A LIST of digital currency exchanges published on the website of Bank Negara has stirred some level of interest. It has led some quarters to think that this list is some kind of sanctioning given by Bank Negara to this group of exchanges.
However, this does not seem to be the case. For starters, the list appears on the central bank’s website under the “Consumer Alert & Updates” section. It merely states that these exchanges are reporting institutions. Bank Negara has reiterated its official stance, namely, that the public must be cautious of digital currency investments and that digital currencies are not legal tender.
The central bank also does not regulate nor does it recognise digital currency exchanges. This clearly means that Bank Negara is not in any way giving its blessings to these exchanges.
What is also worrying, especially if parties are taking this list to be a central bank endorsement, is that the parties behind one particular exchange on the Bank Negara list seem to appear in allegations of running investment scams.
The Internet has a few postings alleging that one of the shareholders of one of the exchanges listed on Bank Negara’s site is involved in a multi-level and bitcoin scam. One wonders if the authorities have any ongoing investigations into that. Under central bank rules, reporting institutions are required to comply with all requirements of the Anti-Money Laundering and Counter Financing of Terrorism – Digital Currencies (Sector 6) policy document issued on Feb 27.
These institutions also come under the purview of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 or better known by its acronym, AMLA.
In the case of digital exchanges, being on the central bank’s list of reporting institutions does not mean that it is licensed.
What it could mean, though, is that the central bank may be taking steps to regulate activities in this space despite officially saying it does not. Whether or not this will lead to licensing, only time will tell.
The supply chain’s value chain
GARTNER Inc, a provider of research to the technology industry, expects spending on consumer electronic devices to grow by 7% this year. This was up from its forecast of 2% spending growth last year.
It cautions that there will still be fluctuations in the shipments of these devices on a year-on-year basis, but forecasts worldwide shipments of devices such as PCs, tablets and mobile phones to grow 1.3% or 2.3 billion units this year after declining 3% last year.
This should be good news for Malaysia’s electrical and electronics (E&E) industry, which accounted for 36.7% of the RM935.39bil in total exports last year.
Interestingly, Gartner says the spending growth will be underpinned by better specifications on top of the increasing average selling prices, which it expects to rise by 5.6% this year from 9.1% last year.
The better specifications mean that local E&E players must move up the value chain. As they produce high-specification goods, the overall economy will also benefit as high-end services such as research and development (R&D) centres, services that are sorely lacking in Malaysia, are set up.
High-end manufacturing will be a catalyst for not only R&D jobs but other high-end service industries, in banking and finance, for example, or even urban services.
The global economy is closely tied to the supply chain where a product is conceptualised in one place, then designed in another while different parts are manufactured in half-a-dozen other locations before being put together in yet another place and shipped out to the end-markets. These parts criss-cross oceans and continents and are part of the global trading system.
Malaysia occupies an intermediate position where the E&E value chain is concerned, as its factories are more parts manufacturers than the producers of the finished goods.
That’s where a focus on devices that house high-tech software for the Internet of Things and cybersecurity features will help in moving up the value chain and help create the high-end jobs needed to raise wages.
Dealing with a monopoly
When e-hailing companies first appeared on our shores, their entry was greeted with much enthusiasm. Users gushed about being able to take a new car, have fare certainty and book a taxi far more efficiently than the traditional taxi centres were providing.
Taxi companies revolted after their entry, but the prevalence of Uber and Grab cars for people to use via apps made them the preferred choice for many commuters.
The cheaper fares, although enormously subsidised, was a big carrot for people to use those rides.
Fast forward to today and we have a situation where Uber has shut down its business in Malaysia in favour of taking a stake in Grab. That’s because Grab has entrenched itself in many markets in South-East Asia and has raised billions of ringgit from investors to fund its growing operations.
But the process of creating a virtual monopoly in the e-hailing business has met with some resistance, and rightly so.
Monopolies are often frowned upon, as it creates an inefficient market. If an operator has monopolistic power, it often will flex its muscles to make more money to the detriment of consumers.
Regulators will step in when assessing the situation, and it was no different when the deal between Uber and Grab was announced. Politicians and regulators took a different stance than when such companies first started operating in Malaysia.
In the past, they understood the need to have such services because consumers wanted that. Those agencies are now using their power to protect consumers from being taken advantage of.
Singapore’s competition watchdog stepped in to make sure that people do not pay the price from the creation of a new monopoly, and it was reported that its measures are meant “to keep the market open and contestable”.
What Uber and Grab did was to introduce competition to a regulated market and now it is only appropriate that regulations are used to keep the market open and fair for consumers.
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