☕️ A li'l bit of meritocracy in action - Matriculation spots ‘opening up’ to non-Bumis

1. MARKET SUMMARY 📈

2. NUMBERS AT A GLANCE 🔢

As Malaysia becomes an ageing population, Japan gives us a good template for what could happen and allows us to plan ahead (something our government is entirely not known for). In the latest research, long-abandoned houses (aka akiya) in Japan have brought down the values of surrounding properties, with losses reaching USD24.7 bil (RM116.4 bil). From 2018 to 2023, the number of houses that remained empty increased by nearly a staggering 11x from 360k to 3.85 mil, with more than 70% of these being detached, single-family houses. In areas where abandoned houses are on the rise, there are many elderly people living alone. The research only looked into single-family houses and excluded abandoned condos, which is estimated to have a greater negative impact if factored in. Airbnb has a solution for these akiyas by turning them into tourist lodgings.

Uncle Sam’s sanctions against Huawei perhaps might be a blessing in disguise for the Chinese tech giant to gain its tech independence. After being barred from using Android, Huawei has developed its operating system, HarmonyOS. There are now some 900 mil Huawei devices installed with its own-built OS. For comparison, Apple said there were 2.2 bil active Apple devices globally at the end-2023. Huawei’s premium phones have also eaten into Apple’s market share in China. Huawei saw the sale of this premium segment phones shot up by 72% in the first five months of the year as it started enjoying phenomenal growth following the introduction of the Mate 60 Pro, which contained the 7-nanometer processor chip that the US thought Chinese firms weren’t capable of developing.

There were only 277 organ transplants performed last year despite a staggering waiting list of 9,024 adults — that’s a meagre rate of 3.1%. The organs in the highest demand are the kidneys due to the high number of dialysis patients in Malaysia. There are two categories of organ donations: living transplants which involve kidneys and livers, and cadaveric transplants, which occur after death. Organ donation awareness is considered relatively low compared to the overall population in Malaysia, as only 300,000 people in Malaysia are registered as donors. Some prevalent reasons for the hesitation towards organ donation were concerns over body mutilation and the lack of knowledge about the deceased’s last wishes. On the black market, a kidney can be purchased for a price tag of USD9,000 (RM42.4k).

3. IN MALAYSIA 🇲🇾

Matriculation spots ‘opening up’ to non-Bumis
A little bit of meritocracy in action. PM Anwar Ibrahim announced that the cabinet is lifting the ‘racial obstacle’ for high-achieving non-Malays to enrol on matriculation programmes. He guarantees that those who score all As in SPM from ALL races will be given the opportunity to join the programme. However, in the same breath, he also said that the existing Bumiputera quota for the programmes remains in place – currently, there is a 90% Bumi intake quota with the remaining 10% open to non-Malays. If the quota will remain the same, how will the racial obstacle be tackled? While specifics of this “restriction lift” are yet to be detailed, one thing is certain: this is a move that is long overdue. The Malaysian Matriculation Programme is a one-year preuniversity preparatory programme offered by the Ministry of Education.

In a particularly sombre Royal Education Award acceptance speech by M Nahvin last year, he mentioned a friend who fell into depression after being rejected by the same matriculation programme, even though he was equally as qualified. He then relays the plight of minorities and how education should be a meritocracy game. Anwar is adamant in defending the Bumi quotas and policies, but many minorities are disadvantaged by the policies, too. Where do we draw the line?

Works Ministry’s ‘Plan B’ for the RM3.46 bil MLFF toll project
The government is looking at a new way to handle the RM3.46 bil Multi-Lane Free Flow (MLFF) toll system project. Deputy Works Minister Ahmad Maslan mentions a plan to issue a request for proposal (RFP) to potentially lower their cost. Companies are given until December to submit their proposals. The proposed MLFF system is estimated to cost RM3.46 bil for 33 highways. This project sparked controversy last year. To recap, according to The Edge Malaysia, a private entity which is 60%-controlled by YTL and 40%-owned by a state-owned entity, pitched its idea for the MLFF to the Malaysian Highway Authority and the Ministry of Works. However, some toll operators expressed concerns over leakages and YTL’s lack of experience. Works Minister Alexander Nanta Linggi says that decisions are yet to be made.

