☕️ BNM co-payment: what and why

1. MARKET SUMMARY 📈

2. NUMBERS AT A GLANCE 🔢

The US and EU have a USD230.8 bil reason to impose tariffs on Chinese EVs — that’s the amount of state-backing the Chinese EV industry received between 2009 and 2023, according to new research from the Centre for Strategic and International Studies (CSIS). CSIS analysed 5 areas of support: national rebate programmes, infrastructure funding, government purchases of EVs, research and development programmes for EV makers, and exemption from China’s 10% sales tax, which formed the bulk of Beijing’s support that ended last year. In fact, CSIS said its data is a “highly conservative estimate” as it did not include a number of factors such as local government support, land, credit, and electricity provided for EV companies.
View research: The Chinesee EV Dilemma: Subsidized Yet Striking

Still on China — its foreign reserves at end-June stood at USD3.222 tril, down marginally by USD9.68 bil month-on-month, according to official data. It held 72.8 mil troy ounces of gold value at about USD167.9 bil. At its peak in 2014, China’s foreign reserves were worth about USD3.84 tril. China also parks a huge chunk of its reserves in US government debt, making it the second-largest lender to the US at USD770.7 bil as of Apr 2024. The US Treasury publishes monthly on its top bondholders — view here.

Since 2017, a total of 14 incidents involving fallen trees have been recorded, causing 9 injuries and 5 fatalities in Kuala Lumpur. Unfortunately for some victims, their claims had been declined as the incidents occurred outside locales not within the purview of DBKL. So far, 1,488 trees have been assessed, of which 133 (8.94%) were categorised as high-risk and have been cut down.

3. IN MALAYSIA 🇲🇾

Sg. Bakap by-election rundown
Despite being the Prime Minister’s hometown, PN retained the Sungai Bakap seat after Abidin defeated PH’s Joohari Ariffin with a majority of 4,267 votes – 1,563 votes more than the previous election. Bersatu leaders are confident that the win represents the rakyat’s rejection of the Madani government, according to PN Sec-Gen Hamzah Zainuddin’s Facebook post. He uses the diesel fuel subsidy removal as a blatant cause of the people’s ire, signalling that the rakyat is worse off from the reform as external prices of goods and services shot up after the policy change. Meanwhile, party youth chief Wan Ahmad Fayhsal, or WAF, attributed the loss to the MAHB deal. 

Malaysiakini’s analysis showed that voter turnout decreased to 62.9%, 4,500 fewer than last year. PN’s vote share increased to 58.6% from 52.7%, while PH’s reduced to 41.4% from 47.3%.

Medical costs: pay less, co-pay more
Starting Sept 1, Bank Negara Malaysia (BNM) mandates that insurance companies and takaful operators (ITO) offer policies with at least a 5% co-payment or RM500 deductible. We can choose between two types of medical insurance plans: cheaper plans with co-payment features or existing plans without co-payment but higher premiums. You might be wondering, what does that even mean? Co-payment means you’ll share part of the medical costs with the insurance company. This could either be a percentage of the total hospital bill or a fixed amount set by the insurer or ITO, but emergency treatments, follow-ups for critical illnesses, and treatments at government facilities are exempt from co-payment. Insurance companies can also waive the co-payment if you face financial problems. To simplify the matter further, an insurance agent explained the rationale behind this move.

BNM targets to lower premiums as the co-pay option can be 19%-68% cheaper than ones without, but it also helps curb fraudulent claims and control rising medical costs and keep medical inflation at bay. However, you can still stick with your current plan or buy existing non-co-pay policies. All future insurance plans will include a co-pay feature. In 2023, the country recorded medical inflation of 12.6%, significantly higher than the global average of 5.6%.

Could we really tackle corruption with two legal reforms?
Two recurring issues in the Auditor-General 2023 reports, and its surprise, surprise: corruption and mismanagement (to recap, we published last Friday here on this). Anti-graft experts are calling for two key legal reforms to address the issues, but could it really be that simple? 

• The first suggestion is to amend current laws to include a Misconduct in Public Office (MiPO) component, inserting MiPO as a provision in the MACC Act. It would hold public officials accountable for misusing government funds and “failing in their duties”. The experts say that auditors should be the “third line of defence” against malfeasance in public projects, but accountability is weak within civil servants, hence recurring issues.

• The second proposal is the enactment of a Freedom of Information Act (FOIA), empowering citizens to request information on public projects and government spending. This, we like. We could actually enhance transparency and allow better monitoring of public funds if the data is made public. An additional proposal was made to introduce project-based grants for NGOs and journalists to investigate public sector projects and agencies. With that said, these reforms are long overdue. It’s sad that they’re not already enacted by any of our many, many governments before considering the glaring number of corruption issues we face.

PNB’s fintech platform Raiz bids goodbye after 4 years
Raiz Invest Ltd announced that Raiz Malaysia Sdn Bhd, a joint venture with PNB, will shut down after 4 years of operations following a strategic business review. Raiz Malaysia is run as a partnership between Raiz Invest Australia Ltd (a subsidiary of Raiz Invest) and PNB’s Jewel Digital Venture Sdn Bhd (JDV). JDV has committed RM3 mil to ensure the closure is smooth and phased to manage client assets properly. Curious how much was invested in total in this Malaysian JV.

Launched in mid-2020, the Raiz app, a micro-investing and fintech platform, initially aimed to help Malaysians save and invest in ASNB’s unit trust funds. Raiz then expanded its services to more banks, added investment funds, and partnered with merchants for rebates. Raiz saw its revenue grow to RM2.43 mil in FY2023, but the company has faced losses every year, with RM6.54 mil loss in FY2023. On March 27, Raiz finalised its exit from its Indonesian JV operations.

