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Will there be surprises from Invest Malaysia?
INVEST Malaysia, an event organised annually for the global investing audience, takes place next week, just in case many are not aware yet. It will be the last one before Prime Minister Datuk Seri Najib Tun Razak faces the people in the general election (GE).
The event usually takes place in the period of April or May. However, this year, it has been brought forward, largely to accommodate the GE. Many will be watching what the prime minister has to offer the investment community.
The ringgit has improved on the back of the weak US dollar, and the economy is humming well in sync with the global economy. Oil prices are rising, which means it gives more room for the federal government to manage its finances and meet the targets set by the rating agencies.
The market has discounted issues such as the troubled 1Malaysia Development Bhd fund. It has taken the view that the federal government, being the sole shareholder, will resolve the financial shortcomings of the fund. Foreigners are convinced that it will absorb any liabilities arising from the activities of the fund.
The number of foreign fund managers coming to the investment forum this year is expected to be far less than the usual turnout. The reason being many would not have had the time to reschedule their meetings to accommodate the conference being held earlier than usual.
Although the conference is a platform for investors to get to know companies better and understand government policies more clearly, politics will dominate the event. For sure, the GE will be held this year.
While the event is ideal for the prime minister to showcase his economic achievements – a lot of which is already well-publicised – investors will be looking for more signals.
Everybody knows that the GE will be held this year. The question is when?
How long more will this GE overhang on the administration continue?
What happens to Malaysia’s economic reforms after the GE? Will the economic reforms continue? How long will it be before politics takes a backseat while government administration comes to the fore?
To be sure, nobody would be able to answer many of the questions. But the participants will try to decipher the answers from the body language of the prime minister.
Under the present administration, the subsidy on energy has been reduced and the goods and services tax (GST) implemented.
The GST, which came into force in 2015, is a major structural reform by the government. The revenue collected from the GST replaced the federal government’s loss in income due to the drop in oil prices.
Apart from the GST, under Najib, public transportation has been given prominence, especially in urban Kuala Lumpur.
Today, we have mass rapid transit systems running 40 km. The high-speed rail (HSR) project connecting Kuala Lumpur and Singapore is certainly going to happen. In Sabah and Sarawak, the Pan Borneo Highway, a project broken into two phases, is taking shape at a cost estimated at RM30bil.
After splashing on infrastructure and implementing the GST, does the government have any other story to tell investors? Nothing significant comes to mind at the moment.
We can’t offer a drastic cut in the corporate tax rate as what United States President Donald Trump has done. We cannot offer foreign companies more incentives than what we are already offering.
We offer a stable investment climate well-supported by strong institutions such as the Employees Provident Fund and the pension fund, which are prepared to fork out long-term money for good investment prospects.
For instance, it is said that Hartalega Holdings Bhd 
, a top glove producer, trades at valuations of almost 50 times its price earnings multiple because local institutional funds continue to support it.
However, close scrutiny suggests that capital always chases good investments, which is a reason why manufacturers in other countries also command high valuations.
We can open up more segments of the economy to foreigners to reduce their cost of doing business. But other countries are also opening up their economy to foreigners.
So, will there be any surprises from Invest Malaysia?
Let’s wait and see.
Source: https://www.thestar.com.my/business/business-news/2018/01/20/will-there-be-surprises-from-invest-malaysia/#3Y7BB6mBevF36BWk.99