☕️ Will GST make a return?

1. MARKET SUMMARY 📈

2. NUMBERS AT A GLANCE 🔢

Starbucks has just opened its 20,000th store outside of North America in Manchester, UK. The coffee chain opened its first international store in Tokyo, Japan, in 1996 and now has more than 37,500 stores across 86 markets globally. China is Starbucks’ largest international market, with 6,500 stores. The company sets goals to reach 45,000 stores globally by the end of 2025 and 55,000 by 2030.

Greenland sharks are the longest-living vertebrates on Earth, with an estimated lifespan of 250-500 years, according to the National Ocean Service. The sharks are rarely seen or photographed as they live thousands of feet underwater in pitch darkness. It can grow up to 24 feet (7.3 m). The sharks need to wait until more than a century old before getting laid — they only reach sexual maturity until at least they are 134 years old.

Women now represent 30.6% of boards of top public-listed companies (PLCs) in Malaysia, up from 14% in 2015. For all PLCs, the percentage grew from 10.7% to 25%. Currently, 19 PLCs still have an all-male board, failing to meet Bursa Malaysia’s requirement in 2021 for all PLCs to appoint at least one woman director by 1 June 2023. The list of companies with all-male boards here published on 2 June 2023 - there were 24 companies listed then, with five having met the requirement after this publication.

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3. IN MALAYSIA 🇲🇾

Things Rafizi said

On GST: Economy Minister Rafizi Ramli said the reintroduction of the goods and services tax (GST) to widen the government’s revenue base would hit lower-income households hard. However, he agreed that GST is the most efficient tax in combating tax evasion. He did not rule out imposing a consumption tax (i.e. GST), but has to be done carefully, and the impact to be analysed; otherwise, it could become a regressive tax. 

Separately, PM Anwar told Bloomberg at the Milken Institute 10th Annual Asia Summit that the government first needs to reduce subsidies for the rich before bringing back GST. Rafizi shared last week that targeted subsidies will be implemented next year, as the next step is for the main database system (Padu) to open to the public for verification of their socioeconomic status. Whether the mechanism is to be cash transfer or card issuance is to be determined later. 

In ASEAN, Malaysia is one of the three countries, besides Brunei and Myanmar, that do not impose GST. The rest of ASEAN countries have implemented consumption tax even before 2000.

On pardoning Najib: During an interview with BFM on The Breakfast Grille, when asked to comment on PH’s stance on pardoning former PM Najib Razak, Rafizi who is also PKR deputy president, said the matter will be discussed within the unity government and the Cabinet, but added that “it’s given that PH will not agree to it”.Listen: Rafizi Ramli on the new themes of 12MP mid-term review.

Proton to inspect X90s for fire riskAutomaker Proton will be contacting Proton X90 owners to have their vehicles inspected on possible ground connection issues following a viral video of an X90 catching fire (see here). Proton said the fire was caused by the grounding connection of the vehicle’s body, which can cause overheating, resulting in thermal incident due to its proximity to the soundproofing material. 

X90 owners will be contacted individually to bring their vehicles for inspection and if required, remedial action will be taken to eliminate this thermal risk. Proton also confirmed that the vehicle’s battery was not the source of the incident. View Proton’s statement here. 

Halal certification approval to be decided within 30 daysDeputy PM Ahmad Zahid Hamidi announced in his keynote address at the Halal Sector Forum 2023 that decisions on applications for halal certificates must be made within 30 working days, following complaints suggesting that the application process had taken from 9 months to 2 years, with some applicants receiving rejection notices only after two years. 

Other initiatives to improve the Halal application process include halal certification workshops to be conducted triannually and producing more halal auditors through MARA and technical and vocational education training (TVET) institutions.

Business spotlight: TH Heavy Engineering BhdOffshore fabricator and shipbuilder TH Heavy Engineering Bhd (THHE) is undertaking a voluntary winding-up a year after it was delisted from Bursa Malaysia as it is unable to continue its operations due to its liabilities. THHE had a capital deficiency of RM210.87 mil (liabilities exceeding assets. Learn: What is winding up (voluntary vs. compulsory).

THHE was once a subsidiary of Lembaga Tabung Haji but was taken over by the Ministry of Finance-owned unit Urusharta Jamaah Sdn Bhd (UJSB), which now owns 64.45% of the company. UJSB was a special-purpose vehicle formed to take over and manage the underperforming assets of Tabung Haji in 2018. The assets include stakes in 106 listed companies, one unlisted plantation counter, 20 real estates, including four hotels and a plot of land at Tun Razak Exchange worth a total of RM19.9 bil. View UJSH top 10 shareholding companies here. Read: Urusharta Jamaah explains its role and strategy (2020).

THHE has its own mini-littoral combat ship (LCS) scandal as it has yet to deliver any of the three offshore patrol vessels (OPV) to the Malaysian Maritime Enforcement Agency (MMEA). The RM738.9 mil contract was awarded in Jan 2017, with the first vessel delivery slated for Feb 2020. Earlier this year, MoF has taken over the project and extended RM152.6 mil loan to ensure completion of the first vessel this year, which was supposed to be delivered back in July but did not occur and has been moved to October. 

