 mil). The deadly protests led by students led Yunus’ predecessor Sheikh Hasina to flee the country. Some of his policies: 

• Rohingya: He will offer more support for the Rohingya community in Bangladesh seeking refuge in the country and to ensure their safe eventual repatriation. The refugee came from Myanmar in 2017 after a military crackdown. Bangladesh is home to about 1 mil Rohingya. 

• Garment industry: The unrest and mass protests caused widespread to disruption to the country’s major sector, with suppliers shifting orders out of the country. Bangladesh’s 3,500 garment factories account for about 85% of its USD55 bil in annual exports. 

• Election and “atrocities”: Yunus committed to holding free and fair elections in the near future and will assist the UN in its investigations into the “atrocities” committed during the student-led protest that saw more than 450 people killed.

7-Eleven to get new owner in Japan’s biggest foreign acquisition
Seven & i Holdings announced that it had received a takeover bid from Canada’s Alimentation Couche-Tard, operator of a rival convenience store chain Circle K and would set up a special committee to review the proposal. The news sent shares of the Tokyo-listed company surging by almost 23%, valuing it at USD38 bil. This deal would be the largest-ever buyout of a Japanese firm by an overseas company, which is a rare occurrence for Japanese companies to give up majority control to foreign buyers. Japan’s new rules introduced last year to make M&A of domestic companies less difficult and activist investors circling around Seven & i partly contributed to this development. 

Seven & i operated 85,000+ stores, massively outnumbering Couche-Tard’s 14,000 though the latter is worth more in terms of market cap (USD57.5 bil). Couche-Tard and Seven-i had crossed paths before - both were rival bidders to take over US gas station Speedway, which the Japanese company ended up purchasing for USD21 bil. The Canadian firm is also on an acquisition spree - it acquired TotalEnergies’ European petrol stations last year and attempted a USD20 bil bid for Europe’s largest food retailer Carrefour but was rejected by the French government. Started as an American company, the 7-Eleven brand became Japanese and could turn Canadian soon. 

Shorts

1. Extreme misogyny to be classified alongside terrorism in UK
   Misogyny is the hatred or prejudice against women, typically exhibited by men. The new UK government has ordered a review of the UK’s counter-extremism strategy to determine how best to tackle threats posed by harmful ideologies. The review will look into far-right extremism in the UK, and wider ideological trends, including extreme misogyny or beliefs which fit into broader categories, such as violence. According to the Femicide Census (view report here), a woman is killed by a man every 3 days. The rise in misogyny has been linked to “incel” culture, referring to people - usually men - who call themselves “involuntarily celibate” and take out their anger on women and the wider society. Learn more about incel here.

2. Philippines reports new mpox case with no history of foreign travel
   The country has reported its first monkeypox virus case, the first since December. A 33-year-old Filipino male from the capital Manila tested positive for the viral infection out of 5 suspected cases of mpox received by Philippines health officials last week. 9 cases of the virus were detected back in 2023. 

3. The USD100 bil Mormon Church
   The Church of Jesus Christ of Latter-day Saints (widely known as the Mormon church) has filed its financial investments with the Securities and Exchange Commission (SEC), disclosing an investment portfolio of over USD100 bil that includes USD55 bil invested in the stock market (view their top 10 holdings here). The church’s investments were little known to the public until 2019 when a former employee filed a whistleblower complaint that the church’s investment arm acted as a “clandestine hedge fund” disguised as a charity and should not be tax-exempt as it doesn’t engage in any charitable activities.

5. FOR YOUR EYES 📺

1. For dividend investors, here’s how well Malaysian banks pay dividends. For novice investors, dividends sound good (cash in the pocket), but it isn’t always the best investment strategy — learn more here.

2. The 7 deadly sins - tech edition