Shorts

1. Fireflies dimmed by threats of global warming

   The magical flicker of fireflies in our mangrove forests like in Kampung Kuantan, Selangor, is fading. Global warming is partly to blame for this decline, alongside habitat destruction. Dr. Wan Faridah, a firefly expert from Monash Uni Malaysia, has studied these pretty insects since 2006. While rapid development and pollution have long threatened fireflies (60 species in Malaysia!), global warming has become a significant threat. Rising sea levels are disrupting mangrove ecosystems which are crucial for the firefly population, and it’s endangering the people living in the coastal areas as well. Of the 60 species, 10 are found in mangrove swamps and four of them are on the endangered species list.
   Watch: How and why do fireflies glow

2. 29-year-old found dead after cyber-bullied on TikTok

   In a tragic case that went viral on X, Rajeswary Appahu, 29, was found dead after she was threatened with rape and murder on TikTok live. Rajeswary, a social media influencer and activist, lodged a police report last Thursday expressing fears of rape and murder before she was found dead in her condo the day after. The police have arrested a 35-year-old woman for allegedly making the threats online, as Rajeswary had named two people in her police report. Our thoughts and prayers go to the family and friends of Rajeswary.

4. AROUND THE WORLD 🌎

Election Weekend

• UK: The Labour Party scored a landslide general election victory, kicking out the Conservatives after 14 years in power. Sir Keir Starmer becomes the UK’s next PM - a short profile here. Labour won 412 seats (63.4%) of the 650 parliamentary seats. Interestingly, of these 650 MPs, 335 (51.5%) have never been MP before. Nothing dramatic in this election, but some interesting stats here in terms of gender, ethnicity, and educational background representation. For drama, read on. 

• France: First, it was a highly unexpected move by President Emmanuel Macron to call for a surprise election. The first round of the election (there are two rounds in the French system) saw the far-right National Rally (NR) seemingly on course for victory. Shockingly, in the second round, the left-wing New Popular Front won the most seats and Emmanuel Macron’s centrist Ensemble alliance staged a comeback. None of the parties had enough of the 289-seat majority in the 577-seat parliament to form the government. France is in a state of a hung parliament, like Malaysia back in Nov 2022. The French election system can be quite confusing — here’s a video breaking down the results and explaining how NR ‘shockingly’ lost. 

  Learn: Understanding the political spectrum from left to right

Philippines — one of only 2 countries in the world where divorce is banned
In the Philippines, a married couple cannot legally end their marriage, even in cases of infidelity or domestic abuse. The other country - the Vatican. Connect the dots and a commonality between both are their staunch Catholic beliefs. Catholics hold deep beliefs that marriage is sacred and should happen only once. That said, the Philippines has made progress with the Absolute Divorce Bill being passed by the House of Representatives in May and now awaits approval from the Senate before divorce becomes legal.

Previously, Filipinos could file for legal separation, but it does not legally end a marriage. Another alternative is annulment, which is expensive and requires clear evidence that a marriage is invalid (i.e. had an earlier undisclosed marriage). In some extreme cases, Some Filipinos moved to other countries to file for divorce abroad, then hoping to have the process recognised back in the Philippines.

Deals 

• Entertainment: Paramount Global, one of Hollywood’s oldest companies formed in 1914, has agreed to merge with independent film studio Skydance Media in a complex deal that would value the new firm around USD28 bil. Some of Paramount Global’s well-known properties include CBS, Comedy Central, Nickelodeon and MTV. The company said it has a global reach of 4.3 bil subscribers across more than 180 countries. Skydance’s recent hits include Top Gun: Maverick and Star Trek Into Darkness. Skydance is owned by David Ellison, the son of Larry Ellison, who founded tech giant Oracle. 

• Beverages: Danish brewer Carlsberg will acquire British soft drinks maker Britvic for USD4.23 bil to form a UK beverage powerhouse. Soft drinks currently make up about 16% of Carlsberg’s volumes. Britvic sells non-alcoholic drinks in Britain, Ireland, Brazil and also in the Middle East — check out its brands here. This acquisition will also see Carlsberg taking over Britvic’s bottling agreement with PepsiCo, as it also bottles for PepsiCo in several markets. 

Shorts

1. When watching K-drama ends with life imprisonment or death sentence
   A news leak by Chosun TV reported that the North Korean government has sentenced 30 teenagers to death or life imprisonment for watching K-dramas, though it’s not known how many had to face the gallows. In 2020, Pyongyang passed a law to make watching or distributing South Korean entertainment punishable by death. 

2. China’s new milestone - big brand sponsors of Euro 2024
   According to UEFA, there are 13 global partners in this year’s tournament held in Germany, of which 5 are Chinese companies: BYD, Vivo, Hisense, Alipay and Aliexpress, marking a historical record as Chinese firms now occupy over a third of the sponsorship slots. In 2016, Hisense was the sole Chinese sponsor. The tournament is now entering the semi-final stage. These final four countries is well-summarised in the tweet below.

3. A good summer for animated movies

   “Despicable Me 4” (watch the trailer here) is the second animated film of the summer after “Inside Out 2” and had globally grossed USD229.5 mil, more than double its USD100 mil production budget. This is the sixth movie in the “Despicable Me” franchise and has made the series the highest-grossing animated film franchise of all time. Inside Out 2 continues to rake it in at the box office, with its global box office haul now at USD1.22 bil.
   We think this is the missing character in Inside Out 2 (meaning here):

5. FOR YOUR EYES 📺

1. Out Summer 2025 - ‘F1’ starring Brad Pitt. Watch the trailer here. Interesting behind-the-scenes in the thread below.

2. Corporate earnings calendar. Get your portfolio ready.