4. AROUND THE WORLD 🌎

Corporate Scandals and Executive Exits

Qantas: The High Court of Australia has ruled that national carrier Qantas broke the law when the firm sacked 1,700 ground staff early in the COVID-19 pandemic. The court ruled that, while Qantas had commercial reasons, namely the border closures from the pandemic, the firm broke industrial law by going against the rights of unionised employees to engage in industrial action and collectively bargain. Still, the previous Qantas CEO, Alan Joyce really made out like a bandit. Early retirement and leaving behind from the scandals with a nice USD15.3 mil in his pocket.

China Life Insurance: In China, the corruption crackdown on the USD60 tril financial industry snagged another one. Wang Bin, the former chairman and Communist Party chief of China Life Insurance, was sentenced to life in prison after he was found guilty of taking 325 mil yuan (USD44.6 mil) in bribes and hiding another USD7.4 mil in overseas deposits. Authorities also warned that the crackdown, which started two years ago, is far from over.

BP: Oil giant BP’s CEO Bernard Looney resigned with immediate effect for failing to fully disclose details of past personal relationships with colleagues less than four years after he took on the role. This comes as BP started an investigation into the alleged relationships, the second such investigation in two years. A company spokesman shared Looney admitted he was not “fully transparent” initially.

Almost 1,000 cases of sexual abuse identified in the Roman Catholic Church in Switzerland since 1950An official inquiry into the church found that many of the cases involved children and that 56% of the victims were male. The inquiry also found that more than half the cases happened where pastoral care was taking place, like during confession, altar service, and religious education in children’s clubs and associations. A further 30% of the cases were committed in institutions, such as Catholic children’s homes, day schools, and boarding schools.

Researchers from the University of Zurich also found evidence of a “widespread cover-up”, and authorities believe these cases are just the tip of the iceberg. The report criticised various officials for not doing more to help those affected and found that clerics accused of committing abuse were “systemically” reassigned by those in positions of power to other posts, sometimes abroad, to avoid prosecution.

France orders sales halt of Apple's iPhone 12 over radiation concernsOn the same day Apple announced its iPhone 15, French regulators marked the model in question as emitting too much electromagnetic radiation and ordered the tech giant to fix existing handsets in addition to the sales halt. The European standard is a specific absorption rate of 4 watts per kilogram by the human body during tests simulating when the phone is held in hand or kept in a pocket. The iPhone 12 reportedly had a test score of 5.74 watts per kilogram.

Apple has rebutted the claims, stating that the iPhone 12 was certified by multiple international bodies as compliant with global radiation standards. The tech giant stated it had provided the regulating agency, the Agence Nationale des Fréquences (ANFR), with multiple lab results by Apple and independent third-party labs proving the model’s compliance. Apple will also be contesting the results of ANFR’s review and continue to engage with the Agency to show its compliance.

India the big winner as Western firms shift investments from China, but Nipah virus forces shutdown of KeralaResearch organisation Rhodium Group reported that US and European firms are shifting investments from China as investors worry about the country’s business environment, economic recovery, and politics. The shift to other developing markets sees India becoming the big winner of this redirected foreign capital, followed by Mexico, Vietnam, and Malaysia. US and European greenfield investments into India grew by 400% or USD65 bil between 2021 and 2022, whereas investment in China slipped below USD20 bil last year, down from a peak of USD120 bil in 2018.

Unrelated but relevant — Tesla is also planning to source as much as USD1.9 bil worth of auto components from India this year, almost double the value purchased last year. Tesla CEO Elon Musk promised in June that the automaker would make significant investments in the country following his meeting with Indian Prime Minister Narendra Modi in the US. India is also considering incentives for makers of auto components and wants to see more investments and higher output of electric vehicles in the country.

Unfortunately, India’s southern state of Kerala is battling its fourth outbreak of the Nipah virus since 2018, leading to the shutting down of schools, offices, and public transport to stop the spread of the virus, which has already claimed two lives. Authorities shared that the focus is on contract tracing and isolation and that the virus was the Bangladesh variant, which has a high mortality rate but is less infectious.

Shorts:

1. Thailand to waive tourist visas for China, Kazakhstan in bid to bolster economy Thailand is looking to attract more visitors and spur spending in the year-end high season, employing this temporary waiver “to see the impact” on a slowing economy caused by weak exports. The waiver will be in effect from September 25 until the end of February 2024. Tourism accounts for nearly 20% of the nation’s GDP. Pre-Covid, over 11 mil Chinese tourists visited Thailand, making it the largest overseas tourist, accounting for more than a quarter of the total. 

2. Libyan flood death toll climbs to over 5,000 Authorities are still struggling to get aid to the hardest-hit coastal city of Derna, as the flood had washed away most access roads. Reports from the city describe the devastation, with thousands still missing and tens of thousands displaced. Authorities also expect the death toll to continue rising. See Libya on the map here.

5. FOR YOUR EYES 📺

Study found that viewing images and videos of cute animals helps with reducing stress levels. Here’s us playing our part to help you reduce your mid-week stress.

1. An orangutan babysits tiger cubs in Myrtle Beach, South Carolina.

2. Three humpback whales synchronised jump caught on camera off the coast of New England.

3. One-of-a-kind aquarium with a box inside it for cats to watch the fish.