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Saturday, July 27, 2019

Anti-corruption crusade in full force in Corporate Malaysia






Enough time: Ruslan says there should be adequate time for corporates to implement the guidelines by June 1, 2020.

Will the much-anticipated enforcement of Section 17A of the MACC in less than a year result in a corruption-free business scene?


THE Pakatan Harapan government envisions a corruption-free Malaysia in five years’ time, but the journey towards the ambitious objective will be a bumpy one – especially for Corporate Malaysia.



According to PricewaterhouseCoopers’ Global Economic Crime Survey 2018, about 35% of the Malaysian companies surveyed have suffered as a result of bribery and corruption in their daily operations. This marks a sharp increase from just 19% in 2014.

Speaking with StarBizWeek, Transparency International Malaysia (TIM) president Muhammad Mohan cautions that “corruption is rampant and has worsened in the Malaysian business sector over the last few years”.

Despite the worrying trend in Corporate Malaysia, preventive anti-corruption measures among local companies remain limited.

As at end-May 2019, only 59% of listed companies in the country had an internal anti-corruption policy, according to the Securities Commission (SC).

The good news is, the Pakatan administration has been ramping up its anti-corruption initiatives over the last one year.

About a month after the 14th general election (GE14), the government established the Governance, Integrity and AntiCorruption Centre (GIACC) to monitor and coordinate all activities related to combating graft, integrity and governance.

In January 2019, the National AntiCorruption Plan 2019-2023, which was developed by GIACC, was launched by Prime Minister Tun Dr Mahathir Mohamad. The five-year plan has outlined six priority areas and 115 initiatives to achieve zero-tolerance to corruption and bolster good governance.

On July 18, the SC presented its anti-corruption action plan to the Cabinet Special Committee on Anti-Corruption chaired by Dr Mahathir, with recommendations to prevent corruption, misconduct and fraud.

Section 17A comes into force 

In addition to these efforts, beginning June 1, 2020, Corporate Malaysia will take its next step towards a corruption-free business environment via the enforcement of Section 17A of the MACC Act.

The new provision, which was inserted into the anti-bribery act before the GE14, establishes the principle of corporate liability among businesses. Under Section 17A, companies and their directors could be deemed personally liable if an associated person such as an employee or subcontractor is caught involved in corruption for the benefit of the commercial organisations.

Section 17A covers companies, partnerships and limited liability partnerships operating in Malaysia.

The companies and directors could defend themselves against prosecution if they have implemented “adequate procedures” such as internal guidelines or staff training within the commercial organisations.

However, senior lawyer and former Malaysian Bar president Datuk Lim Chee Wee says the existence of adequate procedures does not preclude a commercial organisation or the directors from being charged or prosecuted.

“That is to say, a company may still be charged or prosecuted for corruption offence under section 17A (1), but the fact that the company has in place adequate anti-corruption procedures may absolve it from any finding of criminal liability by the court,” he says.

“However, Section 17A does not put an undue amount of responsibilities on the management. While the definition of associated person under section 17A (6) appears to be general and extensive, there is a safeguard in section 17A (7) which provides for the need for a holistic assessment of the relationship between the company and the associated person to be conducted before any liability of the associated person can be imputed on the company,” he says.

With the anti-bribery provision, companies can no longer hide behind third parties such as consultants or subsidiaries. In the past, holding companies and the board of directors could absolve themselves of any blame if there were corrupt practices at the subsidiary levels.

“Now, the directors and companies are accountable for everything. Even consultants who act for companies come under the MACC Act and the employee hiring processes must be accounted for,” says a CEO of a listed firm.

He adds that the focus should be more on the wide implications of Section 17A, rather than the cost of compliance.

“It is not whether the corporate liability provision is difficult or adds to costs of Malaysian companies.

It is a question of whether the companies and directors are aware of the wide implications with the act coming into force next year.

“The MACC act together with the beneficial ownership laws gives MACC the bite to act on corporations, directors and owners. If they want to get you, they can,” he says.

