The Malaysian GE14 (Part 1) – The Pakatan Harapan Manifesto

equities ge14 malaysia stocks Jun 04, 2018

by: Tam Ging Wien

Edited by Dean Goh for ProButterfly.

All examples and stocks quoted here in this article and on the ProButterflyTM site are for learning purposes; it does NOT constitute financial advice or a Buy/Sell recommendation. Contents are reflective of personal views and readers are responsible for their own investments and are advised to perform their own independent due diligence and take into account their own financial situation. If in any doubt about the investment action you should take, you should consult a professional certified financial advisor.

The "Malaysian General Elections (GE14) – An Investors Perspective" series is intended to discuss and generate investment themes and ideas, but it should NOT be misconstrued or otherwise interpreted as financial advice.

In our previous article on the Malaysian GE14, we discussed the results of the election and the immediate impact on the markets. Do make sure you catch that article first before you continue reading on.

The Pakatan Harapan Manifesto

The Pakatan Harapan (PH) has campaigned with a very clear message of hope for the people of Malaysia in their manifesto entitled Rebuilding Our Nation Fulfilling Our Hopes. The manifesto sets out the following pledge:

  • Fulfil 10 promises within 100 days
  • Fulfil 60 promises across 5 major pillars within 5 years
  • Fulfil 5 special commitments to specific groups including the FELDA Settlers, The Indian Community, Women, Youths and Senior Citizens

The manifesto sets out the following promises the new government intends to fulfil within the first 100 days of taking office:

  1. Abolish the GST and take steps to reduce cost of living.
  2. Stabilise the price of petrol and introduce targeted petrol subsidies.
  3. Abolish unnecessary debts that have been imposed on FELDA settlers.
  4. Introduce EPF contribution for housewives
  5. Equalise the minimum wage nationally and start the processes to increase the minimum wage.
  6. Postpone the repayment of PTPTN to all graduates whose salaries are below RM4,000 per month and abolish the blacklisting policy.
  7. Set up Royal Commissions of Inquiry on 1MDB, FELDA, MARA and Tabung Haji, and reform the governance of these bodies.
  8. Set up a Special Cabinet Committee to properly enforce the Malaysia Agreement 1963.
  9. Introduce Skim Peduli Sihat with RM500 worth of funding for the B40 group for basic treatments in registered private clinics.
  10. Initiate a comprehensive review of all megaprojects that have been awarded to foreign countries.

In addition to the 10 promises within 100 days, there are also 5 major pillars of reforms that the PH government promise to achieve within the next 5 years:



Pillar 1: Reduce the People’s Burden

The PH government’s central campaign message focussed on pinpointing the various scandals and corruption-laden excesses during Najib’s reign as the main cause of the wastage of government finances. As a result, the Ringgit has weakened, funds and charges such as tolls were raised, new taxes such as the GST was introduced and the country is saddled with excessive debt. These burdens the people with higher costs of living, increases household debt and detoriates the quality of life for both urban and rural folks.

To reduce the increased financial strain, PH promised among other things to abolish the Goods and Services Tax (GST) and tolls, introduce targeted petrol subsidies, reduce excise duties on imported cars, increase the number of affordable housing, improve the quality and reach of public transport, reform the healthcare services and increase welfare to the rural and agricultural segments of society.

Pillar 2: Institutional and Political Reforms

PH likened Najib’s rampant cronyism and corruption practices in all levels of government organs to cancer within the country. The centralisation of power within the Najib administration resulted in the loss of confidence of the people in the BN-led government and various institutions of power.

The PH government promised to overhaul the various government institutions and restore the people’s confidence in them. Among the actions proposed is to strengthen the anti-corruption efforts by reforming the Malaysian Anti-Corruption Commission (MACC), separating the Office of the Attorney General from the Public Prosecutor’s, limit the PM’s term of office, enhance transparency in  government budgets and reform the government’s procurement processes. PH also promised to abolish or reform what they view as oppressive laws like the 1948 Sedition Act, 1959 Prevention of Crime Act, 2016 National Security Council Act, 2012 Peaceful Assembly Act and 1998 Communications and Multimedia Act.

Pillar 3: Spur Sustainable and Equitable Economic Growth

PH pointed out that Malaysia has been enjoying prosperous economic growth over the years but the prosperity is now inequitable. The rich are getting richer while the middle class and poor are gradually being left behind. This rich-poor divide is widening and very little of the economic benefits are trickling down to those who need it most. Such inequality could lead to an unstable society , detoriating into a dysfunctional society and affecting national harmony.