New regulations caused 90% drop in MM2H applications
There’s been a 90% drop in applicants for the Malaysia My Second Home (MM2H) scheme, and it’s mainly due to the new regulations posed. The scheme used to be favoured by foreign retirees, contributing a hefty RM58 bil to the economy over 17 years. The latest guidelines mandate property purchases and require ownership for at least 10 years, with higher bank deposits – ranging from USD150,000 (RM700,000) to USD 1 mil (RM4.7 mil) alongside property investments, which cost between RM600,000 and RM2 mil. It seems that the minimum 10-year hold requirement is proving to be a deterrent for new applicants. The scheme is less appealing when compared to Thailand and Indonesia, where the mandates are relatively more lax. The new scheme is likely to attract ‘high-net-worth’ individuals, representing a policy shift by the government. But it’s a double-edged sword, as the new mandates are unlikely to boost the housing market as it intended.

Grab, beware - inDrive, the new superapp
inDrive, a ride-hailing company rivalling Grab is expecting to double its current 10,000 drivers by the end of 2024. Last year, inDrive was the fourth most downloaded ride-hailing app in Malaysia but is now the second most downloaded globally. This growth is thanks to their unique fare-bidding system, where riders and drivers can negotiate a fair price between them. Although it’s in the early days, inDrive thinks that this feature has the potential to make transportation more accessible and, in turn, boost the app’s growth. InDrive is already available in KL, Penang, JB, Kuching and Kota Kinabalu.

Courier and intercity services are underway to become significant revenue sources, and the app also provides specialist services which allow users to hire professionals for tasks like repairs, construction, cleaning, pet care, IT services and the likes (but, but, where’s food delivery?). The fare-bidding feature definitely sets them apart from current competitors, giving both driver and rider more autonomy. Especially when Grab keeps cancelling rides and adding insane surcharges just because they can. Watch this TikTok on inDrive vs Grab. InDrive claims on its website that it has more than 240 mil downloads and operates across 749 cities in over 46 countries - more about the company here.

Shorts:

1. Langkah Muar: SS’s 200km run reaches parliament, raises RM800/km

   Muar MP Syed Saddiq made it in one piece after completing his 200km run and stood outside the Parliament gate and called for justice to provide constituencies with the necessary funding. SS said that he managed to collect RM160,000 from 2,000 donors for his service centre from the run, exceeding his RM100,000 target. He was able to raise funds at a ‘speed’ of RM800 per km.

2. Goodbye, Good Vibes (again)

   The Good Vibes Festival (GVF), scheduled for the weekend of July 20 and July 21, has been cancelled yet again. But this time, it’s due to the King’s installation that is to be held on July 20. Future Sound Asia, the organiser, has tried to postpone the acts but failed to do so as many artists are slated to perform elsewhere on different dates. This is the second consecutive year that GVF has been cancelled, thanks to the Smallest Man Who Ever Lived (Swifties, unite — reference here) last year. Poor management from the organiser or could it just be bad luck?

4. AROUND THE WORLD 🌎

Geopolitics in Asia

• The making of Asian NATO
  North Korea has criticised a joint military exercise by the US, South Korea and Japan, saying such drills have turned the relationship of these 3 nations into the “Asian version of NATO”. NATO, which stands for the North Atlantic Treaty Organisation (or to some - No Action, Talk Only), is an intergovernmental military alliance of 32 member states whose member states agree to protect each other against attacks by third parties and operate as a check on the threat posed by the Soviet Union during the Cold War. Despite the dissolution of the Soviet Union, the alliance remained in place and posed a threat and provocation towards Russia. Last Thursday, these 3 nations conducted a large-scale joint military drill in South Korea involving major military vehicles and equipment aimed at boosting defences against missiles, submarines and air attacks. 

