VIEWS FROM THE TOP

How will political changes in Malaysia impact business, investment from Singapore?

In Views From The Top, business leaders from The Business Times' CEOs Club discuss this week's topic: "How do you see the political changes in Malaysia impacting business and investment from Singapore?"


Jayaprakash Jagateesan
CEO
RHT Holdings Pte Ltd

THE immediate focus of the new Malaysian government is the welfare of the people as well as to restore the rule of law and beat corruption. As part of its main policy pledges, the abolishment of the Goods and Services Tax could boost consumption, benefiting Singaporean businesses in Malaysia's consumer sector.

Investments into Malaysia will increasingly need to focus on bringing in capital and technology while boosting local employment to receive the full support of the authorities.

Dr Mahathir's experience and the new vigour among Malaysians point towards greater optimism as the country maintains its commitment to being business-friendly, presenting an opportunity for Singaporean businesses to grow across the causeway.


Edwin Khew Teck Fook
President
The Institution of Engineers, Singapore

THE new Malaysian government's determination to change policies could swing both ways for Singapore investors. Its intention to review foreign contracts for major projects like the High Speed Rail may affect Singapore businesses already involved in the projects.

But abolishing GST would reduce the burden of compliance and lower costs for Singapore businesses in Malaysia. However, this removal would reduce the government's capacity to reduce fiscal deficit and weaken investors' confidence.

But then again, appointing Lim Guan Eng as finance minister would boost confidence. In all, if the government continues to place pro-business at the core of its economic plan, Singapore businesses would enjoy more investment opportunities there.


Chris Burton
Managing Director for Singapore and Malaysia
Vistra Group

THIS was a watershed election result in Malaysia. Nothing is crystal clear in policy terms yet, but there are some hints. Investors caught up in shiny infrastructure projects (for example, the High Speed Rail) need to take a breath.

Dr M has made it clear (rightly) that he does not wish to incur sovereign debt unless he can be sure economic benefits accrue to Malaysians.

Investors close to Najib-preferred businesses/tycoons should also carefully consider their positions. In the longer run, the move to remove the Goods and Services Tax should benefit Malaysians and could increase retail sales and consumption.

Dr M's pledge to stamp out corruption (if carried out) will improve investor confidence and should increase the value of the ringgit, reducing import prices and further improving the lives of Malaysians. The environment feels much more positive but there is some transition to go through yet. The cautious investor should wait for the first 100 days to assess how Dr M progresses.


Victor Mills
Chief Executive
Singapore International Chamber of Commerce

ALWAYS leave room for the unexpected - especially in politics.

No-one predicted the result of the Malaysian general election would be a victory for the opposition coalition. Everyone predicted the narrowest of wins for Barisan Nasional.

However, the new Malaysian government has stated that it will be business-friendly. That is reassuring. It has every intention of improving the lives of its citizens and needs economic growth to continue to achieve that goal. My guess is that its review of all agreements entered into by the previous government will not adversely affect the High Speed Rail project which will benefit both countries' economies.


Dileep Nair
Independent Director
Keppel DC Reit

THE Malaysian election results portend seismic changes for the country. As their closest neighbours, Singaporeans should wish them well. We are Malaysia's second largest trading partner and third biggest source of foreign investment.

Certainly, with Malaysian leaders now talking about meritocracy, rule of law, eradicating corruption and other issues that are ingrained in our body politic, it will encourage more Singaporeans to venture there. Of course, a gulf exists between policy rhetoric and implementation.

Most important, though, is not to allow bilateral ties to be consumed by domestic politics. This requires the centrality of political leadership supported by mutual trust, personal chemistry and smart strategic thinking so that both sides adopt a ''prosper thy neighbour'' mindset.


Vipin Kalra
CEO
BankBazaar International

SINGAPORE and Malaysia have built strong business ties over the years. While there may be some short-term impact to investment and certain business sectors in the time it takes for the government to take shape and policies to be put in place, we do not foresee any significant impact to business in the long term.

On our end, we will continue to invest in our Malaysia business and look forward to aiding the new government's vision of affordable housing by enabling faster and paperless delivery of loans for Malaysians.


Vikram Mengi
Co-Founder & CEO
Latize Pte Ltd

GIVEN that it is the first power transition at the federal level, the fact that it took place without a hitch speaks to the maturity and stability of the democratic and political system in Malaysia. And this stability is a big positive for the business and investment environment.

With regards to specific deals agreed upon earlier, I assume these were win-win deals for all parties concerned. Pakatan Harapan won on an economic platform, and hence as long as individual deals make economic sense I do not believe they face any risk.

If, however, there were extraneous considerations, then they ought to be re-evaluated.


Chua Khai Lin
Co-Founder and CFO
Fundnel

THE immediate impact of a post-election Malaysia is likely to be uncertainty. Ongoing projects and policies face uncertainty, while the valuation of the ringgit is potentially in flux. Politically, Malaysia is stepping into the unknown after many decades of dominance by the previous incumbent.

But Malaysia and Singapore are fundamentally connected by our close proximity, and make natural business partners and collaborators in the long term, whatever the political climate may be.