If found guilty of an act of corruption under the soon-to-be-enforced Section 17A, the penalties imposed on a commercial organisation would be severe.

A company could be fined not less than 10 times the value of the gratification or RM1mil, whichever is higher, or be subject to imprisonment not exceeding 20 years, or to both.

In short, it will not be “business as usual” for Corporate Malaysia come 2020.

Delay in compliance 

While there are only 10 more months before Section 17A is enforced, many businesses in the country have yet to introduce adequate procedures to prevent corruption in their organisations, in line with the “Guidelines on Adequate Procedures”.

On Dec 10, 2018, Dr Mahathir launched the “Guidelines on Adequate Procedures”, which serve as reference points for any anti-corruption policies and controls an organisation may choose to implement towards the goal of having adequate procedures as required under Section 17A.

SC says that even among the listed companies that have an anti-corruption policy, “the majority of these policies contain gaps when compared to the Guidelines on Adequate Procedures”.

TI-M’s Muhammad Mohan hinted that not all government-linked companies (GLCs) will be ready by June 2020 for Section 17A.

“GLCs especially the larger ones are making preparations to handle the corruption risks involved. The problem is many GLCs and non-GLCs have wasted so much time by not implementing or preparing their organisations for this.

“Many businesses are expecting U-turns or extensions to be given,” he says.

Federation of Malaysian Manufacturers president Datuk Soh Thian Lai says the organisation supports the introduction of Section 17A and has undertaken several sessions to educate its members on the implementation of “adequate procedures” as well as the ISO 37001 Anti Bribery Management System.

As the deadline for the enforcement of Section 17A nears, Soh points out that concerns
remain on the readiness and capacity of the small and medium enterprises (SMEs) in ensuring that adequate internal measures have been put in place to potential acts of corruption. specially still lack the know-how lementing such measures. There e greater capacity building in place to assist SMEs,” he says.

However, among major corporations in uch as those related to Nasional and the Employees Fund, the guidelines are being owed, says a CEO of a listed company.

The compliance department has grown bigger, he says.  In an email interview with StarBizWeek, SC says that it will take steps to mandate companies to establish and implement anti-corruption measures.

 "While there may be additional costs in putting these anti-corruption in place, it is important for comealise that these measures will m to avail themselves of the statutory ddefence provided for under Section 17A (4) of the MACC Act,” says the commission.

Vulnerable businesses 

Past experiences indicate that compaed with procurement, governracts and the construction sector ulnerable to corruption and kickbacks.

While government and key industry ve introduced several anti-coreasures such as open tender corrupt practices continue to be prevalent in such sectors.

In fact, between 2013 and 2018, nearly 43% of the total complaints received by MACC were on the procurement sector.

Experts say that the trend is expected to change as businesses in Malaysia fully comply with Section 17A, following its enforcement. The adoption of anti-bribery ISO 37001 standards will also bolster Corporate Malaysia zero-tolerance approach towards corruption.

Facilities management service provider GFM Services Bhd, which is actively involved in government contracts, welcomes the enforcement of Section 17A.

Group managing director Ruslan Nordin believes the corporate liability provision not only upholds a business’ integrity, but also protects shareholders’ value and preserves profitability of the company.

“We view that there is adequate time for corporates in Malaysia to implement the guidelines by June 1 next year,” he says.
Senior lawyer Lim says that Section 17A imposes a duty on all businesses, its directors and officers to be honest in their internal and external dealings.

“This is to be welcomed, corruption increases the cost of transaction, and with this new provision, it should reduce the cost of business,” he says. UHY Malaysia managing director Steven Chong Hou Nian believes that compliance with Section 17A offers businesses an opportunity to exhibit positive values in their corporate culture.

“I opine that the qualitative gains from Section 17A compliance outweigh the additional costs,” he says.

He was also asked whether Section 17A will be successful in reducing corruption within procurement and tendering for government contracts.