To fulfil this promise, the PH government proposes to implement the retirement savings scheme for housewives where 2% of the spouse’s contribution are diverted to housewives, support the economic growth of Bumiputras, Orang Asal (natives), women and all citizens through the development of the SME sector and support entrepreneurship. Moreover, they aim to simplify business processes to encourage trade and investments from China and other Asian countries, retrain and retool the populace through educational reforms, review existing business tax rates and incentives, setup an equal opportunity commission to minimize discriminatory practices at the workplace, raise the minimum wage to RM1,500 per month, review the minimum wage every 2 years, reduce the number of foreign workers and balance the growth with environmental protection such as sustainable logging quotas, controlled mining and strict regulations against poachers and illegal loggers and abolish the National Service Program (PLKN).

Pillar 4: Return Sabah and Sarawak to its Rightful Status Accorded By the Malaysian Agreement 1963

The 1963 Malaysia Agreement signed between the signatories of the government of the United Kingdom, Malaya, North Borneo, Sarawak and Singapore led to the union of the Federation of Malaya, North Borneo, Sarawak and Singapore known today as Malaysia. Singapore later ceased to be part of Malaysia. During the negotiation of the union, the issue of self-determination of the people of North Borneo (now Sabah) and Sarawak was a contentious issue. Finally, a 20-point agreement was drawn up to protect the rights of Sabahans and Sarawakians. Among them are the exemption from any federally imposed religion on the states, independent control over immigration matters , retention of control over their own finances, developments, tariffs and taxes, special rights accorded to the indigenous races, independent control of their education systems and control over state land. PH has accused the BN government of undermining the rights of the Sabahans and Sarawakians.

The PH government promised to adhere to the true spirit of the 1963 agreement based on mutually agreed special clauses. It proposes to do so by setting up a Cabinet Committee to review and ensure the fair implementation of the 1963 agreement within the first 100 days, increase petroleum royalties to 20 per cent for Sabah and Sarawak, review the 1974 Petronas monopoly on O&G resources and open upthe possibility of Sabah and Sarawak setting up their own O&G company, increase resource allocation to Sabah and Sarawak build more schools, supply clean water, build roads and highways, initiate the Pan Borneo Highway project and create at least 2,000 jobs, allocate 30% of the annual budget to be devoted to Sabah and Sarawak, promote Sabah and Sarawak as a model of racial harmony, give priority to training local teachers and health workers from Sabah and Sarawak, pioneer electricity generation initiatives using solar, micro-hydro and biogas in rural areas of Sabah and Sarawak and provide more autonomy in government.

Pillar 5: Create A Malaysia That is Inclusive, Moderate and Respected Globally

PH charges that the former ruling government had been pitting one race against another for short-term political gains, which would lead to fragile social relations. PH also charges that the former administration ran a political model where the personal beliefs of the political elites represented all races in the country, a stark deviation from the true ideals and values of society.

The PH government seeks to achieve this by improving the education system from the primary to tertiary level, ensuring education is assessable to all including the rural and disabled, increase funding for law enforcement agencies to reduce crime rates, reduce trafficking, increase social safety nets, and create more spaces for social and family activities with public parks and promoting inter-racial and inter-religious harmony.

The broad-based understanding of the PH manifesto gives us a general idea of the focus points and targets of the new PH government. Armed with this understanding, we can start to anticipate potential impacts on various industry sectors. Within these industry sectors, what we hope is to uncover hidden gems for good long term investments.

As of time of writing, we can clearly see that the newly formed government has been swift to implement its promises. For example:


With the above examples a testament to PH’s swiftness, we can gain some comfort that the new government is likely to follow through its promises made in the manifesto.

Within the short time that the new government has formed, we view this rapid progress as fairly market positive.

Therefore, we will take the 10 promises and 5 key pillars at face value and assume that the new PH government will see through its promises and implement them in the most efficient and practical way.

In The Weeks Ahead...

In the weeks ahead we will be discussing a range of topics including a summary of the Pakatan Harapan Manifesto, the various related investment themes to ride on as result of the implementation of the manifesto and perhaps a deep dive into the 

We will be watching the political developments in Malaysia very closely over the coming weeks.

In our previous article on the Malaysian GE14, we discussed the results of the election and the immediate impact on the markets. Do catch this article if you haven't done so!

Follow us to learn more about the profile of Malaysian listed stocks!

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