TWO latest developments that have nothing to do with the tobacco trade – Indonesia lifting the freeze of its workers to Malaysia and passing of the anti-hopping law –have been music to the ears of CGS-CIMB Research.
Obviously, a resolution on the recent temporary freeze on Indonesian foreign workers will allow the resumption of Indonesian foreign worker intake in the next few months to alleviate the current foreign worker shortage issue.
“This will be positive for the plantation, manufacturing, construction and services sectors in Malaysia as it will help boost future productivity and profitability of the businesses,” opined head of research Ivy Ng Lee Fang and analyst Nagulan Ravi in an economic strategy update.
“The recruitment of plantation workers from Indonesia is critical to boost the fresh fruit bunches (FFB) yields, raise crude palm oil (CPO) output and reduce the production cost at Malaysian estates.”
Additionally, CGS-CIMB Research is also positive on the passing on the anti-hopping which will prevent members of political parties from switching parties – a phenomenon that has led to political instability in Malaysia over the past few years.
“The anti-hopping law which is expected to come into effect in September will likely be enforced before the 15th General Election (GE15) and will likely lead to better political stability in the country, hence likely to be viewed positively by investors,” justified the research house.
“The anti-party hopping law is a key condition of the memorandum of understanding (MOU) signed between the opposition coalition (Pakatan Harapan) and Prime Minister Datuk Seri Ismail Sabri Yaakob’s Government in September last year.”
“We are of the view that GE15 could be held this year and could improve political stability and market sentiment,” added the research house.
Reiterating the FBM KLCI’s 2022 target at 1,506 points, CGS-CIMB Research expects the potential beneficiaries of GE15 to include Telekom Malaysia Bhd, Tenaga Nasional Bhd, Maxis Bhd and Gamuda Bhd. – July 30, 2022