To this, he said that the government has pledged to re-design the entire public procurement system while introduce relevant technologies to facilitate a clean, efficient and transparent procurement regime.

“The effectiveness of what Section 17A seeks to achieve, would naturally be premised upon the ecosystem that the MACC Act would operate within.


“The eventual success of the initiative is anyone’s guess, yet I applaud the nation for boldly taking this step forward. This is indeed a success in its own right,” says Chong.

 

Trade War Spurs Recession Risk in Singapore

The Tanjong Pagar container terminal in Singapore.
  • Shock contraction in quarterly GDP raises risk of job losses
  • Officials already grappling with aging, productivity threats
Singapore’s economic data have gone from bad to worse this month. Exports slumped to their second-worst rate since the global financial crisis, the purchasing managers index slipped into contraction for the first time since 2016, and the economy shrank the most in almost seven years in the second quarter.

Exports, manufacturing PMIs sink to multi-year lows




After spending much of early 2019 enjoying relative resilience, a recession is now looming. That’s a warning shot for regional and global economies, since Singapore’s heavy reliance on trade makes it somewhat of a bellwether for the rest of Asia.


The severity of the slump may be down to trade tensions and a global slowdown, but Singapore has been grappling with longstanding economic threats that have been slowly eroding the city state’s growth potential: rapid aging, labor market shrinkage, and sluggish productivity among them. Those risks will become more acute for policy makers now.

“Any undue turbulence or prolonged stresses from the trade war are only going to compound the challenges of all the other issues -- productivity, demographics, anything else,” said Vishnu Varathan, head of economics & strategy at Mizuho Bank Ltd. in Singapore. “External demand concerns will be at the top of the list for now, because if you don’t get that one right it’s that much more difficult to solve everything else.”

Singapore remains one of the most export-reliant economies in the world, with trade equivalent to 326% of gross domestic product, according to World Bank data. That puts the city state at the center of the storm stirred up by its top two trading partners sparring over tariffs.

The shock GDP figures earlier this month prompted some analysts to downgrade their Singapore forecasts for the year to below 1%. The government is set to revisit its own 1.5%-2.5% range next month, but for now, it’s remaining calm, seeing no recession for the full year.

What Bloomberg’s Economists Say...

“Barring a swift rapprochement in U.S.-China trade relations, our forecast for a 0.2% year-on-year contraction in Singapore in 2019 remains on course.
The government has ample firepower to cushion the blow, but it may not be enough to avoid a recession.”
-Tamara Henderson, Asean economist
The slump is largely contained so far to manufacturing, which makes up about a fifth of the economy, but could soon spread to other sectors such as retail and financial services. That increases the risk of job losses at a time when businesses like International Business Machines Corp. are already laying off workers and banks such as Nomura Holdings Inc. cut staff.

The number of retrenched workers in Singapore rose to the highest in more than a year in the first quarter, though the unemployment rate has remained fairly steady at 2.2% amid a recovery in construction.

“The labor market looks to be on two tracks at the moment -- there’s a weak market in the manufacturing sector but a steady one in the services sector,” said Shaun Roache, chief Asia-Pacific economist at S&P Global Ratings in Singapore. “High-frequency indicators including industrial production and trade suggest that the environment will remain challenging in manufacturing for the year.”

While those cyclical headwinds buffer the outlook, policy makers are also grappling with structural impediments to growth.





SINGAPORE AGING
An employee clears tables at a food center in Singapore.
Faced with a rapidly aging population, the government has been on an aggressive campaign to re-skill its labor force and prepare workers for a postponed retirement. The median age is set to rise to 46.8 years in 2030 from 39.7 in 2015, faster than the other top economies in Southeast Asia as well as the world as a whole, according to United Nations projections.

Tied to its rapid aging is Singapore’s productivity conundrum.





As the labor pool shrinks and gets older, the city state’s answer to the productivity challenge has been to automate and digitize. With an ambition to become a “Smart Nation,” the government has poured money and energy into digitization projects of all kinds, from helping seniors fine-tune smartphone skills at digital clinics to attracting financial technology giants to set up shop and test their ideas.