As long as there is a stable transition of political power, the Malaysia election outcome is a win for diversity, and shows a willingness of Malaysians to embrace change. Singapore's continual investment in its neighbour can help to support this renewal process for longer term prosperity in both nations.


Grace Sai
CEO & Co-Founder
Found

MALAYSIA has long been overshadowed by its more progressive neighbours; these election results will bring it back to the regional (and even global) stage, standing as a symbol for what democracy can achieve. With this election, the status quo was irreversibly disrupted against all odds.

For Singapore, this may mean a period of uncertainty, and even a reverse brain drain as talented Malaysians based here consider returning home to help rebuild the nation. The power of bottom-up change has not been felt with such force in a long while.

However, I'm confident the Singapore government will manage this transition. And ultimately, if this change contributes to and reaffirms South-east Asia's position as a leading economic powerhouse and innovator, that can only be good.


Ang Shih-Huei
CEO
Klareco Communications

MALAYSIA has ushered in a new era with its election outcome. While there is an air of optimism on the ground, there is also some uncertainty as the Pakatan Harapan manifesto has highlighted a number of significant changes.

It is however in the best interests of the new government to ensure that business continues uninterrupted. Ultimately their focus is clear, which is to look into institutional reforms, restore public confidence in the government and renew investor sentiment. Given the strong economic fundamentals in Malaysia, Klareco continues to see opportunities for our business, despite the administration change


Virginie Maisonneuve
Chief Investment Officer
Eastspring Investments

DR Mahathir was known in the past for his complicated relationships with Singapore. However, the mood may have shifted for although the new government said during the election campaign that it would review the High Speed Rail (HSR) link, Dr Mahathir's core targets for review appear to be China-related contracts. That means the HSR is unlikely to come under substantive review. Investors in both countries will want to see clarification on election promises, such as subsidy increases.

Meanwhile, the bilateral relationship between Singapore and Malaysia, with their deep cultural ties, is likely to continue to be a pragmatic one based on mutual interests. There is bound to be short-term uncertainty in the markets but in the long term, this watershed election could herald much needed change in Malaysia's economy and possibly lead to more opportunities for Singapore.


Ian Lee
Regional Head, Asia-Pacific
The Adecco Group

THE political changes in Malaysia bring a significant shift in the business climate and we can expect companies to proceed with caution while waiting for further clarity on the new government's policy directions. Businesses and investments will be affected not just in Malaysia but also in Singapore given that the two economies are intricately linked.

On a more positive note, the new government's campaign pledges of free tertiary education at public universities and boost to technical and vocational training have the potential to uplift growth and create much-needed higher-level jobs in Malaysia together with the required local talent to fill these jobs.


Helen Ng
CEO
General Storage Company

IN a 2017 report on the self-storage industry in Asia, Ipsos Business Consulting listed Malaysia as one of the top 10 most attractive destinations for market expansion. Malaysia also experienced a resurgence in demand from individual storers; as a result, self-storage providers grew their share of the market from 67 per cent in 2015 to 74 per cent in 2016.

Recognising the importance of shoring up consumer and investor confidence, one of Dr Mahathir's first actions as Prime Minister was to appoint key Cabinet ministers including a respected finance minister. I am confident that the new government will remain committed to projects that promote economic growth in Malaysia.


Ana Dhoraisingam
CEO, Singapore
PineBridge Investments

THE announcement that the new Malaysian government will have the guidance and support of the Team of Eminent Persons clearly helped instil confidence among foreign investors and limit volatility in the markets.

Pakatan Harapan's victory ended 60 years of political dominance by the Barisan Nasional coalition, on the back of promises to end corruption, crony capitalism and to improve the lives of the ''rakyat'' in Malaysia.

It reflects Malaysians' strong desire for change. We believe the improvements in corporate governance across all institutions within Malaysia will bode well for investors and businesses. Already, the new government has sprung into action, announcing that the GST will be scrapped on June 1. Other key initiatives including reducing the country's national debt and enacting fiscal reforms remain on our radar.


Maren Schweizer
CEO
Schweizer World

IN the light of the election results, Singapore's Prime Minister has said that the outcome will not affect bilateral ties and that the two nations would continue to work together.

In terms of business, many have speculated that the new Malaysian government would pave the way for reforms and/or modernisation. What will be interesting to see is what level of statism will affect or open up opportunities for business collaborations and investments. Will that boost Malaysia's already strong export, internal economic growth and attract even more FDI into the country?


Joanne Wong
Senior Regional Director for Asia-Pacific & Japan
LogRhythm

IT is without a doubt that both countries enjoy a close relationship. While it is still early days under the new government, I believe there will be vast opportunities for Singapore businesses to invest and collaborate with Malaysian companies, as we can expect good growth prospects within Malaysia.

This could start from exploring and expanding on cross-border partnerships to facilitate exchange of information and intelligence in order to tackle shared concerns including regulation on cybersecurity and terrorism. The aim is to create a more stable environment where businesses could benefit and thrive.