• Think tank: How China can take over Taiwan without invading
  The Centre for Strategic and International Studies (CSIS), a prominent thin tank, in its latest report, said that China could still take control of Taiwan without ever having to launch an invasion through a “coercion campaign”. China could quarantine Taiwan to restrict access to the island’s ports, completely sealing off the island from the world. CSIS added that this method represented a “significant gap in US strategic thought”. Quarantine could be a preferred method for China as it would not be seen as an act of war versus an invasion or blockade, which CSIS defined as a military-led campaign. It’s also more reversible and would not require the closing of the Taiwan Straits.
  View report: How China Could Quarantine Taiwan: Mapping Out 2 Possible Scenarios

Non-tech winners of the AI-craze - consultants
Non-tech players are cashing in on this AI craze. Put on a suit, speak well and make beautiful decks (with the help of ChatGPT) - businesses are turning to these consultants to navigate their way in this unchartered territory with generative AI going mainstream. Some winners:

1. Boston Consulting Group now earns a fifth of its revenue - from zero just 2 years ago - through AI-related work.

2. IBM has secured more than USD1 bil in sales commitment related to generative AI consulting work and its watsonx system, which can be used to build and maintain AI models.

3. Accenture booked USD300 mil in AI-related sales in 2023.

4. About 40% of McKinsey’s business in 2024 will be generative AI-related.

5. KPMG is expected to generate more than USD650 mil in US business opportunities from generative AI-related work from nothing a year ago. 

Not all of these consultancies are related to the adoption of generative AI and vary from business to business. Some consultancies advise on regulatory compliance and some draw up plans for AI customer support systems or developing guardrails to prevent AI systems from making errors. 

Corporate Deals 

• Boeing buys back its faulty door plug supplier in USD4.7 bil deal
  Boeing announced it will acquire back its struggling fuselage maker Spirit Aerosystems in an all-stock deal to improve safety and quality control. Spirit made the door plug that blew out midflight on a 737 MAX 9 Boeing jet back in January on an Alaska Airlines plane. In 2005, Boeing spun off operations in Kansas and Oklahoma which then became the present-day Spirit. Boeing contributed about 70% of Spirit’s revenue last year, whilst Boeing’s rival Airbus contributed 25%.

  Airbus is also taking part in this transaction. The European planemaker will pay a nominal USD1 for the assets of Spirit which is involved in supplying key parts for Airbus’s planes. Not only did it pick up part of Spirit on a bargain, Airbus will also be compensated for agreeing to take on this work by a payment of USD559 mil from Spirit. 

• Sony’s new business - crypto exchange

  Japenese electronics giant Sony Group is relaunching its crypto exchange Whalefin, which it acquired last year in August from crypto lender Amber Group. The terms of the deal were not disclosed. Sony will rebrand the crypto exchange to S.BLOX. Sony has dabbled in Web 3 and crypto through investments and this latest deal marks its first proper foray into crypto. 

Shorts

1. China’s SpaceX accidentally launched its rocket and crash

   Tianbing Aerospace Technology accidentally launched a rocket it was testing, causing the vehicle to lift off and crash into a nearby mountainside. The Tianlong-3 rocket is designed as a rival to SpaceX’s Falcon 9, with a similar takeoff mass and reflight and is estimated to be partially reusable for up to 10 trips. People in a nearby city were able to capture footage of the accidental launch and subsequent crash - watch here. For some reason, exploding rockets are satisfying to watch. Here’s Elon Musk tweeting his favourite SpaceX explosions. 

2. US Supreme Court’s ruling a win for Donald Trump

   The US Supreme Court, for the first time in history, recognised that ex-presidents have immunity from prosecution for certain actions taken in office, as it threw out a judicial decision rejecting Donald Trump’s bid to shield himself from criminal charges relating to his efforts to overturn his 2020 election loss. The court ruled 6 to 3 that former presidents can enjoy immunity for actions taken within their constitutional authority and not for actions taken in a private capacity.

5. FOR YOUR EYES 📺

1. An unconventional tourism ad by Oslo, a city in Norway, to promote itself. No matter how kick-ass their ads gonna be, it will burn a big hole in your pocket travelling to Scandinavian countries.

2. The T10 bas sekolah flex

3. Ferrari delivered only ~14,000 cars last year. Here’s how Ferrari makes its money.