Silver-Medal Race
It’s that technological advancement, along with its world-beating infrastructure and efficiency, that continues to make Singapore attractive to businesses like Dyson Ltd., the U.K. manufacturer that picked the city state for its location to build its first electric cars. It’s also a reason why officials are confident Singapore can meet its foreign investment targets for this year.

“They’re saying the right thing, doing the right thing,” said Edward Lee, chief economist for South and Southeast Asia at Standard Chartered Plc in Singapore, who has penciled in 1% growth for 2019. “Retraining, ongoing structural reforms on the labor side -- those are the right things.”

By

 — With assistance by Cynthia Li

Thursday, July 25, 2019

China orders US to remove ‘black hands’ from Hong Kong

Escalating violence in Hong Kong over the weekend opened new fronts in its crisis over an extradition Bill that could see people sent to China for trial in Communist Party-controlled courts.ST PHOTO: CHONG JUN LIANG

Why are protests in Hong Kong turning violent?
 
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FM Spokeswoman Refutes FBI Chief's Fallacy



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Mike Pompeo, US Secretary of State, who was once the intelligence chief of the U.S., bluntly stated in a public speech in April that 'we lie, cheat and steal, and this is the glory of experiment of America.'
 

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China said on Tuesday (July 24) that US officials were behind the violent chaos in Hong Kong and warned against interference, following a series of protests in the city, including bloody clashes on the weekend.

“We can see that US officials are even behind such incidents,” said Chinese Foreign Ministry spokesman Hua Chunying at a regular press briefing on Tuesday.

She was referring to violence related to weeks of protests spearheaded by pro-democracy activists against a Bill that would allow people to be extradited from the city to stand trial in courts in mainland China.

“So can the officials tell the world what role did they play and what are their aims?” Hua asked.

On Sunday, groups of men in white T-shirts, who opposition politicians suspect were linked to Hong Kong criminal gangs, assaulted some pro-democracy protesters, after some protesters had vandalised Beijing’s main office in the city

Hua, asked about criticism of violence by the United States and Hong Kong’s former colonial ruler, Britain, said China would not tolerate any interference.

“The US should know one thing, that Hong Kong is China’s Hong Kong, and we do not allow any foreign interference,” she said. “We advise the US to withdraw their black hands.”

On Monday, a British junior foreign minister said Britain “will be keeping a close eye” on Hong Kong leader Carrie Lam’s investigation into the vicious assault on pro-democracy protesters.

“I welcome Carrie Lam’s statement today saying she has asked the Commissioner of Police to investigate this incident fully and pursue any lawbreakers,” Andrew Murrison told the House of Commons.

Britain, which signed a treaty handing over control of the territory to China in 1997, “remains fully committed to upholding Hong Kong’s high degree of autonomy, rights and freedoms”, he added.

Earlier this month, the US State Department urged all sides in Hong Kong to avoid violence after protesters ransacked the territory’s Parliament on the anniversary of its handover to China.

Following that episode, US President Donald Trump said that the protesters who stormed Hong Kong’s Parliament wanted democracy for the semi-autonomous territory.

“Well, they are looking for democracy, and I think most people want democracy. Unfortunately, some governments don’t want democracy,” Mr Trump told reporters at the White House on July 1.

But on Monday, he praised Beijing’s handling of the protests, saying he believed Chinese President Xi Jinping has acted responsibly.

"I know that that’s a very important situation for President Xi,” Trump said, adding that “China could stop them if they wanted”.

“I think that President Xi of China has acted responsibly, very responsibly,” Trump told reporters. “I hope that President Xi will do the right thing.”.

Hong Kong, a global financial hub, returned to Chinese rule in 1997 under a “one country, two systems” formula that allows freedoms not enjoyed in the mainland, including freedom to protest and an independent judiciary. .