Robin C Lee
Group COO
Bok Seng Group

I DO not expect significant changes in the way business is conducted nor in the amount of investment from Singapore as a result of the political changes in Malaysia. Businesses will adapt along the way, like we have always done wherever we invest in.

What is now more crucial to manage are the mega deals between the governments which best have clarity as fast as possible. As the new government would need time to review all foreign investments and projects, the Kuala Lumpur-Singapore High Speed Rail's timeline may be deferred. This will impact both Singapore and Malaysia as funds and preparatory work have been put in.

Don't fret over the regular businesses between the two close neighbours, just address any concern that may surface and focus on aligning the win-win HSR back on track, albeit with some delay.


Magnus Grimeland
Founder and CEO
Antler

ANTLER strongly believes in the strength and potential of the Malaysian economy and its people, and we are excited to see the depth of innovation there.

We are optimistic that Malaysia will continue to grow its influence in the region and have a positive effect on businesses and investments in Singapore.


Toby Koh
Group Managing Director
Ademco Security Group

THE new Malaysian government brings enormous positive vibes to the local businesses and foreign investors. I believe they will quickly set out a framework to encourage foreign direct investment to stimulate the economy and drive employment.

Investors must keep their eyes on opportunities that will arise in the near future. I am hopeful that the new government will put in concrete plans to open up the economy to foreign investors.

There will be a shakeup in the state investment funds as clearly indicated by Prime Minister Mahathir. The restructuring will inevitably present investment opportunities for Singapore businesses. I also see the Malaysian government stabilising the ringgit and perhaps weakening it slightly to increase competitiveness.

The Council of Elders has deep experience and expertise which will be a pillar for progressive economic reforms. This can only bode well for our closest neighbour.


Lim Soon Hock
Managing Director
PLAN-B ICAG

THE new Prime Minister, Dr Mahathir, promised reforms to win back investors' confidence, grow the economy, reduce government debt, waste and nice-to-have expenditures, and redeem the trust in government. These are tough decisions, especially those relating to the 1MDB financial scandal, but correct ones which he has to make,

It is clear this epochal development signified the long-overdue change that the electorate desired. When executed well - which remains to be seen - a stable and prosperous Malaysia can only benefit businesses and investments from Singapore. The new PM has pledged to have friendly relations with other nations.The increased connectivity between the two countries from the High Speed Rail can only be a boon for business and investment from both sides. Given that it will support Dr Mahathir's new plan, we can only hope that it will not be canned or delayed.


Annie Yap
CEO
AYP HR Group

MALAYSIA'S new administration will bring about greater transparency and accountability. As Singapore Prime Minister Lee Hsien Loong said, Singapore has a vested interest in Malaysia's stability and prosperity. Admittedly, there are concerns about Dr Mahathir's inclination towards protectionist policies.

But overall, the Pakatan Harapan leaders are on friendly terms with Singapore. Also, Anwar Ibrahim is pro-foreign investors. I would say that the political change is positive for business and investments from Singapore, if not in the short run, definitely in the long run. But businesses operating in Malaysia have to monitor the situation closely, zero-rated GST will soon be in effect, and this may lead to additional taxes.


Zaheer K Merchant
Regional Director (Singapore & Europe)
QI Group of Companies

EVEN within the political change, the key word is ''uncertainty'' - from the Pakatan Harapan alliance itself to business dealings. That said, post-election, the Bursa opened to some tepidity and then strengthened, as did the ringgit. This suggests a level of confidence since the country's basic economic fundamentals are not undermined.

The new Prime Minister and Finance Minister have also said that Malaysia is open to business. As such, to me, the B2B, B2C and C2C impact is small. But question marks hover over the business deals and commitments under the Najib regime that involve government bodies and regulations. With reviews being undertaken, G2G dealings and related business interests will undoubtedly be open to reconsideration. This, in my view, is where there will be some uncertainty and impact on business and investment.


David Leong
Managing Director
PeopleWorldwide Consulting Pte Ltd

SINGAPORE'S warm relationship with Malaysia may likely evolve again following Dr Mahathir's election triumph. Singapore has to adapt to the change of political temperature and attitude by the new government. The Singapore government must tread water carefully and know the heat and depth of the water with our prior historical points of disagreements with Malaysia during Dr Mahathir's earlier tenure as prime minister.

We may have to cross the crooked bridge to reach the other side when working with Malaysia over the various agreements inked during Najib's tenure. A straight walk across to the other side may not be easy. However, personally I think business between Singapore and Malaysia should still be strong and resilient.


Jay Shah
Founder & CEO
OpenDNA

DURING Dr Mahathir's tenure as prime minister during the period 1981-2003, the relationship between Singapore and Malaysia was a tumultuous one, with frequent bickering between the two sides over several issues.

Despite that background, we at OpenDNA are optimistic that moving on, the new Malaysian government will establish a stronger and mutually beneficial relationship with Singapore.

Although it is still early days, under the leadership of Dr Mahathir and Anwar Ibrahim, the Malaysian government is poised to deliver on its campaign promises, including to reform the economy. And as Malaysia strengthens its bilateral ties with Singapore, both countries will benefit from their business relationship.