But many in Hong Kong resent what they see as Beijing’s creeping control and its refusal to let its residents directly elect their leader. .

China denies interfering in Hong Kong and has warned that the violent protests over the proposed legislation allowing extraditions to mainland China were an “undisguised challenge”to the formula under which it is ruled. - (Straits Times, REUTERS, AFP)

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Wednesday, July 24, 2019

China releases white paper on national defense, expounds on missions, tasks of China's armed forces in new era

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China says it will never seek hegemony in national defense white paper


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The PLA's expanding role in the New Era


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A white paper titled "China's National Defense in the New Era" released by the State Council Information Office Wednesday expounded on the missions and tasks of China's armed forces.

China's armed forces endeavor to provide strategic support for consolidating the leadership of the Communist Party of China and the socialist system, safeguarding national sovereignty, unity and territorial integrity, protecting China's overseas interests, and promoting world peace and development, said the white paper.

The missions and tasks of China's armed forces were laid out in seven aspects:

-- Safeguarding national territorial sovereignty and maritime rights and interests;

-- Maintaining combat readiness;

-- Carrying out military training in real combat conditions;

-- Safeguarding interests in major security fields;

-- Countering terrorism and maintaining stability;

-- Protecting China's overseas interests;

-- Participating in disaster rescue and relief.

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Tuesday, July 23, 2019

Invest early for your golden years



Many procrastinate on starting a retirement fund thinking there is still a long way to go to retirement age. However, they fail to realise the effects of inflation on their retirement funds. To ensure you have enough time to build a stress-free retirement, here are some reasons you should start saving while you are young.

Financial independence – As the saying goes, “Sikit-sikit lama-lama jadi bukit.” When it comes to investing your savings, the earlier you start, the greater the accumulated returns on your original investment thanks to compound yield. By investing consistently and regularly, you will be able to secure yourself a comfortable retirement without having to depend on others. Work towards accumulating enough to cover the cost of your basic necessities, lifestyle expenses and occasional splurge on luxuries.

Saving is a good habit to develop – If you start saving for your future from a younger age, you will find that it becomes second nature. It will be easier to put aside some money for retirement. It helps to start with small amounts, especially for young adults who are just entering the workforce, so it is not as overwhelming. How you manage your paycheck will determine how you save for the rest of your earning years. A person who is used to saving on a monthly basis will find it easier to set aside 10% of her salary for retirement as opposed to an individual who is not used to spending her money prudently.

Gain control over your future – When you set aside money for your retirement, remember that you are shaping your future. This is a task no one else will perform for you or push you to do. By saving consistently, you are ensuring that you are well prepared for any outcome when you leave the workforce. With sufficient savings, you will most likely be able to live your dream lifestyle even during your retirement years – promising you the peace of mind of a secure financial future.

Steps to successful retirement planning

Building a substantial sum for your retirement nest egg can be easy and painless if you start investing early and regularly. Public Mutual’s Direct Debit Authorisation facility allows you to invest regularly while employing the Ringgit Cost Averaging strategy.

Not only that, you can enjoy tax relief of up to RM3,000 per annum if you contribute to the Private Retirement Scheme (PRS) fund. PRS contributions are creditor-protected. Public Mutual’s PRS contributors can also enjoy a free insurance or Takaful coverage of up to RM100,000, subject to terms and conditions.

To cater to diversified investors’ needs and investment objectives, Public Mutual offers six PRS core funds and three non-core funds, which make a great pool of funds for investors to choose from. Young investors who have long-term investment horizons can consider investing in PRS non-core funds, which can yield better potential returns in the long term.


For more financial tips and investment guidance, visit instagram.com/invest_with_public_mutual

Disclaimer:

These articles are prepared solely for educational and awareness purposes and should not be construed as an offer or a solicitation of an offer to purchase or subscribe to products offered by Public Mutual. No representation or warranty is made by Public Mutual, nor is there acceptance of any responsibility or liability as to the accuracy, completeness or correctness of the information contained herein.

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